Startups For the Rest of Us

Rob Walling:
And so when you plateau, you’re not going to know why you plateaued because you got lucky because you threw 10, 6-sided dice against a wall. One landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked. And that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling, and this is the podcast that is shipped every week since 2010 for 720 something episodes focused on helping folks who want to bootstrap and mostly bootstrap amazing companies. 

If you’re listening to this podcast, you probably want to change your life or the life of those around you, but you are not hell-bent on begging venture capitalists for money and trying to make a dent in the universe or change the world, at least not with your first effort and the effort that you’re probably focused on, if you’re listening to this podcast. 

Do the lessons on this podcast apply to folks building SaaS companies? Absolutely, and that is the main focus. Do they also apply to folks building media companies, content companies, info product, course companies, frankly construction companies, all types of businesses? Yeah, a lot of them do and I have folks who I meet in person or who write in and let me know that they have no plans of ever launching a SaaS startup, and yet, they listen to this podcast to get learnings and the thought process from myself and other successful entrepreneurs. So if you are here, you belong here. Thanks for joining me. 

This week, I am diving into listener questions. I made a request on X/Twitter for more advanced questions, and so I don’t want to call these late stage questions because they’re certainly not all focused on seven or eight-figure businesses, but I wanted to get away from just answering a lot of questions about validation, and how do I find an idea, and how do I pick an idea, and how do I build an MVP, and those are fine questions, but when that’s all that’s coming in, it gets a little tiring and it’s less helpful for folks who are further along. 

I really do want this podcast and all the content that I put out to help folks who are in early stages, but also in the medium and late stages, seven and eight-figure companies and it’s easy to get pulled in the direction of focusing on early stage because that is the majority of the audience in any entrepreneurial audience, 80%, 90% of the people are early stage. It’s just the way the numbers work out, but I want to continue to have this podcast focus across the lifecycle of building your company. 

So today, I’m answering some more, I don’t know, intermediate questions, I don’t know, intermediate, late stage, whatever we want to call them, from a handful of folks who sent in audio, video and then a couple written questions, and I still have a backlog after this of another, I think, 25 more advanced questions. And so, I’m really excited to dig into those in the coming months. 

Before we get into questions, I wanted to let you know that MicroConf Europe is almost sold out. This year, MicroConf Europe is in lovely and amazing Dubrovnik, Croatia, it’s October 6th through the 8th, and our pricing for tickets goes up again on August 15th. So get your ticket today to save $200. And with that, let’s dive into my first question. As a reminder, audio and video questions go to the top of the stack.  

Speaker 2:
Hey Rob, big fan of the show and also the Slack community. My question is about managing managers. I run a software company in Germany and we’re around 25 people now and just hired the first two managers. One person in marketing that has three to four people under her and another leader running a product line with two people under her, and I am no newbie to managing ICs, but managing managers or leadership team is new to me. 

So what’s something that you focus on to A, not undermine their authority, but B, still be on the pulse of what’s going on because especially in marketing and in product, I, of course, don’t want to lose touch with what’s happening and want to make sure that results are still being achieved? Would love your insights and thanks a ton.  

Rob Walling:
I really like this question because we are often taught how to supervise, how to manage people. I even talk a little bit about it in the SaaS playbook. It’s not focused on that, but talking about how to manage managers is a whole other experience, and there’s a couple things that I have kept in mind during my career as I have done this because I did it both at full-time jobs and of course, I do it today where with MicroConf and TinySeed, I manage people who manage other people. 

And the couple things that I like to keep in mind are number one, try to find a couple good go-to resources, even simple things like what are the top two or three books you know about management and leadership? And if you have to ask on X/Twitter or if you know what you read coming up that really set you straight and provided a lot of value and education for you, have those as easy references, A, when you hire someone or B, if you promote someone to start managing people, so that you can give them those resources and you may need to consume them again and talk them through the thought process. So that’s number one. 

Number two is I try to model how I manage and communicate that to my managers. We tend to hire nice people who get along with others. I tell them the hardest part you’re going to experience as a manager is you really have to give negative feedback at a certain point or constructive feedback, however we want to talk about it, and now is the hardest thing for a lot of folks that I know. It’s easy to tell everyone they’re doing a good job. It’s easy to post the confetti emoji in Slack and thank everybody for their hard work. It’s hard to give someone pointed constructive feedback and not feel bad about it. 

Some people do this really well, some people are jerks and do it all the time, and those are the folks you probably tend to not hire, right? They take it too far. They “tell it like it is,” which usually means they’re an asshole, but folks who are nice and get along and view harmony as a positive thing and they want to get it done and they love working with their teammates, can often find it hard to give negative feedback. 

So that is one thing that I try to really address early on about you are going to want to get into the habit of giving constructive feedback because if you don’t, it’ll come as this huge surprise six months down the line. If you have five direct reports and you just never do it and then all of a sudden you do, it’s a big deal, but look at it as something that your team members, your direct reports really want. You’re actually helping them improve. 

That’s the thing that I started learning about myself was that that’s how I learned to couch it in my own head of I’m helping someone improve by telling them, “Hey, I think you could do better on this,” or “Hey, I think we messed up on this. How can we do better next time?” Usually, the best people, already know they messed up on things and you barely need to tell them, but that’s the second thing that I think about. 

The third thing that I think about is I do implement some light key performance indicators, KPIs. I hate the acronym stuff and the rocks and that I’m just not a big process person, but I do find it helpful to define pretty concretely some numbers that should move in a direction and sometimes this is as lame as NPS. Other times, you can just make up your own satisfaction score. How satisfied are X users? Oftentimes, it’s if they’re in charge of marketing, how many leads are coming through, how fast is growth. If they’re in charge of sales, how many deals are closing, their, customer success, how low is churn? 

There’s some other things you can add in there, customer support, how fast are we responding and what are the ratings, do we have high ratings of our responses. So getting something in place that’s pretty concrete so that your managers know what they’re managing too can be helpful and it doesn’t have to be super complicated. 

You can have one, two, three numbers that you agree with, that you collaborate with to decide which are the priorities for the business, and having that means you can talk about those week to week, month to month, and you may need to change them. What you may do is set two or three key performance indicators that you want to go up into [inaudible 00:08:38] and realize, “You know what, these aren’t quite right and we need to adjust them.” 

But the last thing that I’ll touch on is I do what’s called skip level meetings, and this is where you do maybe a quarterly meeting with the folks who report to your managers to have a conversation, ask them how it’s going, try to suss out, “Hey, is everything good? How are you feeling about things? How is it working with so-and-so?” You may not be able to ask them directly, but you’re just trying to get a sense of how things are going. 

And I often will ask about what do you want to do next? Where are you headed in terms of self-improvement, professional development? What things excite you about this job? What things do you like the least? What do you want to get better at? What do you want to do next year that you aren’t doing now? What will make you better? And I will ask them, “Have you talked to your manager about this?” I won’t say your manager. I’ll name him by name, but obviously, I would say, “Have you talked to Tracy about this at TinySeed?” 

And if they haven’t, then I will make it a point. I’ll either say, “Well, do you feel comfortable talking to her about it,” or “I will have a conversation with Tracy and let’s make sure we get you what you need. So it’s obviously more to be said on this topic, but that hopefully gives you a few recommendations for how I would approach it. My next question comes from Sean about attending conferences without overselling.  

Sean Matthews:
Hey, Sean Matthews from Left Hook here. We currently work as a services company trying to bootstrap our way into a software product. We also have built a open source framework to help develop and deliver user-facing B2B software integrations, so that would be anything you find inside your integrations page. We’ve built a framework that helps build those quickly and has all the infrastructure in place, so leverages a lot of the best of breeded or new packages and concepts architecturally out there. 

Long story short, our target market, our ideal customer profile are typically partner leaders, product people, sometimes the developers that are being asked to go build those things, CEOs, C-suite, oftentimes startup, but sometimes all the way up to enterprise SaaS. We find ourselves often going to events and thinking about attending events where we, as our own aspiring B2B SaaS founders, attend and actually be part of the conference because we have questions about how do you set up your marketing and what’s the right pricing strategy, et cetera. 

At the same time, we are around a target rich environment. Everyone is potential customer for us. Aside from, and we’ve done this before is sponsoring, so we’ve sponsored some conferences and that kind of fits fairly nicely, but when we’re not sponsoring, if we go to MicroConf, how do we approach people and just show up while actually being able to sell to them and not feel like we’re selling? 

And that’s maybe a question of just be yourself, but figured I would ask that because you probably get people that lurk around conferences that really they’re just there to sell as opposed to be a part of the conference. So just curious as your thoughts on that.  

Rob Walling:
Thanks for that question, Sean. I appreciate it. Yeah, so with MicroConf, some folks attend MicroConf where their audience or their customer, their ICP, ideal customer profile, are the attendees, and usually, it’s pretty obvious the ones that are selling and overselling and they’re annoying. People don’t like them, people avoid them, they pretty quickly find themselves not in the good graces of most of the people there. 

I think that if you are mindful of this, it’s easy not to oversell. Does that make sense? It’s easy to just be cool, just be cool. Like Samuel Jackson said in Pulp Fiction, “Just hang out.” Wow, quite the reference there, but the idea is people are going to ask you what you do, what company you’re with. You’re going to say, “Oh, I’m with Left Hook and we build software that helps B2B software integrations,” and see if they ask more. They might say, “I don’t have any interest,” and they change the subject or they might say, “Oh, so are you like Zapier?” And you’re like, “Well no, we allow you,” da-da-da-da. 

It’s a question and you play the conversation, but you don’t go around pitching. You don’t hand people business cards for crying out loud, not at a MicroConf especially, unless I ask for it, right? But the idea is you’re just having a conversation with another founder and you’re a founder and that’s it, and at a certain point, if they show enough interest, you might ask, “Hey, do you want something,” whatever it is. Do you want to try out the software? You have interest in it. You can ask them, but don’t make it high pressure, because it’s not a sales demo that they opted into. 

The other thing to think about, obviously sponsoring is a great one because if you’re sponsoring, you have a little sponsor tag on your badge, then of course, people are coming up to you because they know what you do and they want to hear that. So it’s kind of an open door for you to communicate that and for you to talk about what you’re doing. 

The other thing to think about is to apply for attendee talks or lightning talks. A lot of conferences have the opportunity that if you’re already an attendee with a ticket, you can name a topic that you want to talk about that gets you up on stage like at a MicroConf, say it’s 10 or 12 minutes and you don’t want to sell your product, but you might say things we’ve learned integrating with 100 different APIs. And then you say, “I’m the founder of this and this is what we’ve learned and [inaudible 00:14:02] if you’re interested in what we’re doing, it’s very light on sales and very heavy on actionable tactical advice. 

If you do come to MicroConf for another conference and you are not a sponsor and you start selling pretty heavily, it will get back to the organizers and they will remember your name because we have had folks do that. So I think you’re asking yourself the right question here, how do I do this well. 

The other thing is to gauge. If you go to SaaStr, everyone’s there to sell their stuff to everyone else. It just is. Everyone’s trying to put deals together, everyone’s trying to put meetings together. That is kind of the point of SaaStr. A lot of people ignore the content because trying to sell. If you go to MicroConf, it’s not like that. 

And so, you also want to know the audience and know the type of event that it is, and if you don’t know, ask a prior attendee and ask them what the vibe is or you can frankly ask on X/Twitter, I’m really going to struggle to call it X because when I say X, I know that you kind of know what I mean, but it’s tough. So thanks for that question, Sean. Hope it was helpful. 

My next question comes from the post I made on X and Bankster Life asks, “There are a lot of SaaS companies stuck in the 20 to 30 KMRR range. How do you break out or is it not possible due to market size?” So here’s the thing, I don’t necessarily disagree with there are a lot of SaaS companies stuck in the 20 to 30K market size. I know. I don’t disagree with that, but it’s not as if that’s some magical place where a bunch of SaaS plateaus. 

If you look at the State of Independent SaaS report, which stateofindiesaas.com, you can download the 2024 report. It just came out a couple of weeks ago. You’ll see we asked what’s your MRR? We surveyed almost 700 B2B SaaS companies. And you’ll see, if you imagine on the left-hand side, it’s like one KMRR and on the right-hand side, it’s, I don’t know, more than 5 million or more than 10 million or whatever, and the left-hand side is the tallest and it’s almost, it’s just a curve down and to the right. 

It’s just the way these funnels work. It’s the 80/20 rule. It’s like a sales funnel. If you think about, well, 100 people come to my website and 80 people stay longer than five seconds and 50 people click this button and get to the pricing page, it just decreases and decrease. It’s the same thing with MRR. The fact that a bunch of people churn at 20 to 30K is like, “Yeah, but a bunch of people churn at 1K as well and 5K and 10K, and it’s just fewer and fewer make it further and further.” 

So I want to kind of dispel the notion that there’s some magical 20 to 30K plateau point that is any more magical than any of the other revenue markers, but what I will say is I was going to write a talk about plateaus and it turns out, it just wasn’t going to be a very good talk, but I have this, it’s not even an outline, it’s just a list. I’ve tried to think of every possible reason that a SaaS company would plateau and I came up with 10 of them, okay? 

So there’s three that are weak product market fit. I don’t like to say pre-product market fit, that implies you suddenly cross this finish line and you have product market fit, but let’s say early or weak product market fit and there’s three of them. Cause number one is churn is too high because you haven’t built something people want. Cause number two is churn is decent so far, but you’re not driving enough traffic. Cause number three is you’ve built a one-time use product rather than building something people want to subscribe to, which is not a recurring product. 

And then, there are seven when you have stronger product market fit later plateaus. So there are reasons like number one, top of funnel is too small. Cause number two, subpar funnel conversion rates. Cause number three, your churn is too high. Cause number four, a competitor starts eating your lunch, whether on the product or on the marketing front. Cause number five, you’ve tapped out the market, et cetera, et cetera. 

So you get the idea that you can’t just ask, how do I break through a plateau if you don’t know why you’re in that plateau and someday, obviously, I’m going to put these in something, I don’t know if I’ll do a podcast episode about all of them and talk them through or if I’ll put them in a talk or what have you, but that’s not really the point of this. 

The idea is, like Bankster Life said in the tweet, how do you work out or is it not possible due to market size? Well, it just depends on your market. If you built an ESP and the market is tens of billions of dollars for sure, it might be larger than that, then no, it’s not due to market size, but if you have targeted an incredibly small niche, then yeah, that’s the reason. And then, you have to decide, do I expand into other verticals? Do I build a second product? That’s the thing, the thinking. 

This is why general advice when you ask on Twitter, someone will say, “I plateaued and people are telling me that you need to do this or that.” It’s like, well, if they don’t understand or you don’t understand why you’ve plateaued, then how are you going to fix it? And this is my biggest issue, I think, with the whole launch one thing a month and see what sticks because you are not going to know why you’re growing. 

And so, when you plateau, you’re not going to know why you plateaued because you kind of got lucky because you threw 10, six-sided dice against a wall, one landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked, and that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

So thanks for that question, Bankster. I hope my answer was helpful. I know it wasn’t a direct, I mean, it wasn’t a direct answer. The answer is it depends, but hopefully, I’ve given you the full framework of what it depends on or at least a taste of the full list, which again, at some point, I will publish in some form or fashion. It’s just not there yet. It’s not publication ready. Trust me. 

I know someone’s going to email me and ask me for it, and it’s just a bunch of bullets and then it’s like how to fix it and it’s things like the causes, you don’t have enough top of funnel traffic and it says how to fix, drive more traffic. It’s not. It’s not a tactic of how to do it, it’s just the obvious answer to these things. So I’m just not sure how helpful it actually is in the form that it currently is. 

My next question is from Adam Denver Co is the username, but it’s Adam Wright on X, “What happens when you’re building a SaaS machine, which is what you want, but it becomes an agency or a more hands-on business?” And so, I responded to Adam and said, “Is your question exactly as you’ve asked it or is it more of a question of how do you not let it become that?” And he responded, “It’s more of a whoops, this happened. What now? I started a job board, jschimp.com, but it’s turning into a hands-on recruiting agency for immediate money. How do I balance the lucrative agency work with my original self-serve vision?” 

I think for me the answer is if you really don’t want to do the consulting, just don’t do it in the first place or if you’re doing it now and you don’t want to do it, just stop. The downside of that is, oh no, I have this very lucrative agency work that is actually funding the self-serve vision. 

Then, you need to balance the two, and this is the classic agency trying to turn into a SaaS conundrum and frankly, most agencies don’t make that pivot, because they are so addicted to the amazing money to the 150, $250 an hour that they can bill versus how do I justify building this thing that’s doing a few hundred dollars a month and may never make more than a few hundred dollars a month? It’s risk versus reward, right? 

You have to think about it as asymmetric upside. If JS Chimp actually succeeds wildly, what is the upside of that versus continuing to do the agency work? I think funding your SaaS, or in this case, it’s a job board, with agency work or freelance work is a great way to do it. I mean, I did that. I did it on the side where Craig Hewitt had a productized service. We have seen some folks do it, but the adjustment to productizing or to getting the product built, can be a difficult one. 

The way I think about it is either do the lucrative agency work 40 hours a week and then focus on the job board nights and weekends, a self-serve aspect, or set aside one day a week where you do not, or two days or three days, whatever makes sense, set aside a certain amount of time where you absolutely do not let agency work interfere. Maybe that’s two hours a day, maybe it’s one day a week, but be super disciplined about it. 

The other thing you can do is depending on what has to happen to push JS Chimp forward, can you hire that out to someone who is less expensive than you with the money you get from the lucrative agency work? I used to do this where I was billing 100 to $150 an hour as a software engineer. 

I was a freelancer contractor and I was billing 40 to 50 hours a week doing that, so I was banking the extra money that I could because we didn’t need all that to live on, and then, I would hire folks at the time, it was in the Philippines, sometimes in India, but these days, depending on your time zone, you can, I don’t necessarily want to recommend those countries at this point, but the idea is that you can hire someone, whether it’s a developer, whether it’s a marketer, whether it’s a whatever needs to get done and do this geo arbitrage, you’ve been hearing about this for years, so then you’re kind of managing one or two individuals to get stuff done and push it forward while you do the more lucrative work. 

It’s a hard road and most aren’t able to make the shift, and I do think, I mean, I hate to say it’s a lack of discipline, but I kind of think that’s what it is. It’s that you have this thing that is just so much a bird in the hand and it’s hard. It takes real fortitude to not just do more and more and more of that and look, maybe you should just do more and more and more of that. It’s really making you a ton of money and maybe the long-term, self-serve vision isn’t worth it if you can make boatloads of money and hire a team and build a small agency to do the recruiting. 

We’ve seen remote first recruiting do an amazing job and build incredible seven-figure business on that, and they still have the job board, but I don’t think they regret building the agency around that job board. So I appreciate this question, Adam. I hope my thoughts were helpful. 

My last question for today is from podcast guest and longtime listener and MicroConf speaker Christopher Gimmer. He’s @cgimmer on Twitter. Give him a follow, “While you are running Drip, I’m curious as to how you structured team meetings and whether you followed any sort of management framework like Traction or EOS,” and he doesn’t say it here, but there’s scaling up, which I think is for later stage folks, “Specifically, I’d love to hear what things looked like when it was just you, Derrick, and a handful of employees versus how you ran things at the point Drip was acquired?” 

This is a good question and what I will say is I lead and manage a certain way and other folks have different opinions. If you go back and listen to old episodes of Craig Hewitt and Andy Baldacci’s podcast called Seeking Scale, you’ll hear a lot of talk about frameworks and management, and that’s probably if you want to go down that road, I would start there. Craig is very knowledgeable about this stuff. 

I am not. I know a bit about it. I know the basics, the rocks and the KPIs and this and that, and that’s about all I use. I’m a pretty light framework or light process person in general, and that includes, that extends to when I’m managing people and managing a team. So I did not use any sort of management framework and really have never done that aside from having numbers that we’re shooting for these. 

Again, I’ll say KPIs, because everyone knows what that means. It just kind of pains me, but it’s just goals for certain things. It’s like I want MRR to go up by this. We need this many leads to do it. This many, we should have a sales conversion rate to demo to close of X, Y, Z percent or above. And so, team meetings were a lot of me leading them and saying, “This is where we’re going. How does everyone feel about it? What are the status updates? What’s working and what’s not? Here are the new things we’re going to try. Here’s a new person we’re going to hire and what’s breaking where so we can figure out how to not let it break?” 

After we got acquired, we expanded pretty significantly. So the Drip team itself, by the time I left, was 125 people. I was no longer CEO though. I wasn’t running all of that. I was running maybe it was about 20 people between engineering and product that were under me and it was two teams plus products. It was kind of like three different teams. We had two different engineering teams for infrastructure and more like app features and stuff, and then, product folks. 

I still ran those without rigorous frameworks, although product meetings, once I hired a product manager, he used some, I don’t know, it wasn’t Traction or EOS because it wasn’t about rocks, but there were definitely prioritization frameworks that he brought into it as a more academic and experienced product person, but for better or worse, I do tend to go about this stuff pretty intuitively. 

I have found that some folks who lean so far into the frameworks do so to their detriment, that the frameworks are a bit like having exact detailed instructions on how to cook a hamburger or a steak that don’t always take into account all the details or all the nuances of cooking a hamburger or a steak, and I feel like if you have some natural inclination of how to borrow just some really minor pieces of Traction, EOS, Scaling Up whatever you want to borrow, but that it fits with your personality to manage in a more intuitive way, I guess what I’ll say is it works for me. 

It worked at Drip, it was 10. It worked once I was managing 20 and it works at TinySeed MicroConf today. No one could argue that I don’t manage a huge org. I wasn’t running or I don’t run an org that’s say 125 people where I have managers who manage managers, who manage individual contributors. And so, maybe at that point I would need more of a framework. 

I do know that the CEO who took over, so Clay Collins was CEO when they bought us, and then, another CEO who’s very much more kind of an MBA spreadsheet thinker, and I don’t mean that in a detrimental way. He’s a great operator. He had frameworks, but they were not Traction or EOS. It was kind of his stuff. He learned it in business school and he had seen it in other SaaS companies he’d been involved in and the venture capitalist kind of lean on stuff. 

So he had his own just self homebrew framework that I think works well for him. It’s a certain style of pushing things forward. It’s a very operational focused versus I tend to be more creative and product focus, so less operational, but all that said, I think there’s a lot of different approaches that can work, and I think as long as you’re not strapped to the dogma, and you don’t get hung up too much on the details of a framework, and be really careful about taking one of these frameworks and just implementing it too early. 

I like to have the absolute minimum amount of process as long as possible until we need more process, and then I don’t go from 1 to 10, I go from 1 to 2, add a little bit more just sprinkle a little bit on, and then you sprinkle a little bit on as things start to break or as you’re like, “Yeah, we do need more process.” Things are getting complicated, communications, breaking down and we’re not getting stuff done. People don’t know what they should be doing. 

Then, I’m ratcheted up from two to two and a half, two to three. You get the idea? That is my personality, that’s how I work, and it works for me, and I think the idea is it’s best for you to know yourself and develop your skills that lean into your personal giftings. And so, if frameworks, and I’ll say just more left brain thinking about it works for you, then think about how can I adapt this framework to the size of my team because again, I don’t think EOS is great at five people. 

I think there’s too much process and I don’t know exactly the number where it’s a perfect fit, but I personally would be concerned. I would really strip it down and I guess these days, I kind of do run an extremely stripped down version of one of these. It’s basically just, “Here are the goals. Let’s go. Let’s update and work great as a team.” And there’s a bit more to it than that, but you get the idea. I feel like I’ve covered this point. I really do appreciate your question on this, Christopher. I hope that was helpful. 

If you have a question for this show, I’m going to be moving even text questions as you heard in this episode, that are a bit more advanced, intermediate to advanced. Later stage text questions are going to go to the top of the stack along with audio and video questions. I hope you enjoy this focus of thinking more about what do folks who are already managing managers think about and other topics that’ll be more applicable to that stage. Thanks for joining me this week and every week. This is Rob Walling, signing off from episode 724.

Rob Walling:
Welcome back to Startups For The Rest of Us. I’m your host, Rob Walling, and this week I speak with Pulitzer Prize winning journalist, Charles Duhigg. Charles writes for the New York Times and New Yorker magazine and has written three books including The Power of Habit, Smarter Faster Better, and most recently, Super Communicators. I wanted to have Charles on the show not to cover material from the book per se, but to figure out how to translate that into why being a better communicator should matter to you as a bootstrapper. Whether you’re having conversations at your day job, while you’re doing your side hustle, whether you’re doing sales demos, whether you are talking to folks that you have hired, contractors or full-time employees, or even communicating with your spouse or significant other as you try to navigate the frothy waters of building your company. Charles is extremely well-spoken and has a deep, deep understanding of this topic, so it was a pleasure to have him on the show. Let’s dive into our conversation. 

Charles Duhigg, thanks for joining me on the show.  

Charles Duhigg:
Thanks for having me on.  

Rob Walling:
It’s great to find to meet you. We were talking offline and I realized I’ve read at least two, maybe three of your books, but I hadn’t put together … Sometimes you just don’t put together that the author has written all these books. So Power of Habit, a lot of folks have probably heard of, as well as Smarter Faster Better, and most recently Super Communicators, and that’s what we’re here to talk about today. How to unlock the secret language of connection. And I know there’s a lot of listeners probably listening to this thinking, “You know what? I’m a software developer. I’m going to go indie hack my way and build a solo empire.” But you always need to know how to communicate with people, and that’s why I wanted to have you on the show today.  

Charles Duhigg:
Yes. Even if you are building a solo empire, you probably have a spouse or a significant other at home, and if you’re not communicating well with them, it does not matter how big your solo empire becomes. Communication is at the heart of what humans do, and it’s critical.  

Rob Walling:
Yep. And I used to be a not great communicator, and I’ve had to develop that over the past 10 or 15 years. I grew up left brain, introvert, developer, and so I would almost gravitate towards roles where it’s like, well, I just don’t need to communicate with people. Again, I’m going to be that solo person just doing my thing. And I’ve learned that the better I’ve got at communication … Partially through doing this podcast, to be honest. You talk for 720 episodes, you get a little better at it. But also dealing with the hard things of life, starting companies. As you said, working with my spouse on those. I think to get us started, there are super communicators, which the book is about, which are folks that are much, much better at communicating than what normies, we might call Muggles, as they call them in Harry Potter. But just define the term for us to set the stage.  

Charles Duhigg:
Sure. Absolutely. And it’s worth noting that all of us are super communicators at one time or another. So here’s a great way of demonstrating it. If you were having a bad day and you came home after this long day and you’re feeling lousy and you’re like, “You know what, I’m going to call someone I know calling this person will make me feel better.” Do you know who you would call? Does that person pop into your mind?  

Rob Walling:
Yep.  

Charles Duhigg:
Who is that?  

Rob Walling:
It’s a friend of mine named Brendan.  

Charles Duhigg:
Okay, Brendan. So for you, Brendan is a super communicator and you’re probably a super communicator back to him. And I’m guessing … And tell me if I’m getting this wrong, I’m guessing that one of the reasons why you love talking to Brendan is he knows what questions to ask you, and he proves to you that he’s listening and he shares things about himself. He doesn’t try and steal the spotlight, but he’ll share things about himself. And so it just feels really good to talk to him. So there are some people who can do this with anyone. There are some people who can be consistent super communicators. And the reason why is because they’ve recognized the skills that Brendan brings to his conversation with you and the skills that you almost unconsciously use in talking to Brendan, those are fungible skills. Those are skills that you can use with anyone once you recognize it’s a skill. It’s just like learning how to read. If you learn to read on nonfiction, that doesn’t mean you can’t read fiction or you can’t read a cookbook. It’s a completely fungible skill. Communication we’ve discovered is exactly the same, and so anyone can become a super communicator. It’s just a matter of understanding that there’s this handful of skills that you need to recognize the skills, and once you do, you can practice them until they become habits and use them with anyone.  

Rob Walling:
Got it. Well, let’s dive right in then. What are the skills? If someone’s thinking to themselves, I want to be able to communicate better, have hard conversations. And maybe it’s having hard conversations about firing someone. Maybe it’s having hard conversations about saying, “Hey, you’re not cutting it. I want to try to train you up, but I have to give you hard feedback.” Right?  

Charles Duhigg:
Totally.  

Rob Walling:
You can be an employee and have these conversations. You can be in your own company and have employees, but how do you get better at being a communicator?  

Charles Duhigg:
Yeah. There’s a handful of them. The first one is to understand what kind of conversation you’re having. This book really started when I fell into this bad pattern with my wife, which literally anyone in a relationship will recognize, which is I would come home from work after a long day, I’d start complaining about my day, and my wife very reasonably would suggest some practical solutions. She’d be like, “Oh, you should just take your boss out to lunch and you guys will get to know each other a little bit better.” And instead of being able to hear what she was saying, I would get even more upset. And I’d be like, “Why aren’t you supporting me? You’re supposed to be on my side. You’re supposed to be outraged on my behalf.” She would get upset because I was attacking her for giving me good advice. 

And so I went to these researchers and I was like, “What’s going on here? I’m a professional communicator. Why do I, and everyone I know fall into this pattern?” And they were like, “Well, actually, we’re living through a golden age of understanding communication because of advances in neuroimaging and data collection. We really know what’s happening inside people’s brains for the first time.” And they said, “One of the things that we’ve learned is that when you have a discussion, you assume that discussion is about one thing. You’re talking about your day or you’re talking about your kid’s grades, or where to go on vacation. But actually every discussion is made up of different kinds of conversations.” And in general, these conversations, they tend to fall into one of three buckets. There’s practical conversations where we’re solving problems together or we’re making plans, but then there’s also emotional conversations where I might tell you what I’m feeling and I don’t want you to solve my feelings, I want you to empathize. 

And then there’s social conversations, which is about how we relate to each other and to society. And they said, “What we’ve learned is if you’re having different kinds of conversations at the same moment, it’s really hard to hear each other. It’s really hard to connect.” Which is of course what was happening with me. I was coming home and having an emotional conversation. My wife was responding with a practical conversation, and as a result, we really couldn’t hear each other. And so the first thing that super communicators do really well is they just take a step back and they just asked themselves what kind of conversation does it seem like we’re having right now? Are we having an emotional conversation, a practical conversation, a social conversation? And there’s ways to flush that out and help you figure out what kind of conversation you’re having. But once they know, then they lean into it. They try and match the other person or invite them to match themselves. And within psychology, that’s known as the matching principle, that successful communication requires having the same kind of conversation at the same moment.  

Rob Walling:
As you’re saying this, I know a super communicator. It’s my wife, Dr. Sherry Walling. Folks who listens to the podcast will know. A, she’s a psychologist, so she’s trained, but B, she has empathy, and also she’s now a professional. She’s a CEO and founder coach. She’s an entrepreneur herself and just deals with a lot of entrepreneurs. Anyone who’s talked to her, who’s listening to this knows that she picks up on where you are and then goes with it. So that’s fascinating. I think that’s helpful for listeners who are listening right now, think of the person … There’s got to be someone in your life who is just amazing at this. And what is it? Is it that they pick up on the speaker, the other person where they are and meets them there? Do they also sometimes transition? You said there are three types but-  

Charles Duhigg:
Yeah. Absolutely. Absolutely. It’s both of it. So let’s talk about how we figure out what kind of conversation we’re having. One thing we know about consistent super communicators is that they ask more questions than the average person. They ask 10 to 20 times as many questions as the average person. And some of those questions are very special questions that are known as deep questions. And a deep question is something that asks me about my values or my beliefs or my experiences. And that can sound intimidating. It sounds like that’s a big question, but it’s actually as simple as if you meet someone and you’re like, “What do you do for a living?”, and they say, “I’m a doctor.”, it’s natural to say like, “Oh, where do you practice medicine?” But a better question, a deep question is to say like, “Oh, what made you decide to go to medical school?” Because when I’m asking that question, what I’m really asking you is tell me about who you are. Tell me about your experiences, your values, the things that shaped you. 

And it’s an invitation. It’s not a mandate, it’s an invitation. But what tends to happen is that when you ask a deep question, when you ask someone how they feel about their life, instead of the facts of their life, they tend to tell you what kind of mindset they’re in. So the same person, that doctor, depending on the situation, depending on how they’re feeling that day, they may answer that question one of two ways. They might say something like, “Oh, I wanted a steady job, and I knew that medicine would always be a steady job.” Okay. They’re in a practical mindset right now. But that same person, if they’re feeling more vulnerable, they might say something like, “When I was a kid, I saw my dad get sick, and I saw the doctors and the nurses help him, and I wanted to be one of those people.” That person’s in a much more emotional mindset. 

And so once I know what kind of mindset you’re in, then I can match you. And I can say, “Oh, it’s so interesting you mentioned that. I’m a lawyer and I became a lawyer because I saw my uncle get arrested when I was a kid.” And I can also invite you to match me. For instance, when I come home and I’m talking to my wife and she listens to me complain and she emotes with me, at some point she can say, “I understand how you’re feeling. Do you want to talk about solutions? Because I think that there’s a way to solve this problem.” So what super communicators do is they ask deep questions to try and figure out what kind of conversation is happening, and then they match the other person and invite them to match themselves. And that can sound hard, but it’s actually very, very easy and very natural and graceful because our brain makes asking deep questions and matching into a habit very quickly.  

Rob Walling:
You’re so on point, and it reminds me of … I don’t know if you’ve seen it on Instagram, but there’s a text where a guy’s girlfriend texts him and says, “I just bought an ice cream cone, and the scoop fell off onto the sidewalk.” And he says, “Are we in a feeling and empathy mode, or would you like to hear solutions?” Total tone-deaf, but it totally links into what you’re saying, right?  

Charles Duhigg:
And yet what’s interesting is from the outside that seems totally tone-deaf, but when I come home and I’m having a bad day and my wife says to me, “Okay. Do you want to talk about solutions or do you just need to complain and get this off your chest?”, I actually really appreciate it. Because I’m like, “No, no, no. This isn’t a big deal. I just want to vent for a couple of minutes.” So asking maybe over a text is not the best way of doing it. There might be a little slightly more graceful way. But when you’re in that conversation, it actually feels good to have someone ask you, “What can I do to help you? What are you looking for in this conversation?” That’s not something that feels ungraceful, that feels actually very welcoming.  

Rob Walling:
Do you have any advice on how to transition from one type of conversation to another? And I want to give you a specific examples, so let’s say that I’m in a weekly or monthly one-on-one with someone who reports to me. And there’s often … Well, early, there’s chitchat, and then we get in like, “How are you doing?” There’s the emotional like, “How are things going over the past month? Is there anything we need to address in terms of your happiness here at the company?” And at a certain point, maybe you do need to transition that to being more practical, maybe giving feedback or whatever. But how does one do that elegantly?  

Charles Duhigg:
Honestly, the best way to do it … And there’s two things to do here. Let’s talk about a conflict situation and a non-conflict situation. In a non-conflict situation, if you’re like, “How are you doing here?”, and they’re saying, “Oh, I’m frustrated with this one thing, and my wife thinks I’m not home enough.” Listen. Say, “I’ve had that similar experience myself.” And at some point you can literally just say, “Look, we’ve been talking about how we feel. Is it okay if I propose a solution to you, if I make a suggestion?” What you’re really saying is, can I move this conversation from an emotional conversation to a practical conversation? Now, the fact that you’re asking permission to do it, almost inevitably the other person says yes, but it also feels like instead of you mandating that they have to have a different kind of conversation, you’re inviting them to match you in return. So that’s very elegant, it’s very graceful. It doesn’t feel weird. 

But let’s talk about a conflict situation where it’s hard to do that. So in a conflict situation, what’s really important is that we prove that we’re listening to the other person. And by conflict situation, I mean even if we just disagree about something. We’re talking about something where we just see things a little bit differently. So maybe it’s not a fight, maybe it’s not that hard a conversation, but it’s something where there’s a little bit of a difference. It’s really important to prove that we’re listening. And there’s actually a technique for doing this that they teach at Harvard and Stanford and all these other fancy schools that’s known as looping for understanding. And the reason it’s important to prove that we’re listening is because in many conversations in the back of our mind, we suspect that the other person is not listening, they’re just waiting their turn to speak. 

So that situation you described before where they’re complaining and you want to get a practical, if you just jump in with a practical, it seems to the other person, they’re like, “Oh, he basically sat there while I complained but now we’re talking about the thing he wants to talk about.” But if we prove that we’re listening, we overcome that suspicion that the other person’s just waiting their turn to speak. And what looping for understanding does is it has these three steps. Step one is ask a question, preferably a deep question. Step two is after the person has answered the question, repeat back what they said to you in your own words. And the key here is not mimicry. It’s to prove to them you’re paying attention. And more importantly, to prove to them that you’re processing what they’re saying. 

And then step three, and this is the one we usually forget, ask if you got it right. Because one of two things will happen. The first thing is they’ll say like, “No, I don’t think you understood what I was saying.” Which is really useful to know. The second thing is that they’ll say, “Yeah, I think you understood what I was saying.” And what we actually did in that moment is we asked them for permission to acknowledge that we were listening. And when they acknowledge that we were listening, they become more likely to listen to us in return. So when you’re in that conversation and you’re trying to transition to something, or when you’re in a tough conversation and you’re trying to move it from criticism to solution finding, if you prove to the other person that you’re listening to them, they become much, much more willing to match you, to join you in having a more productive conversation.  

Rob Walling:
Got it. You were saying that was more of a conflict approach, so that could be applied with a spouse, significant other, that could be applied at work. Yeah.  

Charles Duhigg:
Yeah. When we go in and we give someone some performance feedback that’s not overwhelmingly positive, when we have a partner and we disagree about how to move forward and we have to come to a consensus, if we prove to each other that we’re listening as our first and primary goal, that conversation is going to go much, much better.  

Rob Walling:
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I want to switch it up a little bit because we’ve been talking about close relationships, people you work with, significant others, life partners and such. There’s another element to communication, and I want to give you another scenario. So we host an event called MicroConf. We host it twice a year where a bunch of entrepreneurs, a couple of hundred entrepreneurs get together. And one of the most valuable parts of the event is what we call the hallway track, which is not the main track, it’s where you go out in the hallway and you’re talking to other entrepreneurs. So there’s a lot of introverted folks who want to connect with other founders, and they maybe are not sure, how do I do this well? How do I not ask the same three questions? How do I not stay on the surface? How do I make connections with those who I want to connect with? Do you have any advice for those folks?  

Charles Duhigg:
Yeah. Absolutely. There’s been a lot of experiments on this. And it’s interesting because I think the people who are introverts, they think that they’re at a disadvantage to being a super communicator, and it’s actually not true at all. In fact, one of the things that we know is it doesn’t matter if you’re an introvert or extrovert. Because these are skills, really, they’re skills that can be learned by anyone. Moreover, what we know is that people who are real super communicators consistently, if you ask them, were you always good at communication, they often say no. They say things like, “I had trouble making friends in high school, and so I really had to study how kids talk to each other.” Or, “My parents got divorced and I had to be the peacemaker between them.” And it’s the act of thinking about communication that makes someone a super communicator. 

This is what super communicators do, is they think a little bit more about just what’s going on here. So here’s the thing that I would say. There was this experiment that was done at Harvard Business School where they brought a bunch of students into a room and they said, “Look, you’re about to have a conversation with a stranger.” Telling someone you have to have a conversation with a stranger is one of the most anxiety producing things you can do for anyone. And they said, “But before you have this conversation, here’s what we want you to do. Take out a piece of paper. Just write down three topics or questions you might want to talk about. Stupid stuff like are you going to the party this weekend? I just saw Dune two and I thought it was terrible. What do you think about it? Just write down three things.” 

And so they did. They stuck them in their pocket, then they went and they had the conversations. And afterwards they asked everyone how’d those conversations go? And the participant said, “Interestingly, the three things I wrote down, they never came up, but I felt so much more confident and calm during that conversation. I felt like I could really focus on the other person so much better because I knew that if there was going to be that awkward silence, I knew what I was going to say. I knew what I had in my back pocket.” And for introverts in particular, but this is true for everyone, the thing that makes conversations hard is not the conversation itself, it’s our anxiety about the conversation. We’re thinking like, “I’m going to go into this hallway. I’m going to have to talk to five people I’ve never talked to before. It’s going to be exhausting. There’s going to be weird, awkward silences.” And so when we can remove that anxiety, it allows us to tap into our natural communication and listening and speaking instincts much more easily. So simply just writing down three things that you might want to talk about, that can change things entirely. And what’s important to realize is that the reason why this is so powerful is because communication is Homo sapiens superpower. It’s the reason our species has been so successful. 

So as a result, our brains have evolved to be really, really good at communication. Like an introvert’s brain and an extrovert’s brain, and someone who’s somewhere on the spectrum, their brain, all of our brains are really good at communication. And oftentimes what we need to do is we need to allow our brains to do what they’re good at. And when we’re anxious or when we’re uptight, or when we’re like, okay, my goal is I have 30 seconds with this person and I want to impress them how smart I am, that’s when we get in the way of our instincts. But the more we allow ourselves to just do what feels natural, the better those conversations are going to go.  

Rob Walling:
It reminds me of the first time you give a talk in front of a bunch of people and you know the material pat. You know it forwards and backwards, and then you get up in front and you freeze, and the blood rushes to your head and the hair stands up on the back of your neck, and you become just a … presenter. And you watch it back later and it’s like, ah, it wasn’t as bad as I thought, but it’s the anxiety. It’s not your ability to communicate because when you gave it to yourself in the bathroom mirror with no anxiety, it was a great … presentation. But when you get up in front of people …  

Charles Duhigg:
And in the 30th time you give that speech when you’re bored by it, so you have zero anxiety because you’re like, I know exactly what I’m doing. When all of a sudden on the stage you start doing these flourishes and these little charismatic things. It’s because you’re not thinking about giving the speech. You’re just giving the speech. And that frees your brain up to let all those instincts come out to be like, oh, here’s a fun joke. It’s never occurred to me before, but I’ll just try this joke out. And that’s why it’s so important that these are skills. Is because our brains are designed that when we identify these skills and we practice them, our brain makes them into habits very, very quickly. And once they’re habits, we don’t have to think about them. We get to just relax and let the habit take over.  

Rob Walling:
I mentioned to you offline that I listened to your book last week as I was driving around Iceland, and it was super enjoyable to hear about it. One thing that struck me … And I don’t know that you phrased it in this way, but I was thinking, man, I can get really good at unquote small talk based on some things you said in the book, even beyond the example we just used at a conference. But if you’re a salesperson, usually you want to build rapport in the first two to three minutes as you’re doing a sales demo. I interview hundreds of startup founders every year or two to get into the accelerator. There’s just a lot of times when I find a meeting someone new for the first time, I have a 20-minute call, I need to get rapport very quickly. And usually small talk is just garbage. It’s like, “Oh, where are you from? What’s the weather?” This and that. But you had examples of, here’s a question that most people ask, here’s how to ask it in a way that is much more effective. Can you talk us through that?  

Charles Duhigg:
Absolutely. Absolutely. So in the book, there’s all these stories. There’s the story of a CIA officer who asked to recruit an overseas agent that’s just terrible at it, or the Big Bang Theory. Why the writers of the Big Bang Theory were able to make it work. And at the core of a lot of those is just a reframing of what’s going on in a conversation. So let’s say it’s small talk. Let’s say you meet someone you’re trying … You don’t know anything about them. You’re trying to get to know them. And you say like, “Oh, what part of town do you live in?” And they say, “I live in the Heights.” That’s a dead end. But if your next question is, “Oh man, the Heights, that’s really interesting. What do you like about it up there? Why did you guys decide to move up there?” That’s a deep question. And what that person is going to say is they’re going to say something like, “Oh, my kids’ schools are near there and so we just wanted to be close to it. And there’s also this great community. We used to live in the valley and we didn’t know any of our neighbors, and now we live up in the Heights and we know all of our neighbors.” 

So at that moment, what you can do is you can reciprocate and you can say … Because what you just told me is you told me you have family, community is important to you. You’ve been in this town for a little while, long enough to at least live in two different places. I’ve learned so much about you just by asking, “What do you like about the Heights?” And at that point, I can reciprocate and I can say, “Oh, it’s so interesting. I have two kids also, and actually, we live over in a different part of town in Midtown. But it’s similarly, the reason I love it is because we just know our neighborhood and it’s such a diverse neighborhood. There’s all these people from different socioeconomic backgrounds. It’s just really interesting.” Now we’re actually communicating with each other. Now we’re actually bonding a little bit. And that doesn’t mean we’re going to be best friends, but it definitely means that we are making a connection. We feel like we know something about each other. And all it took to do that was just to ask you a question about how you feel about something and then to reciprocate what I’m hearing.  

Rob Walling:
And is that something that you yourself do if you go to a dinner party?  

Charles Duhigg:
Oh, I do it all the time.  

Rob Walling:
Yeah.  

Charles Duhigg:
Oh, yeah. Yeah. I do it literally all the time. I mean, there’s this guy named Nick Epley at the University of Chicago. He plays this game where he’ll get on a bus, and his goal within three questions of sitting down next to a stranger is to get them talking about their hopes and dreams. And he says usually it takes two questions because he’ll sit down next to someone and he’ll be like, “Hey, what do you do for a living?” And they’re like, “I’m an accountant.” And he is like, “Oh, did you always want to be an accountant? Was that your dream when you were a kid?” And they’re like, “No, of course not. Who has a dream to be an accountant as a kid? No, I wanted to be an astronaut.” And then they’re off to the races. They’re talking about their dreams when they were young. I do it all the time. Again, once you practice it once or twice, it becomes a habit and it’s so easy. It’s so easy to connect with other people simply by just asking them what seems like a fairly benign question.  

Rob Walling:
Yeah. And that’s fascinating because it’s, when I first read the summary of Super Communicators before I listened to the book, I thought it was going to be about … I don’t know if you’ve read the book Crucial Conversations.  

Charles Duhigg:
Yeah.  

Rob Walling:
It’s about having hard conversations or being able to communicate complex things or whatever. But it really runs the gamut because you and I, just in this 20-minute conversation, have talked about small talk, we’ve talked about dealing with a significant other spouse, a life partner. We’ve talked about dealing with direct reports. We’ve talked about being at a conference, which I guess is small talk, but it’s different. The super communicator moniker that you’re talking about and that you describe in the book really does cover the gamut of person-to-person interactions.  

Charles Duhigg:
Oh, absolutely. And if you think about it, what do we consistently spend most of our time doing? We all eat once or twice a day or three times a day or more. We all sleep every single night. But if you were to actually log most of the minutes, you spend certainly in the top three, if not, the top one would be communicating with other people. It’s like asking your kids, how are you doing, you’re getting to school today, ordering a coffee, talking to the barista to give her your order, calling the person you’re working on some project with. Communication is at the core of what we do. And so you’re exactly right. Being a super communicator, it’s not about hard conversations, it’s about all conversations.  

Rob Walling:
And that actually brings me to an interesting question, and you may have addressed this in the book. I definitely was daydreaming a bit, staring at the volcanoes in the mountains as I was driving through Iceland. So something that occurred to me is a lot of my communication is via email and DM and Slack. It’s not verbal. You and I on this, again, in the last 20 minutes, we talked a lot about verbal. Does it change? Is it different when you’re typing?  

Charles Duhigg:
The same principles apply, but the important thing is to recognize that each form of communication has slightly different rules. So one of my favorite examples of this, just to put it in context, is about a hundred years ago when telephones were first becoming popular, there were all these articles that appeared that said no one will ever have a real conversation over telephone. Because think about it, up to that moment, all conversations that happened basically face-to-face. And they said, “Look, if you can’t see the other person, you’re not going to be able to understand what they’re feeling. You’re going to miss all their facial expressions, their gestures.” What’s interesting is that at the time, they were exactly right. So if you listen to early phone conversations or transcripts of early phone conversations, what you see is that people basically use them as telegrams. They would call up and give someone a grocery list or a stock order, but they didn’t know how to have a back-and-forth. 

Now, by the time you and I were in middle school, we could talk for seven hours a night on the phone, and they were the most meaningful conversations of our lives, and that’s because we learned the rules for talking on phones. One of the rules … And you still live by it, I live by it. We all do it subconscious without even realizing it. When we’re talking to someone on the phone and we can’t see them, we over enunciate our words by about 15 or 20%. We put about a third more emotion into our voice because we know the other person can’t see our facial expressions. We do that without even thinking about it. Now, the thing is that there are slightly different rules for phone conversations than face-to-face conversations. The same thing is true of DMS and texting and sending a messages with emojis and sending an email versus having a Zoom call. 

When we get into trouble is when we forget the rules. Or it’s not even like we forget the rules, we just don’t pay attention to them. So I know that if I’m going to send you something hard, if I can do it over voice, that’d be great, and if I can’t, it’s definitely better to do it over email than it is over text. That’s not a huge discovery. But when we’re moving really fast and we’re just thinking about ourselves and we’re just thinking about getting the information across, we forget to remind ourselves what are the rules of texting versus DMs versus something else? That’s when we suddenly send that text that the other person reads, and they get pissed off because they took it out of context. So the only real difference … All the same principles apply, the difference is that there are slightly different rules and slightly different strengths or weaknesses for each channel of communication and we have to remind ourselves of that.  

Rob Walling:
And if folks want to dig in deeper, they can buy Super Communicators wherever greater books are sold. Amazon. I got mine on Audible, of course. And folks who want to keep up with you. They can head to charlescuhigg.com. That’s D-U-H-I-G-G. Or you’re also C. Duhigg on Twitter/X. Charles, thanks so much for joining me today.  

Charles Duhigg:
Thank you for having me. This has been so much fun.  

Rob Walling:
Thanks again to Charles for joining me on Startups for the Rest of us. Hope you enjoyed this episode. Obviously a little different than some episodes of this podcast, but I like to broaden my own horizons, as you can tell, from … I think I’m at 904 audiobooks in my Audible account, and sometimes I like to share topics that may not be in the direct focused wheelhouse that you might experience week to week on this show. But know that if you come back to this podcast again next week, it will continue to have content, information, insights, and hopefully inspiration to motivate you to continue building your company. My mission is to multiply the world’s population of independent self-sustaining startups, and that’s why I record this podcast each week. That’s why it focuses on building incredible businesses that may not change the world, but they can change your life and the life of those around you. Thanks so much for joining me this week and every week. This is Rob Walling signing off from episode 723.

Rob Walling:
Do you need help recruiting great global talent for your startup? Check out today’s sponsor, Outwork Staffing. Outwork Staffing can help you hire customer support, virtual assistance, developers, or whoever you need. You pay a one-time hiring fee after they find your ideal candidate, and that’s it. No additional costs, even if your new hire stays for years. If they don’t work out in the first six months, Outwork Staffing will find you a replacement free of charge. Interested? Visit outworkstaffing.com/startups to book a call and get $500 off your first placement by mentioning this podcast. 

It is another episode of Startups For the Rest of Us. I am your host, Rob Walling, and today I talk with James Mooring, the co-founder of Astalty. James and his co-founder have a pretty incredible story of bootstrapping a vertical SaaS app to seven figures in ARR in 18 months. A lot of things went right for them, but it’s obvious that James and his co-founder are very smart and executed exceptionally well. I know that sometimes it’s helpful to hear founder stories of people failing, making mistakes, picking themselves back up, and sometimes it’s inspiring and you can learn a lot from the tactics, the strategies, and the approaches that someone used to achieve relatively fast success and quick growth. As James and his co-founder have done, they’ve built an enviable business by all measures. One thing I like about this conversation is it’s not just the headline of how they bootstrapped the seven-figure business in 18 months, but James is very thoughtful about how they did it. 

Sometimes when you talk to folks, they don’t really know how they did it. They lucked into it and they claim it was all word-of-mouth and virality. These things that it’s like, “Well, A, that’s not helpful to me if I want to grow a business and, B, I don’t actually think that’s what happened.” With James, he’s given it a lot of thought. I think directionally, he’s pretty correct with why they were successful, which is even more helpful for you listening to this podcast because, now, you can potentially take some of the learnings from his journey and apply them to yours. With that, let’s dive into my conversation. 

James, welcome to Startups For the Rest of Us.  

James Mooring:
Perfect. Good morning. Thanks for having me.  

Rob Walling:
It’s nice to have you on, sir. So your company is Astalty and your H1 is, “Simplify your NDIS business operations. Ready to take your NDIS business to the next level? Try Astalty, the most straightforward NDIS software with the most advanced features.” 

What is NDIS? I’ve never heard of this. Literally, I had to Google it before this. So if someone does not live in Australia, describe what NDIS is and then what your software does.  

James Mooring:
I think some people that do live in Australia still probably don’t know. The NDIS is the National Disability Insurance Scheme, so it’s essentially a government-funded scheme that provides funding to people that have a disability to go and access supports from service providers for a range of different things. It could be accessing the community, it could be accommodation, it could be assistance at home with self-care, things like that. Our software provides a platform for businesses that provide those supports to those people with a disability to run their business.  

Rob Walling:
Got it. Let’s say Gymdesk is a TinySeed company and their software is like the operating system for a gym. Your entire business runs on it, people check in and out with a key fob to get in the thing and it tracks that they’re there and it does invoicing and billing and subscriptions. Just imagine everything that a gym or a [foreign language 00:03:50] or a yoga studio, a fitness studio needs. So it’s kind of the OS, the operating system of that? Jim, is that what Astalty does for these, they’re not affiliates, NDIS providers?  

James Mooring:
NDIS providers, yeah, NDIS service providers. Yeah. The term CRM is very common here for what we do, but essentially how you’ve described it is exactly what it does. Most businesses will subscribe to Astalty, an accounting software like Xero or similar and then they’ll have their Microsoft or Google to power their email, and ideally that’d be all they need.  

Rob Walling:
And talk to me about where the business stands today.  

James Mooring:
So now, we’re a team of five. We’re doing seven-figures ARR and still growing significantly every month, so it’s in a really good spot.  

Rob Walling:
And this has happened very quickly. It probably doesn’t feel that way. I know your timeline… Timeline always feels really long, but when I actually read through it, because you were very generous to send me the entire timeline which is what we’re going to work off for here, it seems like from actual paid launch until seven-figure ARR was less than two years.  

James Mooring:
I think, around 18 months, we worked it out to be.  

Rob Walling:
Unbelievable. That is so fast.  

James Mooring:
From when we launched our first paid offering to when we hit the seven figures.  

Rob Walling:
Unbelievable. So one thing before we dive in, because… Here’s what I want to cover for someone listening to this, it’s to figure out how you got here this quickly and then to pull out things that you and your co-founder did really well where you were smart and then potentially where there were things where maybe you got lucky, as you and I saw in Atlanta, because you were at MicroConf Atlanta, which is how we met, where potentially… As Ben Chestnut said, they Forrest Gumped their way in. They kind of stumbled. They got a little lucky, and that’s okay too. It’s not 100% luck. It’s that, along the way, sometimes you do things and they turn out really well. Before we dive into that though, Astalty, you told me, stands for a solution that actually listens to you. Is it a dad joke? It’s like it’s not a good acronym. What’s the deal with it?  

James Mooring:
I think when we came up with it, we had much, much worse business ideas. And a lot of businesses in the space had care or health or these types of words in their business name, and we didn’t want to be that. The whole premise behind Astalty was that we felt that software was built by people that have no idea about the actual business problems that they were solving. At the time, we thought, “Why not try an acronym?” and this kind of came out and then it stuck. We don’t put that acronym everywhere, but it’s a very sticky business name and people remember it, but it does actually drive a lot of our, I guess, culture around how we invest time with our customers and build features, I suppose.  

Rob Walling:
And astalty.com.au, if folks want to check out your website. 

You touched on something right there that I want to dig a little deeper into. You talked about how in… Well, let me just say this. In deep verticals, where there’s a lot of subject matter expertise required to build a good tool, we see one of two mistakes usually. We see a software developer who comes into it and doesn’t actually understand the business problems. So then they build, it can be good software, but it doesn’t do the business any justice. It doesn’t actually solve the problem. Or, vice versa… We see subject matter experts who are like, “I’m in roofing construction and I’m going to hire a developer,” but they’re not a product person. So they have the subject matter expertise of what it should do, but the product sucks. 

You and your co-founder are a developer and a subject matter expert, and that combination is in the top three co-founder combos that we see, right? I’ve invested 191 to companies and the top three, in no particular order, it’s kind of all tied for one in my head, is a developer plus a marketer or a developer plus a salesperson, depending on if it’s a hired low touch funnel, and developer plus subject matter experts, as long as that subject matter expert is willing to do the sales or the marketing. So you and your co-founder… You’re the developer, right? And your co-founder was in the NDIS system. Does he have a consultancy or a software company in there?  

James Mooring:
He has an NDIS service provider business. So, he actually is one of… His business uses our software and we’d been talking about the NDIS for early days. My job was to try and decode what he was saying and think, “How can we solve these processes using software?” And I think that kind of unique position is part of the reason why we built such a good product.  

Rob Walling:
Yeah, that makes sense. In a space like this, you would need… I don’t know that you would need a co-founder. It sure help, but you would really want what we call a patient zero, a customer zero who really is on board with being able to advise you, or you’d need an advisor or an advisory board, two or three people, who all had NDIS. You could have done it different ways, but this to me is one of the ideal ways because then he has so much skin in the game, right?  

James Mooring:
Yeah.  

Rob Walling:
And if he was willing to help with sales and marketing as well, something that… If we rolled the calendar back three years to… We’re recording this in June of ’24. We roll back to June of ’21, you talked about development work on Astalty starting slowly and that you were going to try to do everything that a CRM in the space had to do, but then you realized that you would probably do that quite poorly. So, you instead streamlined to just focusing on support coordination. This is, I think, a lesson that a lot of developers screw up is they don’t want to build an MVP with limited functionality or they don’t want to focus the thing down thinking they didn’t solve a big enough problem. So, I guess it sounds like that was the right choice for you. And how did you come to that? How’d you come to that conclusion?  

James Mooring:
Yeah, absolutely. So I think Jona, my co-founder, when he was explaining everything, I was thinking, “This is fine. We can do this.” And then we started and we’re like, “We need this thing, and that means we need this thing.” And then the waterfall just got so big. And then we wanted to get to market quickly. So what we did is we really said, “Well, where’s the gap?” and we focused on that. And then I’m really glad we did it back then because if we came to that realization 12 months later, it would’ve been an absolute mess. It’s kind of funny because through that process of really focusing on a niche, within a niche, you could say, “We actually built 90% of the functionality that we need to serve the whole NDIS space.” It’s just that there’s one kind of scheduling piece, and that’s what we’re working on building now. So it was just interesting that by niching down, we were still able to build functionality that would help us serve the customers that we wanted to serve initially, if that makes sense.  

Rob Walling:
It does. It does. So your co-founder, you and he are talking through NDIS and he’s probably saying, “There’s no good software on the market.” He’s saying, “There’s a huge gap.” What was his company using before you built Astalty?  

James Mooring:
They were using another software that they actually still use because it does the functionality that Astalty doesn’t quite do. So, they use both at the moment. Yeah, there was just no innovation in the space that we felt, so we came out and surprised… You put a really nice easy-to-use interface on something, you speak the language that your customers speak and you make the product easy to use, which sounds so simple, right? But it’s funny how far that could actually go.  

Rob Walling:
How many NDIS providers are there in Australia?  

James Mooring:
I think probably a few, a couple hundred thousand. Yeah, there’s heaps, and they range from sole traders… They could be sole traders up to the top 10, which might have a few thousand employees. There’s a really wide range of sizes of businesses.  

Rob Walling:
That’s a big market to not have a really well-built tool. When I think of any market in the US that has a couple hundred thousand businesses that would be willing to pay, there are a lot of tools available for them. Many of which are decent, some of which are reviled. But I’m kind of surprised by that. Why do you think that that vertical… There are probably listeners right now, salivating, thinking, “Oh, my gosh, I wish I could…” Only two years ago, there was a market this big that didn’t have software. Why is that the case? Why has no one attacked this?  

James Mooring:
I think there’s certainly a software that exists, but it was built 10 years ago, 6 years ago. They got into the space and they probably solved the problem that existed six years ago and thought, “Great. We’ve solved it.” I mean, this is my opinion anyway. And then I think they said, “Great. We’ve solved it. Let’s just stay here,” and that’s fine. But at the pace that the technology moves, at the pace that NDIS itself moves, you need to be able to iterate fast and change and listen and pivot, and I think that is another huge factor to our success. So there’s certainly a software that existed, but just not up to speed, I suppose.  

Rob Walling:
So as you’re building the… You start in June of ’21 writing the code. Six, seven months later, you’re in January 2022 and you launch a free Chrome extension, which… You talk about NDIS has a price guide and the Chrome extension allows you to search the price guide in real time, I guess, in Chrome.  

James Mooring:
Yeah.  

Rob Walling:
My question for this one… I have a note next to it, and it says, “Smart or lucky,” because a lot of engineers want to do engineering as marketing because we are builders. If I can write code instead of marketing or if I can write code as marketing, I’m going to do that, right? So what I wonder is if… Were you pretty calculated about this? Like, “Yeah, I’m all in. I’m in on this. It’s a lead gen. I’m going to build this thing. It’s going to do it,” and you were confident? Or was it kind of like, “Well, might as well throw this thing together. Maybe it’ll work, maybe it won’t.”  

James Mooring:
It came about because Jona and I were actually… Because we had to have some of this price guide functionality in Astalty to kind of get your business set up. I think we were looking at the price guide and we were like, “Man, this sucks. I can’t believe we have to search through this.” And then somehow, we got onto the concept of extensions, and I’ve never built one. I thought, “I wonder how hard it would be just to throw this in the browser,” because we use quite a few extensions and they’re just so handy. 

And then, I guess, we were calculated in the sense that we could use it as a lead gen, get our name out there. We were calculated in that way. Did we think it would have the uptake that it did? No. But when we built it and when other people started using it, everyone was thinking, “Why doesn’t this exist already?” So we were kind of first doing that and then we’ve seen a couple of others come along. But yeah, I would say maybe a combination of, “We know what we wanted to do. Did we know exactly what the pathway would be?” Probably, not. No.  

Rob Walling:
Right, so a combination, a lot of things. And then the next month, February ’22, you launched Astalty Lite, which, as you said, is a free-to-use CRM that would hopefully get customers engaged and on the platform. By August of that year, you had 450 users to the free platform and you specifically said, and I like this data point, “Of those, a few dozen were engaging us and providing feedback about the platform,” because that usually what happens. You get hundreds or thousands of free users and there’s 2%, 3% that are likely to upgrade. So similar with this one, you kind of went freemium or free… I guess the first question is, is that still a free plan on Astalty? Or is that just kind of a preview, so you do still have a free plan?  

James Mooring:
We do. It’s not very utilized because it doesn’t have your invoicing, which is such a core time saver that Astalty gives you. We do still have it.  

Rob Walling:
Similar with that, were you smart there to be like, “Oh, if we get this, we get the buzz and we get people in it”? Or did you kind of get lucky because, I’ll just say, most free offerings don’t work. Most people don’t know how to do it and they kind of backfire and you devalue your product and then you have a bunch of… on and on and on. But it seems like it worked… I guess the question is, did it work for you and was it intentional or was a little lucky in that one?  

James Mooring:
Astalty Lite was very calculated, absolutely. So when we were building, we were thinking… I think, by that time, we were thinking we would have our paid offering out, and that just didn’t happen. I think by the time we got to Astalty Lite being launched, we wanted to have our paid offering out and we wanted to get to the market early and we thought, “The best way to do that is to give people the functionality because we also needed feedback from our potential customers.” So it was a way to provide value, which was good for our engagement, getting a brand awareness, and also good to get people using the product. Did we know that people would actually use it? Probably, not. But even though it wasn’t, I guess, validation, which is something that I didn’t even know at the time or we didn’t know at the time, the fact that people were actually engaging and giving us feedback even though they weren’t buying, for us, was a very good signal that people are enjoying what we’re building. Some of those customers now pay us every month, so it’s great.  

Rob Walling:
What would the signal have been? Let’s say barely anyone signed up for Astalty Lite, because I almost view it as a nice MVP or a validation signal where you were kind of still like, “Well, are people using it?” And when they are, you’re like, “Oh, this raises my motivation,” because that’s what you need as a bootstrap founder is motivation, right? You’re not running out of money, but you’re like, “Ah, should I keep building this?” or, “Is this the right thing?” or whatever. So, it sounds like it was pretty motivating. What would you have done if 10 people signed up and no one used it? Would it have been bail on the idea, “This isn’t going to work”?  

James Mooring:
No, absolutely not. And this is a pretty important point, I guess, for me because I put my whole other software development company on hold and we were going to make Astalty work, period. There was no second option. So if that didn’t work, we would’ve pivoted, we would’ve reached out to people, we would’ve done whatever it took to make that work. I think in your book or on a podcast, you talk about roadblocks versus speed bumps, and this is something that we try and really put into practice that we would’ve just changed. We would’ve pivoted, got more feedback, changed the product, and go from there.  

Rob Walling:
So, that was February of ’22. So then, in August, you essentially launched a paid plan, Astalty Pro, Astalty Professional, 50 bucks a month per user, and you gave a discount at launch. 50 bucks a month per user, that’s decent pricing. Again, a lot of startups when they launch, I’m like, “Oh, they’re 10% of the price. They should be 10x below or 5x below. But at 50 per seat, I’m imagining… You said there are teams of thousands literally. But even if a team of 10, right? You’re talking $500 average revenue per account on that. Did you look at competition? How did you come to that price? Because it seems like you’re pretty smart on it.  

James Mooring:
Lots and lots of hours. People think building software is hard. Pricing is the hardest part of-  

Rob Walling:
Tell me about it.  

James Mooring:
It was extremely, extremely difficult. And I think we did the discount because we thought, “Oh, well, if we launch at a 30% discount and 49 is too expensive, then at least we can kind of revert down to that 30% off.” We did look at some of our competitors and we were cheaper than some and more expensive than some. I guess what was really interesting is the fact that we stayed at 49 and we probably tripled the number, the functionality that you could do through the platform. And our customers, I guess, had that trust in us that we were going to deliver on what we said that we were going to deliver. We got it right, I think, in the end. But yeah, it was lots and lots of time on the phone talking about it.  

Rob Walling:
Obviously, I’ve been thinking about your business for approximately 25 minutes or something. I don’t know it that well, but it feels directionally correct of like, “50 bucks a seat, that’s a pretty good price.” To get a full picture, obviously I’d want to look at all your competition and… There’s a bunch of other stuff, but it certainly doesn’t seem too terribly low. I guess it started paying off, right? Because by December of that year, you launched in August, you’re five months, six months later, is that even… or four or five months later, you’re at almost 9,000 MRR, which is a kind of a Cinderella story, right? I mean, how many people are listening to this podcast thinking, “I’ve been working on this… I’ve been launched for two or three years and I’m not at 9K MRR.” 

Aside from getting the things right that you got that we’ve already covered, was there something else? Are you a good marketer? Is your co-founder doing a lot of marketing? How is there so much interest and fast growth? I mean, you got a couple hundred paying users in that five months. What was the key there?  

James Mooring:
I think the biggest key is that the product was so good, and that’s a combination of Jona, my co-founder, having such a good understanding of the NDIS and being able to translate that into software and the fact that the businesses that use our software essentially charge $100 an hour for their service. So, we only had to save our customers half an hour a month per user to see the value. And our invoicing alone was saving businesses, in some cases, two whole days, a fortnight. So it becomes very easy, I think, for our customers to justify the cost. 

In the early days, we just did everything. We were both doing the demos, we were getting on calls with the smallest users. If it was a five, we would literally be building features to get customers in that it was missing. So, we were just doing everything we had to do to get these customers on board. Like I said, my business partner have such a good understanding of the NDIS. I think we were able to leverage his network and his knowledge of what people are really looking for.  

Rob Walling:
Got it. Yeah, you’ll hear me say is, if you listen to the podcast, “Build your network, not your audience.” So, it sounds like he… You guys didn’t have an audience of NDIS folks, but he did have a network of folks who would be willing to try it to give feedback to potentially spread the word.  

James Mooring:
Yeah, exactly. If you can go to a business and say, “Hey, pay us 50 bucks a month for a sole trader,” for example, “and we’ll save you 10 hours a month,” it’s kind of hard to say no to.  

Rob Walling:
That raises the question, do you feel like you might be underpriced? Could you charge $100 a seat or 150? What is the place where that breaks? Usually, it’s if there’s a replacement, it’s they can either do it with a clipboard, Excel spreadsheet, or there’s other software where they’re just like, “Forget it, I’m not… Even though this is the best tool, there’s an alternative that is good enough.”  

James Mooring:
The pricing scales well for all sizes of businesses we feel. So, we didn’t want to make our pricing complicated, “You have one user, you’d pay this. You have five users, you pay that.” I just wanted the billing to be super straightforward. So I feel like our price point, maybe we could charge more for smaller businesses. But then if you have say 20 users or 30 users, it does start to get quite expensive each month. So we charge the same for all sizes of businesses at the moment, and we’re comfortable with that. Could we charge more? Maybe, but I guess you don’t know until you actually try it, right?  

Rob Walling:
So you end 2022 at just under 9K, you end 2023 at almost 60K MRR, so the story continues. Did anything change? Did you do anything differently during ’23 to get to that? I mean, you’re 6x, you’re approaching a million already. Was it more the same? Or was there anything during that year that just lit a fire under the growth?  

James Mooring:
I think because we had such good word-of-mouth, our reach was kind of exponential. The more users we had, the more people that were talking about our product, the more people that would see that. So, it was kind of like a self-fulfilling hamster wheel in the sense that we just got more people really enjoying using the product and they would tell two people and then they would tell two people each. So that kind of grew, our user base, quite quickly. 

We also did some offers, three months free, we did a Black Friday sale, so that stuff sort of drove our growth. And we always ask ourselves, “Would they have joined even if we didn’t do those offers?” I’m not sure. It doesn’t really matter now. Funnily enough, we only made our first hire in October of that year. I think more people were just talking about the product and, of course, we were adding more and more functionality that we needed as well. So, we were kind of growing the market that we could sell to.  

Rob Walling:
And this is something I want to call out to someone listening. This is the reason that, at the beginning of this year when I made predictions for 2024, I said vertical SaaS and, later added, orthogonal SaaS, which is like role-based or title-based, will continue to be incredible places for bootstrappers. We’ve kind of been seeing that over the past few years but even more, and there’s reasons for this and you’ve pretty much enumerated all of them. One is that word-of-mouth in small verticals is like wildfire, way more than… The examples I always bring about horizontal SaaS are like SignWell and SavvyCal, right? Word-of-mouth can be fine, but it’s not wildfire in those spaces, versus Gymdesk and Astalty where it travels real quick. 

The other thing is the folks in these verticals hang out in the same spaces. They’re in the Slack groups, they’re in the Facebook groups, they’re at the same in-person events. If they have a trade publication, a magazine or something, it goes to 50,000 to 100,000 people. It’s very small in the scheme of things. It’s not so big. In addition, marketing in these spaces usually is either not that expensive or not very well done. You’re not competing against Google, Microsoft, Facebook and Netflix. Netflix [inaudible 00:24:21] an example. But these other companies, if you were building a Google Docs competitor for example, not only does your product have to be incredible because these horizontal products are usually pretty good or have a lot of features at least, but your marketing has to be that. Astalty’s in the NDIS provider space, the space I had never heard of, before looking at your H1. 

And then pricing’s the other one is usually you can just charge a lot more. If I’m buying Microsoft Word or competing against Google Sheets, you know that the price goes to zero. If I build Microsoft Word for academics who write in Hebrew or whatever, I should charge 10, 20 times Microsoft Word at least. You, in this space of like, “Well, couldn’t someone use Basecamp or Salesforce to do their NDIS?” You know what I mean? It’s like, “Aren’t there horizontal tools?” Yeah, probably, but you should be able to charge… For a specialized tool, you have pricing power because you’re not a commodity. Whether you can charge more or not is one part of the question. But the other one is that you do in fact… Your pricing is not going to zero.  

James Mooring:
Yeah, and there’s two really important things that we did that you just mentioned. So the first one is that we actually go to in-person events, which is probably an important piece that I missed. We were aware of these events and, essentially, the person… It’s kind of like a speed dating setup. You sit down, there’s a circle on the other side of the table and they all rotate. You give five minutes to sell your thing. The customers on the other side were kind of like 80% our ideal customer, and we were thinking, hopefully they’re not listening, “Why none of our competitors going to these things?” So we started going and they have been fantastic because we could actually demo the product right in front of them and our product was the best marketing that we had. So, that was another key to our success. 

And the other thing was around Facebook groups. So, a lot of these businesses do hang out in Facebook groups. I really remember in the early days, people would go into these Facebook groups and we’d search for the keyword software and we’d think, “I wonder if anyone’s asking what software to use.” So many people would be, “What CRM are you using? What software are you using? How do you handle your invoicing?” and they’d be saying all these different companies. And Jona and I said, “Wouldn’t it be nice if that was Astalty getting talked about there?” 

This happens fairly frequently now. Three days ago, somebody asked, “What software should we use?” And I think there was 22 comments, and 20 out of the 22 were Astalty. And not just Astalty but, “Astalty is great. I wish I went to Astalty earlier. I talked to Astalty, the support is amazing.” So all of our reviews are actually more… And if you look at Google as well, all the reviews are really in depth. They take the time, and I feel like that’s a very good indicator that people enjoy being here and just being part of the Astalty community and network.  

Rob Walling:
Yeah, and that’s great to have that. Here’s the assessment I asked Jason Fried years ago on MicroConf like, “Why did Basecamp work?” And he said, “Luck and timing were one and two, but we also did a lot of things right.” I don’t think luck and timing were one and two for you actually. I think the fact that you had a co-founder who really was deep in the space and that you’re obviously a gifted product person we’re probably one and two and I think you did a bunch. And there’s luck somewhere in there, and then I think you also did a lot of things right. That’s one of them of you said your support is lightning fast. I think your average response time is 45 minutes or something. You’ve obviously really cared a lot about your customers. 

Someone can listen to this and, any of these things individually, you can’t cherry pick these. You can’t say, “Well, I’m just going to do that one, and I’m just going to do that one and it’s going to succeed.” It’s like you need a lot of these in the same direction. And in yours case, we could pull some of these off and you still would’ve been successful. If your support was not amazing, you’d probably still be winning because I think your incumbents are just not great. I having never used them, I know what type of software that is. So I think some of these you could have left, but I think the combination of all of them is what makes a big difference.  

James Mooring:
I was just going to say on that point, in the early days, these all feel like one percenters and they feel like, “This is making no difference.” When a customer signs up and I call them, that’s not going to make a difference at all. But when you kind of compound that effort over months and years, then you see the payoff, and it’s not that hard to do. While you need to duck out, go to the grocery store, pick up the kids from daycare, jot down a customer’s number and just call them. How many times have you signed up to a software platform and got a phone call, not from a sales person, but just from somebody saying, “Hey, welcome to ABC product. If there’s anything I can do, just sing out.” I honestly can’t remember the last time, if any time, that’s happened to me. And that’s something that we do. 

So a lot of these things, people were just so refreshed because a lot of our competitors don’t have phone support. In the early days, we’re thinking, “This is going to be painful, but let’s do it anyway,” and they are painful in the early days and they feel like they’re not making a difference. But if you stick with it, eventually, if you invest time into your customers, they’ll give it back to you 10x, 100x in some cases.  

Rob Walling:
Before I move on to what I think will be my last question for you, I did want to call back to… You and I were just talking about in-person events and you were mentioning how valuable they were, and that would have been my guess actually. I don’t think it was in the timeline. You and I hadn’t talked about it, but I would’ve guessed for this business, negative churn, which you have, and in-person events. So I have these things, I call them the big five, B2B, SaaS marketing approaches and its content, SEO, cold outreach, integrations, partnerships as one, and ads. So I haven’t written on this thing, I refer to it all the time. But my next five depend on the type of business and it depends on the lifetime value and all this stuff. My next five are in-person events, free tools, so like engineering and marketing, podcast tour, affiliates, and Capterra or G2, and I separate those from ads even though they’re kind of same thing. 

The events one, when it works, it really works and it works usually in tight verticals and you need a high enough annual contract value to make it work. So, it definitely fits my kind of mind map of your type of business, of this vertical with a 50, $60 per seat price point with all that. It’s not surprising to me at all how valuable the in-person events have been for you.  

James Mooring:
Jona, my co-founder, he’s actually working really hard. We’ve just launched a partners and affiliates program as well. So we have a lot of consultants in the space, as you can imagine, being a complicated area. So now, we’re engaging with consultants and other businesses that have similar customer base and trying to partner with them. And we’ve got an affiliate program, refer a friend, we’ve got ongoing commissions where we’re kind of doing all these things now, which is again just kind of compounding on everything else that we’re doing, which is fantastic.  

Rob Walling:
I want to leave us on this high note of you did a very clever price increase, and I don’t even know if you would call it a price increase. The way you described it to me was I was like, “I don’t know that I’ve ever heard anyone do it this way.” I want to bring it up so that someone listening might think about doing it the same way. So we talked about how you had Astalty Pro or Professional, you still do, that is a tier of the software, $49 a month, and that’s how you’ve been for two years. 

So just a couple of months ago, in February of ’24, you launched Astalty Premium that was an early access, new price point, $64 per user per month, and you had built a bunch of functionality. You didn’t just want to throw it in the 49, so you built Premium. So not only did you get a bunch of people upgrading from Astalty Pro, but you said… If you go to the pricing page right now, it’s kind of hidden, it’s that you say, “We kind of hide Professional,” so you must be able to click a link and get to it or something so that actually most people are signing up at $64 a month and getting full functionality. Did I summarize that correctly?  

James Mooring:
Yep. Yeah, exactly. Exactly, and I think when we launched… Within the first week, 30% of our existing customers upgraded straight away.  

Rob Walling:
Interesting. So if you had gone in and just said, “Hey…” This is the hack, this is the cleverness, is you could have put all those features and all that functionality into Pro and then said, “By the way, we’re raising your price to 64 because we launched this stuff,” and guess what? Some people would’ve been cool with it and some people would’ve been really pissed, but you actually launched a separate plan that’s too close. $15 is too close. If you told me I was going to do 49, 64 as my price points, I’ve been like, “No, no, no. Move them far apart,” but you were kind of going for a incognito price increase. This sounds like it was pretty deliberate.  

James Mooring:
Yep, and the price difference was also very deliberate. We wanted it to be a no-brainer and Professional’s actually now $59 a month for new customers, so it’s only $5 extra, and we gave everybody on Professional a four-week trial. The Premium features are pretty sticky. You can generate contracts, you can send things for e-signing, you can track documentation. There’s a lot of things that are built in that are super, super valuable. And we said, “Well, let’s just give everybody four weeks to give this a go.” It’s kind of like once you get a taste of it, you don’t want to not have it. And then we kind of changed our pricing page. I think 98 or 95% of new customers signed up to the $64-a-month plan, which is fantastic. So, yeah, we kind of did a price increase without doing a price increase.  

Rob Walling:
End of this year, are you doing 79, 79 a month for Astalty Gold? Is that where we go next? Astalty Platinum?  

James Mooring:
79 was actually going to be the price point of premium and we thought, “Let’s bring it down and try and go for more volume,” and I’m very glad with did because I think 79 would’ve been a little bit too… Once you kind get up around the 7s, 8s, 9s, those numbers start to look a lot bigger, especially for bigger teams. When we launch the kind of next functionality, which is scheduling and rostering, we will actually have a cheaper price point for that because the user type is different. They’re only going to be on the platform a few hours a week, things like that. But it’s all about for us trying to make Astalty, not just the software, but through our partners, through our resources, through the software itself, through the support, just a place that you want to be. 

I use this analogy of not choosing the least worst option, and I think about tools like Slack as one of those. You choose Slack as the least worst option to solve that problem for you, right? And then, I don’t know if you know a tool called Linear, which is an issue tracking kind of like Jira. Whenever I use Linear, I think, “I enjoy using this software, I want to use this software,” and we want people to feel the same way about our software. And you can’t do that just through product or support or resources. You kind of have to have everything, “Come to us and we’ll look after you, whatever you need. If we can’t do it, we’ll let you know about somebody who can.” So, we’re just about providing value and I think people really appreciate that. It’s quite refreshing as well.  

Rob Walling:
Yeah. James, big congratulations on you and your co-founder’s success. You’ve built a heck of a business. I hope, as listeners have heard this, that they take a bunch of things away that you did a lot of things right and that you and your co-founder made smart choices. There was probably some luck involved in a few of them, but I think you would’ve succeeded with almost minimal luck because of all the things that were in place, like your founding team construction, I already talked about, developer plus subject matter expert. You backed off on building an entire CRM and instead you built just the support coordination piece of it. You limited the scope you marketed before you were coding, right? You built the Chrome extension. You built Astalty Lite as marketing. You picked what sounds like a market with kind of a big hole in it. You built vertical SaaS. You increased your prices multiple times. You priced well from the sell. You did a lot of things right.  

James Mooring:
I just want to kind of point out the other thing about doing things right. If you’re not (beep) things up along the way, you’re not going to get there. It’s more about being able to not be afraid of being wrong. If you get it wrong, change fast. And the speed of being able to iterate is super, super important. The quicker you can eliminate the wrong things to do, the faster you’ll arrive at the right things to do. So I think it’s kind of nice that we get to this point and everyone’s like, “Well, you did all these things right.” Now, sure. But when you’re going through that process, you do do a lot of things wrong, and that’s absolutely fine. If you’re not doing things wrong… That’s where you learn what’s not going to work. So, I think that’s just an important point.  

Rob Walling:
I like that a lot. That’s something Einar and I tell to our TinySeed companies all the time of like, “You got to move fast. You’re going to make some bad decisions, you’re going to make some wrong decisions, but you need to do a lot of things such that you work mostly on the right things.”  

James Mooring:
Like Ben Chestnut says, “Stab in the dark, but stab very fast.”  

Rob Walling:
Exactly. Super impressive, man. It’s a great business you built. If folks want to see what you’re up to, they can go to astalty.com.au. And is there anywhere else online that you hang out, to look for? I don’t think you have a Twitter account, but is there anything that… Is it LinkedIn where people could maybe keep up with you?  

James Mooring:
Yeah, LinkedIn is probably the best place. I’m kind of on Twitter, but not super active there, but certainly on LinkedIn.  

Rob Walling:
So folks who want to find you on LinkedIn, you are James Mooring, M-O-O-R-I-N-G, and you live in Australia. I don’t know how… On LinkedIn, what if there’s 25 James Moorings? How are they going to know it’s you? Oh, Astalty, right? That’s going to be the… You need one more piece. When I search for people’s names in Google and I’m like, “James Mooring Twitter,” and there’s like 20 of them, so then I usually throw in the company name and that gets me there. 

So James, once again, thank you so much for joining me on the show today.  

James Mooring:
Not a problem. Thanks. Really appreciate it.  

Rob Walling:
Thanks again to James for joining me on the show, and thanks to you for joining me this week and every week. I did a call for more advanced questions because obviously a lot of the questions that I get on the show are from folks looking to validate ideas, are just very early stage, and that’s fine. But I know that there are a lot of listeners to the show that are doing 10k, 100k, 300k a month or more. There are folks out there right now thinking, “Yeah, I’m doing a lot more than that.” And I don’t want to give the impression that this show is only for new folks just getting started. There’s so many people doing seven and eight figures in the MicroConf community, in the TinySeed community, and even in the Startups For the Rest of Us audience. 

So if you saw my question on Twitter, thank you for responding. I’ve got 10, 15 really good questions that are for folks who are building great businesses and not just about early stage stuff. And of course, I will continue to accept those and answer them in future episodes. You can always submit questions by going to startupsfortherestofus.com. Hit Ask a Question in the top and ask them there, or you can respond to me on Twitter. Thanks so much. This is Rob Walling signing off from episode 722.

Rob Walling:
Welcome back to another episode of Startups For the Rest of Us, I’m Rob Walling. I’m your host this week and every week. And in this week’s episode, Asia Orangio and I talk through 7 key takeaways from the 2024 State of Independent SaaS Report. There are many more findings or takeaways than just seven, and of course you can download the complete report at stateofindiesaas.com. But here in this episode, Asia and I talk through our thoughts about the report and some key findings. And without further ado, let me welcome Asia to the show. Asia Orangio, great to have you back on Startups For the Rest of Us.  

Asia Orangio:
Yes, thank you so much again for having me. Always a pleasure.  

Rob Walling:
So it’s been awesome working with you this year on the State of Independent SaaS Report. So for folks who aren’t aware, this is our fourth report that we’ve done over the course of five years, and we survey our entire … All the MicroConf, TinySeed, Startups For the Rest of Us audience. And this year we got, I believe you were just telling me it’s just under 700 usable responses, and that’s statistically significant. I’ve seen other reports done with 2 to 300 folks responding, and so these numbers start to have some meaning at that point in my opinion. But this year you helped do some data analysis and had some pretty interesting findings that we’re going to talk about in this show. 

Now, I do want to say one note before we dive in, is we talk a little bit about slides and visuals and such, and it’s because we have used part of this episode on the YouTube channel. And if you go to microconf.com/youtube, you’ll be able to watch this video and see the full slides. But if not, we did talk through the findings so that if it’s audio only, you should be able to follow. So I’m curious, from your perspective, State of Independent SaaS Report, what do you see as the value to something, to putting something together like this? Because you reached out and said, “I know you’ve done three of them, you’re probably going to do another one. Do you want some help with it?” And obviously that means you have an interest in it, and you feel like there’s some benefit to the community to have a report like this. So tell me your thoughts on that.  

Asia Orangio:
Absolutely. So I was just counting the other day, how many founders have I worked with over the last six years that I’ve been running to DemandMaven, and it’s over 100. It’s well over 100 if we count how many people I’ve advised, how many people I’ve just consulted just in a call. And I get so many questions about how am I doing? How am I doing a comparison to my peers? And also there’s tons of just market research data and reports like this about the SaaS industry as a whole. But when it comes to indie SaaS and bootstrapped companies and founders, there just is not nearly as much. And I’ve always looked at the State of Indie SaaS as like this is the report for a lot of my clients and I get so many questions that I just can’t answer because there is no stat, there is no … No one’s dug deep into this. 

And so I was working with a founder more recently and I remember he had really good questions about, “Okay, yeah, I know what the stats are for the average activation rate, for example, of average SaaS companies and PLG, but what about my peers and bootstrappers?” And I remember thinking, I don’t have an answer to that, but I would refer to the State of Indie SaaS a lot. And so I was very motivated by what are some additional questions that we can ask? What are some other data points that we can collect to help support founders? And I think this specific report was we leaned a little bit heavier on the operations side because I was getting lots of questions from founders about how to structure their teams, how to think about their tool set and what they’re using. 

And then also pretty much everyone I talk to is always wondering, “Well, what about my specific context?” So anyway, so that’s a little bit of backstory around the motivation and what I … Me kind of feeling like, well, I can’t answer these questions, but maybe I can. Maybe I can help get answers to this and clear a little bit of the fog and debunk some myths about what this looks like.  

Rob Walling:
And that’s the reason we started doing it actually, was for exactly that reason. I would see the state of SaaS or the state of venture capital or the state of this and the growth rates, if you don’t have 200% year over year every year, blah, blah, blah, you can’t … And it’s just like, well, yeah, that’d be nice, but that’s not the game we’re playing. And so I was talking it over with my team back in, I think it was 2019 when we first started talking about doing this. And it was like, “What would it take to do this? How hard would it be? And what are the questions that we want to ask?” And look, the data in this report is, it’s directionally correct. It is a data point, it is a lighthouse on the … It’s not the exact prescription or 100% infallible. It’s like any other statistic. It can tell a story and it can be made to tell different stories. 

But especially the first report, it was so eye-opening. I just had no idea what percentage of bootstrapped, mostly bootstrapped SaaS companies asked for a credit card upfront. I had a feeling that it was like X%. I remember I used to tell people, “I think based on TinySeed and MicroConf, like my gut is this.” And it turned out to be relatively close, but it was so neat to not just have to save my gut to actually be like, “Oh, here’s a screenshot of that page.” And then recently, it probably happens every four or five months, someone on X, Twitter will say, “What’s the most popular country in the world or city in the world for bootstrappers? Where are all the bootstrappers?” And it’s like, well, we have this data, at least for our bootstrappers, the 700 or so folks who responded. 

The tough part for me has always been naming the report. Originally when I first came up with it, I was like, “I want to call it the State of Bootstrapping.” That was this report. And then I realized, A, is it really bootstrapping or is it bootstrapped SaaS? So then I was like, “Well, it’s State of Bootstrap SaaS.” So then it’s like, okay, so can people who raised funding, let’s say they take a little bit of money from TinySeed, can they no longer respond? Because those are mostly bootstrap companies and I think they should be in the report because they’re in a similar community and a similar economic boat. They’re venture capitalists who will say, “If you’ve raised less than a million dollars, you are effectively bootstrapped.” That’s how they view it. And for me, usually the number is in the 250 to 500K. I think that’s when you start to transition and like, “Oh, you’re pretty well … You’re reasonably well funded.” 

So coming up with Independent SaaS is like, I had to coin a term to basically be like, how do I … Because I can’t say the State of Bootstrapped and Mostly Bootstrap SaaS. It’s too cumbersome. So anyways, but before we go on, if you want to go to stateofindiesaas.com, you can download the report that Asia and I will be talking through today. And we have each brought a handful of findings and I’ll say thought-provoking insights that have some of which are puzzling. And I’m like, I didn’t expect that. And others it’s like, oh, this is totally in line and this supports my view of the world. If you could pick one finding that it most supports your view and one that was completely surprising, do you remember what those might be?  

Asia Orangio:
Yeah, the one that just makes me feel very validated …  

Rob Walling:
I love it.  

Asia Orangio:
Is, it’s got to be the model. So I get tons of questions from founders about, “Okay, but what are the average growth rates?” Ironically enough, I don’t think that we asked … We did ask about activation rate, but we didn’t ask for the specific number, which to be fair, how you define activation rate is its own thing, which is why we didn’t do that. But when it comes to like LTV churn and month-over-month growth, a lot of founders have questions about, “Well, which model is ‘the best?'” And I think the answer at the end of the day is going to be, it depends. It depends on your market, it depends on what your product is, all those things. But the thing that still made me feel like yeah, was when it comes to freemium versus free trial and then within free trial opt in versus opt out or basically credit card required versus credit card not required. 

So when it comes to not requiring a credit card on the free trial, this is actually the model that I recommend the most to bootstrapped founders because you do get more data in, but not so much data like you would in freemium, but not so little like you would with requiring the credit card. And what we found, what was surprising to me was growth rate actually was much higher when you required the credit card. But when you didn’t require the credit card, it wasn’t as high of a growth rate and churn was also okay. But not requiring the credit card gave you two times the LTV, which made me feel like, okay, yeah, so more money in the pocket. But to your point, this is so contextually dependent, it’s possible that the people who responded who don’t require the credit card just simply have better monetization, they’re charging more, maybe they’re targeting an industry that they’re able to charge more. All of those things are certainly contextualized. 

And then I think the thing that also just kind of validated my perspective personally was freemium not being as successful, but I think that’s just because too many founders don’t know how to make it work. There’s not enough education about how to make freemium work and also what are the right contexts that you really should consider freemium, and then what are the resources you need to make freemium work? It’s a much different ballgame than free trial in general. But that’s what definitely made me feel validated. And then also low-key surprised me. I would’ve expected not requiring the credit card on the free trial just would’ve been way better, but it actually technically wasn’t on the month-over-month growth side, but it was on the LTV side.  

Rob Walling:
And so for folks to have context, we are running this State of Independent SaaS survey every two years and we kick out the report a few months later, and as I said earlier, if you go to stateofindiesaas.com, you can view and download the report for yourself. And with that, let’s dive in to some of the findings. You and I are going to go back and forth with findings that we pulled from the report. Let’s dig in to your first finding. We are going to each have four that we’re sharing today, but talk to us about founder count.  

Asia Orangio:
Yeah, okay. I love this topic of conversation because, well, first and foremost, solo founders, of course, you guys out there, you’re already making growth waves, you’re already doing the thing. And on average and also the median, we typically saw on average it was around 17% month-over-month growth. When it came to the median, I think most … So just for context too, median represents more of the, this is what most people are probably experiencing, and the average of course is the number that you get after looking at the entire dataset. Even still month-over-month growth, still looking pretty good. What I think is interesting though is there’s a little bit of a very slight diminishing return on the average when you look at founder duos, meaning there are two founders. 

But what I think is fascinating is once you get to founder trios, meaning there are three co-founders, this is when you start to see around two to three X average growth month-over-month. And I think that this is so interesting because I think the connotation of a trio is that maybe it goes a little bit slower, but actually I think having the third person probably … My hypothesis is that the third person probably breaks a lot of ties, so to speak. However, there are diminishing returns. Once you get to four or more, we start to see a dramatic drop-off when it comes to average month-over-month growth. Not that it’s terrible or poor or anything, it’s just not maybe as efficient as some of the other growth rates month-over-month. But I still think it’s really interesting.  

Rob Walling:
This has been relatively consistent since we started asking this question over the … Because this is the fourth report that we’ve done over five years, I think, and I’ve noticed this pattern in each of them. We could go back through the others, but I believe for some reason, and I’ve never been able to explain it, that why three founders perform significantly better than one, two, and certainly than four. I’ve always been … With bootstrappers, we have the numbers in the report, I forget if it’s like 70% of mostly bootstrapped SaaS are single founders. It’s like a huge chunk. And then another 15+% is 2 founder companies, and that’s just the most common. I mean, that’s the lion’s share, 85%. 

And the more you get, I’ve seen four co-founder bootstrap companies, usually there’s a weak link is what it is. Usually there’s someone who shouldn’t, by my judgment, shouldn’t really be part of it. And you get too many cooks in the kitchen and people can’t, like you said, can’t break the ties, decision by committee. There’s all kinds of stuff. So it makes sense to me that at four, it’s too many. But I’ve always thought like, well, three is probably too many as well, but that’s not what our numbers have shown us each year.  

Asia Orangio:
Yeah, yeah. I would’ve assumed that more than two and you would start to see declines.  

Rob Walling:
Me too.  

Asia Orangio:
No, I was surprised as well. Way back in the day, I actually worked in-house for a company that had three … They had three co-founders. And I never would’ve guessed though that statistically speaking, at least in this dataset, it would imply the opposite. But it makes sense. But I remember the CEO at the time saying three was actually perfect for them because two can sometimes spend a lot of energy trying to make decisions, but not really going anywhere. And so the third person, especially if they were a strong force of nature so to speak, they were able to create momentum by again, tie-breaking, lots of tie-breaking, lots of like, “Okay, what do you think?” And then it’s like, “Okay, well I think it’s this” and so there’s actual momentum that happens. That’s the hypothesis. Of course, we don’t know exactly why, but yeah, I was surprised too, but two to three X is a lot. It’s a pretty big difference. Even on the median, it’s two X, which I think is really interesting. So that just tells me that this is something definitely to pay attention to and to think about.  

Rob Walling:
All right, for my first finding, we asked, “When a potential customer registers for a free trial, does your company request a credit card number to start the trial?” And what we looked at in this case is over the course of the 4 surveys we did from 2020 to this year’s 2024, and the findings are that the asking for a credit card upfront has increased and then decreased again. So the first year it was 73% asked for credit card upfront. Then it went up to 78%. 78% in the next one. And it’s down this year to 71%, so about a 10% drop. So it’s not precipitous, but I am curious, Asia to hear your thoughts on in the space, especially with bootstrap founders that you talk to, do you feel like the goalposts are moving for A, free trials, B, freemium and C, credit card upfront? Maybe start with credit card upfront because that’s what this slide is about, but have you seen that goalpost moving over the past several years?  

Asia Orangio:
Absolutely, absolutely. And there’s actually, we’ll get to this in a second, but I think that there’s some very real proof behind why more and more bootstrap founders are leaving behind requiring the credit card upfront. Yes, with the founders and the companies that I work with, absolutely. I think there’s a little bit of aha moment coming. It feels like there’s a communal aha moment happening around the opt-out credit card requirement or the opt-out free trial, which basically means you’re requiring the credit card. I think there’s a lot more movement towards opt-in free trial, and I think we’ll probably also discuss a little bit about freemium as well, but definitely, I’m absolutely seeing this. I have some hypotheses about why, but we’ll get into that in, I think, in one of the future slides that we’re going to cover.  

Rob Walling:
Yeah, my default has tended to be if I don’t have any other information, I ask for credit card upfront because usually I want to narrow the people who are going to try the software to folks who are actually interested and I think might pay. Now it depends though. It depends on the space. If the person who’s going to use the software is different than who’s going to pay for it, probably not the best idea because they don’t have a credit card. If a software developer at a certain company is going to use it but doesn’t have a credit card, then obviously you might need to allow free trial without a credit card. 

The thing, the mistake that I’ve seen folks do is either enact freemium where they then have the bootstrapping and using freemium where they push revenue down the line and maybe they don’t have the criteria in place to do it. But also then they get a lot of noise, especially in the early days. And similar with removing credit card, you can get more people in, you can get more feedback, and that’s the pro. The con is you get more people in and you get more feedback. And depending on how well you are at dealing with that, if you’re a first timer, that can be completely overwhelming. And so when I say I default to it, I mean it’s like a 60-40 for me. It’s not an always, never, but it’s like with no other information, that’s what I do. However, I think there’s a lot of leeway here for it to go up and down.  

Asia Orangio:
That’s so interesting because I’m the total opposite.  

Rob Walling:
Is it to get more data? What’s the reason that you would go with not having a credit card upfront for a free trial?  

Asia Orangio:
If you already have a really dialed in sense of who your customer is, then I think why put the limits on the free trial? And also I find that when you are able to get a little bit more information, I just feel like assuming that you have help and that you have experience in this, I’m actually very confident in my ability to detect, okay, who’s actually qualified? What do we got to do to activate people? 

I think to your point, if you’re less confident in your ability to do that, then yeah, require credit card upfront. Once you get to 10, 20, 50 paying customers, I think that you can take the credit card requirement off and create more of a pipeline for yourself. But again, the assumption is that you’ve got a pretty dialed in understanding of the customer. Considering that’s literally what I do, I’m pretty confident in like, okay, yeah, we don’t have to require the credit card upfront. Yes, I do think it makes sense though if you’re very, very early, may very new, first time founder, also new to SaaS, then requiring the credit card upfront will be a really good litmus test. So I see a lot of value for sure in that.  

Rob Walling:
Yeah, that’s the key is I was referring to, if you don’t really know your ICP yet and you’re still trying to figure it out, so that’s the difference. Yeah, once you know your ICP, you’re driving traffic, your ideal customer profile for those listening or watching, that makes sense. I think we’re on the same page. All right, Asia, let’s talk about target market.  

Asia Orangio:
Yeah, this might sound really obvious, but I think that this slide just illustrates it and makes it visual for people because the market that you ultimately decide to focus on is going to have a huge impact on your growth rates. This also might not be that surprising when I say, but if you are targeting enterprise companies, traditionally speaking, your average month-over-month growth rate was probably like in the 26 or so percent. That’s pretty high actually for a company. That essentially means that you potentially more than double year over year, but there are some trade-offs depending of course on who you target. So for example, if I look in this chart here, towards the end we see consumers, so on average month-over-month growth rate looked closer to 5% for consumers. Government was pretty slow, 1.75. Now keep in mind this is the average. The medians reflected something very similar. 

But what was also interesting was depending on just how people respond to the survey, if they selected other, which to be honest, I was kind of having a hard time of what would other be? But if you were not really targeting any of these ideal customer types, then you probably saw contractions in growth. This could actually be due to a lack of focus. This could also just be maybe there are some consumer customer categories that just don’t fit within this model. But at the end of the day, who you target from a business perspective is going to have a lot to do with how you grow. That should be both … I think it should be seen a little bit as, I don’t want to say blessing and curse, but almost like setting expectations for yourself. So if you’re targeting, if you’re going B2C, if you’re going consumer, just have an expectation that growth might look a little bit different than if you’re B2B targeting enterprise or even mid-market. 

SMBs fell right in the middle, which probably not surprising. So if you were targeting small businesses, your average growth rate probably looked around like 12% month-over-month. But overall though, something to keep in mind. But yeah, Rob, I’m curious how you see this and how this reflects for you.  

Rob Walling:
Yeah. So for context, the top three fastest growing target markets are enterprise and mid-market, which is slightly smaller than enterprise, and NGOs or non-government organizations. I’m a little surprised the NGOs are there, but it is what it is. So those are the top three, which the first two certainly line up with my experience of at least having a dual funnel with enterprise and mid-market plus SMB. But with the TinySeed companies, we see the ones with the bigger ACVs, the ones with the bigger average revenue per account, per month, or per year do tend to be the ones that grow faster. On the bottom end, the bottom four are totally in line with what I would think. Aspiring entrepreneurs, education, selling into schools and academics, consumers, and then government. And yeah, none of those are really surprising to me.  

Asia Orangio:
Yeah, yeah. NGOs though, that makes me think that those software companies are solving a very big problem for them. That’s what makes me think that NGO is doing so well.  

Rob Walling:
I think the NGOs are probably enterprise or mid-market companies is my guess. We’ve broken them out because people … We used to have, well, we do have other, and people would write in NGOs, that’s our target market, and so we included it. But if you think about it, a lot of non-government organizations are actually large businesses and I think the first three all line up. 

So for our next one, we asked, “Do you plan to seek outside funding for your company within the next 12 months?” And I am glad we started asking this. I think we’ve only asked it for two years, but it was insightful for me the first year to realize this really gets sent out to the MicroConf, TinySeed, Startups For the Rest of Us ecosystem, which frankly, it’s mostly bootstrappers. It’s overwhelmingly folks who want to bootstrap and that’s fine. That’s okay. 

What I was surprised by was in 2022, 30% of respondents said they plan to seek outside funding within the next 12 months, and then in this year’s report it’s down to 23.5%. Now, a couple thoughts on that. 

Number one, it’s interesting that across all the TinySeed companies that we funded, somewhere around a third of them wind up seeking or raising additional funding. So that one third number, it seems to be something. This is even for companies who’ve taken an accelerator round from TinySeed. 

The other takeaways from year to year, if you heard me say 2022 is 30% and 2023 was about just under 24%. So there’s a decrease of 20, 20 something percent. I think that’s due to the funding environment. I’ll say this, the 2022 results were actually surveyed in fall of ’21 when things were still gangbusters. It was so easy to raise funding, everyone was thinking about it, everyone was doing it. The valuations were high, there [inaudible 00:24:14] going on, there was crowdfunding going on, all kinds of stuff. So I do think there was more of an appetite because it was just easier, money was cheaper. And this year’s survey taken, what? A couple of years later because we skipped a year in between is down to about 24%. And I’ll admit that’s just not that surprising. I think with funding being harder to raise kind of makes sense. You bootstrap until the money’s available and if the money’s never available, you just keep bootstrapping.  

Asia Orangio:
Funding being harder to raise, but then also terms not nearly as appealing as maybe they once were.  

Rob Walling:
There you go.  

Asia Orangio:
And then also I think there’s just like a … What was the quote from MicroConf most recently? “The exit strategy is death.”  

Rob Walling:
Yeah.  

Asia Orangio:
I think the culture is culturing when it comes to bootstrap in general. Yeah. But I also think it speaks maybe a little bit to the mental resilience of bootstrappers. I think a lot of people are learning about how to grow sustainably and also being maybe a lot more discerning about when does it make sense to get funding?  

Rob Walling:
And Asia for your next slide, we have a battle of the models. Talk us through this.  

Asia Orangio:
Oh yes, okay. It is one of my absolute favorite debates and it’s just because there isn’t really a right or a wrong answer, but the data is going to show us a couple of really interesting trends. So basically there’s of course offering freemium, then there’s the free trial. You can do opt-in free trial, which basically means that you don’t require a credit card upfront. And then there’s the opt-out free trial, which means that you do require a credit card upfront, you have to opt out of it. So when it comes to growth, churn and LTV, which we’re going to look at in here in a second, when it comes to growth overall, so what we find is free plans and free trials that do require a credit card, we’re going to see on average at least 10%. And for free trial credit card required, it actually is the highest. So 14% month-over-month average growth for companies that do that.  

Rob Walling:
Yes.  

Asia Orangio:
So requiring the credit card upfront does have a pretty big impact when it comes to initial upfront growth. And then not requiring the credit card had the least amount of month-over-month growth. This was about 7.6, we’ll call it 8% on average. And at first blush, that may seem like, oh, CC required for the free trial is the obvious answer and then maybe after that freemium. But not necessarily because now we have to look at churn. So for churn for the free plan, this was absolutely fascinating, but basically your month-over-month growth average, while it might’ve been 10.4 or 5%, churn was the same. It was almost 11% month-over-month average for churn. So basically freemium tended to see if you offered a free plan, you probably saw a little bit higher churn as well. 

When it comes to the free trial credit card required, the average for the month-over-month churn was 5.5%. Now, this was actually shocking to me because traditionally speaking, we tend to see really high churn numbers when you require the credit card upfront because people forget to cancel and they email you and they’re like, “Oh, I forgot to cancel. Can you cancel my thing?” And then ProfitWell and a lot of other subscription metrics will actually count that as churn, even though they might’ve just forgotten. So I was actually shocked to see that the average was about 5.5% on credit card required. 

And then finally not requiring the credit card on the free trial, 6.34, so a little bit higher. Now again, that might make you think, oh wow, not requiring the credit card on the free trial is the worst one. But then we’re going to look at LTV. But first I’ll pause here. I’m so curious, Rob, your gut reactions to this.  

Rob Walling:
It’s tough because it is averages, but my gut feel is typically that folks who are asking for credit card upfront, I would think that the churn for the first 30 or 60 days would be higher. But if they have their stuff dialed in, then beyond that, as long as they’re getting ICP, their ideal customer profile in because they are gating it with a credit card, kind of makes sense. That’s why I say it’s my default. Again, it’s a default. It’s a rule of thumb. It’s just a thing that I lean towards. So it does kind of make sense. It really makes sense to me that free plan, meaning freemium has, I’d say lower growth, but that the churn is high, which I guess this isn’t churn from the free plan. This is churn from the paid plans, which almost tells me the business is broken. 

And that’s the thing. Just bootstrappers using freemium in general usually means they don’t know what the (beep) they’re doing. That’s been my experience. You know what I mean? And I don’t mean that … I use that bad word only to imply that I just see it too often. It’s the same thing. People want to do B2C, they want to bootstrap a two-sided marketplace and they want to have freemium. I don’t know why they’re drawn to this like moths to a bug zapper, but it really is the most common questions that I get. I’ve just stopped taking these questions on the podcast. So the freemium part, kind of being a train wreck and the business being on fire, that makes a little more sense. The fact that free trial with credit card required performs better, at least with these averages, I think is in line with my experience, but it doesn’t … More questions to be asked is how I feel about it.  

Asia Orangio:
This is where I would say the story flips a little bit. So LTV, ultimately what that KPI speaks to is the lifetime value of the customer. So for as long as they spend with you, how much actual money do they spend on average across their entire experience with your product? And what we found was while the free trial credit card not required, certainly did not look as appealing month-over-month growth-wise or even churn-wise, what we found was it actually would have on average two times the LTV versus other plans. So for context, free plans and freemium, we saw an average of three K LTV. When we looked at credit card required on the free trial, it was about 3.6K LTV. Free trial and credit card not required, 6.5K, so easily 2X over freemium or free plans, and then of course a slight bump over the free trial credit card required. 

What this tells me is that while businesses might choose the free trial where the credit card is not required, what they’re basically trading off is faster, maybe upfront, month-over-month growth for basically more money in the pocket, which I don’t think you can be mad about. However, that’s not to say though that requiring the credit card upfront is not a good option. If anything, this makes me think that maybe monetization is a little bit broken for companies that tend to do the credit card required upfront. And then for freemium, it’s exactly what you said before. I think a lot of founders just don’t really understand how to make freemium work. How do you make it do the thing? But it also could speak to lower pricing plans and charging less in general because you’ve got freemium as your starting point. So it could also speak to that as well. So maybe monetization is a little bit broken here as well.  

Rob Walling:
Yeah, this one’s interesting for me because in our last slide we looked at growth rate and free trial with credit card required was growing significantly faster month over month than the others. But free trial credit card not required has significantly higher lifetime value even though the churn is higher. So it implies that without credit card required, that basically they’re charging more. I mean because for the LTV to be higher with higher churn means they have to be charging more.  

Asia Orangio:
Charging more, keeping more, I think, too potentially.  

Rob Walling:
This is where data can be made to tell a story because Asia and I could go on Twitter, X and we could say, “Well obviously based on this slide you should not ask for a credit card and we have data for it.” We could flip to the slide before. We could say, “Obviously by this slide, free trial credit card required allows you to grow faster.” And I won’t say it’s apples and oranges because they’re related, but it’s unclear. And honestly, this is why the answer is it depends. It really does depend on your space. It depends on your customer type, your ICP, it depends on your stage. If you’re $2,000 MRR versus 200,000 MRR, you have to take the data you can and the data you have and you use it to your advantage. 

And for our last slide, this one will be quick. I just like looking at it because the question we ask is, “Please select up to three advertising channels that have most significantly increased your revenue.” And the number one, 65ish% is Google AdWords. Number two with about half that, so around 30ish is Meta or Facebook ads. And then next is other, and fourth is LinkedIn. And every year I’m always like, I think Twitter ads are going to do something at some point and they never do. They’re always so far to the right. It’s like that Twitter ad ecosystem is terrible. Usually though I would expect LinkedIn to be third. Just in broader experience, it’s like it’s Google AdWords, it’s Facebook and it’s LinkedIn would be my top three that I would recommend to founders, B2B SaaS founders. 

The issue though is the LinkedIn ad tools are not great, and that’s what I’ve heard. And so TinySeed has invested in [inaudible 00:33:06], which is a SaaS that sits on top. It helps you manage and deal, basically get around LinkedIn’s crappy ad interface. You heard me say that, that’s not their marketing, that’s me just saying it’s pretty rough. The ad tech of LinkedIn is significantly behind Meta and AdWords. 

The thing that I want to dig into, and I wish I had this data with me today, is other advertising. I don’t exactly know what that is, and I bet we had a text field that people entered stuff. I’m curious if other advertising is advertising on podcasts, advertising or sponsoring events or display advertising. I can imagine those being an other. And so the fact that it’s ahead of LinkedIn might be just that it’s so varied. There’s so many different options that people kind of bucket it all in one.  

Asia Orangio:
Yeah, the LinkedIn thing is also not surprising to me. I think in order for LinkedIn to work, you’ve got to be targeting an audience that just actually lives on LinkedIn. I live on LinkedIn, that’s where I hang out now. So I’m not surprised that Meta, which includes Facebook and Instagram, I’m not surprised that Meta beats LinkedIn. And then of course Google AdWords. I mean this is bottom of the funnel keyword searching. Not shocking at all here. But yeah, LinkedIn, that’s awesome having the thing that sits on top of it. I agree, because it’s trash.  

Rob Walling:
Asia Orangio, if folks want to keep up with you on X, Twitter, you’re Asia Orangio and demandmaven.io if they want to find out what you do on a day-day basis with your growth consultancy. One of the best in the business. Thanks so much for joining me.  

Asia Orangio:
Thanks again for having me.  

Rob Walling:
Thanks again to Asia and DemandMaven for working with MicroConf to help produce this report. Again, stateofindiesaas.com if you want to download and check out the report. And let’s connect on X/Twitter. I’m @RobWalling, once again signing off from Startups For the Rest of Us, this is episode 721.

Rob Walling:
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Welcome back to Startups For the Rest of Us. I am Rob Walling, and today, I’m joined by Craig Hewitt, the founder of Castos and the host of the Rogue Startups Podcast. In this episode, Craig and I talk through several topics. One of which is prioritization, and we went pretty deep on that, both prioritizing things from a marketing or growth perspective, in general when you’re working on a startup, how do you think through what’s a framework for prioritization, and also, we talk how to prioritize balancing work and life. I also talked to Craig a bit about what it’s like to be a founder and to start doing some coaching of other founders, and we also talk about what it’s like to have a podcast with a co-host and then suddenly be a solo host. 

Before we dive into that, you should check out MicroConf Connect at microconfconnect.com. This is our online community and forum. We host it in Slack and we’re approaching 7,000 members. They’re bootstrapped and mostly bootstrapped SaaS founders. Recent conversations in Connect, including a debate about magic sign-in links, how long you should spend diving into a niche before deciding on the product offer, how to safeguard your product from misuse during free trials, at what point in your journey should you invest in a conference booth and more. It’s a vibrant and highly moderated community, very high signal to noise. 

If you’re looking to find and hang out with other misfits like you and I, head to microconfconnect.com. It’s a great episode today. I hope you enjoy the conversation. The Craig Hewitt, thanks for joining me on the show.  

Craig Hewitt:
Yeah, man, thanks for having me.  

Rob Walling:
I hear from a lot of folks that they really enjoy the episodes of Startups For the Rest of Us that you’re on, so it’s good to have you back.  

Craig Hewitt:
Yeah, man. Likewise. It’s not a lot of opportunities to riff and BS on startup stuff, and you’re one of my favorites to do it with. So, this is awesome.  

Rob Walling:
Yeah, thanks. Yeah, it’s nice to go deep with other folks that you have chemistry with. This is what people tell me about these types of episodes. There’s the Derek Grammer and the Rubin, where it’s like you just have a rapport is what they say. You have a common language and you get there real quickly and you go deep really fast on things because there’s not a presupposition of, “Oh, I need to be really polite and walk on eggshells here,” or “I can’t say what I really think.” It’s like, “No, we’ve known each other for a very long time.” Oh, more than a decade. It’s probably like 10, 12 years, I would think.  

Craig Hewitt:
I think so, yeah. Yeah.  

Rob Walling:
So anyways, I came up with a few topics to chat with you about and then I realized that last week I had some success just tweeting out, “Hey, what do you want me to talk about with Derek Grammer?”, who was on the show a couple of weeks ago when this airs. So, I did the same thing for you, and what I thought was funny was you responded with one of my favorite topics. I was like, “Wait, the guest responded with the topic.” So your tweet said, “I want to talk through how you think about prioritization both from a marketing growth perspective, but also work-life balance and stuff outside of work with only so many hours in the day.” You want to give more context around what you’re thinking there.  

Craig Hewitt:
Yeah, I think part of it stems from just being a busy founder, have my own podcast, have content I’m doing, have a family, try to take care of myself and exercise, and try to have a garden. It’s summer and find myself looking at the calendar sometimes just being like, “This doesn’t add up.” So something’s got to give and I sometimes think I’m not doing the “right things”. So, I think that’s more so it’s like there are enough hours in the day if you prioritize the right things, and that’s within the eight hours of a workday and that’s within the whatever, however many hours we’re awake during the week. So, I don’t know. I would be very curious to hear how you think about it and I can share a little bit of what I think too, if that would be helpful.  

Rob Walling:
Yeah, for sure. I think we should both dive in on it. There’s a few things here. There’s a quote that I had in a talk one time that resonated with a lot of people, and I’ve said it a few times, but in your personal life, money saves you hours. In your business, money can save you years. What that means is if you have money in your personal bank account, you can pay someone to mow your lawn, your dishes, do your laundry. We have someone who comes to our house 5 or 10 hours a week and does errands and does basic stuff, $30 an hour, and then they’re local. They handle all kinds of returns and just anything you can imagine that an admin can do in person. It’s a hundred something dollars or 300, whatever it is. 

Sherry and I are two busy working professionals. We both have successful businesses for us at this stage that I’ll just say it’s a rounding error compared to we’ll go out to a really nice dinner with friends and spend that. So, it’s like that’s something that, and I’m getting it. I’m not saying everyone in the audience, you have $300 to waste on an assistant who comes in, but it’s like at a certain point, even early on, I started paying someone to mow my lawn. I remember I had friends who made fun of me for that and said, “You don’t want to put in the hard work,” or like “Oh, you’re a real bougie now, aren’t you?”  

Craig Hewitt:
Sideways.  

Rob Walling:
Yeah, these were the friends that I had to distance myself from to become an entrepreneur because they had this old script. Let’s say I was 25, 26 and I was making $60 an hour as a developer hourly. It was contract. I could work 10, 12, 14 hour days back then and I would get paid for 10, 12, 14 hours a day times 60. So, really the math was there. So, instead of me buying a lawnmower, maintaining it, and doing all this stuff, I would do that. I started hiring more out and I was really guilty about it for a long time of like, “Am I wasting money? Because I could just go do that on the weekend.” Same thing with cleaning my house, that was a tough thing for me to get over. 

So, that’s a very basic first one, but I think people don’t delegate or outsource enough in their personal lives. To be honest, man, is it easier to find someone to come into your business and do support, customer success, and train them on that, or is it easier to find someone who can run errands and do laundry and do a few things and the cost might be similar or less? So that’s a super tactical one to start with, but I want to toss it back to you in the sense of how you think about trying to prioritize these things.  

Craig Hewitt:
Yeah, so totally on the money buys you freedom or time. Dan Martell’s book, really good, Buy Back Your Time. I know he’s been on the show, really, really good book from a business perspective. I’ve been on and off with assistants. Actually yesterday, two days ago, I signed back up with Zirtual. That’s how I had my assistant before, signed back up with them. I think they started like 500 bucks a month for 12 hours a month, so a couple hours a week. For me, it’s just like, “Can you take care of this notice from the State of Virginia that I literally have no idea what to do? Can you just please go take care of this?” They’re pretty senior level folks to where you can say, “I just don’t want to think about it until it’s done please. Here’s the SOP and the documentation, but solve this problem for me.” 

Outside of work, what I have tried to start doing is just less. Instead of just saying, “How can I possibly manage all these things?”, I’m just like, “I’m not doing that.” A good example is I was going to CrossFit for a while and it’s a really great workout at 44 now. It’s maybe a little too much for my old ass, but one of the challenges was it’s at 5:00 or 6:00 in the morning. So, then that’s very fixed and the rest of my day has to fit around that. So, I’m like, “No, because what I need is a thing that can fit around my schedule.” So it’s like let’s break down the rigidity and the barriers to where I can just do my stuff whenever and however I want. 

So, I think that it gets at the same concept is like how can I bend the reality to fit more what I want? That’s been away from work. Something I’ve really tried to do is just optimize for convenience as much as possible. We haven’t gotten someone local, but that’s probably the next step is get somebody a couple hours a week to help with the house or stuff and groceries and things like that.  

Rob Walling:
So I actually contacted Zirtual and four other VA agencies and said, “Do you have anyone? I want someone local and I want an EA level person, but I want them in Minneapolis,” because I want them to be able to do the stuff you’re saying, which is this tax notice. Or I got something from my insurance company the other day, and again, it’s like, “I need you to make a phone call and I need you to figure this out,” or “I need you to change this plane flight. It’s going to be like 30 minutes on the phone with Delta. Can you just do it? But I also want you to be able to run these errands because there’s just enough in a week with us around.” 

We actually found a friend of a friend who’s doing it for us now, but more than that, I like what you said, it’s not just about hiring stuff out. It is about doing less. This is the thing I realized is again, going back to when I was 25, I would sometimes code 12 or 14 hours a day because it was just like, “I’m going to make money because I need to make money to pay the rent and to be self-sufficient.” Sherry and I were married already at that time. Then as I started becoming an entrepreneur, I transitioned into that mode where I’d work all day and then I would entrepreneur all night till 1:00 in the morning or something. So, I would work a lot and then even as I became an entrepreneur, I was like, “Well, I will just grind it out. That’s how I will win.” 

That was perhaps a good choice early on, but there’s a question mark on there because grinding it out and working 12, 14 hour days, which again, I did as both a contractor and then doing products for a while back when I had time, no kids, all this stuff. I worked on a lot of the wrong things. I wasted so much time, so much time. I mean probably half my time was wasted, maybe more where I just didn’t know what I was doing. I wasn’t asking for advice. I wasn’t following rules of thumb, didn’t have a plan. I just flailed around and did the next thing because I was like, “Well, I’m going to keep working. I’m going to keep working. I did stuff.” It took me a very long time to hone that ability to say no to a lot of things and pick. There’s no one right thing to work on.  

Craig Hewitt:
There’s a whole lot of wrong things.  

Rob Walling:
But there’s a whole lot of wrong things. If there’s 100 ideas, there’s probably like three or five that are probably in the 80, 90% correct. It’s in this direction. How do you identify those? How do you do that? Do you think about it?  

Craig Hewitt:
Yeah. So, I have a really good one there. So, this is on the work front. I have several people that I work with, I actually wrote about this in my Founder Insights newsletter last week. It’ll show up as a blog post on craighewitt.me if you want to go check it out. But what I’ve started doing is really leaning into having several different coaches in my life. So, I have a wellness coach from My Body Tutor. Amazing. Check it out if you haven’t. I have a sales coach now and I’m a sales guy, so I should know what I’m doing. But I think it’s a testament to even if you are the subject matter expert, having an objective third party unbiased person to bounce ideas off of and say, “Hey, I want to grow this part of my business. What do you think about this or this or this as an approach?” 

They with probably a whole lot more experience and context and perspective would say, “Well, obvious just do this.” Then I have a founder coach who at a higher level strategically, I’m able to say, “Hey, we want to do this,” or “We want to acquire this company,” or “We want to raise more money or whatever.” He’s able to really give me the same really honest feedback. So, that’s something I’ve really benefited from a lot in the last year or so is just not putting all the pressure back on me because as founders, you got to make so many decisions every day that especially as a solo founder to say, “I got to make this other decision,” and then it’s the next one and the next one and the next one. 

Some of them are really important and you have a mastermind group or you have a mentor or whatever, but you got to have somebody to talk to, I think, is the point. To me, paying someone who has actually done the thing is way more valuable than pretty much any other peer group because that is then the answer. You have a relatively high confidence that that’s right.  

Rob Walling:
If you can find someone that you trust in a domain to give you their best advice, and here’s the thing, if you trust them, it’s likely they will say things like, “I feel very strongly that you should do X” or… I’ll do this all the time with tiny C founders. I’m on the fence. I’m going to be honest. I think you have two viable options. Let’s name the other. There’s five total. I think these three are garbage. I think you have two, and I’m struggling to know what you should do, but it’s pretty obvious it’s one of these two and then I’ll pass it back. What do you think? What’s your gut? Because you know your business better, you know your customers better, you know whatever this space better than I do. I know the best practice is probably better than you do, and we’ll do that. 

I think a good mentor, advisor, or even friend, mastermind, whatever, couches things like that. They’re not so certain of everything, but then sometimes, sometimes it’s really, really obvious what you should do. It’s like, no, I’ve seen exactly this 10 times and 9 out of 10 times that this was the right, that type of thing. You can get to that point of certainty. That’s a huge win. These days. I try to think about how I make decisions. Well, A, I try not to make a ton of decisions all the time, and that might sound weird, but it’s like you have to make a lot fewer decisions than you think. The key phrase, have to. There are a lot of things you just don’t have to decide. 

I think in the early days of a startup, you have to make a lot of decisions quickly of, “What am I building? What are we doing? ICP, I got to move faster.” TinySeed was like that. MicroConf was like that. Drip was like that. But you get to a point where it’s like, “Oh no, we don’t need to decide about that. We’re just going to let it run. What’s working is working. We’re going to keep doing that.” That’s a skill. They often talk about retail investors, just consumers who day trade and they buy this stock and then they buy this index fund and they sell it because they read something in Bloomberg and then they do this and that. It’s flailing. It is tax disadvantaged. Almost no one does that. You have no advantage in that. 

I feel the same way about some founders who are like, “What’s working is right now for you, it’s like SEO and cold outreach or whatever it is, but it’s a grind.” No, shit. It’s always a grind. I don’t care if it’s a grind. Is it working? Yeah, yeah. We’re growing two grand MRR every month. Then why would you make any decision? Just keep doing it. It’s like I know that you want to day trade. You want to do something more exciting. The most exciting thing is new MRR.  

Craig Hewitt:
So I have two things around this because this is really hard. We are at the point in our business where it’s getting a little boring in a good way, to your point, and that the challenge, one, is you as a founder accepting that like, “Hey, just tune out all of that stuff and focus on the stuff that’s working.” You have to get over that. Then what I’ve found is you have to get over this next hump, which is you have to relate to your team that that’s how they need to think too. Because hopefully, your team is like, “Oh, hey, what if we do this? What if we build this feature? What if we support? What if we do this?” I think about this movie, the Yes Day, but in the movie they’re like, “I’m the fun guy, and you’re always the one that’s saying no,” the parents. 

I feel like the parent that always says no to the team because they’re like, “Hey, what if we do this? Hey, what if we do that?” I go, “No, what if we don’t do any of that stuff and just focus on this really narrow thing?” What you’re saying to the team is like, “Hey, we have to focus and prioritize.” If you do it wrong, which I think I might have at the beginning, what you say is let’s just dial back the intensity a little bit. That’s not exactly right, but it is, right? Because what you’re saying is we’re going to do less. We’re going to do it better and it’s going to be better for the company. It’s a very different mindset as a founder for sure. But even I think if you have entrepreneurial team members, they go, “Whoa, I only have to do this one thing. That’s crazy.” I have a little bit of insecurity around that.  

Rob Walling:
Yeah, I could see that. I am guessing that’s where sprints were invented. We’re going to do a sprint. Whether it’s two weeks or three months, you hear marketing sprints are sometimes two or three months and development sprints are two weeks. Lock it in. Can’t change it, pretty much unless there’s a [inaudible 00:16:56].  

Craig Hewitt:
Yeah, put one the blinder.  

Rob Walling:
Yeah, because everyone has ideas and some of those ideas are good. There’s this Steve Jobs quote I mentioned offline, but I think that I quote him in my book, whatever. I don’t like it when people use Steve Jobs as an example, blah, blah, blah. He’s such an outlier. It’s like, “I’m going to use it to justify his really dumb thinking. Oh good.” But Steve Jobs says, “Focusing on stuff and building great things is not about the focus. It’s about saying no to hundreds of really good ideas.” I think about that quote so often of, “What is the one or two things that I should really be focusing on?” And then my next step if I’m going to do something in the business is how can I find someone who knows more about this than I do? 

So when we were going to start YouTube, we futzed around with it for a while, and I realized pretty quickly I have to be able to pay someone who just can get us there faster. We did. We hired a consultant and they were not cheap. They were several grand a month for advice, which I struggle with as a total cheap ass, a guy who grew up without money, but I’m like, “Dude, if I can grow this channel, it’s worth it.” It did, right? We’re at 80,000 subscribers or something. We grew very quickly, and there’s other stuff I’ve looked into. It’s like, “Oh, should we do TikTok? Should we do LinkedIn? Should we do whatever?” These are decisions I have to make, but I make them very slowly until I’m pretty damn sure that it’s the right one.” 

Then I’ll go deep and I’ll go really fast. I will spend a lot of money to have someone tell us exactly how to do it, maybe even to do it for us, depending on what it is that needs to be done. Then I will go all in. YouTube for us was I was shipping 52 videos a year at relatively high quality if you go watch them and 15 grand, 18 grand a month spent it on that, which is a lot. You might say, “Wow, that’s a lot of money.” It is a lot of money, but I deemed that I was either going to do it or I was not. What I wasn’t going to do was take that 18 grand, split it among, well, let’s try three or four things because guess what? Really low probability that any of them would’ve worked.  

Craig Hewitt:
It is what’s a good idea that you can execute on and that’s your skills, the people on your team, the people available is you, the money, all that stuff. This makes me think of is this book, Who Not How, and I’m blanking on the name.  

Rob Walling:
The author.  

Craig Hewitt:
Yeah, but that’s it, right? It’s like when there’s a problem at a point when you have the resources, who can I hire to help me solve this or solve it for me? And then your goal is just to define what good is and let them go.  

Rob Walling:
Dan Sullivan.  

Craig Hewitt:
Dan Sullivan.  

Rob Walling:
Just looked it up.  

Craig Hewitt:
Amazing guy.  

Rob Walling:
You recommended that book to me a couple years ago and I got the Audible version of it.  

Craig Hewitt:
I think that one’s from Rubin.  

Rob Walling:
Is it? This is what happens.  

Craig Hewitt:
Rubin, the press, yeah.  

Rob Walling:
Rubin has the A method for hiring. That one came from Rubin. There’s a few. There’s a few of those. Yeah. So, it’s interesting. A, I make fewer decisions than most people these days. I used to make all the decisions. I’m going to do the stuff and flail around. It’s like that was something that as I matured, I realized, “Oh, that was not the right way to do it.” I should make fewer, more important, more focused decisions. As a result, my decisions are bigger and tend to have bigger consequences, I’ll say. Because when I committed to this money and this recording these videos, which is a lot chunk out of my week every week, and I wasn’t very good at it. It took me a long time when I started. So, I knew I was investing. 

But when I make those decisions, I think I mull it over for a few months usually if I have that luxury. Sometimes you don’t, but several weeks and then I start going to people. What do you think about this whole thing? We have this idea. So, Rubin, what do you think about that? Each of them has a different perspective. So, Sherry, what do you think about this? It’s like I get all these different inputs, mastermind, co-founder, whatever it is. I’m talking to a listener right now of how to make hard decisions. It’s like who do you have in your life? If you don’t have someone, then you might need to hire someone. Like you said, you have coaches. I have a therapist. I’ve been seeing a therapist for years on and off. 

There’s this stigma around it of like, “Well, you’re seeing a therapist, you must have (beep) wrong with you.” A, all of us have (beep) wrong with us, so please don’t kid yourself to think otherwise. For me, it’s self-reflection. She’ll tell me, “Here’s what I’m hearing you say.” I’m like, “Huh, why did I say that?” She’s like, “I don’t know. Let’s figure out why you said that. You obviously are programmed to have this limiting belief maybe.” So sometimes I’ll talk stuff through with her as well. I wouldn’t talk through a YouTube launch, but I would talk through a hard decision that I think has a mental component. Sometimes you know what’s the right decision? But you can’t do it. You won’t do it and you’re avoiding it because it’s making you uncomfortable. That’s when I’m like, “I need to talk through why I’m uncomfortable and figure out-”  

Craig Hewitt:
This is okay.  

Rob Walling:
Is it because the way I was brought up as a kid? Is it because I didn’t have money in my 20s and I’m scared of always going back to that or whatever? Are those the reasons? We’ve talked a lot about decision-making in professional context, which I think is helpful. I know people often like to hear, especially the folks who listen to this podcast that are further along where it’s like, “Oh, I’m doing a million a year, five million a year.” This type of stuff, we all struggle with it, but let’s talk about the work-life piece. In terms of family time, we both have families. When my kids were younger, I definitely struggled. My kids are older now. They’re almost 14 and 18. So, they’re self-sufficient. It’s having a roommate rather than a kid. You know what I mean? 

They put themselves to bed at the time that they should go to bed and they wake up in the morning. If I make breakfast, they eat it. Otherwise, they make it for themselves. So, it’s different with younger kids. That’s one thing I will say is if you have young kids now, realize it won’t be there forever. They will get older and you will be able to leave them alone overnight for multiple days at a certain point. It’s mind-blowing when I say that, right, but we haven’t hired a babysitter in years because it just changes. You can, right? But it’s like realize that this time is only a few years, however that few is. 

So, with that caveat, I will say that much like making fewer decisions and focusing in my professional life, when I’m with my family, well, A, I try to have really interactive, meaningful time with them where it’s like, “Dude, let’s play a game together.” My 17-year-old, he’s almost 18, is home from college for summer. I’m like, “I’m off calls at 3:00 today. You and I are walking somewhere.” We’ll go on a walk for an hour, 90 minutes. We’ll go somewhere. We’ll get ice cream. It’s a great day here in Minneapolis. I’m just very deliberate about that. We don’t need five hours together tonight. That one hour, we will have so much conversation about so many things about our lives, about what I’m thinking about. He asks me about work. What’s going on with this and are you stressed about that?  

Craig Hewitt:
That’s cool.  

Rob Walling:
You know what I mean? It’s not all perfect. It’s not all amazing and it’s harder. If my kids were two and four, it would be a different story. Both of us can weigh in on there because we’ve been there. But I think that’s been my realization is it’s similar of if I’m going to spend time with them, focus it in a way that is very meaningful. 

We watch movies or watch YouTube or play games or do other stuff. I’m not saying it’s all just this intense conversation, but if I start feeling myself distracted or not wanting to be there, then I’m like, “Okay, check yourself. Should you just switch to something else and come back to this? Come hang out with the kid in an hour when you really are able to focus on them, or do you have something going on that you need to deal with?” So how do you think about this? You have younger kids.  

Craig Hewitt:
So I have 11 and 13-year-olds, and they’re getting to this point. We haven’t hired a babysitter in a while, but they can’t stay by themselves overnight. A couple hours, we can go to a dinner or a movie or something. Absolutely. The biggest improvement for me has been this intentionality and separation of there’s work time and then there’s just hanging out together time unstructured. There’s me being more intentional like, “Hey, let’s go play basketball” with my son, or hey, let’s go walk the dog after dinner with my daughter or something. To boot, my wife started working again about four months ago for the first time in 13 years since our daughter was born. That’s an understatement. 

That’s been a really big change in our life and family dynamic is wow, for several days a week now, she’s just gone and I’m the only one. I’m working and responsible for the kids. So, I’ve just had a lot more this is it. At 3:00, I’m at least flexible because the thing is the kids come home and they’re fried because they’ve been at school for six or seven hours. They just want to hang out and play Fortnite or whatever. So, I will mix that time is I’ll just grab my laptop and go downstairs and sit on the couch and futz around. But what that means is the really super important (beep) has to get done in the beginning of the day because I know I got to create this proposal, I got to follow up on this email. That’s just leisure, work time. 

So, that’s how I overlapped the two. Then at 4:00 or 4:00, cool, done, put the computer away. The computer comes back to the office. So, it’s not physically in the space where we are as a family and then we do stuff. We’ve started cooking together a lot more. That’s a really cool thing. Then yeah, same here, we have a garden and my son is in charge of getting the salad every night from the garden. So, there’s just little stuff like that. Empowering them with chores and activities that we can do together are really cool. So, as much as you can extrapolate that out, I think, into your life, it’s positive.  

Rob Walling:
Yeah, that’s really good. Those kids will remember that for probably the rest of their life. Not every moment, but they will remember, “Oh, I remember getting stuff from the garden.” If they do it 20, 50 times, whatever, it’ll just all be an amalgam of a single memory. But for sure, I have a bunch of stuff like that from my childhood. I don’t want to paint this as like, “Oh, if you have a two and a four-year-old or four kids under eight or whatever-”  

Craig Hewitt:
You’re screwed.  

Rob Walling:
It is just a lot more challenging, but it’s even more reason to focus relentlessly and try to figure out the right things to work on. In a business, to me, it’s this dichotomy of risk versus certainty. It’s like what’s the riskiest part of the business that needs founder-level thinking? That’s what I’m focused on. Anything that has certainty in a SaaS company, it’s like if you’re two years into a SaaS, you know that someone can answer support requests. There’s an SOP and most of them can be answered. There’s a knowledge base, whatever. Frankly, writing code, I know it’s a craft. I loved writing code and I was a craft person when I did it, but someone else can build that feature, but most other people can’t design that feature. That’s the thing. 

Designing it or crafting it or saying exactly how it should operate, product-level work is quite hard to find because your knowledge of your customer need there is founder-level need until you can hire. I mean the first product person we hired, we were doing several million in ARR, and his salary was $165,000. I mean it was really expensive. He makes more than that now. It’s like that’s the level of product person who can take stuff off your plate who’s been doing it, but there are always elements of risk and always elements of certainty in a business. I think that the certainty is that’s where your comfort zone is. 

So, unprodded you will slide into the comfort zone because it’s like, “Oh look at so much work I’m getting done” and then you work 12 hours on something that really should have either not gotten done or should have been delegated to someone else.  

Craig Hewitt:
Yeah, I mean the rule of thumb I use there is… This comes from my coach, Mike Del Ponte is like, “Do the work that’s as close to the customer as you can.” Typically, that’s sales that. That’s the best, right? It’s like, “Can I go talk to this person and sell them a thing?” After that, I agree. It’s probably either marketing or UX product design because that’s more of a one-to-many. Then the things that are way down on the scale are like, “How do I grow my falling on Twitter?” Even should I start a podcast? I don’t know, maybe, but only if you think there’s real potential direct impact. I think a lot of the time that we waste as founders are on brand marketing. If you’re at a few million, maybe you can allocate 20% of your marketing budget to brand marketing, but until then you got to be hand-to-hand.  

Rob Walling:
Yeah, yeah. You’re not a media company, right? That’s not what we are as bootstrap SaaS companies and thinking you can do that quickly and it won’t be a waste of time. It’s pretty rough. Same thing with, “Oh, you should build an audience in order to build your…” Oh, that’s a real long way to do it. I built an audience. I built multiple audiences over several years and it’s 15 years or whatever. It’s way more time than sales you will make if it’s for SaaS, but if you want to sell info products or courses, that’s another thing.  

Craig Hewitt:
I say it for all the people who are yelling at their phones right now, I say that because we made that mistake. We thought, “Hey, we’ll do a bunch of brand marketing and it’ll really result in a lot.” It didn’t. Now we’re much more one-to-one and we’re growing faster than we were when we were a team of 15.  

Rob Walling:
So let’s switch it up. This is a great topic and I didn’t want to cut it short because I think there’s a lot to be said about it, but we did have other folks weighing on Twitter about stuff, and I want to get to their questions. Christopher Gimmer asked, “I’d like to hear Craig talk a bit more about the coaching he’s doing, the pros and cons of it. When he felt confident enough to start offering it, would he recommend other founders do it on the side? Does it attract from the main business, et cetera?”  

Craig Hewitt:
That’s like four questions.  

Rob Walling:
It is.  

Craig Hewitt:
How did it come about? A bit of the focus that we talked about is we had just said no to a whole lot of things and I found myself with a little bit of time. I didn’t have that thing where I said, “Ooh, if I had 10 more, I could spend these 10 hours in the week to do something and it would move the needle.” So I said, “Well, I can spend these 10 hours in the week doing this other thing that I really enjoy. I’m pretty uniquely qualified to do and it would be helpful and I can make a little bit of money.” So that’s how it came about, and it was just very, very, very slow. I think I wrote a LinkedIn and a Twitter post about it maybe. I sent an email to the 200 people on my newsletter about it and got a couple of clients, got a couple of referrals from that. 

So, at this point, have a handful of folks that I’m coaching and it is the ICP’s founders, typically SaaS founders who are looking for help growing their business, so sales and marketing. We work together every other week for an hour and I want them to come with the biggest challenges they’re having. That can be anywhere from review my cold email sequence to how do I think about managing this sales rep to here’s my org chart, where do you see the holes to I helped someone go through an acquisition where they were acqui-hired. That was super cool. So, I mean, all the (beep) that I did, that you and I’ve done is I’ve done this for folks who are looking to do it, just like we talked about before. 

It’s like, “How can I pay a little bit of money or how can they pay a little bit of money to get a few years ahead?” Is it a distraction? Actually, I think I’m a much better founder now because of doing this, because part of it is I see a lot more, right? I see in the market how people are doing things, and so you have a lot of visibility through TinySeed of all the companies. I have a much smaller percentage of that, but also, I got to walk the walk when I am talking to a founder and they’re like, “Oh, I was thinking about doing this and I’m thinking about doing that. I’m thinking about doing the other.” I go, “Do the thing that’s as close to the customer as you can,” and then I hang up the phone and I go futz off to do some SEO thing. 

I’m like, “Whoa, Jack, that is not what you just said. So, you got to walk the walk.” So yeah, I think it’s not that much time. It’s definitely not that much mental overhead or stress because it’s just a call and I really, really, really like it. So, there’s that. It’s like sometimes you got to just eat the ice cream and that’s a bit of what it is.  

Rob Walling:
Yeah, I think that makes a lot of sense. I would guess for some founders, it would be a distraction if they were in super grind 10 hour, 12 hours a day, all consumed with their business and they’ve never done coaching, because just because you can do something doesn’t mean you can coach other people on it. I’ve seen some coaches who are so sure of their point of view because they had a success or whatever, and they’re like, “No, everyone should do it.” So then every call, it’s like, “No, you should do this. You should do that.” It’s like that’s not coaching. 

Coaching is more asking questions and figuring out, “Hey, what is really the best option?” Usually, there is no one best option. There’s a couple options that are viable based on criteria, but I do think that you were in a spot, you are in a spot with Castos where you’re five years, six years in, seven years, depending on how far.  

Craig Hewitt:
Seven. Yeah.  

Rob Walling:
At a certain point, as the business matures, it does require I think less. If you’re doing it well, you are delegating and it requires less and less. Even if it requires eight hours a day from you still, less and less founder cycles because it comes back to risk versus certainty is how much risk is left. There’s a few areas of risk, meaning uncertainty, or just founder level thinking, but you’re not making the same number of decisions on a day-to-day basis now than you were four years ago, five years ago, right? It’s that good glucose, as Dan Andrews says, to be able to coach, because I tell you what, coaching is… I don’t know if you find it this way. It’s very tiring. I say that in a good way, but it grinds me down in terms of you’re going to present me… 

The only problems I get, because I obviously do this through TinySeed. The only problems I get are ones that talented, gifted, handpick founders don’t know the answer to. So, it’s all the hardest problems. I consider that an honor and an amazing thing, but damn if it does, it just burn through my brain cells because I’m like, “All right, tell me again and let’s get it all in.” Then I’m like, “Oh, this is hard and it matters.” So I’m not going to half ask this decision, so let’s dive in. I’m taking notes, I’m thinking through. It’s like whiteboarding a new feature where you’re going deep and you have a mental model in your head of ba, ba, ba, right? 

So for me, coaching is exhilarating. It keeps me in the game, exactly what you’re saying. I have 192 companies and I’m like four, five, six, seven conversations a week depending. But those ones I end and I’m like, “I need to go for a walk because I’ve just expelled a lot of good…” Talk about decision making fatigue almost. It’s like I’m in that helping them make hopefully the best decision. So, that comes back to if I was 8 to 10 hours a day on a startup and I didn’t have that energy to do it, I wouldn’t coach, but again, I feel like you’re in a pretty good spot where you were ready for it and you’re highly gifted at it as well.  

Craig Hewitt:
Yeah, it’s interesting. I don’t find it draining at all, which is a really good sign. I think I did a bit of it for free and found I really liked it. I learned a ton about this whole giving advice versus asking questions. I’m like way, way better coach now than I was at the beginning, but yeah, it’s exhilarating in a very healthy, appropriate way. So, to me, that’s a really good sign that it’s probably a pretty good place for me.  

Rob Walling:
Sounds like it. Yeah. Our last question from Twitter comes from Matt Paulson, longtime listener of the show, and I presume of Rogue Startups as well because he says, “The thing that the two of you have in common is you both used to have podcast co-hosts and now you don’t.” I think the implied question there is maybe what was that experience like? I don’t know you need to say better or worse with a co-host or without, but is that maybe hard? Was that a learning curve? What was it like for you to transition?  

Craig Hewitt:
Yeah, so just for context, I have a podcast called Rogue Startups where started as just me, and it was an interview-based show. My third guest I think was Dave Rodenbaugh, who then became my co-host for the next 290 episodes, for the most part, over six or seven years. I mean, we’re a very long time into it. I just published episode 314 this week. Yeah. So, Dave and I largely had just a co-host show where we just provide updates on what’s going on, a lot like you and Mike did, sometimes interviews, all this stuff. Then really through COVID, it was really hard for everybody. A little bit after, Dave was like, “Man, I don’t care to continue anymore,” is I think what he would say. To me, maybe to you, this is super important to me. 

If you want to use the term brand, it is probably my biggest aspect of my personal brand, which has some importance. So, I was like, “Cool, man, I want to continue. Are you okay with that?” He said, “Yeah, this is just not for me, so not for me anymore.” So that’s the context. Yeah, it was super hard. It was super hard. In a way, I was really excited because I was like, “Cool, I get to continue doing this thing that I really like that has been the catalyst for a lot of my business stuff.” But then I was like, “Whoa, when you have a co-host, it is that mirror of energy a lot,” right? Hey, let’s just hop on. I don’t have a lot to talk about, but (beep) Dave just did this thing. Cool. That’s the episode for the week. 

Now, I don’t know what to do. I got to find a guest, I got to find an interesting guest. Because the last thing I want is to get whoever to come on and talk about SEO again. I always say when we’re advising our customers at Castos, like you got to find the person, you got to find Rob Walling, who everyone has heard on podcasts to talk about something you’ve never heard him talk about, which is pretty challenging. Or you got to find the person who no one has ever heard about that’s going to blow their mind. That’s slightly easier, but still pretty challenging. Both those things just require a lot of effort. 

So, I’m fortunate to be networked pretty well in the entrepreneur podcast community, have probably taken a lot of similar steps to you of don’t have as many guests as rotating co-hosts. Then I get the most good feedback from my solo episodes. So, aside from my episode with Jason Cohen that went out two weeks ago, I only get positive responses to my solo episodes, but they are soul sucking and I can only manage about one a month. So, having a co-host to your podcast is by far the easiest way to have a podcast. Not doing it is really hard, but I’m glad the podcast is continuing on. I guess that’s the short version.  

Rob Walling:
I think I feel the same way. I agree fully with you that having someone else on the mic is you can show up with almost nothing to talk about and fill time with pretty intelligent and entertaining things. Doing that solo, like you said, if you don’t plan for it, you’re on your own and what are you doing then? You are either answering questions or you’re just coming up with a topic and then talking to nothing for 20 minutes or 30 minutes or whatever. You’re right, those were really hard for me. They’re less hard now. Now, I have more confidence in my voice or there’s just something that shifted where I was like, “Okay, I am just going to say…” I used to filter a lot more if I’m honest. 

I was like, “Oh, what if I have shown my real personality?” or “Maybe I shouldn’t be so opinionated, but maybe this will make someone mad.” I’m not going out with super scathing hot takes or anything, but you might notice that over the past, probably four years, five years since I went solo, I have just become more opinionated about certain things, about certain anti patterns and certain success patterns that I see over and over. That makes it almost easier because I don’t have to censor myself as much on the solo episodes where I used to start, I would say a whole paragraph. Then I’m like, “Oh, what if that makes someone feel bad? Editor, just cut that whole thing.” So it was just a start, stop, start, stop. It wasn’t that fun. 

I was always worried, “What am I going to talk about? What topic can I possibly talk about?” Now I have this huge Trello board because stuff just hits me. As I consume things, I listen to audiobooks. I hear other podcasts like yours and the other ones I listen to. Oftentimes it’s something completely outside of startups like the Comic Lab Podcast where it’s these two artists that are independent comic guys and they publish their own books, not through publishers. They do Kickstarters and Patreons and all that. They’ll say something and I’m like, “Oh, that totally applies to startups, and I’ve never heard-”  

Craig Hewitt:
Oh, that’s cool.  

Rob Walling:
Yeah, I’ve had three of those probably in the past six months where I brought it on the show. Then there’s even Dungeons and Dragons podcasts or metaphors with games or something. I’m like, “Oh yeah, that is a thing.” The thing I’ve really enjoyed about it, I think, is I definitely wanted to experiment with a lot of formats and just experiment with things. I mean, if you’ve listened to this show for any length of time, you’ve heard me bring in Beatles music and I forget who else I brought on, but different. I’ll talk about a song and then I’ll bring the song on. It’s super cool when you listen to it, but it’s a weird thing to do on a startup podcast for the first time. 

It was something when I had a co-host, I was like, “Oh, do I check with him? Is it weird to do a solo episode if I have a co-host? Is that pulling the spotlight?” There was all this stuff that I was concerned about experimenting with, and I think that was maybe to the detriment of the variety of the show. Because after Mike stepped back, I tried a lot of stuff and actually a bunch of formats that I don’t do anymore, but I tried them. They were forgettable, the formats. People just weren’t that interested. The ones that stick are the ones that people comment on and they say, “Oh, I really like that.” Similarly, the solo episodes always resonate. It resonates with somebody.  

Craig Hewitt:
If I could, I think the thing that brings this full circle to business is nothing’s forever. You won’t do this podcast forever probably, or you won’t be the host of this podcast forever. I don’t know. Maybe I’ll run Castos forever, I don’t know, but you won’t be at your job forever. You won’t have the same co-founder forever. Maybe you’ll stay married forever. That’s cool. I hope I do, but I think to go into most of these things expecting it to be forever is setting yourself up for disappointment. Going into it a little eyes wide open and setting expectations with a co-host or with a co-founder, you talk about, “Hey, if you go into a co-founder agreement, have (beep) in writing.” 

Maybe with a podcast co-host, it doesn’t need to be a legal document, but an email to say, “Hey, this is it. We’re going to check in once a quarter. If anybody wants out, that’s cool. This is the process.” I didn’t have that because Dave and I just started podcasting and backed our way into a partnership. If I did it again, I would be a little more intentional to say, “This is the situation now. It probably will change, and these are the parameters around how it can change.” Just there’s no hard feelings and there weren’t with Dave and I. I don’t think there were with you and Mike. It was just the right time to start doing something different, but it doesn’t always work out that way.  

Rob Walling:
Yeah, I like that. Nothing is forever. Everybody sells eventually. Everybody sells eventually. Never thought Mailchimp would sell. You’re right, podcasts either fade or they change, different co-hosts. Like Calacanis on This Week in Startups had Molly Wood as a co-host. Then Molly Wood disappeared and there was never anything mentioned about… I mean, I shouldn’t say she disappeared. She stopped being co-host suddenly, and there was never a conversation about it. Now I think he has a new co-host, but that’s a thing, but what is he, like 1,200 episodes in or 1,300? I don’t know. He’s a lot of episodes and it’s like that’s just how things happen when you do them for 14 years. They do change, and this podcast is episode 700, whatever, 19. 

It’s 14 years, about 14 years in, similarly. So, just expect that you roll with it or you quit at some point, and that’s okay. There’s a pretty good book called Quit. What’s her name? She’s the poker player, Annie Duke. It just came out. I will admit, I could summarize the book in about a three-minute Loom. There were some key takeaways that I thought these were really good, and there was a lot of stuff that I was just like, “Eh.” But if you can read a summary or listen to the audiobook or whatever, it’s interesting and not a justification, but a defense of like, “Hey, sometimes you should quit.” 

There are times when you should stop doing things, and it’s a good reminder because society somehow has this big stigma around it, but I know some people where them quitting either a business or a relationship or some other effort they’ve done for a long time was actually the kickstart of a whole new chapter in their life. So, it’s always something to keep in mind. Craig Hewitt, thanks so much for joining me, man. You are @TheCraigHewitt on Twitter and craighewitt.me if folks want to check out your email newsletter. Thanks again for coming on.  

Craig Hewitt:
Yeah, man, thanks for having me.  

Rob Walling:
Thanks so much to, Craig Hewitt, for spending a few minutes with me today and providing you with your weekly dose of Startups For the Rest of Us. I hope this is an amazing week for you both on the personal front and also in terms of your business goals. Thanks for listening this week and every week. This is Rob Walling signing off from episode 720.

Rob Walling:
This is in line with that thinking. That really, even if you’re a horizontal product, you still have to make some difficult decisions about who your someones are going to be. Who are you going to have everything for? Because even if you have a horizontal product, there are going to be different use cases and you are going to have to make hard decisions with incomplete information as the founder, or as the product leader, about what to build and what to say no to. 

You’re listening to Startups For the Rest of Us. I’m your host, Rob Walling. Today, I’m going to be covering some solo topics. There’s a listener question or two thrown in here, but they are questions that I think apply to a Rob solo adventure. 

The first topic I’d like to cover today is about testing pricing for your product. This came about when I asked Twitter for questions when Derrick Reimer was going to be on the show and we got more questions than we had time to cover. This question was an overflow that I saved in a questions Trello board. It’s from Kat at buildthekeyword.com. She asks, “How do you test different prices for your product?” The answer is there are several different ways to do this. 

Testing pricing is hard, but the thing to think about is there’s testing pricing for brand new customers who are coming to your website, or doing a demo or sales call. And then, there is changing pricing on existing customers. Notifying them, “You’re currently paying $50. It’s going up to 100,” or 75. Separate those two things in your mind. Because what you don’t want to do is change and test prices on existing customers without being really confident that those price changes are in order. Usually, you test it on new folks coming in. 

I have only known of one SaaS company that ever test prices. Everyone else just does not have the volume, and frankly it is so much work to do this well. It’s truly just split testing. Having people click and the price appeared differently, the standard split test definition that we talk about. It’s not something that I see almost anyone doing. Usually, the way that you test pricing if you have a low touch funnel is you go to your pricing page and you just change the pricing on it. You see how it impacts your conversion rate over the next week or month. I’ve called this a poor person’s split test before, which is it’s not ideal, it’s not scientific. But if you have a real pulse on your business, and you have a decent flow of traffic, and prospects, and people coming across your pricing page frankly, then you can see patterns. When I used to test pricing, it was only when I had a lot of folks hitting that pricing page. Because if it’s a trickle, you can’t see the difference. There’s too much noise. 

Usually, most people don’t look at changing their pricing as a test. They often say, “I’m going all-in and I’m just going to change my pricing. I think I’m priced too low or I think the value metric is off.” They go to the pricing page in the Stripe call, and they just change it. I’ll say hope for the best, but really it’s a calculated risk. It’s a calculated gamble of odds are pretty good I’m under-priced, I feel like I’m under-priced. I am going to solve that by raising all of my tiers. Or by, let’s say, dropping my lowest tier is something people frequently do. Obviously, I’ve seen several TinySeed founders do that. And then, trying to make it work. There were times, when I’ve raised prices, where I was just like, “I’m committed to making this price point work.” It’s called aspirational pricing. I aspire for my product to be worth this much, this is the business I want to build, it has this pricing. Therefore, I’m going to keep building features to where this price is a no-brainer. 

You can say, “I want my price points to be $1000, that’s the minimum.” It’s like yeah, it’ll take you years to get there, or you’re just in the wrong category to have that kind of price point. There’s all kinds of ways I can poke holes in what I just said. But for me, it worked. It allowed me to build a great business. 

If you are demos, and it’s one-call closes, or it’s procurement, or whatever, and it’s a high touch sales environment, you can just unpublish your pricing from your website. You can either say, “Starts at 499 a month. Starts at $1000 a month,” whatever it is. Or you can list some pricing and call us, or you can just not list pricing at all. Have a pricing page. When they click through say, “Hey, click here to talk to our demo team.” You could say our sales team. You could say, “Click here to talk to the founder to learn more about how we structure the product and how this works.” Then you split test it a bit, and you start quoting prices that are higher than what you’re currently changing, basically. You see the reaction. You see if folks choke, or you see if folks … 

Usually, what you’ll do is you’ll double your price and someone will say, “Oh, yeah. Great,” and they still sign up. Then you’ll double it again, and maybe get some pushback from a few but you realize, “Oh, I can still close some deals. This is how I think of testing pricing. Notice I haven’t said test price drops. That does happen, it’s just very, very infrequent. Usually if you’re testing, you are trying to test the price elasticity of your space and of the folks who visit your website. Or the folks who are raising their hands and becoming leads for you. It is an inexact science. It just always is. 

So is attribution. When people are clicking through and converting, where did all these leads come from? You can’t attribute 100%. Can you attribute 60 or 70 percent? Yeah, probably. Is that good enough, is that the best you can do? It probably is. It’s the same with any hard decision where you have incomplete information. You do the best that you can. Part of it is some founder gut. You collect what data you can, and you make observations, and then you make a bit of a gut decision about, “Should I continue with this price increase, or is it not working? Have I killed the business?” Not even killed the business, have I slowed the growth? 

It’s not just testing pricing. It could be I’m going to add a credit card before free trial. I’m going to remove the credit card before a free trial. I want to try freemium. I want to discontinue freemium. I want to keep the pricing the same, but I just want to change the structure. I want to change the value metrics. So my tiers are still 50, 100, 200, but maybe I don’t price based on storage, now it’s priced on emails sent, or whatever. There’s a bunch of different things you can do here. 

Before I did these, I would always have a conversation, well A, with myself. But B, with a couple other trusted folks that I had. Is this a co-founder? Is this an advisor? Is this someone in my mastermind? Is it a mentor, if you’re in a program like TinySeed. I would get the best advice that I knew how to get. I would factor that in with my own gut feeling, and then I would test. For me, most of the time, I was dealing with low, medium touch funnel so I could test on the website and we also had a lot of traffic. It allowed me to quickly … I wasn’t split testing, keep in mind. But I knew historically, in any given week, how many new trials we got. And in any given week, how many new conversions we had. I could see, within a week, I was like, “Okay, we’re still on track but our pricing has increased from there.” Or, “We’re ahead of track.” You could get a gauge for it early. It wasn’t definitive, but it made me feel more comfortable with it. 

Testing pricing is hard, it really is. But I would actually say you have an advantage if you are doing high touch, if you’re doing demos, and that allows you to have conversations with people. It allows you, you double the price, you quote it to them and they say, “Wow, that’s out of our budget.” You say, “Oh, what is the budget? What is your budget?” Or, “We can work with you. For example, if you want to pay annually, I can knock 20% off of that.” I’m not saying sell from your heels. I’m not saying you just back off instantly. But when you are increasing prices, there are ways to back off that increase in realtime on a sales call if you realize that you have potentially over-quoted for this particular prospect. 

Thanks for that question, Kat. I hope it was helpful. 

My next topic is about one-time payments, especially folks talking about them on Twitter. It is usually indie hacker founders, who are now doing, I don’t know if they’re following in the Basecamp steps of doing once. They’re doing lifetime deals on SaaS, which doesn’t quite … Who was it, Ahnar and I were talking on this show? It might have been Derrick. Where I said if you collect one-time lifetime payments for a SaaS, but you now need to keep that SaaS running for years, and years, and years, is it a little bit, I don’t want to say Ponzi scheme, I know you’re not doing that intentionally. 

Basically, if you don’t sell additional lifetimes a year from now, you will be paying server costs, hosting costs, whatever, all the other costs, storage costs, whatever else is there. Even maintenance cost, unless you’re doing everything yourself. You are taking that out of one-time earnings that you got 12-months ago. It’s just an odd model. One time software makes sense if you download it and install it, and there is “no maintenance.” I don’t need to do bug fixes, I don’t need to maintain server infrastructure, and all that. That’s one my struggles with it. 

My other struggle is I almost feel like people don’t understand how different one-time revenue is from recurring revenue. Monthly recurring revenue is the golden standard. This is the cheat code of every other business, where they want to get paid monthly on a predictable schedule. SaaS has that cheat code built in by default. You’ve heard me talk about the cheat codes of SaaS being net negative churn and a handful of others. But even annual revenue, when it’s recurring, can be tricky. It can seem … 

I’m going to give you an example. We’ll get folks who apply for TinySeed. You’ll see their revenue over the past six months, we ask for MRR. You’ll see it going up. It’ll be six months ago, it was 1000. Then it was 2000, 3000, 4000, 5000, 6000. We’re like, “Well, this is an interesting early stage business.” For a business to be growing that quickly over that short a period of time, obviously depending on their customer count and all this, they have some product market fit. Someone is wanting to buy this, they’re sticking around. There’s growth, they know how to market. There’s signals there. It’s early, but you see it. Then we’ll get on a call with them and we’ll realize they are collecting annual payments. All those numbers have to be divided by 12. Because it’s actually $6000 of ARR, of annual recurring revenue they collected. Which, divided by 12, is only $500 a month of MRR. 

Really quickly, we can have a $6000 MRR business, that appeared to be that way but wasn’t actually, suddenly become a $500 MRR business. Which frankly, is at the bottom, bottom end of the threshold at which we would even consider funding a company. So it went from this amazing business to oh this is, I won’t say unfundable, but as a general rule, we don’t fund companies with MRR that low. That’s just going from monthly to annual. 

One-time is another order of magnitude removed from this. To where, this is the old days, where I started the first of every month with DotNetInvoice, which was $300 downloadable software. First of every month, $0 in revenue. It was such an uphill battle to grow that business. It was a step one business, there was a bunch of things around it so I’m not trying to extrapolate my experience with that one thing. But once I went to recurring, I swear, I will never go back. Recurring revenue is where it’s at. Whether you’re doing annual … I’m not saying monthly is better than annual or anything like that. 

I really want to caution you against getting caught up in what feels like zigging when everyone else is zagging, but just doing it for the sake of being a contrarian. It feels like this willful belief in something that … As I’m saying annual and recurring, and doing the math, and then saying one-time is just so, so much less valuable than that, there are folks on Twitter in the indie hacker community who are posting these one-time things and acting like it’s a big deal. It’s something, but you’re selling a lifetime whatever for $50. You’re just competing on price at that point. I guess that’s good, to get your brand out there. There are pros and cons to this. But this is not the kind of business you should aspire to. 

If you’re listening to this podcast and you view it as a step in the direction of trying to get your name out, great. Be really aware what you’re getting into if you’re going to be charging lifetime or one-time deals. It’s not a never from me, but it’s a be very, very cautious of how you think about that revenue. As Ruben Gomez says, he did an App Sumo deal. He views those users, he got paid once, and he made I forget what the number is, 33,000 or something from it. App Sumo takes the lion’s share, they take 70 or 80 percent, I believe. He views them as freemium users. He says, “They don’t even think of them as paid users.” That’s how you need to think about it. They are free users that you happened to get a check at one point to maybe help you develop, to maybe help you build. 

I think that’s a much more healthy way to do it. Personally, I can’t imagine ever doing lifetime deals, actually. Then those customers, if you go to try to sell this app, now they are a liability because you have to service them and there is no ongoing revenue. There are some problems with it. It’s not a never do, but it’s a highly discouraged. If a TinySeed company came to me and said they were going to do a lifetime deal, it’s like forking your code base, it’s like translating it into other languages, it’s like launching a second product. I would be pretty hard against it, unless they convinced me that they have thought through all of the ramifications, both positive and negative, and they could convince me why it’s the right choice. 

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My next topic is one from Des Traynor. I saw a tweet from him. He’s the co-founder of Intercom, which I believe is a unicorn company out there with a few billion. He spoke at MicroConf several years back, he’s a good dude. I invited him actually to speak at a recent MicroConf, but he’s busy. He said he has a hard time getting out and about, and speaking at events. But he tweeted, “Having something for everyone gets you acquisition. Having everything for someone gets you retention. Choose wisely.” What an insightful tweet. I respect Des a lot as a product thinker. If you’ve heard any of his conference talks frankly, he’s done talks at YC, he’s done talks at MicroConf. Search him up on YouTube. 

His thinking, for me, it always lines up with a lot of the things I’m thinking, but it takes them to the next level. He says things that, once he says them, I’m like, “Oh my gosh, that’s brilliant. Oh my gosh, that’s obvious.” But it wasn’t obvious before he said it. That’s the best type of philosophy or thinking that I like, which is something that makes me realize something new, it educates me, but it feels very also intuitive at the same time. 

I love this idea. “Having something for everyone gets you acquisition. Having everything for someone gets you retention.” And, “Choose wisely,” he’s implying you have to choose between those. Because in a perfect world, wouldn’t we have a bunch of stuff for everyone so that we could acquire new customers? And then, we could have everything for just one or two of those ICPs. But what he’s saying is then you lose the others, they all churn out. This is in line with that thinking. That really, even if you’re a horizontal product, you still have to make some difficult decisions about who your someones are going to be. Who are you going to have everything for? Because even if you have a horizontal product, there are going to be different use cases, and you are going to have to make hard decisions with incomplete information, as the founder or as the product leader, about what to build and what to say no to. 

This is where realizing who your ideal customers are, who are your best customers, who are the ones who are least price sensitive, who are the ones that get the most value out of your product that churn that least. That are, I don’t know, the best to work with, and that just love it, and stick around. And they tell their friends. They do all these things that help push the business forward. Those are the folks that you try to build everything for. It can often to be hard to find those people, or to know what their commonalities are. 

It might be as simple for you as it was when I built my last startup, Drip. Originally I was like, “Well it’s going to be SaaS founders, and bloggers are using it, and WordPress plugin developers.” There might have been one other, but I think those were the first three. What I realized quickly was WordPress plugin developers were not actually a great audience for it. There’s a bunch of reasons for it. But it became obvious that really, SaaS founders, because there wasn’t a great ESP for SaaS at the time, and then bloggers because they were trying to move automations, move up from MailChimp or move down from Infusionsoft. Then what we realized is we actually were naturally, organically acquiring ecommerce customers. 15% of our customer base was eComm and we had never marketed to eComm. 

It was surprising to me when we found that out. I didn’t know. We had a few thousand customers. We had a virtual assistant. This is before AI, I’d have AI do this now. But we had a virtual assistant go through and categorize a big sampling of them. It turns out that it was surprising to me that so many eComm folks were using it. There was later a pivot to focus on eComm after I left, or as I was transitioning out. Now, it’s been a pivot back to where it’s more of a general email marketing tool and not going specifically after eComm. But those realizations … Drip is a horizontal play. It is an ESP. It could be used by anyone. We had realtors using it. We had folks building custom, bespoke tailor in London. We had podcasters, we had all this stuff. We had internet marketers, info marketers, course makers, all this stuff. That was actually the third, I was grouping bloggers with course folks. I think today they’re called makers or creators, but that term wasn’t really around back then. 

What that made us realize though, is I could bucket the feature requests into, “Oh, they’re SaaS, so they’re going to want this. I want to build some stuff for SaaS.” We did realize that SaaS wanted to go down a path that was really complicated. At a certain point, we backed of it, I’ll say. Folks like Customer.io and Userlist have done a much better job of catering to SaaS. But the bloggers, the course creators and eComm were folks that we were taking comments, thoughts, and really trying to serve. 

Now what we also realized was that bloggers were high churn. Bloggers really hopped around. They would quickly switch. Or they would stop blogging, that’s what we saw a lot. They were very price sensitive, actually. It became this interesting balance of you can have a few ICPs, especially if you have a larger team. But you can’t have 20. You would need separate products if you were going to do that. You would need a lot of folks working. Can you imagine, one code base that catered towards 20 different ideal customer profiles? It’d be a mess. 

That’s what I like about what Des is saying here. It’s, “Having something for everyone gets you acquisition. Having everything for someone gets you retention.” That idea of having everything for one ICP in the early days, and then two, and then three. Maybe you never even get to three, maybe you do only have a specific vertical where you’re targeting HR representatives that work for construction firms, for example. And that is your vertical, then maybe you really do have one ICP. That makes it even easier. Then you build everything for that someone. At a certain point, you tap out your total reachable market. Then, you get to decide do I build a second product for this same ICP? Or do I expand into an adjacent vertical? Do I move to be more horizontal? Do I raise prices? Whatever else, you figure out how to get past that plateau. 

But having something for everyone, a little bit for everyone, it can get people in the door. But does it create the longterm retention, and net negative churn, and expansion revenue, loyal customers, retention, all that? It’s hard to do that. You have to build a product that your ideal customers love and need, and solves a desperate pain point. Desperate enough that they are willing to stick around through the ups and the downs. It’s easier said than done. But that’s why I liked Des’ relatively succinct yet elegant statement of choosing wisely, which you focus on. 

The last topic is on recommending things to other people. This is a person-to-person recommendation thing I’m thinking about. As an example, when I recommend a biography to someone I will say, “Even if you don’t know this person or know their story, it’s a really good story.” This is Phil Knight with Shoe Dog. I don’t really care about the advent of Nike and the start of the company. In fact, I didn’t even wear Nikes when I was a runner, I love ASICS. The idea of Nike was just, “Okay, is this going to be interesting?” It is so well written. If you’re listening to this and you haven’t read or listened to Shoe Dog, I recommend it. It’s an incredible story. One of the best parts is that it ends right at the startup story because it ends, I believe, right before they go public. It’s like once they go public, I don’t really care. I don’t want to hear the trials and tribulations of being a big company, it’s not something that interests me. That’s one of those books where I’m pretty opinionated. Even if you don’t know the person, it’s good. 

Versus the Sid Meier autobiography. If you don’t know who Sid Meier is, you don’t know the games he made, it’s fine. But it’s really cool if you know Civilization. His book is called Sid Meier: A Memoir, or something like that. If you know some of the games he created and you hear him, the touchpoints are really interesting. 

Another one is Masters of Doom, which is the story of id Software, that made Doom, and Quake, and Wolfenstein 3D. I never played any of those games, didn’t really care about them. Even if you haven’t, it’s incredible. It’s one of my favorite audiobooks of all time. Then there are others where, again, you need to know the person in order to be super interested in it. I actually felt like John Romero, who is one of the id Software guys, has a book. It’s an autobiography called Doom Guy. That one was similar where it’s like, “This is cool.” But if you don’t know him or don’t know the story, I think it’s less interesting, so you have to weigh that. 

The reason I’m bringing this up is I think this is a helpful mindset or a helpful framework to think about why you’re recommending someone and letting someone know that. It’s like having strong tastes about particular elements of it. Because I get recommended, I’ll ask on Twitter or I will just get recommended stuff. I’m often like, “What did you like about it?” Because I want to figure out if our tastes are in line enough that it’s worth my time. It’s not the cost. Buying a book, whether it’s on Audible, or on Kindle, or in dead tree version, the cost is irrelevant for me. It is the time it’s going to take me to get into it and evaluate it. I dig in pretty deep on recommendations. 

I’ve had a lot of recommendations. Like I will ask specifically, “Hey, I’m looking for a book that goes deep on SaaS or startup marketing approaches.” I’ll say tactics, specifically marketing tactics, “I want to know a good one to recommend to people.” People will just recommend just crazy random (beep) like, “Shoe Dog by Phil Knight.” I’m like that’s not startup marketing, what are you talking about? Or someone recommended The Lean Startup. Its talks almost nothing about marketing. There’s nothing about marketing tactics in there. It’s this fundamental misunderstand of what the question asker … it’s like they see a keyword, maybe it was an AI answer. I don’t know, man. It’s like they see a keyword that says startup and the AI writes something. But you didn’t think it through, so usually I have a followup question of if I didn’t know any better, I wouldn’t know those were not good suggestions for what I was looking for. 

That’s why, if I’m going to recommend something to anyone, to a friend or to a startup founder, I will tell them, “I recommend you read this book and here is specifically why.” In fact, I recommended Chet Holmes Ultimate Sales Machine today. What I said is, “I think the book is 20 years old, so it’s a little dated. I also think there’s about a third of it that you don’t need to read, and there’s a third of it that is really focused on the Dream 100 customers. I think that’s what you really need. Then there’s a third that’s about business operations, and you can read that if you want to. But really, the reason I’m recommending it to you is because this whole concept around sales and how we does sales. Even though it’s outdated today, you’ll get the idea and you can adapt it.” 

That recommendation is so much more helpful than me saying, “You should read this book.” Not only does it tell you why, it puts guardrails around which part should you really focus on. “If you really like it, read the whole thing, but in the interest of your time being valuable, you can probably just read the part about the Dream 100.” It allows them to think internally, “Oh, this is why I should or shouldn’t read this.” And it allows them to think, “Maybe I shouldn’t.” Maybe the recommendation is off and I get to make that decision. I think being pretty descriptive when you make recommendations is certainly something that I’m doing and I hope it’s something that you will consider doing as well. 

That’s it for today’s episode. Thank you so much for joining me this week and every week. I’ll be back in your ears again, one week from now. Same time, same place. This is Rob Walling, signing off from episode 719.

Rob Walling:
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Welcome back to Startups with the Rest of Us. I’m your host, Rob Walling. In this episode, I sit down with Derrick Reimer, and we tackle I think it’s like six or seven, maybe even eight questions that were submitted on Twitter. When I let folks know Derrick and I were going to be having a conversation, got some really interesting questions from listeners just like yourself, questions about how Derrick validated or whether he validated his idea for SavvyCal, the most painful feature he’s built for SavvyCal, how his redesign worked out, what it’s like to have an opensource competitor raise a bunch of money and compete with him, and the key question you’re all wondering, is Derek looking to get on a regular weekly podcast again at some point in the future? Stick around to the end to find the answer to that, and with that, let’s dive into my conversation with Derrick. 

Derrick Reimer, it’s great to have you back on the show.  

Derrick Reimer:
Always a pleasure to be on the mics with you.  

Rob Walling:
Little do people know you are founder of SavvyCal and an author of the upcoming book, I’m Obsessed with Kerning.  

Derrick Reimer:
That’s a good one.  

Rob Walling:
The reason few people know that is because you’re not working on the book, but you are in fact obsessed with kerning. I had never heard the word kerning before I met you.  

Derrick Reimer:
Really? Yeah. I’ve always had a thing for fonts. I don’t know why. That was one of my childhood obsessions with my computer was exploring the world of fonts. Maybe in another life I could be a font designer.  

Rob Walling:
Yeah. Oh, I could see it in this life.  

Derrick Reimer:
Yeah, I probably could, not this season.  

Rob Walling:
After you exit SavvyCal for 50 million, you’re just on the beach designing fonts. I feel like you might’ve been called a nerd when you were younger, huh?  

Derrick Reimer:
Maybe a few times, yeah.  

Rob Walling:
Few times? When you were obsessing about fonts? That’s great.  

Derrick Reimer:
Fonts, accounting software.  

Rob Walling:
Oh, yeah, doing things in Photoshop that may or may not have a statute of limitations on them, meaning trying to replicate currency.  

Derrick Reimer:
Yup. There was that.  

Rob Walling:
We won’t talk about that. It was a hypothetical. So I was going to have you on the show and I had three or four topics I thought we could cover, and I was like, “You know, I might want one or two more.” So I go to Twitter. I mentioned that you’re coming on the show and just inundated in the best way with really good questions, topics, suggestions from a swath of people. So that’s what we’re going to do. We booted all my topics. Those will go into some other, I don’t know, maybe I’ll talk about them in the future. Maybe we’ll do them next time or whatever, but I want to dive right in. 

It won’t be a lightning round per se, but we probably do have, what, 8, 10, 12 things, not necessarily topics, questions to dive through. So our first one is from KP on Twitter, and we just met KP MicroConf in Atlanta. He is the host of the Build in Public Podcast, and his question for you is, “What’s the most painful feature that you’ve built for SavvyCal, pain as in which took longer and felt harder than you imagined?”  

Derrick Reimer:
I think we actually just built this feature, and it launched this past month called Group Scheduling Mode. So this is a feature that allows you to basically specify a link that allows multiple people to book the same time slot. So think of a webinar or a group coaching call, and it seems simple on the surface because it’s just a setting like what’s the maximum number of people you want to allow to book this, but under the covers, it basically touches almost every part of the scheduling infrastructure because we have so many places where we assume that only one person can be on a calendar event at a time booked through SavvyCal, I guess. Obviously, you can have calendar events with multiple people on them, but generally, the product assumed that when a booking occurs through SavvyCal, once that booking is in place, that time slot is blocked and not available for others to hop onto. 

So adding this meant, okay, so someone can book a time slot, and then if another person picks that and it hasn’t reached the limit yet, then they basically hop onto the calendar event, which is kind of a separate action. We need to notify in a different way about that. Then if that person decides to reschedule, well, now we need to remove them from that event and spin up a new event if it doesn’t exist already, but if they reschedule from an existing time slot to another time slot that already has a person attending, then we’re doing this lateral translation move of moving this attendee from one existing event to another. 

So you can see all the permutations that this takes. Ultimately, I feel like we’re in a better place. We had to refactor a bunch of the guts of the scheduling infrastructure to kind of pass around, change events, I guess you could say like one type of change is when an event is scheduled, another is when an attendee is added or an attendee rescheduled. So we kind of formalized the underlying infrastructure for this, which will set us up for being able to build integrations easier. So I’m happy that a lot of the work is not just for this feature, but, boy, it ended up a lot gnarlier than we anticipated at the outset.  

Rob Walling:
So when you quoted your manager an estimate of two days to complete it, how quickly did you realize, “Uh-oh, this is going to be a problem”?  

Derrick Reimer:
Yeah.  

Rob Walling:
I ran into a few of those, the iceberg problem of getting in and discovering. That’s the beauty, honestly. So I used to be a consultant. I was a contractor, and we would give estimates, and it’s like, “We bill 150 bucks an hour. I think it’s going to take probably 16 hours,” I might say or however many, and it’s like, “All right.” So the client’s like, “All right, 16 hours.” Sometimes you get six hours into that 16 hours and you realize, “Oh, no, this is an 80-hour project,” and you have to go back to them and say, “Look, we either don’t do this and we just lose the six or we move forward,” and it got even worse on big projects when you’re like, “Oh,” you estimate all these webpages or whatever, and you estimate 400, 500, 600 hours, and then you get in and you realize, “I was off by 10, 20%.” 

So that’s the beauty of being an entrepreneur is that you’re able to make that call and you could have just pulled the plug. You could have gotten three days in and been like, “You know what? This is not worth it,” and just killed it, but I’m guessing you did that calculus and you were like, “No, it’s worth doing,” for all the reasons you just said and you kept moving forward.  

Derrick Reimer:
Yeah, there were definitely a few points where, because I never want to fall victim to the sunk cost fallacy if at all possible, so even a month in stepping back, and Taylor and I are talking about this daily as the project is going on and we’re talking about different snags and roadblocks that we’re running into and things that we know are going to expand the scope, and we would kind of regularly check in like, “Is this still worth it? Do we still want to do this?” I think it was only because we could see the follow-on benefits and the way that it makes the infrastructure better not just for this feature that kept us going because otherwise may have just pulled the plug and said, “Sorry, you can’t do that kind of thing with SavvyCal,” which sometimes you have to make those kinds of hard calls, but in this case, this one’s been requested basically from day one, and we have a huge long list of people who wanted it. So it was kind of like, “Yeah, if at all possible, we should probably add this.”  

Rob Walling:
Are there any other calendaring apps, scheduling links that do that? Because it seems like that would be not for mere mortals.  

Derrick Reimer:
Yeah. I was actually kind of surprised. Calendly does it, and it’s implemented similarly, I think. As part of our research on what might users be expecting, we took a hard look at how Calendly’s handling some of these changes and what happens when the last person on a group event reschedules, does the event just disappear? So we learned about and saw that all the edge cases they had to think through, we kind of teased them out in our testing and we’re able to get a good sense for, “Okay. I think they had to solve a lot of these heart problems too. We’re not just complicating this thing,” but as far as the others, I’m not sure. I think, yeah, definitely anyone else who has it had to go through a lot of pain.  

Rob Walling:
So thanks for that question, KP. Next question comes from Mark Gadala Maria, and he asks, “At what point would you think it’s time to give up on a SaaS idea and move on?” You and I have both each killed SaaS ideas. We’ve started things that we didn’t see through. We’ve started things that we did see through. So why don’t you weigh in first with your criteria of when it is you throw in the towel?  

Derrick Reimer:
Yeah. I mean, it’s a hard question because it’s so dependent on so many factors. Part of it is, how much energy do you have for something to keep working on it? Are you a Matt Wensing type where you’re kind of relentless and you keep pivoting and working off the same core but trying to find the right market? I have a lot of respect for entrepreneurs who have the grit to do that and the resources and the capability and all that, but these days, I try to think about the reasons why I would bail on an idea. So if there’s not enough demand or people just don’t seem to be problem aware or if I find there’s not really willingness to pay or maybe there’s some huge platform risk things or external factors like that or I can’t seem to find viable distribution channels, these are all reasons that would cause me to really pause and reevaluate. 

So I kind of think then in reverse like, “How can I get confidence that these things aren’t true as early as possible?” So generally, if the answer is I don’t know, then I would try to think through how to get an answer to those. You’re not going to know with 100% certainty in most cases. You can’t talk to the entire market unless you have a market of three people or something, but try to gain some degree of confidence on knowing that there actually is demand and that people are aware of the problem and they’re searching for it and they’re willing to pay and all those things.  

Rob Walling:
What you’re saying is that could be summarized as validation. You could say, “Oh, we bucket that all into validation.” I hear some people say, “Oh, yeah, validation doesn’t work,” or, “Oh, validation doesn’t work the way it used to,” or, “I don’t believe in validation,” or whatever. It’s like it does exist. It’s a thing. It’s not 100%, but what you’re saying is it’s learning, it’s research, it’s conversations. It’s like if I came up with a brand new idea and I told it to you and five other people, I would at least get some feedback, positive or negative, and then I would want to dig in and, as you said, look at search query, volley. 

There’s a bunch of stuff. We don’t have to go into what validation is, but I still today believe there’s no formula for validation. There’s no like, “Oh, do this,” and then you’re 20%, and then if you get 10 yeses, then you’re 50. It’s like there’s no exact number, but there’s this directional correctness in this founder gut. It’s incomplete information, and that’s you have to make a hard decision is, “Do I keep going?” but I’m totally on board with that.  

Derrick Reimer:
So with Level, which I think a lot of folks probably have heard me talk about this, wrote a blog post about it back in 2018 when I shut down that startup attempt, and that one I found contrary to what I expected or I just didn’t anticipate this, that the people who were most excited about it and were giving me all the positive signals were sort of downstream users of the product, and they weren’t the actual people responsible for buying it. So a lot of makers in an organization really disliked Slack and wanted something that was calmer, but the people who were charged with buying it were more of in the manager tier of the company, and they loved it. They loved the ability to ping an engineer anytime and get an answer quickly. 

So there was a disconnect on recognizing the actual core problem that I was trying to solve, and it was going to require more of a cultural shift for a lot of the people that I thought would be good customers for their organizations to actually buy into the premise was a whole different animal. To me, it just deemed too difficult, too risky. I’ve since watched others try to run a similar playbook and grow really, really slowly because there’s just so much headwind there. So that was just one anecdote from my experience.  

Rob Walling:
Look, it could be a matter of if you’d raised half a million dollars and spent years more working on it, maybe eventually it would work. You have to make the calculus at some point. You don’t know. The timing, I think of Slack being unseated, is probably coming. I think more and more people I’m hearing really don’t like it. I don’t know if that’s still a real thing though. If you built Level today, would you get any more at traction? I don’t know. You got to make the decision and move on. 

I say a lot that funded companies go out of business or fail when they run out of money, and bootstrap companies fail when the founder runs out of motivation. So that’s usually how I think about it is when I’m … To summarize it colloquially, it’s like when I run out of ideas, when I have no more ideas or no motivation to keep going, and when I say, I mean I would come to you, I would go to Ruben, I would go to Einar, I’d go to all Craig Hewitt, I’d go to all the smart people I know if today I was trying to grow something and it wasn’t growing, and I’d say, “Here’s the situation. What’s your thinking? What should I try?” Someone might be like, “Oh, you know what? I saw this other product do this thing,” and if you had an API layer, whatever, there might be ideas. 

As long as there were ideas on the table that I thought were viable much like back in the days of DripWord, it’s like, “We’re not growing, man. We are plateaued,” but ideas kept coming in of like, “Ooh, you could build automations. Oh, you could build a shopping cart, you could build affiliate management.” There’s all these ideas and we just had to figure out which one or ones do you pick. So I think that’s probably my thing. 

Now, the hard part is if you’re young or you’re new to all of this, you don’t have many ideas. So do you just quit? Do you just launch and then quit because you have no ideas? No, I think you get better at coming up with ideas. You learn from folks that are ahead of you. You learn from this podcast and the guests on this podcast like yourself, and you read the books in our space. There’s a lot of them, whatever it is, podcasts, there’s YouTube, however you’re going to learn about this so that you start to get a sense of, “What would Derrick Reimer do in this situation? How could I channel Derrick Reimer?” Maybe I train an AI bot on all of your podcast episodes and try to talk to it. I know a bunch of people that have done that with Startups for the Rest of Us. 

I actually think that’s an interesting idea of just come up with thoughts and ideas and then figure out, “Are these viable do and do I want to do them?” because at a certain point, you have viable ideas in front of you and you’re like, “I’m so (beep) tired of working on this. I just don’t have the motivation,” and at that point, you get to then take a beat because you don’t want to make an impulsive decision and shut it down overnight, but you get to take a beat and whether a beat is a day, a week, a month and take a breath and say, “Am I getting used to the idea of not working on this anymore?” and kind of let that sink in. So that’s probably my … I feel like I read a whole book chapter on this, but that’s as about as succinct as I can get it to when I give up on something or shut down an effort.  

Derrick Reimer:
I’m seeing more and more people kind of pulling the line of nobody really knows what they’re doing, this is all kind of luck anyways, so you just launch a bunch of stuff, right?  

Rob Walling:
It kills me. Absolutely.  

Derrick Reimer:
I guess that is a way you could do it. So you could start something and then not really pursue a bunch of ideas on how to actually grow it and then just kind of let it sit and wait and see if something hits randomly, but I think the whole-  

Rob Walling:
The roulette, the roulette approach, the lottery ticket approach to building a bootstrap startup, right?  

Derrick Reimer:
Right, and I think there always is a certain amount of timing and luck that has to get woven in as you’re systematically trying to get traction for something like we’re not 100% responsible for all of our traction. There’s always going to be a little bit of the timing, and honestly, hopefully it correlates with you identifying a problem that maybe the market needs. So you intuited that there was an opportunity here, which increases your odds of getting lucky, I guess, with the timing. 

I would say for me, I’ve always been of the mind that if I’m going to work on something, I want to really focus on it and give it the best shot at succeeding, and if that’s not happening, I think it’s really hard to set a SaaS on the side and just wait for it to take off because SaaSes are not really, you can’t autopilot a SaaS. I haven’t really seen it happen with much success. 

So for me, it just is not worth the effort of trying to keep something running on the back burner, but not really investing effort into it. So if I was up against that, do I put this on the side and wait for it to magically start growing or do I just throw my effort behind something else, I would be more apt to just throw my effort behind something else.  

Rob Walling:
Yeah, I think that’s a good summary of it. This is always hard, especially when it’s a gut feel and you’re going to have to ask yourself questions, and it’s different for different people, but I think knowing yourself is another part of it of, “Do I give up on things too early? Do I not push on them? Then I should probably stick with this for longer, but am I the person that stays with the same idea for six years when it still has four customers?” Well, then you should probably not do that again. There’s also that kind of personality factor. So appreciate the question. 

Next question comes from Kartik Manjunath, and he asks, “How do you find customers in a crowded market when SavvyCal is competing against the likes of Calendly?” That’s not only a crowded market, but it’s like there is a 900-pound gorilla as well. Not all crowded markets have a 900-pound gorilla, and not all 900-pound gorilla markets are crowded. Sometimes there’s one big player and there aren’t too much competition, but you are in one of those spaces that has both. So how does one get customers, Mr. Reimer?  

Derrick Reimer:
As I was thinking about this question, I was trying to figure out if it’s really much different in a “crowded market” than a not crowded market because, I mean, fundamentally, it’s the same. You got to show up in front of prospects who have some purchase intent, some demand, and then you have to present them with positioning and a message that resonates with what they care about. So when I think about how SavvyCal, how we position ourselves against Calendly, I mean, obviously, it would be very tough to just copy their H1 and lead with the exact same messaging. That’s a recipe for failure right there. 

So I think it’s figuring out how to really authentically identify some traits or some qualities about what you’re offering that is meaningfully different. Then I think it’s a lot of blocking and tackling on trying to run the playbooks so that you do show up in the places where people are looking for things. So that’s trying to get listed in the Listicles, where if someone searches scheduling software and they see a bunch of articles that are showing top 10 lists, can you get in those articles? Can you get in the Zapier blog when they’re talking about automating scheduling? There’s a bunch of these things that take time and effort and varying degrees of success, but basically trying to get in the conversation as much as possible is how I think about it. 

I think for SavvyCal too, there are some things that are to our advantage like the inherent virality of the product is a helpful dynamic for SavvyCal, and it’s not necessarily there for other products. So every time someone uses it, they’re exposing our brand to the person on the other side, which I think is a pretty big lever. It’s admittedly pretty difficult for us to measure because I think a lot of times there’s kind of initial touch and then maybe they book multiple times and it gets them thinking, and then whenever they’re ready to purchase scheduling tool, now SavvyCal is sort of in their mind because they’ve already been on the other side of it. 

So it’s kind of hard to track through the whole chain of touchpoints to attribute to virality, but I definitely know in qualitatively asking customers when they sign up, “How did you hear about us?” a lot of people talk about, “I used such-and-such as link.” So there’s things like that that just help drive that exposure, but, yeah, I mean, crowded markets, it is tough. Like If I search scheduling software in Google, I mean, there’s hundreds and hundreds and hundreds of tools. So you can’t just rely on those head keywords and trying to rank them. You got to get a little craftier, I guess.  

Rob Walling:
When I think about it super simply, if someone were to say one sentence how do you do it because it’s way more than a sentence, but one sentence, I piggyback on what you said, which is you have to figure out how to be differentiated and/or you want to find what I’ll call proprietary or owned traffic channels. I can’t figure out the exact word for this, but I think of Rubin with Seinwell, where dude is really good at SEO like to an extreme. If you enter any space and you can rank for those head terms, you can get a lot of traffic. Rubin also differentiated Seinwell, like he has features that all his competitors don’t. 

One or the other though can get you customers. You could actually have kind of a clone of the big player. If you had massive, let’s say you got 50,000, 100,000 uniques a month and you were top three in Google, you would grow, not as fast as if you were also differentiated. That’s why I said and and or. I try to do both, but you can’t always do both. 

To quote from page 51 of the SaaS Playbook, “How can I compete in a competitive market? A mature competitive market can be a total bloodbath, but it can also be a fantastic place to grow your business once you get a foothold.” Then I go through. Here are different ways to get a foothold. So one, compete on price, and I say competing on price is tricky, but you can get traction if you offer more than 80% of the product for half the cost. You get it. It’s not exact numbers, but it’s there. I go through five paragraphs of that, compete on sales model. 

So oftentimes, incumbents in competitive markets have high touch sales process where customers may schedule a demo and mandatory setup fees, and it’s just a big pain in the ass. I don’t put that in the book, but I’m ad libing here. So you can go in and do a self server, a lower server, a one call closer or whatever. Compete on product, that’s a little bit what you and I are talking about or trying to differentiate. 

Now, later in the book I talk about features are temporary moats because people replicate your features, which I think you’ve experienced to a large extent. Then I have how to market against large competitors, how much should I worry about them. I talk about building moats and different types. 

Anyways, there’s enough content. I’m not trying to plug the book, but there’s a reason I put that in there because it is really important. This is not a 10-minute podcast answer. This is a big answer of it’s a lot of things to compete in a competitive market, but if you can do it, it’s a superpower because competitive markets usually are large and that’s why they have competition, and so you can grow faster. Usually, I would say competitive markets are often growing quickly. That’s why everyone’s launching in them. So thanks for that question. 

Next question is from Aboma Kelly, and they ask, “Question for Derrick. Do you have any plans or desire to start podcasting again on a regular basis or are you officially retired?”  

Derrick Reimer:
Officially retired.  

Rob Walling:
That is like that, huh? Do you want to tell them our little secret of how we specifically had this conversation?  

Derrick Reimer:
Yeah. We talked about this over cocktails a couple months ago, I think. I’m really enjoying doing episodes just like this one on this podcast. So for those who don’t know, I used to do one of those kind of check-in on what you’re working on every week type of podcast. It was called The Art of Product. Me and Ben Orenstein from Tuple did that for, gosh, five, six years. It was both a lot of fun, helped me build a small audience and a little community, but also, it was a ton of work. It was taxing on me. I think for Ben, it was an easier thing. So I think it kind of depends on your personality, but for me, it was like I always felt this pressure to have something smart to say and summarize, well, my learnings from the last week, and I just found it was kind of ended up being a little bit of an energy drain. 

So I think while I hear from a lot of folks that they miss The Art of Product and they really enjoyed the content, in that regard, I wish I had the energy and the ability to keep that cadence going, but I don’t know, I think I’m done with that sort of podcasting, but I really love showing up here and answering listener questions and just talking about stuff.  

Rob Walling:
Yeah, and that was, as you said, we were having cocktails and I said, “Well, do you just want to come on every, I don’t know, six, eight weeks to the show, just I leave it as a standing invite, you ping me whenever, it’s not a recurring calendar invite, but just come on quite a bit as a guest?” and you were like, “Yeah, why not? Let’s try it.” So we haven’t told anybody until now, but that’s the idea of getting you back on the show, and they’re so easy. These are easy recordings. We always have topics. Even if I hadn’t tweeted today, we would fill 35 40 minutes of good content. 

So I think of it less as retiring and more of moving to that next stage, that next phase like when someone has a big exit, they often become, what, an investor or some other thing, and you are like, “You know what? I had a big exit from Art of Product and now I’m investing in the rest of the community.” The braid metaphor broke down around there. 

Anyways, thanks a lot for that question. Hope it was helpful. TinySeed’s own Einar Vollset asks, “How did it feel to get an open source competitor entering the market with $40 million in funding and that would have developers work for free to rip off,” his words, “rip off every innovative feature that you added?”  

Derrick Reimer:
Oh, Einar, good question.  

Rob Walling:
I love the wording of it. It’s like I feel great. It feels amazing.  

Derrick Reimer:
By the way, those are Einar’s words, not mine. Yeah, no, but honestly, on this topic, I guess in general, I would say these kinds of things like having competitors that are quite active in the market and obviously looking around at the stuff that other people are building, and that includes us as a participant in the market, it really does help you to more quickly understand what your actual differentiators are. I think you point this out in the SaaS Playbook about how features are not moats because there’s not really intellectual property protection in that way for what we’re doing in the software space. Anyone can look at an interface and say, “I like that. Let’s build that.” There’s no recourse. There’s nothing proprietary, so to speak, in that. 

So I think when you’re seeing some of your key interfaces showing up in other places, it’s disheartening at first, but also, it just makes you realize, “Ultimately, I can make my business stronger by not trying to rely so much on things that are ultimately not defensible.” So I think that’s what we’ve been, with this latest brand refresh that we did, we’re trying to really sharpen our positioning a bit to really speak to the people who come across us in the market as they’re searching around for tools like, “Why do they choose us? Why do they like SavvyCal?” 

We had a lot of conversations with people about this and mined through different survey data that we’ve run over the years and just workshopped it a bit and tried to get a sense for this. I think it’s like people like SavvyCal because we’re small and nimble, because they trust us to listen to customers. We started out in response to Calendly not really changing much over the years, and there were many, many forums where people were asking for stuff and they just sort of felt like they weren’t being listened to. 

So we showed up as like, “Hey, we’re a scrappy upstart looking to talk to customers and figure out how to build the best tool possible. We’re going to sweat the details.” So these are all things that we’re trying to call out. I think a company that’s riding on a huge batch of venture capital and trying to grow as quickly as possible probably doesn’t care about the same details. 

So I think we can call out some of that stuff. It’s a little fuzzier than saying, “We have this feature and they don’t have this feature,” but ultimately, features are all, I don’t know, yeah, it’s not super defensible. So I guess that’s how we think about it, and ultimately, I think it does help us be a stronger company.  

Rob Walling:
All right. We have four more questions to get through. Two are from Greg Deneo. His first question is, “How is Derrick’s redesign working out, the SavvyCal redesign?” So for folks who don’t know, you redesigned the home page inside the app as well. It’s a pretty significant one, right?  

Derrick Reimer:
Yeah, not much in the app, although we did at the same time release a refreshed link editor, the core-  

Rob Walling:
That’s what it was.  

Derrick Reimer:
Yeah, the core editing interface in the app with a bunch of UX improvements and a refreshed marketing site, refreshed logo. It’s been really well-received.  

Rob Walling:
Did you change your H1 as well?  

Derrick Reimer:
Yup. H1 changed a bit.  

Rob Walling:
You changed some copy?  

Derrick Reimer:
Yeah. Most of the copy on the home page is different. Added a features page, so one place to kind of summarize key features, and then we’re gradually porting over the other pages to match the design aesthetic, but, yeah, it’s been really well received. I mean, people have recognized the effort that we put into it to try to … We didn’t want it to feel like your typical startup, safe, corporate startup, blue and white landing page. We wanted it to feel organic, and we wanted the design to communicate similar values that we were saying in our words. I feel like we nailed it. I think, yeah, it’s been well-received. We’ve had our best sales month this last month that we’ve had in a long time, so yeah.  

Rob Walling:
Do you attribute that at least partially to the new look?  

Derrick Reimer:
I mean, I think we made a lot of noise when launching the brand refresh and sent some emails to the list. So it’s hard to say that it’s attributable directly to the refresh design, but it was nice to have an excuse to go out and ship a bunch of stuff. We shipped that group scheduling feature and the refresh link editor and the brand refresh. So hopefully that that’s just another indicator that there’s energy and momentum behind the company, which I think helps with marketing effort.  

Rob Walling:
Neat, and I mean even the home page. So I don’t see the home page because when I go to savvycal.com, I’m logged in, so I never … I know I can log out.  

Derrick Reimer:
Oh, yeah, you can go to slash home.  

Rob Walling:
Yeah, and I went incognito to look at it now, but just as a rule, when I go to SavvyCal, I never see the home page because it has me logged in, but I did see you announced it on Twitter and then I checked it out. I mean, the green, the fonts, the kerning, all the things that you care the most about, I mean, it looks great. It looks really, really solid. So yeah, I think you should be happy with it. 

Greg’s other question is, “Was there ever a consideration for launching SavvyCal as a vertical SaaS?” I will actually add to this, launching or narrowing focus at any time. He says, “For example, a calendar scheduling link for salespeople, for lawyers, for insert any customer segment that you enjoy working with.”  

Derrick Reimer:
Yup, that’s a good question. So I mean, initially, the thinking was to be horizontally positioned and pick up on signals on who’s getting the most value out of this and potentially refined positioning or narrow things a bit. To date, I mean, we have a very diverse set of customers, which is both good and bad. It’s good in that we’re hitting the mark on being a general purpose tool for a lot of different people, but the challenge is we have to try to identify the commonalities between them and figure out like, “Should we go after one specific set or should we keep speaking to the same messaging that resonated with this diverse set of customers?” 

I think we’ve experimented with things here and there, but haven’t gone as far as fully updating the H1 on the home page to speak to a specific vertical. I mean, I think in order to do that, I would want to have a strong enough hypothesis that basically, that I’d be willing to exclude some of the people that maybe otherwise would’ve signed up like if they saw that this is for sales teams on the H1, someone who’s not doing sales probably would choose not to sign up versus if we did. 

So I see that as the more mature the business gets, the riskier it feels to make that kind of shift, but I think in smaller ways, we experimented with like for a couple of months we’ll spend some time building features for sales teams and we’ll work on some things, some efforts to try to see, gauge how it’s resonating aside from fully shifting the positioning on the homepage, if that makes sense.  

Rob Walling:
You have to be pretty certain of that to make such a strategic shift, I think. So it’s one of those I would need to sit with for a very long time. I mean, I can bring up a bunch of examples, it doesn’t really matter, but any big strategic shift like that, I need probably months of mulling it over and saying it out loud internally and saying, “I think this is where we need to go. What do you think?” and then I sleep on it for a week and then I come back to it and I try it on again. It’s one of those things of like, “Does this really feel right?” Oftentimes, I can’t remember. It’s been very few times where I’ve made a decision of that magnitude quickly and without some pretty strong … I need some strong conviction that it’s the right call. Sometimes if you don’t have that, it’s tough. It’s tough to think about doing it.  

Derrick Reimer:
The hypothesis around that niche down needs to be as strong or stronger than the one that’s currently working for the business. It has to overcome that, I think for me.  

Rob Walling:
Yup, and I think there’s also has to be a bit of excitement, your internal excitement of like, “Oh, I’m really excited to work on this and I really want to dive deep into this.” So thanks for those questions, Greg. 

Last two questions from Chris Livdahl. He asks, “How did you land on the idea for SavvyCal among others that you decided to pursue, and did you validate the idea before launching it, and if so, how did you validate it?”  

Derrick Reimer:
So I made couple of bullet points here. I’m trying to capture what my initial thinking was because it’s funny how it does shift over time, but I could think back to what was I thinking back in 2020 when I was just starting to pursue this. So the thinking was Calendly doesn’t seem to be innovating much these days. They’ve been kind of the household name, so to speak, for this type of product, but the product hasn’t really shifted that much and it doesn’t seem like they’re really listening to customers that closely. For me, it was big that it would be a relatively quick to get an MVP to market, to build a basic scheduling functionality. So I felt confident that I could start to test this with an actual product in hand pretty quickly. 

It’s a product that has the virality built in, so that was a big selling point for me too. A lot of my existing audience uses scheduling tools. I think about this as this is like kindling for the fire. I can’t rely on personal audience to sustain the entire business, but it’s enough to get maybe a kernel of customers that are really excited about it and willing to start using it and spreading the SavvyCal name and talking about it to their friends and helping get the wheels moving on this thing. So that was an important thing for me. Since I had a small existing audience, I wanted to leverage that. 

Then there was this hook that I picked up on. It was the power dynamic issue. So I feel like every other week there was a Twitter thread where someone was opining that Calendly is rude and it’s not good professional form to send a Calendly link to somebody because of the power dynamic issues. You’re forcing me to do work to get on your calendar sort of thing. It was an interesting like it’s both a people problem and I think a technology problem. I think the tech can help it feel a bit more collaborative so it doesn’t feel as off-putting to receive, but it’s also like, are you exhibiting good etiquette? This was enough of a hook where it’s like, “Well, what if we could build a tool that doesn’t feel so awkward, that feels more collaborative, feels more personal?” and that was the initial hook. 

So I think we wrote a little manifesto talking about the power dynamic and how we’re going to fix it. We had this visual booking interface and personalization and a bunch of other little details that were going to make this better, and put that on a landing page and started to gather email addresses and have conversations with potential customers and engage interest. I think that was the extent of the validation, and then I got down to work building an MVP, and within a couple of months was able to start testing it out with real users.  

Rob Walling:
To take you back even further, I believe you started even considering … You had a list of software that Calendly was on, and that list came from what did we pay for at Drip, what was all the software we paid for, right? There was GitHub and Slack and Calendly. You can imagine what the stack was. You came over, we sat in my front room and we’re talking through like, “Which of these can be disrupted.” You’d already tried to disrupt Slack with Level and that hadn’t panned out, but we were looking at, “Are you going to compete with GitHub? Not directly, but is there a thing there? Is there, whatever?” We went down the list and marked off like, “Oh, these are bootstrappable or mostly bootstrappable businesses.” Then we said, “Which of these has an in?” because that’s the other thing. It’s like, again, Stripe, probably not a bootstrappable competitor business, but there were some, I don’t remember what they were, but it was like, “Oh, there’s this product, but people love that product,” and there’s no wedge, there’s no differentiation, there’s no angle, there are no people complaining about it or whatever. That was what we determined. 

Calendly was one of a couple, I don’t remember what they were, but there were two or three where it was like, “Ooh, any of these you could probably do.” You then talked to me and I said, “Look, I would pay for a Calendly alternative that did X, Y, Z.” I think at the time it was like that integrated with my podcast recording suite, whether that’s Squadcast or Riverside or whatever, but it integrates and automatically creates a room, and it’s like, “I don’t think Calendly is going to build that.” Then you talked to other people. I think you talked to Wensing. You probably talked to Peter. You talked to Einar, and you talked to all these people and said, “What don’t you like about this?” and you were trying to get that of like, “How do I be different?” because again we said, “You could have just gone and replicated Calendly. You’re a good builder. You could have done it. It’d been elegant,” and all that stuff, but that doesn’t get you there. 

So yeah, I just wanted to take people back even further because by the time, you had already gone through a process just to narrow down to what space, what category. Notice you didn’t start with a technology and say, “What can this do?” You didn’t start with, “What new novel thing that has no category can I build?” You were like, “I really want to enter an existing category.” Everything on that list was super competitive. There are a bunch of tools and there’s a big leader in almost all of them. 

I’ve actually quoted that process. I have this book that I will publish it eventually, it’s probably going to be next year. It’s called the SaaS Launchpad. It’s a precursor to the SaaS Playbook, and it’s about coming up with ideas, trying to validate, pre-validate, launching, building a launch, just all the early stuff that comes before that. It’s a hard book to write because it’s so squishy. You can hear us, even you and I, experienced entrepreneurs done it multiple times. It’s still a very squishy process. So to actually put it in writing is like you need a lot of, “Well, this, it depends, this and that,” but one of the chapters is about coming up with ideas like this. 

I have seven different approaches, and one of them is make a list of all the things that your company pays for an hour that you pay for an hour. I totally got this from you doing it. Others are like, “Hey, take a vertical SaaS and go horizontal or a horizontal SaaS and go vertical,” or you have a bad customer experience and you can improve, blah, blah, blah. You can imagine the list of those seven kind of … They’re not frameworks on themselves, kind of a single framework, but I think this is a super interesting way to ideate. 

Then the thing is is how do you get to that next step. How do you not just pick it and say, “Ohm boy, I want to be in that space,” and you don’t take the next step, which is, “Now let’s research. Now let’s find out what the weaknesses are. Now let’s find out what people are unhappy with in this space so that I can at least have some type of wedge or angle or focus that differentiates me from the big incumbent.”  

Derrick Reimer:
Yup, and also when I was taking that list and evaluating them against each other, there’s all kinds of criteria I’m looking at, but one of the ones I was careful to do this time around especially was like, “All right. I want to make sure that this has as close a fit to what my ambitions are and the way that I want to work,” because assuming that I don’t have to work on this for the next several years, what’s the founder fit element of it? I hadn’t always necessarily considered that. It was kind of like, “Well, we’ll figure it out. I’m willing to do whatever. Let’s just find a good idea.” 

There’s a blog post, somebody who’s written in 2019, and maybe this list would be a little different now if I made the same one, but it was a helpful exercise at the time to write these things down, and part of it was coming off of the level experience. I could tell some of these are a reaction to that because I felt a little burned by some of the things that I experienced through that, but I’ll just read it off real quick. 

I have these filters, right? The filters were the market must already exist, so I’m not inventing a category. MVP must must be shippable within a few months. Level took a long time. I spent, I think, nine months on it before I was able to get it in front of anyone, which was way too long. I way over engineered it. The product should not be mission-critical. It should be important, obviously, high value, but not something where if we have five minutes of downtime, we’ve severely impacted someone’s business like processing high volume e-commerce payments or something like that. Making a sale shouldn’t require more than a few decision makers because with Level it was like, “Oh, you have to get buy-in from the entire company.” Yeah, that’s not great. Native apps shouldn’t be a minimum requirement. I wanted to be able to focus on web and maybe a progressive web app or something, but not have to build a mobile app. 

I think this is kind of another level thing too. People wanted to be able to access messages across all platforms with native apps and it’s like, “Okay.” Well, that adds a whole ton of development time to get something minimally viable. Then lastly, the market should overlap with my existing audience because I wanted to be able to leverage as much of my unfair advantages or whatever that I had. So I wanted to use my audience as kindling and not just go into a completely foreign space where no one knows me, and those were my filters.  

Rob Walling:
Derrick Reimer dropping knowledge bombs as always. It’s great to have you back on the show.  

Derrick Reimer:
Great to be back.  

Rob Walling:
If folks want to keep up with you on Twitter, you are Derrick Reimer and, of course, if they want to use the best scheduling link on the internet, savvycal.com.  

Derrick Reimer:
That’s it.  

Rob Walling:
Thanks again to Derrick for coming on the show. Thank you for listening this week and every week. If you’re not following me on Twitter or X, however you refer to it, I am @RobWalling. Let’s connect. This is Rob Walling signing off from episode 718.

Rob Walling:
If you’re looking for Startups For the Rest of Us, you’re in the right place. I’m Rob Walling, and today I talk with Marie Martens about bootstrapping her form building SaaS to 1.3 million in ARR and 300,000 free users. It’s a great conversation, and what I love about what she and her partner have done is really go against the odds of launching something with a massive free plan, very generous, really low price point, and yet still being able to get to 1.3 million ARR in the span of just a few years. 

Marie is going to speak at MicroConf Europe in lovely Dubrovnik, Croatia. Tickets have just gone on sale, the event will sell out. It is being held October sixth through eighth at this amazing venue. It is literally one of the best, if not the best venue that we’ve ever had any MicroConf at. And I mean any MicroConf, a US, a Europe. Really gonna be an amazing event. So if you want to hear more from Marie, if you want to meet me in person and hang out with about 125 of your favorite bootstrapped founder friends, grab a ticket at microconf.com/europe. That’s microconf.com/europe.

Before we dive into the episode, I wanted to let you know that it’s your last chance to apply for MicroConf Masterminds. Applications close on June 12th at midnight. Finding the right founders to surround yourself with can feel like an impossibly hard task. Over the past few years, our team has successfully hand-matched over 1000 founders into mastermind groups by looking at your revenue, team size, strengths, goals, and a few other data points to make sure your peer group is the right fit. Once matched, you’ll also have access to our mentorship series, a three-month program where you can connect with some great minds in sales, business development, marketing, and more. 

If you’re looking for accountability, honest feedback about your business and the opportunity to make new friends that care about your success, you can learn more and apply today at microconfmasterminds.com. Applications are closing soon, so make sure to get your application in by June 12th. Again, that’s microconfmasterminds.com. It’s a great conversation. I hope you enjoy it. Let’s dive in. 

Marie, welcome to Startups For the Rest of Us.  

Marie Martens:
Thank you so much for having me.  

Rob Walling:
I’m excited to talk to you today about Tally and that’s at tally.so. Your H1 is the simplest way to create forms, say goodbye to boring forms, meet Tally, the free intuitive form builder you’ve been looking for.  

Marie Martens:
Correct.  

Rob Walling:
And you’re quite the success story with the Indie Hacker build in public crowd in the sense that you are one of, I’ll say, it’s a small number of folks who are trying to launch things and be a lifestyle bootstrapper, and you’re one of the small number that has really achieved some marked success with it. Can you give us an idea of where the business is today because you’ve been very public about numbers, I’ve heard you talk about in other presentations, but where do you stand?  

Marie Martens:
Yeah, we now have around 300,000 users worldwide using Tally. Most of them are free. We have around 4,500 paying customers and that results in 1.3 million ARR today.  

Rob Walling:
That’s incredible. And that’s over the course of what, three years? Did you launch in 2021?  

Marie Martens:
Yeah, so after summer it will be four years. Yep.  

Rob Walling:
Four years. Okay. So let’s back the clock up that gives people an idea of where you are. Oh, and how large is your team?  

Marie Martens:
So we’re actually like two and a half people. I would say. We don’t have any full-time employees yet. That will change soon though. So it’s basically me and Filip. Filip is my technical co-founder, but also my partner in life. And then, we have a freelancer helping us out part-time for customer support.  

Rob Walling:
You have 300,000 users and a part-time customer support person. That is incredible. Are you and Filip doing support as well?  

Marie Martens:
Not anymore. We do once in a while, but it’s definitely not our main task anymore, no.  

Rob Walling:
How is it possible with that many users that you don’t have ’cause my last SaaS Drip, we had 12 full-time customer support people by the time we had, I think, it was 30,000 or 40,000 free users. So obviously, different products. Drip is very complicated. It’s marketing automation, it’s a lot more expensive and all that. Is it that just the nature of Tally that it’s so easy to build a form and you just kind of know what you’re doing? How would that possibly not be a full-time job?  

Marie Martens:
Yeah, I think the main ingredient there is that we really try to keep the product simple. So as you read on the website, simplest way to create forms, so the simpler, the easier for people to use. So there’s a heavy focus on that user experience. Besides that, we have invested a lot in documenting, in creating tutorials and making sure that it is self-service. It is worthwhile mentioning that now it’s one part-time person, but we are actually hiring two more people, but they will also work a couple of hours a day basically, but in different time zones so that we can reduce our response time because now it’s like max one day, but it is getting difficult. So that’s an important note there. But yeah, I think why, I think because of the product really, the product itself is pretty intuitive and people can find their own way through it. 

But definitely support has been an important factor in our journey. We can maybe talk about it a bit more later and has come with ups and downs. We have had to implement a lot of new measures to keep it manageable, but yeah, for now it’s one part-time person.  

Rob Walling:
Yeah, and I think intuitive is one thing, but a lot of us build intuitive software. I get the feeling that it’s the nature of the product that if you’re going to build a form builder, you know you’re going to type some stuff out, you’re going to drag and drop something and then you’re going to post it, and that’s it. There’s not a ton of complexity on that. I think of it also like electronic signature, like Ruben Gomez, who comes on the show a lot, has SignWell, and there’s stuff to that product, but really it’s like you sign in, you upload a document and someone signs it or they don’t, that’s the extent of the process. It is just a simpler product than like a CRM or marketing automation. Yeah.  

Marie Martens:
Definitely there’s that and I think where it becomes complex is integrations because forms are usually the beginning of the workflow. So a lot of support is also about that. The moment it gets a bit more technical, you can inject custom CSS, stuff like that. It can get pretty advanced because people build crazy things with no code tools, but at the heart it’s just a form indeed, first name, last name, e-mail, so most people can make that work. Yeah.  

Rob Walling:
Okay, so let’s step back a little bit to let’s say 2021 or around the time you launched. There were already dozens, if not hundreds, of form builders. So what did you do in the early days? And I heard some rumblings about cold outreach that you were doing, which is crazy to me because A) if you have a free plan and B) you’re only paid plan, so folks now is $29 a month, cold outreach doesn’t work at that scale. You can’t make money on a product doing cold outreach at 29. So you were doing cold outreach for other reasons. What were you doing to get it kick-started and to get people to pay attention when there’s already a 150, 200, 300 form builders out there?  

Marie Martens:
So I think there’s two parts. So we’re bootstrapped and we’re a small team and from the beginning, we were very conscious about that. We wanted to keep it bootstrapped, we wanted to keep it small and lean. And so for us, it seemed easier to go in a very competitive market. You know there’s demand, but where we can just grab that small percentage of the market and if we can manage to do that, that’s already huge for us because we’re so small, we don’t have to earn as much as the big players. Of course, downside of that is that we don’t have the marketing budgets of the big ones. So we had to do something different. We didn’t have any network in the space. So we mainly launched in the beginning in no-code communities and on Indie Hackers. And to basically get the first users, we did cold outreach because that was the simplest way to do. 

We would go on Product Hunt. On Product Hunt, we would look at people that have uploaded similar products like ours or no-code tools, so not necessarily form builders. We would make lists of them, hundreds, thousands of them, in a Google sheet and find manually, at the time, their contact details and reach out to them. So that’s basically what I did, I think, for four or five months nonstop every day while Filip was building and improving the MVP. And by doing that, we found our way into some communities. One of them was No-Code France, which is pretty big in Europe and Belgium. The whole no-code movement was not really happening yet. They helped us a lot in the start, promoting us, sharing us in their community, and that’s how we found our first thousand users by simply DM’ing people.  

Rob Walling:
That’s crazy. Talk about doing things that don’t scale, right? Paul Graham talks about that. Again, I don’t know if you’re cool with I lump you into the Indie Hacker built in public space. Is that what happened?  

Marie Martens:
Yeah.  

Rob Walling:
Do you identify with that?  

Marie Martens:
Yes.  

Rob Walling:
Yeah, so most Indie Hackers that I see want to post on Twitter and then build a huge following and then launch stuff to them, but not do the grind, the cold outreach. Were you a free tool? Were you cold outreaching to get people to come use a free tool or did you have recharging? So it was free?  

Marie Martens:
It was free.  

Rob Walling:
Wow.  

Marie Martens:
We just wanted to get people on board. We had our TallyPro, our subscription, our paid plan after a couple of months, but we didn’t have any in the beginning. And actually, one of our first users said, “Oh man, I really love this. Where can I pay?” And we didn’t have, you couldn’t pay it and then, that was for us a very early sign of, “Okay, we might be onto something.” He’s actually still, we then made this $5 a month and he’s still on this plan just to have them support us. I guess that’s the success formula of Tally is that we’ve given so much value for free and we’ve built a product that some people really love to use and so it becomes a no-brainer for them to pay for it once they can.  

Rob Walling:
Right. And I do want to call out here for listeners because a lot of people try free and I would say 9 out of 10 who try it, doesn’t work, maybe 95 out of a 100, it is a lot of lot.  

Marie Martens:
Yes.  

Rob Walling:
And Ruben Gomez has these four markers that I often quote, I actually put them in my book, “When freemium can work and if you don’t have all four of them, you probably shouldn’t try freemium.” One is that you have almost zero support and we’ve already covered that ’cause again, if you had to go free and you have 10,000 users and you need to support them, catastrophically expensive if you’re scaling up. The second is there’s no real incremental cost for new users, meaning a new user signs up.= let’s say I had an SMS app where I’m sending text messages, very, very expensive to send SMS, very expensive. AI, very expensive. There’s certain, even e-mail is not very expensive, but there’s a little cost to it. So really having zero, almost zero marginal cost, which it sounds like you do. 

The third is that folks can self-onboard and they can get very quick value from the product. So back to my earlier example, electronic signature has a free plan, SignWell does. If you’re going to have someone e-sign a doc, what do you do? You log in, you upload a doc, they sign. It’s very quick to value. With a form builder, I bet I could build a form in Tally in 5 or 10 minutes if I half-ass knew what I was doing and post.  

Marie Martens:
In less, and we don’t even require to sign up. So you can literally go to the website and do it.  

Rob Walling:
So super quick to value, so this makes sense, versus a CRM, marketing automation e-mail where you’re like building workflow, it’s a different type of tool. And the fourth one is some measure of virality and if you have a free plan with no virality, it’s usually, don’t do it, it’s not worth it. But you as a form builder, if I set up a Tally form and I share it with people, you have a logo I’m assuming, and some type of, you’re at Tally.so, right?  

Marie Martens:
Yeah.  

Rob Walling:
Got it, got it.  

Marie Martens:
So we have the virality baked in because forms are viral by nature, and that’s why we invest a lot in getting free users because they are the biggest growth engine of our product, basically  

Rob Walling:
That’s your engine and that’s what I want to call out to folks listening is it is the, I’ll say the Indie Hacker dream or the lifestyle bootstrappers dream to just never talk to any human and build a product that does 10,000, 20,000, 50,000 a month and so often, people get pulled to freemium because they’re like, “Oh, well Tally made it work, so I’m going to do free too.” But it’s like unless you have what Tally does, which is a very simple product, which is super elegant, which needs no support, all these things, you really shouldn’t try this. It just doesn’t work. And I see people trying it and failing. 

In fact, when I was, so I sold Drip, which was e-mail marketing automation provider, and the acquirers were venture funded, $38 million in venture. That’s how they could afford to buy us, and they introduced a free plan. I was still there at the time and I was like, “I don’t know if this is going to work, guys. I’m fine to do whatever you want. You’re running the company. I was running product at the time. If you want to do free, we’ll implement it, but I just don’t know.” And it kind of didn’t.  

Marie Martens:
It didn’t work.  

Rob Walling:
It really didn’t because it didn’t have… We had a little bit of virality, right? It was like, “Oh, an e-mail with this, powered by a Drip link.”  

Marie Martens:
Yeah.  

Rob Walling:
But the other stuff was not. There is no support, there is incremental costs ’cause we were sending hundreds of millions of e-mails a month. There was no self-onboarding and quick to value, it was just one out of four at most. So I want to call that out, like you’ve built an incredible business with this approach, but I don’t want everyone listening to think, “Oh, well, I’ll just do the same thing” because you really need, do you agree? I’m sitting here and kind of preaching at you, but yeah-  

Marie Martens:
I totally agree. Yeah, I totally agree. I think for us, one of the main reasons as well is that we made it free is because we had to do something else than the market at that time. Because we are so small and the type forms and job forms, they all have volume-based pricing, and that’s something that we didn’t want to do. So we have to make it free at the cost, of course, of having to support a lot of free users, but we have to do that to differentiate ourselves in the market. And Tally would not be where it is today without a free plan. We have grown organically. Until now, we haven’t invested anything in paid acquisition. So not making it free was not really an option for us.  

Rob Walling:
Yeah. That was a marketing channel. Yeah, well, you can’t invest in paid acquisition at your lifetime value. It just wouldn’t work.  

Marie Martens:
No.  

Rob Walling:
29 bucks a month, even if everyone you acquired upgraded a $29-a-month plan, there are no ads anywhere on earth-  

Marie Martens:
Indeed.  

Rob Walling:
… That you can make that LTV work. So it makes sense that this is your growth engine is the free thing. Now, did you know this going in? All the stuff we just talked about where I was like, oh, free is actually quite hard and it only works 1 out of 10, one out of whatever, 5 out of a 100, did you know that going in and you were really strategic and surgical about it or did you get lucky where it was like, “We’re going to try free? Oh my gosh, it worked.”  

Marie Martens:
We were pretty strategic about it being free. I think we didn’t fully know the power of the virality and how the whole product-led growth system would work, but we knew that it had to be free and that we had to stick to this and that it also wouldn’t always be great. We would make less money, but we had to keep it free in order to grow. And that’s the framework in which we were operating and we were still sticking to that. It needs to be free and needs to be simple. That’s what makes it work for Tally. So we knew that, but we definitely couldn’t predict that it would grow in the way that it did. So it’s not like we knew everything when we started, definitely not. Yeah,  

Rob Walling:
I’ve never heard of anyone doing cold outreach for a free tool with no paid plan. That’s crazy. But you were doing it, just you were trying to get the momentum, right?  

Marie Martens:
Yeah, we were trying to get the word out there like we’ve built something new. It’s a bit different than at the time what was at the market. Also, we launched four years ago. I think the last two years, a lot of people have launched new form builders, but I feel like they were a bit less bootstrapped ones at the time, and we just wanted to get the word out there and find those first users. And we managed, I think we got around a 20% response rate to our cold outreach, which is pretty crazy. Of course, it was pretty targeted. We would really go to founders, people in design, people in no-code, people in product, like people that used Notion because we have a similar interface like them, so that definitely also helped us. And yeah, the cold outreach, it’s something that I would definitely actually recommend and I would do it again because we needed that first batch of thousand users to get the flywheel going and to start product led growth.  

Rob Walling:
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So I’m curious if you’ve heard the phrase shrinking a market. It’s where you come in. So Craigslist did this with classified ads, newspaper classified ads where they came in and they basically were like, “Hey, we’re free,” and newspaper classified ads just collapsed. And then frankly, the newspaper business kind of collapsed because that was their main source of revenue. You see it when Make competing against Zapier where they come in and they’re like, “We’re 80% of Zapier or whatever the functionality is, and we are way cheaper.” And you see this with folks going against Salesforce, where Zapier and Salesforce, they still have the brand names, but competitors coming under them and really underpricing them. And it feels like you did the same thing here with what Jotform and Typeform and Paperform and Formstack and SurveyMonkey and Wufoo and Xeroform, Microsoft forms, ServicePro and there are a lot of them out there, but they charge, especially as they get larger, they follow the pricing playbook. 

This is what we talk about at TinySeed. This is what I talk about in my book of like, “Hey, if people are getting million form requests per month, they should be paying you a load of money,” because they’re getting a ton of value and that the money they pay you should increase with the value. That’s like the playbook they run, and it’s the playbook I run, frankly. But you haven’t done that. You have a free plan and you have a $29-a-month plan, which honestly kills me. If I were to invest in you, I’d be like, “Oh my gosh, A) you need more tiers and B) you need to charge for it.” ‘Cause I know that you could, I know that you could. With 300,000 free users, you could be a $5 or $10-million business.  

Marie Martens:
Yeah, we could.  

Rob Walling:
What is your thinking on that? Are you going to keep this pricing forever or is this something to get ;cause built an incredible brand already, an incredible momentum, and is there a time where you reap that, where you reap what you’ve sown and you do introduce higher price plans or the 29 becomes, even if the 29 becoming a $49 plan, we do the math on that, you almost double the size of the revenue of your business overnight? So tuck me through the thinking there.  

Marie Martens:
Yeah, it’s a discussion we have. Obviously, we have, you’re not the first one saying that we are leaving a lot of money on the table. I think what has worked for us is keeping things free and simple and only having one pricing tier and the fact that it’s priced that low actually a large part of the success of Tally. Imagine we would introduce higher price plans, then we would also, one of our USPs would be gone and the cost of marketing would increase. So that’s how we look at it. We do feel like more enterprises or larger companies are starting to get interested in Tally and using us, and we’re not fully equipped for that. We don’t have the legal team, we don’t have the compliancy. All of that costs a lot of money as well. So we’re heavily focusing on startups, creators, the smaller businesses where a Jotform, Typeform, especially Typeform, they’re only raising their prices. So they’re moving away, they’re moving up market. We are doing the opposite. 

So I think for us, as long as we’re small and we remain a small team, it makes sense to not raise our prices. We have talked about introducing more of an enterprise plan, but that would come with more support as well, compliancy, all the things that I’ve mentioned before. And we’re not sure if that’s the road that we want to take as well with Tally, especially because we’re having a lot of fun doing what we’re doing now. So to be discussed, to be honest. it’s not something that we’re planning to change in the near future because we feel like we can grow a lot more with what we’re doing now, but maybe one day. But it’s not something that is on the table right now.  

Rob Walling:
And that’s the freedom you have as a bootstrapper is you can limit your growth, you don’t have to optimize everything. You can make that choice because the business, the pricing right now is, at least I would argue, it’s not optimal, but you’re making that choice to do that.  

Marie Martens:
Right.  

Rob Walling:
You don’t have to go all the way to enterprise. You mentioned enterprise a few times. When I look at your pricing, I think $29 a month, there could be-  

Marie Martens:
Yeah, enterprise is too far off.  

Rob Walling:
Yeah, yeah, a 1000, 2000, whatever. But there’s a 49 or a 99 and a 149 and a 200 or whatever, that could then have tiers. I guess my question, so I understand your pricing is, if I were to sign up and I had 20 team members, 50 team members using Tally, and we were getting 10 million form submissions a month and we had a 1000 forms out there, would I pay you $29 a month?  

Marie Martens:
No, because we have a fair use policy. So basically when you sign up, you also need to agree to the policy and it basically says that when you exceed a normal usage, so when it causes really, when you would have millions of submissions a month, then we basically draft off a custom pricing based on the volume. So it can be very, very high usage or collecting a very large amount of file uploads, things that cost us a lot of money as well. Then you would be on a custom plan, and that can go from hundreds of euros to more depending on the volume.  

Rob Walling:
Got it. So you do have people, you do have businesses paying you hundreds of dollars?  

Marie Martens:
Yeah.  

Rob Walling:
Okay. That makes sense.  

Marie Martens:
It’s a smaller amount. It’s not really where we focus on as well-  

Rob Walling:
Sure.  

Marie Martens:
… But we do have some kind policy or fair use policy in place.  

Rob Walling:
So let’s say, I was paying you $29 a month, and is it when I go over 50,000 form submissions in a month?  

Marie Martens:
It’s something like that. And if it would need to be consistently, so if it would be like a 100,000 for six months, then we would need to adjust the pricing. Yeah.  

Rob Walling:
Got it. Yeah, that’s where the money is, that’s where the money is.  

Marie Martens:
Yeah.  

Rob Walling:
See, I think there’s a lot of money to be had with that. So 300,000 free users, 4,500 paying. So 1.5% of your free users have become paying customers?  

Marie Martens:
Yeah, it’s a bit more, but it’s like 1.5% to 2% or something like that. Yeah.  

Rob Walling:
Okay. I want folks to understand that ’cause again, we launched a free plan at Drip and I think we went to 30,000 or 40,000 free users over the course of while it existed. It doesn’t exist anymore, and I don’t remember if that was a year or 18 months. Getting to 300,000 free users, even just that, is insanely difficult. That is mad props to you for building that engine. And is that pure virality? Is it really once you got to fly with that is what you’ve banked on, you really haven’t done any other marketing?  

Marie Martens:
No. We’ve built in public, we’ve been active sharing that, but that really doesn’t compare to the impact of the virality of the form.  

Rob Walling:
So virality has been the key to growth to date, but that will take you so far. Typically, if you’re having the success that you’re having, you’re looking at other marketing approaches, A) so you can diversify, but B) so you can grow faster. What’s next on your list of marketing approaches to attack?  

Marie Martens:
So this year, we’re looking at two things actually. There’s influencer marketing and there’s SEO. SEO because we’ve, from the start, made some really simple comparison pages, just to try out what it would do. And we do have some that are pretty successful for us, like free Typeform alternative page, forms for Notion, some very specific ones that are getting us more traffic. So we are now investing in, okay, what should our strategy be? Which contents should we create to grow organic, organic search? And then, influencer marketing for me really matches with the positive word of mouth that we have been having by just really engaged, happy users sharing content anyway about Tally and just the idea of how can we amplify that and how can we make sure that there’s more content being made around Tally, especially YouTube is something that is almost unexplored for us, but that can be, I think, a really good acquisition channel, same like TikTok for example. So that’s something that we’re looking at at experimenting with this year. Yeah.  

Rob Walling:
One thing that we dealt with a lot at Drip because we sent e-mail was we dealt with hackers and we dealt with spammers. It was awful. At your volume, you have to be dealing with spammers. Actually, I was checking you out on Twitter ’cause I wanted to get your Twitter handle and it looks like you’re currently-  

Marie Martens:
We’re in it.  

Rob Walling:
… Dealing, as we’re recording this, this will go live in a couple weeks, but you’re currently blocked on Verizon or whatever. And I’ve had all of this happen too. What is that burden like, how are you working around that and what is the experience like dealing with that constant influx.  

Marie Martens:
It’s the first time that it’s been as bad as this week. So we have abusers coming in all the time. We have to spend a lot of time on detecting phishing, abusive forms. People find all kinds of ways to abuse the product. So that’s definitely a downside of having the free product, but even then, people pay with stolen credit cards and still abuse the system. We have been improving abuse detection, like our systems a lot, but still it requires some manual moderation in the end, which is actually a quite time-intensive job. And since last week, indeed, we have been blocked by several ISPs around the world. We’re trying to figure out why because it’s very difficult to get in touch with them to know what the source is, especially if you’re not a customer. And it’s hard to be a customer with all the providers around the world. So we’re actively trying, asking our users for help. They are also contacting their providers to figure out what’s going on. 

So yeah, we somehow got flagged or blocked, which makes it impossible for people, some people in the States, people in the Emirates as well to access Tally and yeah, it’s the first time we’re experiencing it on this scale and it’s pretty scary because it’s something that we don’t fully control ourselves. It’s not like we can just introduce an easy fix and it’ll be solved. So yeah, we’re trying to reach out to everyone possible to make it go away or have it fixed as soon as possible. But I think it’s probably one of the most stressful weeks in the history of Tally that we’re in right now.  

Rob Walling:
I’m sorry to hear that and I know exactly what that feels like where it’s not in your control. Back in my day, I used to be like, this could be it. We could be done here. All of our IPs, sending IPs got blacklisted at one point ’cause of spammers. And I was like, if we can’t send e-mail, what are we doing? And it’s this crazy existential anxiety. So I am sure that’s going through your mind and-  

Marie Martens:
Yeah, I can relate.  

Rob Walling:
Yeah. Sorry to hear it. I think as a final question I want to ask, there’s tens of thousands of listeners to this podcast and I think someone listening might be thinking, can I take the learnings from Tally. And I’m going to say some of the learnings are start with free, be really low-cut, like just undercut price undercut, keep it simple, whatever, go into a different market to take it and apply. I want to apply this to compete with Intercom or Salesforce or Zapier or just any market that we could pick. What are your thoughts on when this would work and when it wouldn’t because I don’t think it’s going to work against Salesforce, for example, complex products, blah-blah-blah? Have you given any thought to how replicable your success is to a new entrepreneur or a new space?  

Marie Martens:
I think it is as long as you manage to build a product that people actually love to use, and I think word love is important in there because our early users are really the people that really value the interface that we created, for example. A lot of people don’t care how it looks, they just want something that works. But I feel like the small group of maybe even a niche of people that really values that user experience is what got us our first users and they were also the most heavy promoters and they have spread the word around. So if you can tap into that small crowd of early adopters to find first users and then afterwards you can scale, I think you can replicate it. 

I think you can build a very, very simple alternative to an intercom, why not? If it’s cheap, if it’s what people need in the beginning of their, for example, Indie Hacker career, I think it could work, but it needs to be, and I think that’s also a big, big part of our success is, it needs to be built very well and it needs to look good, it needs to be fun to use, and you need to have that virality somehow. So yeah, maybe with an intercom that would be more difficult, but I think the virality is probably the key ingredient. Yeah.  

Rob Walling:
But I think you’re overlooking something, it’s market size.  

Marie Martens:
Yeah.  

Rob Walling:
Form builder, the market size, the number of, I don’t think if I build a cheap competitor, simple competitor to intercom, I wouldn’t get 300,000 free users.  

Marie Martens:
No.  

Rob Walling:
I might get 10,000 and so the numbers wouldn’t work. So that’s a factor I think that people would have to think about and should be careful.  

Marie Martens:
Yeah. Everyone needs a form at one point.  

Rob Walling:
Everyone. It’s a huge market and that is such an advantage that you have, so if you’re going to enter it-  

Marie Martens:
Yeah, definitely.  

Rob Walling:
… It’s got to have, like for you to have 300,000 free users, there are tens of millions of users worldwide, if not hundreds of millions. And how many, that’s a rhetorical question, but how many software markets have that many users? There’s probably electronic signature there. We can think of a few, but there aren’t. I don’t think there are hundreds of markets that are that big. I think there’s tens of markets, so that’s what someone would need. Again, I’m trying to say this to educate folks who are listening to be careful because you can’t just take lessons from your experience and be like, “Oh, I could just apply this anywhere.” It doesn’t work that way.  

Marie Martens:
Yeah, market size is definitely, yeah, is definitely a big factor in it, for sure. Yeah.  

Rob Walling:
But I mean your success speaks for itself and it’s super impressive-  

Marie Martens:
Thank you.  

Rob Walling:
… To have watched your journey. And when I looked back and I listened to a few interviews in prepping for this, there was an interview from whatever, a year or two ago, and it’s like we have 60,000 free users and then there was one where you said a 100,000 and I expected, when you got on today, that you were going to say some number that was slightly bigger than a 100, but to hear 300,000, I’m just like, “Oh my gosh, it’s going faster. The momentum is building.” So it’s really impressive and it’s been great having you on the show today.  

Marie Martens:
Thank you. Thank you so much for inviting me.  

Rob Walling:
Folks who want to keep up with you, you are Marie Martens on Twitter, that’s M-A-R-T-E-N-S and of course, Tally.so if they want to check out an amazing form builder.  

Marie Martens:
Yeah, that’s where you can find us.  

Rob Walling:
Great. Thanks again for coming on, Marie.  

Marie Martens:
Thanks so much.  

Rob Walling:
Thanks again to Marie for joining me on the show and thanks to you for listening this and every week. If you haven’t yet left a review or given this podcast a thumbs-up in whatever player you use or given a five stars, followed it on Spotify, I don’t even know how all that works, I’d really appreciate it. It helps others find the show and keeps me motivated to keep producing it. I’ll be back in your ears again next Tuesday. This is Rob Walling signing off from episode 717.

Rob Walling:
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You are listening to Startups for the Rest of Us, I’m your host, Rob Walling. In this episode, I answer listener questions, some really good listener questions today ranging from how to position against existing incumbents, how to evaluate H1 landing page changes, the impact of a niche tech stack on company valuation and more. I’m actually running low on questions, so if you have a question for the show, you can email at questions@startupsfortherestofus.com or just head to the website, startupsfortherestofus.com. Click Ask a question in the top nav. And of course, as always, audio and video questions go to the top of the stack. I’m planning to have fan favorites back on the show in the coming months to answer questions. Folks like Derrick Reimer, Ruben Gomez, Craig Hewitt, Asia Arangio. So get your questions in if you’d like them to be featured on the show. 

Oh, and I want to make a request. I get a lot of early-stage questions about idea validation, choosing between side projects. “What should I do? How do I launch?” I would love to hear some later-stage questions. If you have 5K MRR, 50K MRR, 5 million ARR, write in with a question that you are facing. You can remain anonymous. I realize at a certain point what becomes hard is you have a team and you don’t want to write in with a question that could potentially backfire on you that your employees could hear, or there’s a lot of things to be concerned about at that point. So this is an open invite if folks send in later-stage question. And I just mean anything after you have some type of product market fit. Think of the SaaS Playbook stages of like, “Oh, I’ve built something and people are generally paying for it, but I want to grow this. Here are some things I’m facing.” I would love to have those questions and bump them to the top of the stack. 

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So with that, let’s dive in to my first question from Mackenzie.  

Mackenzie:
Hey Rob, this is Mackenzie. I’ve been listening to the show for the last couple months and I really appreciate the content. It’s helped me out a ton. I have a question for you about positioning. I just finished up episode 673, and in it you talked about positioning TinySeed against other VC funds and also how you position Drip against Infusionsoft. And I’m wondering if I’m in a similar situation, especially as the smaller guy punching up at larger incumbent competition, how subtle or how direct should I be with calling out who we’re competing against and how we can do better? I’d love to hear your thoughts on this. Thanks.  

Rob Walling:
I really like this question. Thanks for sending it in. The answer is it depends, but I’m going to tell you what it depends on and kind of the decision tree that I personally would go through and went through when I was positioning TinySeed or Drip or HitTail or whatever against a large incumbent. First thing I ask myself is, is mentioning their name going to be helpful? Does everyone else in the industry know that when I say the name of my big competitor that everyone will know who it is? So if you’re competing against Salesforce, HubSpot, Slack, Intercom, Jira, even Infusionsoft in the right circles, everyone knows who they are and everyone, I will say… I’m saying everyone very generally, but a lot of people know, “Ooh, yeah, there’s some issues with this tool.” 

So Salesforce, what would be the complaints? Way too expensive, way too complicated, hard to use, hard to get on board. The sales process is not great. I believe it’s annual contracts. There’s all these things you could list. And if you’re going to be the not that, the anti that where you’re going to have monthly plans, you’re going to be easier to use, you’re going to be a lot cheaper, you’re going to basically the zig when there’s zagging and it’s helpful because everyone will recognize the name, then consider mentioning them. 

Now, I will say this is not legal advice because one thing that you can get into a potential danger point is that obviously it opens you up to a cease and desist of mentioning another company by name. Now, do they have any leg to stand on if you’re being honest and truthful and forthright in your marketing, if you have a comparison page that really does compare the two, honestly? Yeah, they don’t really have a leg to stand on if you’re doing that, but if they send you a C&D and they’re a kajillion dollar company, you don’t have the money to defend from a lawsuit. 

So usually what happens, I’ve seen a few kind of versus pages get cease and desists. Sometimes I’ve seen founders just change the page, alter it slightly. Other times I’ve seen them take it down because it’s not worth a headache. Knock on wood, I have yet to see one actually go to a full lawsuit because it’s just not worth it, because as everyone knows, in lawsuits, the only people that make the money are the lawyers. So that’s a little side jag there of obviously it’s kind of a warning, right? If you’re going to mention competitors by name, this is a danger. I will admit, knock on wood, I have never had an issue. I’ve never received a cease and desist myself. And I did mention competitors, I mentioned really large competitors that probably just didn’t care. So it was like Infusionsoft, it was Marketo, Pardot, Eloqua, Silverpop. These were big, big companies and I just don’t think they were paying that close of attention. 

I also didn’t say much about them. I would say, “If you are tired of expensive, clunky solutions that lock you in for an annual contract like…” And I would list them out. So in my opinion, it was not huge, huge risk to do that. However, in your shoes, if no one knows this company name, if mentioning them isn’t going to send them more traffic than the notoriety that you’re getting by mentioning them, then no, of course I wouldn’t. It just doesn’t make sense. You’re only using it. You can be vague is what I’m saying, is you can say, “If you’re familiar with the big gorilla that does this and has all these bad things about it” that I’ve probably already mentioned, but if… You don’t have to name them by name is what I’m saying. 

All things being equal, I would lean towards naming them if you want to know the truth, but you do have to weigh the pros and cons of potential liability, which again, I think is low, but it’s not legal advice. But I found the more specific you can be about positioning against specific incumbents I think is pretty helpful. So in the end, it’s up to you. It does depend, but those are the factors that I would be thinking about as I made this decision. So thanks for that question. Hope it was helpful. 

My next question is about evaluating H1 changes on your landing page.  

Edward:
Hi Rob, I love your podcast and I listen to every episode. I’m Edward and [inaudible 00:08:40] productivity SaaS. I often hear that many startups are changing their H1 on the landing page very often, and I always wondered how are these changes tested. Are these companies and startups, are they running A/B tests or they simply waiting and seeing what happens? I understand it’s also something like changing your positioning and so on, but I would like to hear about how this has actually evaluated these kind of changes. Thanks so much.  

Rob Walling:
So interesting question. I’m curious what these startups are that are changing their H1 on their landing page very often because that sounds like they don’t know what the (beep) they’re doing. In all honesty, don’t change your H1 often unless you are flailing, things are not working, you don’t have product market fit, your positioning’s off, and then, “Okay, I’m changing it to try to figure out how to drive more trial signups or more customers or whatever.” But once you’ve locked in on something that’s generally working, you don’t change this often because your H1 becomes part of your positioning. And you don’t want to change positioning often because it confuses the market. So I guess that’s my first thing, is if you’re looking at Indie Hackers on Twitter who are launching 12 products to see what sticks and they’re just spinning around changing a bunch of stuff, launch, launch, change, change, they don’t know what they’re doing. 

So look, I’m not saying I actually like the Indie Hackers website and the podcast and all that. I’m not trying to disparage that, but just when I say Indie Hacker, I do mean the dev who’s launching a bunch of side projects hoping that something works and they tend to not know what they’re doing. So this is where you have to be careful about who you are watching, who you’re observing and who you’re taking guidance or mentorship from. Even if it’s not direct, but you’re taking signals from folks who don’t know what they’re doing, that can be confusing. 

If you look at companies that have their positioning relatively locked and they are building a great business and they have some semblance of product market fit, like for example, go to tinyseed.com/portfolio and go through 20 of those companies and just for kicks, monitor their H1s and see how often they change. I would be shocked if any one of those 20 companies dramatically change their H1 in a three-month period. It’s just not something that people do that often. 

Now, with that said, I will say that I’ve done plenty of split tests and there are folks who are especially low touch funnels where it’s high volume and it makes sense that you can actually split test. There are some companies, some SaaS companies that do in fact change their H1 subtly. They don’t change the entire value prop, they don’t change their positioning, but they’re changing wording, phrasing and what have you in the H1 and H2 to see if it drives more people to click through or to sign up for a trial or book a demo. 

If we’re thinking about those folks, and my answer to your question is, if they have enough traffic, they should be split testing. That’s what I used to do. I split tested probably 10 different products websites where I was split testing the headlines or the messaging or all this stuff, but they were high volume plays. If you’re getting a thousand uniques a month, even 5,000 uniques a month, it’s tough. You just can’t get a lot of signal and a split test takes a really long time. 

So for folks who don’t have that much traffic, they are probably just winging it and they’re probably taking their best guess and doing what we call a poor person split test, which is where, “Well, how many trials did I get in the last 60 days? How many do I get in the next 60 days?” Close enough. “Is it perfect?” No. “Is it the best you can do if you only have a thousand uniques a month and you’re selling something that’s really expensive so that your end is very low, meaning the number of people coming through your funnel is low?” Pretty much. So I hope that answers your question on three fronts. One, you shouldn’t be changing it super often unless you are actively split testing. Two, split test if you have enough traffic. And three, if you don’t have enough traffic, you can do what I just talked about with the poor person’s split test. So good question, appreciate you sending it in. My next two questions come from Evan.  

Evan:
Hey, Rob, this is Evan from Seattle. Love the show and have been listening for a few months now. I’ve been fortunate enough to save a year of expenses from working a FAANG job, and I’m about to leave that job to pursue entrepreneurship on my own. I found that my full-time role took too much time and mental energy for me to balance full-time work with the family and also working on a side gig. So I’m doing this without a step 1 business under my belt, but have some scratch my own itch type ideas I’m pretty eager to explore. 

Two questions for you. First, is there a modern equivalent of identifying a niche based off of the 5K spend for a magazine full page ad? With print falling off, I’ve been thinking of what equivalents there might be. Maybe a subreddit community with X number of subscribers? 

Second, I’m starting from scratch. And while I’ll be full-time on my solo work, total time is at a premium since I’ll have only about 12 months of runway, I’m debating if I still want to go through step 1 and 2 of the stairstep approach if I don’t have a short-term goal of building enough money to quit my job since I’ll have already quit it. I wonder if that might pivot my approach to only pursue step 1 ideas that could conceivably expand into my entry to standalone SaaS, or if I skip step 1 and 2 altogether and jump in head first and save the extra time, the maybe three to six months I’d have spent on step 1 projects. I don’t think I’d be as passionate about those step 1 projects longer term, but I also want to make sure that I’m being judicious with learnings since this will be new for me. Looking forward to hearing your thoughts.  

Rob Walling:
Thanks for those questions, Evan. So with regards to the $5,000 rule of thumb, I think Tim Ferriss had that in for a work week. I think I might’ve quoted him in Start small, Stay Small. I don’t remember. I had some loose rules of them in Start small, Stay Small, obviously 14 years old now, so I don’t know. I don’t necessarily hold up over the test of time as things change. The thing to keep in mind is these are all just rules of thumb. It’s just not a hard and fast rule. It’s just guessing at how many people are interested in a topic. 

So I actually really like your idea of finding a subreddit with a certain amount of people. And I’d be curious what you think that number is because I’m not familiar enough with Reddit. I mean, I’m on and I click and look around, but I don’t know enough about Reddit to know if a subreddit with 5,000 versus 50,000 versus 500,000 is a big or small one. 

The other thing to think about is if I’m selling a product for $10 a month versus $1,000 a month, well, you need a lot fewer people. The market doesn’t have to be that large in order to make it work. I do like that idea though of thinking about or seeing a community like a subreddit and looking at the engagement. So I think you’re onto something there. 

Another couple thoughts that I have is you can use tools like SimilarWeb or Alexa. I’m sure I just activated a bunch of people’s Amazon assistant, but it’s A-L-E-X-A.com. In fact our digital Amazon assistant got its name from this website. And from these sites, look, they’re not perfect, they’re directionally correct, but you can estimate traffic to certain websites. And so you would want to look at larger competitors in this space and realize that, “Oh, if a SaaS application’s getting 10,000 uniques a month, it better be a really high price point. If it’s getting 100,000 uniques a month, if you’re a developer entrepreneur building a lifestyle business, could you build a business on that?” For sure. I built really great lifestyle businesses on much less traffic than that. And if a competitor is getting half a million or a million uniques a month, then you know or you at least have an indication that, “Oh, there’s a lot of traffic here. How can I kind of siphon some of that off?” 

You can also look at tools. Say again, competitor research like tools like Crunchbase to see funding raised in employee headcount of competitors. Or if you’re going after what I’m calling orthogonal SaaS… All right, so we have vertical SaaS, which goes after a particular niche. This would be accounting software, but it’s designed specifically for freelance web developers or for psychologists. That’s vertical SaaS. Horizontal SaaS is something that any business can use, and that is SavvyCal, which is the best scheduling link on the internet, which any business can use, or SignWell, which is of course the best electronic signature app. That of course is a horizontal play. 

Orthogonal is where it is raw-based or title-based. So it’s focused on a specific title within a company. So for example, HR software like applicant tracking systems or something that helps you evaluate developers and hire developers which may be targeted at say HR or might be targeted at hiring managers or like software development managers. Those things are aimed at a particular role or a title, and I call that orthogonal SaaS. 

So with that said, if you’re going to be going into a vertical or orthogonal SaaS, you can look, and you’re in the US, you can look at the Bureau of Labor Statistics. And so if you look up how many architects there are in the US or you look up how many hairdressers there are or accountants or whatever, that can also give you an idea of, “Oh, there’s 5,000 versus 100,000 of these types of businesses.” 

And look, if you’re bootstrapping SaaS and you want to get to a million, 3 million, 5 million in ARR, you just don’t need that many. You don’t need that many companies. You’re not building a venture scale business where it’s like, “Well, my total addressable market has to be a kajillion dollars.” It’s like your total reachable market or your term as you’ve been hearing me say on this podcast, it just doesn’t have to be that big if you’re trying to replace an income or build a six or seven figure ARR company. 

So anyways, those are the kinds of signals that I’d be looking at. And I don’t have hard and fast rules about them, but you get the idea. You can start comparing the data from one niche to another from one role or title to another. 

And then Evan’s second question was about having 12 months full-time and should he do step 1 and step 2 businesses. Because realistically, step 1 and step 2 are designed to get you out of employment so that you can focus full-time on your entrepreneurial efforts, and he’s already there. So my answer is, I do think this kind of depends. I don’t have a hard and fast rule or strong advice for you on this. What I will say is step 1 and 2 businesses tend generally to be easier to grow quickly and get to 5K a month or 10K a month. Building a full-blown SaaS, it just takes so much longer. All the stuff, it’s just, I won’t rehash the stairstep method here. But a step 3 business, a standalone SaaS, it usually just takes you a lot longer because you’re not injecting yourself into an ecosystem. It takes you a lot longer to iterate. It takes you a lot longer to build and just get the thing out the door because it’s more complex, there’s more functionality and there’s a lot more to it. 

So that’s the pro and con. In my book, I’d be thinking, “Okay, by 12 months I need X amount of revenue per month coming in, or I need to get a job. What’s the quickest way there?” And I would really be thinking about my, if I have any unique advantages like, “Do I have an audience? Do I have a network? Do I have a unique set? Do I have a unique knowledge of a space?” And it’s okay if you don’t. That just kind of helps. Decision making gets easier when you have some constraints. But for me, I think I’m on board with your idea of, “Hey, maybe I’ll do a step 1 business, but I make sure that it can probably get to whatever my revenue goal is.” Let’s say it’s 10K a month, that’s something you can live on in most cities in the United States anyways. Then maybe using that as a constraint of like, “Well, I’m only going to go after step 1 businesses where I think they can get to that.” I don’t think that’s the worst idea. 

And in your shoes, I probably would veer more on the step 1, step 2 approach of kind of get something out quickly, get it into a marketplace, see where there’s traction rather than building a standalone SaaS, which as we know just takes a lot longer to iron out all the kinks and to find product market fit. So thanks for the question, Evan. Hope that was helpful. 

My next question is from Gio about the impact of the tech stack on company valuation.  

Gio:
Hello, my name is Gio. I love the show. My question is about using more of a niche technology to build your SaaS and how that affects things when it’s time to sell. How might a potential buyer evaluate a company that’s built with more niche technologies that they aren’t as familiar with and that aren’t quite mainstream? 

So for instance, people usually use JavaScript, Python, Rails, maybe Java and other mainstream technologies to build their product and to build their business. But for example, I’m a closure programmer and we are a niche community. We are very healthy, smart, vibrant community, but we’re not exactly mainstream, although it’s used in many companies, it’s [inaudible 00:21:11] tested, it’s a very robust language. A potential buyer may not be familiar with it. Commonly, they’re not familiar with it, so they might have questions like, “Will I be able to hire for this? Is this a risk, basically? Is this a technology risk?” 

And while from my perspective, me being familiar with the community, with the language, it is not. And maybe even I would consider it an advantage in a certain sense. From another person’s point of view, from a potential buyer’s point of view that might be a disadvantage. So, provided that the business is actually doing well, might the technology choice of the business impact things when it’s time to sell? I was wondering if you had any thoughts on that both in the context of a micro SaaS as well as a more full-scale SaaS, let’s call it. I was wondering, so how a choice of a niche technology might impact a buyer’s valuation or decision to buy or not to buy? Thank you very much.  

Rob Walling:
All right. So once again, the answer of course is it depends, but here’s what I don’t do on this podcast. I don’t say it depends and then just waffle and kind of give a generic advice. When I say it depends, I try to then say, “Well, what does it depend on and what are kind of the buckets that it would fall into?” And so in this case, it does depend. It depends on the exit price, I think in general. 

A rule of thumb, a generally directional thing is that if you are selling an app for under 100,000 dollars or under 250 or some number that’s low six figures, you are likely selling it to a technical individual because at that sale price, there’s not enough money to hire full-time developers. So even like micro private equity or an investor or someone who doesn’t want to day-to-day be in the business is going to be very unlikely to acquire that business. 

It may even go up to, I’m trying to think, it depends on multiples and all this, but let’s say it’s up to a quarter million, 350,000 or whatever. Oftentimes it’s going to be someone who needs to write the code themselves. And so in that case, I think the tech is going to be very important. And if closure, as you say, is a niche technology, I think it’s going to be a major disadvantage. 

I think if you are selling in the half a million to, I don’t know what number would this be, 10 million, 20 million, I think it becomes a concern, but it becomes less of a concern because I think your buyers at that point are going to be strategics or private equity and they care more about the business fundamentals. But here’s the thing they’re going to be concerned about. The biggest thing, it’s what you brought up. They’re going to say, “Can we find developers for this tech?” So if it truly is some crazy niche, I know closure is not this crazy niche, but imagine some tech that if I said the name of the stack, I said the name on this podcast, most people don’t know what it is. That would be a problem. Because if a private equity is going to spend 5, 10, $20 million, they want to be able to maintain that. And if they just can’t find people, that’s a problem. 

So the question here is, how many closure developers are there and is it a growing technology or is it a mature technology that is sunsetting? Because every technology has its lifespan and its lifecycle that it slowly rides over the hump. So if it’s a dying technology and you’re building it now, or it’s not super popular technology and you’re building it now, will it be less popular 2, 3, 5 years down the road when you go to sell, making it even harder to find developers? That would be something I’d be thinking about because I think that’s going to be your big concern at that point. 

Now, let’s say you’re selling for the sake of argument. I don’t think it’s relevant here, but hey, anything can happen and I wish you the best of luck. Let’s say sell for $100 million or 200 million, a huge, huge nine figure exit. At that point, the tech matters a lot less because think about just saying, “I’m going to spend $100 million on the business.” You’re buying the tech, but really you’re buying a lot more than that. You’re buying the user base and probably the revenue stream and you’re buying the brand and you’re buying the team, and you’re buying all this stuff that’s actually worth more than the tech. Unless you’ve built OpenAI, if you’ve built a CRUD SaaS app, the tech can be rewritten at that point. 

And there is a certain price point where that just flips, right? And again, I don’t know. It depends on the buyer, it depends on the process, it depends on what you build. It’s all these depends. But at five or 10 million and it’s a small app that can be rewritten in three months, then how much does it matter if it’s in closure? But if it’s super complicated and it’ll take two years to rewrite, that number has to be higher. The exit price has to be a lot higher before someone’s like, “Cool, we’ll buy this and we’ll just rewrite it and migrate everybody over.” 

So I hope that my thought process there is helpful at kind of these three different exit multiples or exit prices and how they impact it. I want to tell you a little story. I purchased an app called HitTail. It was a SaaS app, SEO long-tail keyword tool. And that’s the one that I grew into the lifestyle business. It was pretty life-changing in terms of making 30 grand a month more money than we’d ever had or ever seen. And that was written in classic ASP. And it was built in ’06, which should have been built in Dot.Net, but it was built in ’06 and I bought it in 2011. Classic ASP. Think about this. Think about this 11-year-old web technology, VBScript. I happened to know it. I had coded ASP for a year back in 2000, and so I was in there fixing bugs and changing things. 

It was, as I said, a certainly sub $100,000 purchase and I was going to be in the code. If that had been written in closure, I probably wouldn’t have bought it. But with ASP, I got a good deal on it because I knew ASP and not a lot of other people did. So then I grew it to 30 grand a month and I started thinking about selling it. I talked to a few people and no one wanted to buy it. They said classic ASP is a deal breaker at this size. 

So once Drip started getting going, I hired a couple developers and I had one of them rewrite HitTail in Rails. That instantly made it a much easier sell. Now, I paid a developer, I don’t remember how many months it was to be honest, three months, maybe four months. I paid them as a full-time dev to do it and migrate the data. One day we pointed the DNS and the design look the same. We didn’t have to even have to inform… I think we informed customers there’ll be downtime while we do a switch, but we tried to exactly replicate everything in Rails. And that made the business infinitely more sellable. I did wind up selling it in 2015 as Drip was taking off and I couldn’t focus on multiple things. So for what it’s worth, that’s been my firsthand experience dealing with exactly this question. So thank you for that question, Gio. I hope it was helpful. 

My last question of the day comes from Riley.  

Riley:
Hey Rob, my name is Riley. After 15 years as an army doctor, I’ve swapped my stethoscope for the startup scene. I’m a huge fan of your podcast and have turned others on in the SaaS Playbook. So thank you for all the insights. 

My co-founder and I are launching a freemium platform aimed at tackling the bias, paywalls, and inefficiencies plaguing health and scientific publishing. It’s a space where clinicians and researchers can collaborate peer review and publish globally with premium features for those diving deeper. We’ve got monthly plans starting at $15 a month and higher plans for those who want advanced features. My question is, do you see us as more of a B2C or a specialized content service? Eager to hear your perspective. Thank you as always.  

Rob Walling:
The way I’d think about this, Riley, is if the clinicians and researchers are going to be paying out of their own pockets using their personal credit card, then yeah, you kind of are selling to consumers. This is a nice to have and it’s coming out of a personal budget. If you are in fact selling site licenses or multi-seat licenses, doesn’t sound like that’s what you’re thinking of, but you’re thinking about selling it to actual clinics or universities or places where researchers work and you’re selling to the actual businesses, well then you need to charge more, and that would then be more of a B2B play. 

I’m not going to dive too deep into my thoughts around doing freemium. I’m not sure if that’s the right play. I just don’t know this space well enough and I don’t know exactly what you’re doing so it’s hard to say. Maybe freemium is the best play, maybe a free plan, a time-limited free plan or a usage-limited free plan. But if you’re thinking freemium of like, “Oh, you can read up to three articles per month for free, five articles per month, and then it’s paywalled,” it’s fine. I don’t have a major aversion to that in this case. $15 a month is rough, though. That is going to be, you’re going to have some pretty high churn. You can’t afford to market at 15 bucks a month. You can’t afford to do ads. You can’t afford to do anything except for free things. You can’t afford to go to in-person events. You don’t have the money. You don’t have the lifetime value or even the annual contract value to be able to afford to do anything. 

So that’d be the biggest thing, is it’s like, can you do a bunch of free online marketing and convert people? Freemium alone probably isn’t going to be it. But you know your space a lot better than I do and you know your reach. I don’t know if you have any competitive advantages, you have this massive audience in the space or big network with a bunch of people who are going to promote you. It changes things depending on where you’re starting from. 

You say you do have higher plans for those who want advanced features. Maybe that said, I would be thinking about selling, certainly having a dual funnel if I was going to do that. Meaning you have the $15 a month plan and then you do have an enterprise Call Us plan where it’s like, “Get a license for a thousand seats of this.” That’s where most of your money in my opinion is going to come from, at least based on looking across my 192 SaaS investments. So thanks for that question, Riley. I hope it was helpful. 

If you have a question for the podcast, head to startupsfortherestofus.com, click Ask a question in the top nav. I really encourage you to send in some later stage question. Not even that later stage. Anything, I don’t know, a couple grand a month and up to millions a year in ARR. I’d love to hear those again, can keep you anonymous if you prefer. Thanks for coming back this week and every week. If you keep listening, I will keep recording. This is Rob Walling signing off from episode 716.

Rob Walling:
[foreign language 00:00:01] Rob Walling. And in this episode, I’m joined by Dr. Sherry Walling, where we have a great conversation, it’s fun. We move from the best uses of the internet. We tell a couple recent stories that have more relevance to us as humans than we talk about, Sherry’s recent circus show and her desire to do that. It’s as much of an entrepreneurial venture as anything is given the amount of time and focus and money and energy it takes to put that on. I asked her why she does it, and I think there’s some lessons to be learned from her journey and what we all do as entrepreneurs. And finally, we talk about our new book, which I say new book, I mean we’re probably still six months out, question mark, from launching it, but it’s a book about selling your company, about thinking through whether to sell it, things that could change, that would make you consider selling it, the mental side of the process, dealing with all the humans involved. We haven’t talked anywhere else about the book in this depth as we do in this episode. 

Before we dive into the episode, I wanted to let you know that our MicroConf Mastermind Program is open for applications. I’ve talked a lot on this podcast about how important masterminds have been to my entrepreneurial success, but finding the right founders to join up with can be hard. Over the past few years, our team has successfully hand-matched over 1,000 founders into mastermind groups by looking at your revenue, team size, strengths, goals, and a few other data points to make sure your peer group is the right fit. Once matched, you’ll also have access to our mentorship series, a three-month program where you can connect with some great minds in sales, business development, marketing, and more. If you’re looking for accountability, honest feedback about your business, and the opportunity to make new friends that care about your success, you can learn more and apply today at microconfmasterminds.com. Applications are only open until July 12th, so make sure you sign up before then. Again, that’s microconfmasterminds.com. With that, let’s dive into our conversation. 

What’s the difference between a light bulb and a startup founder?  

Dr. Sherry Walling:
Something about screwing?  

Rob Walling:
Oh my gosh. Light bulbs stop working when they burn out.  

Dr. Sherry Walling:
Founders never stop working.  

Rob Walling:
No. Burnout. [inaudible 00:02:37] I figured is-  

Dr. Sherry Walling:
I love burnout jokes.  

Rob Walling:
Isn’t it fun? Is burnout-  

Dr. Sherry Walling:
My whole life is like a burnout joke.  

Rob Walling:
Something to joke about. Well, thanks for coming back on the show. Dr. Wallings, great to have you here.  

Dr. Sherry Walling:
It was a pleasure. Mostly you didn’t have anybody else, so you’re like, “Hey, will you be on my podcast?”  

Rob Walling:
Did you just say it was a pleasure as if the episode’s down? I just think, “It is a pleasure?” Kind of checked, we’re 48 seconds in-  

Dr. Sherry Walling:
It was a pleasure to be asked.  

Rob Walling:
Oh my God, it was a pleasure just to be nominated.  

Dr. Sherry Walling:
I’m happy to be here.  

Rob Walling:
Oh my goodness, we’re off to an amazing start. Okay, so I want to kick us off. We’re going to dive into all kinds of fun stuff today about motivation, about the exit book we’re talking about, maybe even talk about a circus show. But I want to kick us off with a story from you: the best use of the internet. Tell us this story.  

Dr. Sherry Walling:
This is a good story related to this aforementioned circus show.  

Rob Walling:
That you hosted.  

Dr. Sherry Walling:
That I hosted. So I wrote and produced and starred in…  

Rob Walling:
Geez.  

Dr. Sherry Walling:
… sounds very pretentious, a circus show in honor of Mental Health Awareness Month, so using movement art to really depict what I think is a core idea about human flourishing. We’ll talk more about the details later. But anyway, so I’m putting together this show, I’m doing a lot of promotion for the show. Basically everyone I know or is connected to me on social media is probably overhearing about this show. But one of the things that I was doing was looking for visual images to depict the ideas and the characters in the show. And so, of course, like a good tech person, I go to Dall-E and get some cool images that depict this idea of the mind, body, and soul in this certain color scheme that we’re using as characters in the show. 

I think that’s a perfectly fine way to go. The images are fine, they’re okay. But I got a message from a woman who is a local artist, a tattoo artist and a painter, and also dabbles a bit in circus, so I know her peripherally. She sent me a message and she was like, “Hey, just so you know, a lot of visual artists are really struggling with AI-generated art. We’re triggered by it. It is replacing us. We’re getting a little lost in the story of AI-generated art.” I was like, “I completely understand.” She said, “Basically, you might not know that it might be upsetting to some people in your community that you would use images like this.” And then she said, “I know you’re doing this show, I know it’s really important to you. I wonder if I could help you create some art for it that is really from a thoughtful, soulful, non-artificial intelligent way.” 

And so we talked about how I don’t really have budget for that line item for the show. We talked about some other ways that I could in kind reciprocate. But anyway, she made this really beautiful art for the show. I actually have it right here. I think it’s really beautiful, really captures the spirit, really colorful. I loved the best of the internet story because she saw that I posted something that bothered her, not deeply made her, but just bothered her, and she doesn’t know me very well, but she took at the time to write me a very thoughtful note, gave me the benefit of the doubt, wasn’t accusing, wasn’t like, “Hey, you’re clearly aligned with the robots and hate all artists.” It didn’t make it this polarizing discussion, but she just spoke her truth about it in a very thoughtful, respectful way and then offered to help, offered this collaborative, kind solution. 

I know that not every AI-generated piece of art is going to generate that kind of warm human interaction, but I really loved the way that she handled it as opposed to all of the potential ways that could have been much more inflammatory. It also really gave me a space to super celebrate her artwork both on the internet and in 3D, and it was a big poster for the show. So I like the story.  

Rob Walling:
Yeah, there was some nuance. There’s nuanced thinking of like, “Oh, it’s not all bad or all amazing.” And also it sounds like she came in with a posture of questions, of genuinely seeking to find out your thoughts on it, offering a solution instead of just raising… How many people approach you-  

Dr. Sherry Walling:
It just wasn’t a rant.  

Rob Walling:
Yeah, it’s a rant. How many people approach me about my businesses or stuff I publish or MicroConf, it’s just, oh, problem. “Did you know there’s a problem here? Oh man, there’s a problem here. You should really fix that problem.” And it’s like, “Oh, what are you doing to help fix that problem?” I think as a community, we could all fix that problem. She wasn’t saying, “Oh, you created a problem and you should fix it.” She’s like, “How can I offer to help?” That’s great. I love that story. 

I have a best use of the internet story as well, not at all related to startups or entrepreneurship at all. But little known fact, I set the record at my high school for the 300 meter intermediate hurdles. I set it back in 1993. I don’t think about that at all. Obviously it was something that I probably should be proud of. It was a great moment. I remember the moment it happened. I remember qualifying for the state meet in California that year, which is hard to do. And I remember breaking the record. But since I left school, I just haven’t thought about it. My track coach from that year pings me every five years or so on Facebook Messenger and says, “You still have the record, no one’s beat it. You still have the record.” So he thinks about it more than I do because he’s involved with it, it’s a point of pride for him. It was his first year of coaching. 

And so I get this Facebook Messenger message from a guy I went to high school with, and I have not talked to this guy since the day we graduated in 1993. He says, “Someone just broke your record, 31 years.” And he said, “My son runs for our same high school we went to, and is a really good friend of his. I’ve watched this kid go after your record all year, and he just broke it.” He said, “I think there’s a video of it too. I can send it.” I was like, “What?” A, I was like, “Are you trying to scam me out? Do I need to wire you money?” This is so out of the blue. Again, I haven’t thought about this in forever. 

And so he sends me a video of the race, and this kid, I mean, he’s a seventeen-year-old, he’s junior, he’s way ahead of the rest of the field, just destroying them. My friend said, “It makes me realize actually how much of a badass you actually were.” It was such an odd comment, but it just came out of the blue. He says, “Seeing how dominant this kid is and to know that you were running this in the ’90s, that’s a big deal.” So it impacted me a lot in a way, all positive. I was not upset. I was not sad. I don’t think like, “Oh, my record.” All I thought of was, “Good job, kid. Good job. Super proud of you.”  

Dr. Sherry Walling:
I love too that you know this kid was gunning for you.  

Rob Walling:
He was.  

Dr. Sherry Walling:
You know that he knew the number and he knew that you said it, and he’s like, “I’m going to get Rob Walling’s record.”  

Rob Walling:
And my name and number, they have all the records, so my friend said, “He was gunning for Rob Walling’s record.” That’s just such a trippy thing because, again, I don’t think about it that way, but he has no idea who I am. I’m wondering if my friend ever told him that he ran track with me. Maybe he did, maybe he didn’t, but I’m just some amorphous person who ran this 39.30 time in the hurdles. So I thought about it-  

Dr. Sherry Walling:
Until…  

Rob Walling:
Yeah, until he broke it by three… well, 2500ths of a second. I was really impacted by it in a way. It made me nostalgic, but it also made me super proud of myself for being 18 and doing that. It also made me really, really happy for this kid. Just really happy that he could share in that joy. I don’t need the joy anymore. You know what I mean?  

Dr. Sherry Walling:
You’ve accomplished some things.  

Rob Walling:
Yeah, I don’t need the joy of being the record holder. It just doesn’t matter. So I sat down and I recorded a video, a three-minute video on my iPhone, and I said, “Hello,” insert kid’s name here. “My name’s Rob Walling. You probably know…  

Dr. Sherry Walling:
You know my name.  

Rob Walling:
“You know my name.” Oh, it was so funny. And I said, “You just broke my record, and I have nothing but incredible respect for you.” And realize the rarefied air, like our school was… It’s a high school, I think it was started in the ’70s, and the record I broke was set in the ’70s. So I was either the second or maybe the third person to hold it. So now you have this kid who’s the third or fourth person to ever hold this record. And it’s fast. He’s either going to beat his own record or I think it’ll be decades again. This is a hard record to beat.  

Dr. Sherry Walling:
He’s a junior, right?  

Rob Walling:
He’s a junior, he’s 17.  

Dr. Sherry Walling:
He is not done yet.  

Rob Walling:
Crazy. And so I recorded this video, and it was just like, “Mad respect for you. Super impressed. Welcome to the club.” There’s three of us, four of us. Obviously we don’t know each other, but it’s pretty incredible. And then I told him, “I’m pretty old now, it’s been 30 years since I broke that.” And I told him how much track and being an athlete has meant in my life, how much it taught me about hard work and about…  

Dr. Sherry Walling:
So you gave this kid a three-minute, old guy lesson.  

Rob Walling:
A little bit. But I tried to be really authentic, like, “This is the rest of your life in the sense that this-  

Dr. Sherry Walling:
Matters a great deal.  

Rob Walling:
That’s what I was trying to say, “This matters so much.” I still remember the day I broke it. I still remember the accomplishments that I did in track. Even though I don’t think of them that often, once I do, it’s a big part of my life. So anyways, I sent that to his parents because I had their info, and they showed it to him and he was like, “Whoa, this is crazy.” And then the parents were like, “Oh my gosh.” His dad was like, “You just taught him more in two minutes than… I’m trying to teach him all this stuff, but he’s willing to listen to you because you and he are like the only people that have done it.”  

Dr. Sherry Walling:
You’re in this special club that I’m not in.  

Rob Walling:
Just crazy. Anyways, that’s my best use of the internet, because without the internet, I wouldn’t have found out about it. It would’ve been months. I couldn’t have sent him a video. Just so many things coming into play of that is really cool, and I hope this has a big impact on him maybe just for a day, maybe for a week, or maybe, like me, for the rest of most of his life.  

Dr. Sherry Walling:
I love the impact that it’s had on you, on the sense of connection to that part of you, that 18-year-old version of you. And since this has happened, you’ve gone back and you found the video of the race where you set the record, and we watched it together. You showed it to our son who’s just beginning his track career. I think the ability to connect both with other people that you wouldn’t necessarily interact with, but also to connect with this past version of you feels like quite a gift. Thanks, internet.  

Rob Walling:
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So speaking of a past version of you, just a couple short weeks ago, you were hosting, producing, starring… And you sound like Sylvester Stallone, “I wrote the movie because they wouldn’t let me be… I wanted to be the lead.” I mean, this circus show was an event. It was to how many performers, hundreds of attendees, three different performances, a lot of moving parts. Talk us through what it entailed and why you did it. Why do you do something like this that’s hard?  

Dr. Sherry Walling:
So this is the second circus show that I’ve created. It involves 20 artists, and we had 400 attendees over three shows. One of the shows was a continuing education class for licensed psychologists, marriage, family therapists, social workers living in our state, which in and of itself is quite bizarre that the boards of those different entities have to approve an educational activity like this. So they approved a circus show, which I think is pretty cool. 

So the shows that I’ve created, both of them, have been an attempt to bring into the 3D, bring into physical artistic expression some deeper observation or truth about human functioning and human flourishing. So it’s a little bit like Cirque du Soleil meets your therapy appointment. So if you could imagine your therapy appointment being acted out by a Cirque du Soleil troupe, that’s our show.  

Rob Walling:
That’s a heck of a tagline.  

Dr. Sherry Walling:
I only starred in this one because I needed a couple extra acts and I didn’t have any more budget. So I was like, “I guess I’ll do it.” Truth, actually. But I get to work with these extraordinary performers. I think I love doing this work because so much of my work is so intellectual, it’s word-based, it’s thought-based. It’s doing this, it’s having one-on-one conversation with founders, which are hopefully of deep service to them and very helpful to their ability to lead and flourish and function well. But there’s also a whole part of my life as a human and of all of our lives as a human, which is not cognitive and it’s not word-based. And so if we can find ways to have collective or shared experiences together where we’re engaging a topic or learning something or tackling something but not necessarily with this prefrontal cortex, word-based language, I think that people are pretty hungry for those kinds of experiences. It’s what going to a concert does. It sort of sweeps you out of your mind and into the music and into the shared experience of the music that you’re hearing alongside other people. And so, creating a show is about making collective a set of emotions and a set of ideas.  

Rob Walling:
And you put a ton of work, time, energy, effort, money into it. What do you get out of it?  

Dr. Sherry Walling:
I think I get out of it a sense of I’m doing a bit of what I was called to do. I know that’s maybe a weird, maybe philosophical or spiritual way of thinking about things. But many of your audience members may know I lost my dad and my brother in close proximity to each other, so I’ve worked through grief pretty deeply. We have in our lives in the past few years. One of the things that I just have absolutely taken away from those experiences are the fact that words don’t account for everything that’s important and that art and creativity and movement are absolutely essential to human wellbeing. And so, I can talk about that and I write about it and I tell everybody, but to show it and to invite people into an experience of it is a way of having people know something, not just with their minds, but with their cells, with their whole bodies. 

So that’s just part of my mission in life. So when I do something like this or invest all this time and energy, I feel like I’m following marching orders from whatever, the universe, the divine. I also really love to shine a spotlight on other artists. You and I have accomplished a lot in our lives, and I’ve had a lot of opportunity to be on a stage, I’ve had a lot of opportunity to get my ideas across, but to have the opportunity to really cast the focus on other artists feels extremely satisfying to me. I think that’s part of the second half of life work, which is how do we really spotlight people who have something to show and something to say, in this case, the language of movement. So that feels important and meaningful to me. Also, it’s just a thing I think should exist. I think we should have more deep level, meaningful engagement on meaty topics in the creative ways. So that’s what I’m about.  

Rob Walling:
Yeah, it sounds like a really nice compliment or in alignment with life’s mission, life’s passion. It’s nice to be able to do something. And that’s where you’re willing to do something hard and invest time, attention, and energy and do something that is mentally and physically and psychologically challenging, but it’s worth it, maybe like playing a sport, being a founder.  

Dr. Sherry Walling:
Yeah. It also feels in balance. I talk to a lot of founders who spend a lot of time in their heads, and that’s the job, your value is in the functioning of your brain and your creative ideas and the way that you communicate, the way that you see the world. That’s the unique asset that a founder brings to their company. But I think that there’s a vulnerability to get too heady. And so I talk a lot with founders about hobbies, about passion projects, about legacy work, about having a cause or a thing that you think matters and having that be really important in your life. Not to take away from your primary focus on your business, but as a supplement, as a balancing out of the neural circuitry in your brain so that it’s not using the same things over and over, but is diversified in its ability to see and function and problem-solve and feel like you are in the wholeness of yourself. I can’t tell other people to do that if I’m not willing to do it myself.  

Rob Walling:
I want to mix it up and talk about the book that we’re working on about exits, The Psychology of Exits. I haven’t talked much about it on the podcast. I’ve hinted around about it, but…  

Dr. Sherry Walling:
Your marketing strategy is like my marketing strategy, which is write a book and then see if people can find it.  

Rob Walling:
Hey, can you find it based on some… I used a pen name too, so you can’t even use my real name.  

Dr. Sherry Walling:
It’s like a scavenger hunt.  

Rob Walling:
Yeah, it’s great. No, but I was just looking in the document, and we have 16 chapters and seven chapters have a first draft. We have 27,000 words, which puts us on pace to be exactly a Walling book, which is right around 200, 250 pages. All the books we’ve written have been that. I guess Touching Two Worlds is a little longer. 

But yeah, I want to give people an idea of what’s in the book. Chapter one is Why Is This So Difficult? Chapter two is When Is It Time To Go? So obviously that’s thinking through things that might change or come into play to have you move on. Chapter three is Exit Options. Four is What Does An Exit involve? Then it’s Walk-Away Mindset, Getting The Deal You Want, Why Do You Need A Support Team, Collateral Damage, Minimizing Negative Impact, Who To Tell When And How. And then that’s only the first eight chapters. The rest is dealing with the process and managing it afterwards, and you have your team and all this and that. So why did we decide to write this book? What’s the need? Why are we good at this? Why do we know what we’re talking about? No, but why does the world need this? You and I both came to this conclusion that the world needs it and that you and I are as good a people as any to write this.  

Dr. Sherry Walling:
I think we’re the perfect people to write this. You know how bad I am at marketing. But I think we are the perfect people to write this because you’ve been through the exit directly. I’ve been through the exit as your partner, so indirectly, but definitely on the bus for all of the roller coaster of emotions up and down and left and right and upside down. Stop with that, with your face.  

Rob Walling:
It was fine. It was easy and fine, best memories of our life.  

Dr. Sherry Walling:
So we’ve been through it. And then if we take it a level back, in your work with TinySeed and your work with Discretion, in your work with MicroConf, you’ve been on the periphery/the supportive guiding function, the counseling function for a bunch of exits over time. And in my work with founders, I’ve been on the mindset side like, what’s happening? How do I decide to pursue an exit? How do I get through the exit process? What do I do with myself after an exit? 

So we know this topic from every layer imaginable. I think it’s extraordinarily important because it is a thing that people get so stuck on so often, but there’s very little language about that. I mean, again, best-case scenario, an exit is phenomenally successful. Someone walks away with a pile of money, everybody’s happy. That founder is often in the midst of a great deal of emptiness and lossness that is very, very difficult to voice. So anyway, exits are way more difficult than people recognize, give them credit for. You and I know that on all the levels of possibility, and I think I have some really interesting ideas about what to do about that and how to make it strategically preventable to have some kind of… You don’t have to have an implosion around your exit.  

Rob Walling:
Yeah. I remember a couple of years ago on this podcast, it was probably three or four years ago, I said, “Look, an exit, you might only do it once, especially if it’s a seven or eight-figure exit. You might only do it once in your life, and so if you’re at a point where you feel like spending 30 minutes talking to someone who has some experience, knowledge, and advice to give on this, ping me directly and I’ll talk to you.” So I talked to, I don’t remember, 15, 20 founders over the course of six months all at different stage. I mean, some of the exits were, “Oh, I’m at sale for 750K.” Other people were like, “There’s a $10 million offer on the table.” All of this is life-changing, and some of it is never-have-to-work-again money. What I realized through those conversations, and you’ve had a lot more and more in depth than I have had, those obviously aren’t the only ones I’ve had, but I just remember it being a very compressed time, I got to see that, “Oh, there’s a lot of commonalities.” 

I started saying about 60, 75% of the same things over and over, where I was like, “Oh, you’re in… ” There’s a lot of commonality. And that was when I realized, “Oh, someone should write a book that talks about this side of it.” I told them a little bit of like, “Oh, you should get an M&A advisor or a broker, a great one, a great SaaS one is run by Intervals at Discretion Capital, but there are others out there, certainly quite light and a fee and all that we talk about, but M&A advisor. But then there’s mechanics of it of like, “Ooh, I think about it this way.” But then there was a lot of the mental side of it, of just thinking through, “How do I think through? How am I going to deal with this when I’m in the middle of it? How will I deal with it at the end?” 

And there are other books on this topic, right? We know Dan Andrews… Is it Before the Exit, After the Exit? I forget which one it is, but After the Exit. John Warlow’s written three books on this stuff. But we have more to say. In fact, we talk about all those books in the book, like they’ll be in an appendix of like, “Hey, here’s further reading,” but we have our own additions to make and our unique takes and our unique advice. I really feel like there is a gap in the market for this type of book. Look, it’s not going to focus just on SaaS or on tech companies. We obviously have a lot of experience with that in the network, but you also know folks who have tried to move out of agencies, service businesses, even trapeze schools or circus stuff. There’s still real businesses that you can sell. Just because they’re not SaaS doesn’t mean that we won’t include them. And hopefully, what we have to say… I think what we have to say is really pretty valuable.  

Dr. Sherry Walling:
It’ll be interesting to see how the book reads because you’ve got two people with different expertise and different ways of thinking and different voices. We’re trying to weave it together to feel seamless, but I think your deep procedural knowledge about exits and your just ways of thinking in decision criteria, to sell or not to sell, you think about, “Okay, if I’m making this much at this point and this much ever this time… ” You make it like a word problem, like a math equation. I just approach that question very differently. I think both are really, really relevant and both are important. So if we nail it, which I have some hope that we will, I think the fullness of the perspective will really, really be an asset to people who are reading it.  

Rob Walling:
Yeah, I think about it as a spreadsheet. You think about it as an intuition or there’s a lot of heart and mind going into it. I think about it as an escape room, solving a puzzle.  

Dr. Sherry Walling:
You think about an escape room, I think of it maybe as an existential philosopher.  

Rob Walling:
Totally.  

Dr. Sherry Walling:
What’s the meaning behind this?  

Rob Walling:
And that’s what I hope we can bring to this, is there’s a bit about mechanics, a tiny bit, but that’s already been covered in other books, how do you think it through? Here’s the thing, if there’s any criticism someone can give me about The SaaS Playbook or Start Small, Stay Small, any criticism that I will accept because it’s how I write, is it’s like dense. It tends to be succinct, terse. I give maybe an example here or there, but it’s not filled with a bunch of anecdotes about stuff. And, one could think it might be a little dry. I feel like, “Look, I’m very practical about things.” It’s informational, right? Yours is certainly informational, but from a different perspective. I think you drive a lot of, “Oh, here’s a story. Here’s an example. And here’s,” like you said, “an existential question,” rather than, “Are you doing math in your head, or are you really thinking about all the people involved?”  

Dr. Sherry Walling:
Ultimately, exits are both, right?  

Rob Walling:
Yep.  

Dr. Sherry Walling:
They are a math problem of what numbers make sense and they are like, “What is the nature of what is important in my life?” kind of problem. So that’s where, again, I get really excited about this book. I think other people have talked about aspects of that, but probably not with the fullness with which we’ll tackle it.  

Rob Walling:
So I’m excited about it. We have about three quarters of it mapped out really well and obviously half of it written, so hopefully coming, I don’t know, later this year.  

Dr. Sherry Walling:
What are we launching this book?  

Rob Walling:
Don’t know yet, but I do-  

Dr. Sherry Walling:
My chief of staff was asking me, “Well, what’s your timeline on this?” I’m like…  

Rob Walling:
“Yeah, writing this summer, try to get it done.”  

Dr. Sherry Walling:
Because you have a few other things that you’re launching.  

Rob Walling:
I have another book.  

Dr. Sherry Walling:
So we’ve got to launch all our things. I also am going to do a deeply revised update of The Entrepreneur’s Guide to Keeping our (censored) Together. Well, we are.  

Rob Walling:
Totally. I think it could use it, right? I mean, that’s a six-year-old book. It’s held up well, but we have so many more stories, anecdotes, and thoughts. When I read through it now I’m like, “Oh, this is cool. It’s a little light.” I have a lot more to say.  

Dr. Sherry Walling:
Yeah, I have so much more depth now.  

Rob Walling:
And then, of course, The SaaS Launchpad, which is my precursor to The SaaS Playbook, the early-stage stuff, that book, I keep saying it’s written, but now as I go back and read it, I’m like, “Ooh, this is like 80% of the way.” I need to rewrite a lot of pieces, and I think… Not a lot, but I need to rewrite some pieces. I’m doing a video course through MicroConf called The SaaS Launchpad. I think that’s going to be the next thing I launch. SaaS Launchpad itself as a book I think is behind The Exit Playbook, depending on timeline.  

Dr. Sherry Walling:
In terms of launch timeline?  

Rob Walling:
Yeah, I could see SaaS Launchpad being next year.  

Dr. Sherry Walling:
I do love how you/we are going to be able to speak to the whole life cycle of SaaS business. There’s the launchpad, which is like, “So you’re thinking about making a SaaS company.” Then there’s The SaaS Playbook, which is like, “Here’s what you’re going to do.” And then there’s The Exit Book, which is like, “Here’s how you wrap it up nicely, take your bucket of money and go.” And then The Entrepreneur’s Guide will help you not lose your sanity or your family while you’re doing said books one through three.  

Rob Walling:
I’ll tell you what, they have the Star Wars trilogy, right? They have the Unholy trilogy, which is Kevin Smith’s… Was it Clerk, Mallrats, and Dogma I think? Or maybe it’s Clerk, Mallrats, and Chasing Amy. And we are… What is this? A quadrilogy now?  

Dr. Sherry Walling:
Quad, yeah.  

Rob Walling:
Yeah.  

Dr. Sherry Walling:
Unless you wanted to be a trilogy, and then The Entrepreneur’s Guide is like Silmarillion.  

Rob Walling:
It’s the lore.  

Dr. Sherry Walling:
Here’s what’s really going on in your head.  

Rob Walling:
Oh, boy. It’s the deep lore. If you want to read Elvin or Elvish, whatever-  

Dr. Sherry Walling:
No, don’t say that. It’s very, very approachable.  

Rob Walling:
Oh, boy.  

Dr. Sherry Walling:
Yeah. I’ve never, obviously, relaunched a book before. I want to do it that way to retain the title. There’s a lot of reasons to do it. Because it’s not a totally new book, but I’m aiming for 30 to 40% new, which is a chunk. So if you’ve purchased it before, please consider purchasing it again.  

Rob Walling:
Oh, yeah. We will make it so it’s worthwhile. And we’ll re-read the audiobook because the audiobook quality is so-so.  

Dr. Sherry Walling:
Yeah, and we’re going to do it together, right?  

Rob Walling:
I mean, I don’t know. That could be interesting. We’ll have a lot of off-the-cuff moments, arguments caught on tape.  

Dr. Sherry Walling:
Remember that big fight we had in chapter four?  

Rob Walling:
Yeah, that’s great. Let’s talk about this. Boy, let’s relive some… While we’re at, give me some paper cuts and pour lemon juice on them. This would be great.  

Dr. Sherry Walling:
I’m curious, maybe people in your audience know, are there audiobooks that are co-written or co-read by the two co-authors? Because we’re co-writing two books and…  

Rob Walling:
Yeah, I have heard some. So if you’re listening to this and you’ve heard it done well, please let me know. I’ve heard some where it’s basically the two authors trade-off chapters. They don’t actually read it together. I can see why that’s the case, because reading it takes a long time, and who wants to sit and stare at each other through an audio or a recording app for that long? But if you’re interested in any of these books, then be sure to go to robwalling.com, enter your email there. I don’t email very often, but that is the hub where all my book stuff comes out. And while you’re at it, head to zenfounder.com to get Sherry’s weekly newsletter, about twice a month, founder mental health and… No, it’s just the right amount.  

Dr. Sherry Walling:
It’s not too much.  

Rob Walling:
With that, I know that you have to run off to a track meet. I have to take someone to the airport. We are heading on our way. Ready, Break?  

Dr. Sherry Walling:
Go team.  

Rob Walling:
So thank you again so much for joining me today. Folks who want to follow you on Twitter, you are @sherrywalling. And any other place you want them to go to find out more about what you’re doing?  

Dr. Sherry Walling:
I mean, if you are on Instagram, my Instagram’s pretty cool because it’s a cool mix of entrepreneurship and circus. Who doesn’t love that? So that’s @dr.sherrywalling.  

Rob Walling:
Thanks again for joining me.  

Dr. Sherry Walling:
Yeah, my pleasure. 27 years in.  

Rob Walling:
27 years. Each day better than the last. 

Thanks again to Dr. Sherry for joining me on the show, and thank you for joining me this week and every week. [foreign language 00:34:47] Rob Walling, [foreign language 00:34:53]. Wow, that’s a lot harder than it seems.