Startups For the Rest of Us

Rob Walling:
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I’m Rob Walling, and in this week’s episode, I do a Rob solo adventure, where I’m going to talk through a few topics, always bringing it back to being a bootstrapped or mostly bootstrapped startup founder. Before we dive into that, I want to let you know it’s your last chance to get tickets to MicroConf Atlanta. The event is April 21st through the 23rd. Speakers include Rand Fishkin from SparkToro, Asia Orangio from DemandMaven, Stephen Steers, myself, and Dr. Sherry Walling. It’s going to be hosted and emceed by me and Lianna Patch of Punchline Copy. 

I’m also going to be doing a fireside chat with Ben Chestnut, the co-founder of Mailchimp. He does not do very many public appearances, and so I’m very excited to host him at MicroConf this year. MicroConf.com/us, if you’re interested in grabbing tickets. Again, tickets are going to sell out soon, so if you’re thinking about joining me and about 225 of your closest bootstrap founder friends, head to MicroConf.com/us. My first topic of today is how the startup world and the bootstrapper, MicroConf community, and I’m kind of breaking those. 

Those are overlapping Venn diagrams, but they really are two different things. I think of the startup world as probably being more of the Silicon Valley high growth stuff, and then bootstrapping, and MicroConf being maybe a subset of that with some overlap. But the idea is that the startup world struggles to not only learn from prior art, but to credit prior art. It’s two related things, but they really are different. So if you’re an academic and you go, let’s say get your PhD in psychology, or in computer science, and you’re writing papers or writing a dissertation or a thesis, it is 100% plagiarism if you claim someone else’s idea as your own, without giving credit. 

It doesn’t mean you can’t talk about ideas that you’ve heard elsewhere, but you give them credit. So if you go on Twitter and you say, “I had this great idea, it’s to do things that don’t scale,” or even if you don’t say, “I had this great idea,” but you go on and say, “Here’s a secret to success, little known, do things that don’t scale in the early days so that those will eventually lead you to be able to scale up,” but you never mention that Paul Graham wrote an essay called Do Things that Don’t Scale, and he wrote it back in, I don’t know, 2006 or 2007. And it is a very commonly known idea and thought that he came up with, and you don’t credit that, you are plagiarizing someone else’s idea, because the people reading that think you came up with it by default. If you say something and don’t credit, they believe you came up with it. Not a week goes by … 

Literally, not a week. Sometimes it’s more than that, that I don’t see someone on Twitter, or YouTube, Reddit, Hacker News, claiming a concept, or even not claiming it, but not crediting a concept that’s pretty well-defined, that either I invented or Paul Graham came up with, or Jason Cohen, or Hiten Shah, that has pretty obvious and clear prior art, and it’s not like someone saying, “Oh, work hard for success.” Right? That’s a pretty generic way of talking about it, but if someone says, “You have to work hard, and you need skills,” and then there’s a little bit of luck involved. Well, obviously, that is exactly the framework that I talk about for achieving success, is hard work, luck, and skill, and so you can rephrase those two things or whatever, but if you pick those exact three things, the odds of that being a coincidence that we both came up with it, that you came up with it on your own without the influence is pretty unlikely. 

And this is really common, like in the creator maker influencer space, the info product, info marketing space. People are just kind of plagiarizing, and I find it frustrating, I think, as someone who does a lot of deep thinking about this stuff and comes up with a lot of frameworks, and seeing things, whether it’s mine or someone else’s, it just never feels right that folks on the internet, in the startup space, I don’t know why they feel like they need to do that. I don’t believe that it’s an accident. I think it’s pretty intentional, but the thing is, is it’s not just crediting prior art and just saying, “Oh, yeah, that person came up with this idea, but here, I’m going to build on top of it,” or, “Here is how I implemented it,” or, “Here is how it impacted me.” It’s not negative to you to just say that, to just give the credit, but the other thing is not just crediting prior art, it’s learning from prior art, and I see so many folks trying to reinvent the wheel and justify it by saying, “Well, I’m going back to first principles,” or, “That’s rule of thumb, common wisdom, therefore, I’m going to go against that.” 

Like the teenager in the family, every what, generation rebels against the prior generation, right? There’s an example of Ryan Breslow, Breslow. I don’t know how you pronounce his name, but he was the founder and CEO of Bolt, and he was the guy … I don’t know, he’s a 20-something who just thought he knew everything, basically, and he went on Twitter, and what, flame Stripe and Y Combinator as being some type of mafia, or a cabal or whatever. Anytime I hear this type of phrasing, I’m like, “Oh, boy, someone really wants some clicks rather than fighting the good fight.” 

But anyways, Bolt was giving loans to their employees so that employees could buy stock options, and then Bolt lost 97% of its value, and so anyone who took out loans to buy their stock options now owes the company money, sometimes thousands, sometimes tens of thousands of dollars. At the same time, this founder, Ryan Breslow, sold millions of dollars of his shares in secondary, so he seems to walk away okay, but it’s kind of a disaster for employees who are now on the hook for these funds. The thing is, this was already attempted. If you listen to the All-In Podcast, you’ll hear David Sacks talk about this, where this had already been attempted in the ’90s, and it was proven to be a disaster, but he was touting it as this great new invention, this employee-friendly thing. A, did no one tell him this is a catastrophic idea, they tried this 30 years ago, and this same thing happened, or B, did people tell him, and he waved that off, right? 

He said, “Well, no, I’m going back to first principles. They did it differently. They did it wrong in the past.” I’m not saying we should be tied to every mistake that everyone makes in the past and never try things that didn’t work, but you have to learn from that art and do it differently. You have to learn from the failures and not just try the same thing again and expect a different outcome. 

If we are not as a community learning from prior art and reading books like Paul Graham’s Hackers & Painters, or the old blog post from Joel Spolsky, old posts from Peldi Guilizzoni, Patrick McKenzie, my books, my old blog posts and podcast episodes, if you just come on the scene and you don’t read any of that, then you can’t stand on the shoulders of giants. There’s a reason that in academics, you study and you go to school to learn what people before you have learned, so that you don’t have to reinvent everything from scratch every two weeks. If you come on the scene and you don’t read any of that, then prior to yesterday’s Twitter feed or Hacker News, do we just start over from zero every week or two, and we don’t drag anything along with us? Now, you could say, “Well, dragging things along is baggage,” and I want to, once again, go back to first principles, but at least know, “What’s been tried?” At least know, “What’s been talked about?” 

And you can make a case to disagree with it, but even that, just knowing what the common wisdom is, and then zigging when everyone else is zagging, at least make that a deliberate decision, not just a decision of, “I’m going to do this because I didn’t educate myself that I need to actually market and sell this,” even though, every week on this podcast I’m saying that. You go and start a B2C business, it has high churn, and you’re surprised everyone is price sensitive, even though every other week, I talk about that. You go and start a B2C two-sided marketplace, try to bootstrap it with no audience, even though I’ve said it so much, it’s become part of the Startups For the Rest of Us drinking game. And look, I’m not saying just me. I’m not saying, “Oh, I should say things, and everyone on the internet should hear it.” 

It’s not the case. There are so many smart people with experience that are talking about these things, and yet, there are so many people who are making the same mistakes over and over because they’re not doing any of the learning or the research on their own in order to stand on the shoulders of giants. As you start your journey, it’s hard enough already. Learn from the mistakes of others. You do not have to make every mistake yourself, and hopefully, if you’re a creator, if you’re recording videos, if you’re putting out podcasts, if you’re tweeting, that next time you mention someone else’s idea or framework, that you give them credit. 

My next topic is a concept I mentioned on a podcast four or five years ago, and then poof, it just disappeared. I had forgotten it. I think it was during an interview, and the idea of it … I want to bring it back up today because I’ve realized that there’s a lot of value in this framework. It’s about early stage product validation, okay? 

So if you’re a later stage founder, you may want to skip this section, but the framework I’m calling the 2-20-200 validation framework. So you know how I have the 1-9-90 rule, right? That’s where I think about 1% of tech companies should consider raising venture, about 9% should consider raising some type of funding, whether it’s angel, TinySeed, indie funding, whatever, and then about 90% should just bootstrap. It’s directionally correct. It’s directionally accurate. 

As Braden Dennis said on the show a couple of weeks ago, “This 2-20-200 validation framework is similar, directionally accurate.” The idea here is that there are three steps, three stages that can happen in order as you try to validate or invalidate a startup idea, and the numbers stand for the approximate number of hours that I think you’re going to spend doing them. So two hours, 20 hours, 200 hours. And the idea here is the first stage of two hours is something you can do relatively quickly. So if you have five different ideas that you’re thinking about evaluating, well then, you spend two hours each to do this very first step. 

And that first step really involves just implementing the 5 P.M. Idea Validation Framework that I’ve talked about on this podcast. You can Google that if you aren’t aware of it. I’ve recorded a YouTube video about it, and I am including it in my next book, which is about the earliest stages of building and launching a SaaS, and that book is already written, actually. I’m just going back and revising a few elements of it, but 5 P.M. Idea Validation Framework is something that, where you go through several steps and you can do it in literally a couple of hours. So if you have five ideas and you want to spend 10 hours over the course of a weekend, or a week, to just get a little better picture of which of these ideas might be the winner … 

And when I say winner, I mean better than the others. You go through the two-hour stage of the 2-20-200 framework. 20 hours is where you take it to the next step, and this is where you either do landing page validation, or you speak one-on-one with potential customers, or you do both. I tend to do both when I’m thinking about building a product. The idea, of course, is that if you’re going to have a marketing funnel and a low-touch product, then you put up that landing page and you try to drive traffic, and the way that you’re going to ultimately market the product, and you see what kind of opt-in you get, and you see what kind of traffic you get, and you see how many emails you collect, versus if you’re going to do high-touch sales, and obviously you want to have more conversations, I think doing both is always better. 

The idea behind 20 hours is, “How long does it take you to put up a landing page and/or reach out to your warm network for these conversations or reach out to your cold network for these conversations?” Set up ads. SEO takes a while, but cold outreach, whatever you’re going to do to start gathering qualitative and quantitative data around this. You’re not just sitting in a research modem like you are with a SEO keyword tool maybe within the two-hour section of this, but you’re getting out and spending more time. This is where, if you have five ideas, you probably don’t want to do all five ideas at the 20-hour mark. 

It’s just a lot of time to invest, and that’s where the first stage, where it’s only two hours into each idea, is helpful to maybe narrow you down to one or two, and then you move on to this second stage, where you spend 20-ish hours. And then the third stage is the 200-hour stage, and that’s where you think about building an MVP. And, of course, an MVP can be a no-code MVP. It can be a human automation MVP, like I talk about in Start Small, Stay Small, or it can be a full-blown coded MVP, and whether we call it an MVP or a V1 or something to get into the hands of people to see if they like it, what parts of it resonate and what don’t? And honestly, I’m putting together a video course right now for MicroConf that’s going to be out in several months, and I dive more deeply into this because there’s a lot to say about it. 

But the idea behind the 2-20-200 framework is to level-set in your mind that it’s not just this big amorphous cloud of “Validate.” It is there are specific stages that you can go through. I’m not saying this is the only way to do it. You can validate any way you want, but this is just a repeatable way to think about, “How am I going to go about being a little more confident?” This is the thing, right now, you’re probably 0% confident that this is a great idea. 

After two hours, are you 10 or 20%? After 20 hours, are you 30, 40%? After 200 hours, do you get to 50, 60, 70%? If it works, maybe. That’s kind of the goal, is to get a little more confidence before you invest a ton of time, tens of hours, if not, hundreds. 

You get a little more confidence, that the thing might work and that you might actually be building something people want, because that really is the hard part, right, building something people want and are willing to pay for. Credit to Paul Graham for saying, “Building something people want.” I added the and are willing to pay for, but doing that is really hard. I’m not saying everything else is simple, but there certainly is more of a playbook once you’ve done that, and my hope is that the 2-20-200 validation framework can be a sort of … It’s not a playbook per se, but sort of a compass or a guiding light as you think about validating your ideas. 

All right, my next topic of today is about design by committee and why I have always believed that it is by far the least efficient way to do things and that you just get bland, crappy output. Your art or your product or whatever it is usually sucks if a bunch of people have input into it. One example I can think of is every school project I ever did, where it was a group project, the more people involved, just the worse the quality was, right? Unless it was like a hand-picked group of people who are all on the same page and had the same vision, it was like the vision just tore everybody in different directions. And even at larger companies that I’ve worked at, after Drip was acquired, or with TinySeed, which isn’t a huge company, I tend to keep input to a minimum of, that everybody around here is really smart and competent because that’s what we like to hire, that’s who I want to work with, but I bring in one, maybe two people even to make really big decisions because the moment that I have six, seven, eight, nine people weighing in on a decision, A, it grinds it to a halt, and B, I find the output is subpar. 

And that two exceptional people who are on the same page with a similar shared vision can build incredible things, but the moment you get to three, four, five, it can often derail that vision. One example of this is a Metallica album called St. Anger. And if you’ve ever watched Some Kind of Monster … That is a documentary. It’s like two and a half hours. It’s actually pretty long, but it’s of Metallica almost breaking up. 

Is it 20 years ago now? Yeah, it’s probably about 20 years ago, and they bring in basically a therapist, like a … It’s like a marriage counselor. No, he’s actually a sports counselor, but if I recall, they’re paying him at 40 grand a month to be on call, and he’s trying to keep the band together. One of the things that a couple of the bandmates had an issue with was that two of the members of Metallica, Lars Ulrich and James Hetfield, had pretty much written all the songs up until then, and the band’s been together since what, the ’80s, since the early ’80s? 

So I mean, you’re talking 20 plus years, and these two guys had written almost all the songs and almost all the lyrics. Other people would come in with a riff or whatever, but then they would take it and they’d run with it, and there were some complaints, I think it was mostly from Kirk Hammett who’s one of the guitarists, that they wanted input. And so in this documentary, Some Kind of Monster, it’s pretty fascinating documentary, actually. If you’re at all into their music, it’s cool, but even if not, just seeing the dynamics and the craziness of trying to keep a band together, it’s a fun watch. I’ve seen it a few times, but one thing they do is they are writing the songs together as a group, and you can … 

It’s just painful. It is just painful to watch them come up with a riff and to hear the song be like, “This is actually a cool song,” and then they’re like, “Cool, so throw out lyrics,” and people are just throwing out random sentences that have nothing to do with each other, and they string them together as the lyrics to these songs. And so if you listen to the lyrics of that album, they’re terrible. They’re terrible, compared to the cohesive … Look, I’m not saying Metallica are the best lyricists at all before that, but at least there’s a story there. 

At least there’s poetry. At least there’s a cohesiveness to each song prior to that, but on this album, in particular, which … Look, a lot of people hate on this album, especially folks who really are into Metallica. I actually really enjoy the snare sound. It sounds like he’s banging on a beer keg, but kind of has this weird … 

It’s a different sound, and it has kind of almost a punk-ish vibe, even though they’re playing metal, but I don’t dislike the album specifically about two or three songs that are good, and the rest I would pass on, but even then, the lyrics are awful, and I don’t typically pay attention to lyrics that much in Metallica songs, but it is noticeably cringe. And I think 99, if not 100% of the reason, that is the case, is because they designed this by committee. They didn’t collaborate. They didn’t get two people or three people together and all with the same vision. It was, “You said you wanted to write, and the therapist said that we have to let you write, so let’s sit here and just write stuff out on a sheet of paper. Just call things out.” 

It almost feels half-hearted, and it certainly feels like they did not put out the best end product they could have because of this one or two people doing it could have done a much better job than the group doing it together. And so why do I bring this up, and why does it relate to startups? Well, back to my point earlier of, whether you’re on a big team or a small team, I feel like some folks are uncertain around what they’re doing and they feel like getting more opinions will add more certainty to that. And what I’ve found in rare exceptions is that the more people get involved, the more noise there is, and more chaos is created. Now, I will say that I’ve found it helpful to kind of semi-crowdsource some naming stuff recently, where I am trying to … 

I mean, I’ve had to name three books in the past. I guess it’s like maybe year, is that right? Yeah, probably last year, I’ve had to name three books and I’ll have to name a course, and I always want those names to be really good and catchy. And so I do brainstorming and I talk to some people and I go to ChatGPT, and I come up with a list, and then I narrow it down, or I come back three days later when it’s cold, and I start narrowing and narrowing, and then I start asking opinions, but I don’t go and ask 20 people’s opinion. I go to like … 

I’ll say my inner circle, and it’s like three or four people that I trust, that I know have taste and I know have an understanding of the space, and I say, “Hey, I have this handful of titles.” I don’t give them 50 titles to choose from, but maybe I’ll give them three or four, what I call short titles, which is like The SaaS Playbook, right? That’s the short title, and then I give them three or four subtitles. And with The SaaS Playbook, it’s build a multi-million dollar startup without venture capital. And so I have three or four of my tops that came out of like 50 plus, but it’s usually pretty obvious which of these I think are going to be great, and I get feedback there, and then I iterate, and I might even brainstorm again, then I go a little broader. 

I might go into the TinySeed Slack, or I might go to a MicroConf Slack, and get some input, and it’s always noisy, right? It’s always fuzzy. You’re guessing like, “Oh, all right, more people like this.” That doesn’t necessarily mean it’s the best one, I’m going to use it, but there’s a signal there, right? And then maybe after that, I might wind up on Twitter, and at that point, I’m probably trying to more confirm my own favorite pick or have two that are so similar that it maybe doesn’t matter, but I certainly don’t want to go to Twitter with 10 different options because you’re going to get 10% of the people liking each of the 10 options, and then how much good does that actually do you? 

So I do think that getting a lot of voices and input at a certain point can help, especially the further along it is, right? Let’s say you’re building a feature, you’re trying to figure out how it is complicated, how to build it, you get one or two people together, and you crank on this thing, and you put it out, and it’s art and it’s science, and you’ve got this amazing screenshot or this design that you’re using, then you bring it to some people who maybe kind of know how your product works, so they’re kind of in the space, right? And then you bring it to a few inner circle customers, and then you get broader and broader and broader, but you refine it as you go. So I’m not saying you can’t get other voices involved, but if you start with 10 people trying to design that same screen or that same idea, it is so difficult, so time-consuming to get everyone on the same page in a way that you can then be productive and actually move forward in a way that’s not just compromise. “Well, we all disagree, so let’s just do the thing in the middle,” and the mushy middle is like eating a mayonnaise sandwich. 

It’s very bland. A note to the listeners, I put mayonnaise on my turkey sandwiches. I also put mustard, and cheese, and often lettuce, and guacamole. I don’t dislike mayonnaise. Last time I said a mayonnaise sandwich, several people thought that I was ragging on mayonnaise, when in fact, what I’m ragging on is a sandwich that is made up of two pieces of white bread and mayonnaise in it. 

That is the analogy I’m going for when I say a mayonnaise sandwich. If it had turkey in it, I’d call it a turkey sandwich, but in this case, I’m saying, yeah, two pieces of bread with mayonnaise is just very bland. That’s the analogy. That’s all we have time for today. Hope you enjoyed this episode. 

Thank you for coming back this and every week, listening to Startups For the Rest of Us. If you haven’t given a five-star rating in iTunes, Apple Podcasts, Google Podcasts, Spotify, wherever your greater podcasts are served, really appreciate it. If you have, could you please go to Amazon or Audible and rate The SaaS Playbook as a five-star? You don’t even have to leave a review, I believe, and it helps me continue to progress on my mission to multiply the world’s population of independent self-sustaining startups. I’ve been doing that since I’ve started blogging in 2005, so almost 20 years. 

Yeah, next year it’ll be 20 years, and each year, as I’ve pushed that boulder up the hill, I’ve been able to increase momentum and grow the audience and grow the number of people that are impacted by this message. At this point, I do it because it changes people’s lives. I want everyone who wants to be an entrepreneur to have the same freedom, purpose, and healthy relationships that you and I do, so I always appreciate any effort you can put forth to help me continue on that mission. This is Rob Walling signing off from episode 706.

Rob Walling:
Another week, another episode of Startups For the Rest of Us. I’m your host, Rob Walling. This week I talk with Braden Dennis, the co-founder of FinChat about their long journey of launching a product with an existing audience. And in fact, if you’ve ever heard me quote the stat that of all the companies I’ve invested in, 170 companies, that less than 5% of them had an audience before they launched their SaaS. FinChat is one of them. And you’ll hear Braden and I talk about the pros and cons of having that audience in this episode. In addition, they also launched a second product and pivoted the entire company to that second product. They’ve been bootstrapped, mostly bootstrapped, and now, they’ve raised venture funding. He and his co-founders have taken a lot of big risks and made big bets, and they’re doing pretty well with it. It’s a really interesting conversation today. I hope you stick around. 

Before we dive into that, I want to let you know it’s your last chance to get tickets to MicroConf Atlanta. The event is April 21st through the 23rd. Speakers include Rand Fishkin from SparkToro, Asia Orangio from DemandMaven, Stephen Steers, myself, and Dr. Sherry Walling. It’s going to be hosted and emceed by me and Lianna Patch of Punchline Copy. I’m also going to be doing a fireside chat with Ben Chestnut, the co-founder of MailChimp. He does not do very many public appearances, and so I’m very excited to host him at MicroConf this year. Microconf.com/us, if you’re interested in grabbing tickets. Again, tickets are going to sell out soon. So if you’re thinking about joining me and about 225 of your closest bootstrap founder, friends, head to microconf.com/us. 

MicroConf is hiring a director of marketing and operations. You can come work directly with me to help me refine, and expand, and execute on our growth strategy. We have a lot of exciting things going on over the next one to two to three years, frankly, at MicroConf, including a lot of new digital product launches. So if you have a strong background in online marketing, marketing digital courses, course creation, managing a small team and you’re interested in working directly with me to help shape the future of bootstrapped and mostly bootstrapped SaaS companies, head to microconf.com/jobs and you’ll see the listing for this as well as our community manager opening. If you’re interested, please apply and let’s have a conversation. And with that, let’s dive into my conversation with Braden. 

Braden, welcome to the show.  

Braden Dennis:
Rob, it’s so good to be here.  

Rob Walling:
So FinChat.io is your company. You started it with three co-founders. Your H One is the complete research platform for global equities. Do you want to give us an idea of where you stand today, what phase the business is at.  

Braden Dennis:
For sure. So we are a team of 11 people, soon to be 12 in a few days. Seven figures in ARR company, and the platform is for investment research. So we primarily serve professional, sophisticated institutional investors. And we’ve been going more and more kind of upmarket through that process.  

Rob Walling:
And you’ve raised a million and a half seed. Would you call it a seed or a pre-seed round?  

Braden Dennis:
Yeah. I guess, there’s no rules in raising money is one thing I’ve learned. I almost say that it was like a hybrid of a seed and a series A in terms of where we were in scale, but it was a tool for us to get to our next milestones. And we didn’t need more, we didn’t need less. It just felt like a really good number for us.  

Rob Walling:
We’re going to talk about a lot of things today. Building a second product, raising your round, venture versus bootstrapping. ‘Cause you’ve been through a lot in the past couple of years. I want to start by going back to when FinChat was initially launched, it was actually called Stratosphere, right? Stratosphere.io. And you have, is it one of the most popular personal finance podcasts in Canada? You started with an audience, and you built a SaaS, and one reason I want to touch on this is if folks follow me on Twitter or listen to me rant on this podcast, I often say, “Look, if you have an audience, great. That is a great advantage. But if you don’t, don’t go build one for SaaS.” If you’re going to do info products, or courses, or books, of course. But for SaaS, I think it’s more trouble than it’s worth and the time would be better spent doing SEO, or product development, or anything else. But roll us back there. Tell us about your podcast and then how Stratosphere came out of it.  

Braden Dennis:
Well, first I wholeheartedly agree with that sentiment. The podcast network owns two shows, and so I do run it as a separate business. It is an advertising business. If I was to dream up the best lifestyle business, it is truly that. It’s like a few hours of work each week. And I’ve been doing it now for a long time. I was looking at it the other day and I’ve been doing podcasts in various forms for 10 years now. And when we launched it for a while, there was basically no one listening. And then in 2019, since it was about investing, it was starting to take off. But it was taking off right before the big wave brought us even bigger in 2020 when people were doing self-directed investing. And so it’s been a fantastic project, it’s been every single week for 370 episodes now. So I think we’re about half of your catalog.  

Rob Walling:
It’s still a lot, man. Good for you.  

Braden Dennis:
But you can recognize that it is a grind, but I really do enjoy it. I get a lot of career satisfaction out of it. And then to roll that over to the product, to what you said, I say to people, “It gave me a great zero to one type of audience to show the product to, iterate on. Have like really forgiving users for your MVP was great, and I don’t take that for granted. I think it’s amazing to have that. But you do outgrow that audience, and as a business we outgrew it pretty quick because we are starting to focus on more upmarket B2B type clients. And so it gave us a great zero to one, but it is not going to be the thing that gets you 1 to 10 or anything like that. So I agree that it shouldn’t be a main priority for SaaS founders.  

Rob Walling:
And so you had this audience and it’s self-directed investors, kind of people interested in personal finance and investing and you built a SaaS. And what was it, was it like researching stocks?  

Braden Dennis:
It was the tool that I wish I had to save me time for the podcast research essentially, which was just how can I aggregate more historical financials from public companies across the whole world into one place that I can view them really quickly. And the whole concept was just like Yahoo Finance people were really familiar with, but it’s so ad invested and just really limited coverage. And just only has huge scale because they’ve been so good at SEO, and anytime someone searches up a company or a stock, they come up first. But I was trying to build just the MVP of how can I bring in financials from companies around the world in some sort of API feed, and then build Yahoo Finance on steroids to show my podcast audience. It was not some grand vision or product plan really.  

Rob Walling:
Right. And you mentioned you built it, you launch it, people are using it. You decide to go up market. Why was that?  

Braden Dennis:
Well, for all the reasons that you talk about in this podcast, anytime you have really low-price products, you face a lot of churn. It’s really, really hard to scale something when people are paying nine bucks a month, which was the original plan. Right? And so this should come to your listeners as no surprise that as a founder, it’s your job to learn and iterate. Your first plan is never going to be the concrete plan, and our plan right now moving forward is not going to be the plan in two, three years. It’s literally our job to iterate as we go. And so that’s kind of how we found ourselves here.  

Rob Walling:
Got it. And so the audience, as you said, was your zero to one, it got you started. And if I recall, we first talked when you were somewhere around 7 to 10K MRR. And I believe you had gotten bigger, and churn had done some damage ’cause again, $9 a month is, as you said, it’s hard to scale even when you have access to tens of thousands of people or whatever through a podcast. And it was maybe a year later, so I’m thinking, when did you think about start for the rest of his drinking game? When did you think about launching a second product? Because you and I talked about it and usually, as Ruben Gomez and I had spent an entire episode talking about… Usually my response is, “Don’t do that,” and you have to convince me otherwise, right? But you guys did and you executed on it really intelligently. 

I believe I actually used you as an example in that episode of people who had talked me into it. You were one, Jordan Gaul and I think there was a third. But walk us through that in how maybe ChatGPT going live had an impact on your thinking.  

Braden Dennis:
For sure. So the product was called Stratosphere, the company that we originally connected on and got into TinySeed with. Like you said, for context, around seven K in MRR at the time. Lots of churn… Growing, but not a venture scale idea or anything like that. And in the April-ish of 2023, last year, one of my co-founders was like, “We have been aggregating so much financial data. This product’s amazing. What happens if you just talk to it?” We had heard whispers of Bloomberg, the large incumbent trying to build BloombergGPT, but they just have a white paper. What if the small startup beats them to their game? And we did, and it went viral. And so we launched it, we bought the [inaudible 00:10:24]… I couldn’t have bought a domain name faster than FinChat because it was perfect, right? It was the domain for the space. And we launched it in April, and we had 65,000 signups on hour 46 or something of it being live. 

It had gone viral on LinkedIn, it had made its way around Twitter and stuff like this. And it had far surpassed just my reach. That’s when you really know. And we recognized, like, “Okay, this product’s cool. But everything behind it, investors want to know the source.” So when you search up, like, “What was Amazon’s revenue last year?” People want to know the source, and audit it, and go back to the filing that it came for. If people are doing this, especially at a professional scale, I was like, “Perfect. We already built that product. It’s called Stratosphere.” So we brought that in as the layer behind it, and it became one cohesive product. So it was more so just like we built two different styles of front ends and then realized, “Hey, if we just bring them together, this is actually the most compelling product that the market has right now.” 

And it was a scary decision. You and I talked about it. And we decided in an afternoon, we’re like, “This is too obvious.” Right? Like “This is too obvious, and there’s no sense of waiting another day to think about it because this is amazing.” There’s no risk in terms of we don’t have to dish the old product, we’re going to merge it over. And so I think I call it the low-risk experiment gone right, because we shipped that experiment in three weeks. I think it was like two to three weeks, we shipped it from zero to one to domain to live to 65,000 users in two and a half weeks. And so that’s really the key is if that took us four months, oh, gosh, that would’ve been a gigantic distraction at that time.  

Rob Walling:
Yep. And that’s the thing that I see with a lot of folks who do launch that second product is they’re launching it to escape. Usually, it’s to escape something that’s not working and they’re not putting in the hard work on the first thing. And then they take four months, five months, six months to build it, and launch it. And they think about it, and then it is not. You called it what a low-risk experiment gone right, it becomes a high risk experiment. And whether it goes wrong or right, now, you’re six months down the line and you have something that most people won’t have had the intersect. And you had hard work, luck, and skill that all took this. I don’t want anybody to think, “Oh, Braden got lucky. Stratosphere got lucky with FinChat.” It’s like, “No, it was all these things.” Because you launched it in two to three weeks, it wasn’t 30, 40 hours of dev. Somebody put in a lot of hours, your co-founder. 

And the skill, let’s talk about skill. That’s kind of how your preparation, it’s like, “Hey, you guys had the knowledge. You guys had the data.” Without all the data you pulled into Stratosphere, there is no FinChat. That makes sense. I couldn’t have built FinChat on my own in two to three weeks because I didn’t have all the background that you guys had. So I’m calling this out, so listeners who are listening don’t think to themselves, “Oh, well I can launch a second product too.” You are again a counter example, but with good reason because you could do it quickly. And it was a low-risk experiment that if it didn’t go right, you would’ve kept pushing on Stratosphere. Right? So FinChat took off in a way… It wasn’t just users, right? I mean, it was people clamoring for the data and you were like, “Wow, there’s revenue here whether we’re going to close it today or in a month.” 

And so you eventually just merged them. And so if you go to Stratosphere.io now, it redirects you to FinChat, right? And it tells you, “We’ve merged your account settings and dashboards onto FinChat.” Was that part a hard decision at all to merge it in? Was it like, “Well, do we shut it down? Do we run two products?” What was the thinking there?  

Braden Dennis:
Because we knew we were going to roll in that product with the exact same UI, UX experience other than the background, gray is a little bit different. It was an identical experience for those previous users and that’s why we felt really confident. And we even told people, like, “Hey, this is happening.” A lot of people replies on my Twitter being like, “Dude, no. I love the Stratosphere units interface.” And I said, “I promise you. When we launch this tomorrow, I’m going to reply to this thread and be like, ‘See'” And that’s exactly what I did. And they’re just like, “You know what? It’s actually better. You tweaked a few little things that actually improved it.” And as we should, right? As you get a chance to put a fresh coat of paint on stuff. But we didn’t change the experience and that’s really why our users were like, “Okay, the domain’s different. The URL is different. And now, I have all these new features with the AI chat as well.” It’s a no-brainer.  

Rob Walling:
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Why do you think FinChat worked so well so quickly? ‘Cause you had a product… Stratosphere is similar. As you said, the interface was similar, right? There’s a lot of similarities between the two. But it’s a great split test, and you think about in any 10 successes or 10 failures, like, “Was it the founder? Was it the market? Was it the product? What are those magic factors that all come together?” I summarize them as hard work, luck, and skill, but we know it’s very amorphous. You had two similar products in one just up into the right. I’ve seen the graphs. Do you have any sense of why that happened the way it did?  

Braden Dennis:
Before, we were not truly bringing anything differentiated to the market to professionals. We were bringing something differentiated to the market for retail investors who hadn’t had a chance to get a professional accessible research interface. But for those who have been in the business a long time, paying 25 grand a year for each Bloomberg terminal. These incumbents have been building this technology for 30, 40 years and they’ve kind of thought of every use case. And so the expectation for those users is just so much higher. And now, it was something different. Now, I don’t even have to go learn Bloomberg 2.0 as I can just talk to it the same way that I talk to my associate or the intern to pull up a graph comparing these two companies. It’s like, “Hey, can you quickly compare Google Cloud’s business to Amazon Cloud’s business? Build a chart and also, layer in operating margins ’cause I want to know why there’s such a big discrepancy in profitability.” Those are very casual conversations that happen in the office for these people. And then they’re just like type it into FinChat and it creates it. 

And they just had this magical experience for the first time. And so I think differentiation is a roundabout way of saying that it was different for the first time and the timing was right. So I think that that’s probably what it comes down to.  

Rob Walling:
Timing feels like a big piece that people… Everyone’s talking about GPTs, and AI, and LLMs and so it’s going to tend to get noticed at least. And look, if it got noticed and it wasn’t a great product, then it doesn’t go anywhere. Right? As people look at it and blah. But it really is taking advantage of a moment in time that you were at the right place and seized the opportunity. You saw the opportunity, you seized it. You did it quickly. And you rode that wave is what it feels like, right? And sometimes, this is where I always say there’s some luck involved because you weren’t lucky in going viral. You were lucky in the sense that GPT just came out the moment that you had this product. Let’s say you had built Stratosphere five years ago, seven years ago, what were the tech waves that it was AR/VR and it was crypto. Maybe you’d have done a blockchain strategy, whatever. 

It’s like you did happen to have that, but you also had the ability to execute so fast that led you to raise your funding ground that we talked earlier. So you took money from TinySeed, right? So you’ve been bootstrapped. You’ve been, what I call, mostly bootstrapped, which is like, I don’t know, 100 grand to 500 grand is kind of mostly bootstrapped, usually. There’s no fine line, but that’s kind of in my head what I think about. And then now, you’ve literally raised venture. You want to talk us through that decision because as a entrepreneur, self-made with your podcast, and you’ve bootstrapped that, we know that you could have bootstrap Stratosphere/FinChat. But you decided to go in between and then take the full step. So talk us through your thinking there.  

Braden Dennis:
And what feels like a short time, I know it’s been several years now. I’ve seen all three of that bootstrapped, mostly bootstrapped, and going venture scale. And even on the same company, which is kind of even more bizarre. But there’s a couple pieces there, right? I say to founders who are thinking about raising money and you mentioned that, what is it 1, 9 and 90 rule? What is that one again? That’s the 1% should go venture.  

Rob Walling:
Should at least consider venture, they’re probably venture ready. And then about 9%, I think, should consider some type of funding ’cause it just makes it a little easier to get off the ground. And that maybe is angel friends and family, maybe it’s TinySeed type money, but it’s non venture money. And then I think about 90% of tech companies, startups, and stuff should probably just bootstrap. And again, you and I talked, it’s directionally correct. It’s not the exact numbers, but yeah, probably 10 times more should do this and 10 times more should do that.  

Braden Dennis:
Yeah, those kind of rule of thumb directionally correct things. I think that this one’s spot on, and it’s just kind of important to be honest with yourself because along that way… What we’ve actually described, the whole genesis of this. When it was a product for my audience, it was a bootstrapped business. It was not even a mostly bootstrapped business, it was fully… This is a cool side project turned main time project that we could generate a decent living for ourselves, basically. It’s not going to support a big team or anything like that, but a good bootstrap project. Two things are actually really working, we had a successful pivot up market to, “Okay, this is not a venture idea. But this could hit 1 million in ARR, maybe two,” that kind of thing. And so we were being honest with ourself about what that outcome looked like. And I even had angels and VCs reach out and I just said, “Look, I’m not getting on the venture route because this isn’t a venture company.” 

I’m an investor myself, it’s my job to be a steward of your capital. I became investor first before company operator. And then when FinChat happened and that explosion happened, our ambitions grew with the opportunity of recognizing it. If you were to see me and my co-founders call about level setting around the ambitions that we wanted to go to, they changed in a massive way in six months. In terms of what we thought was possible, the company we wanted to build, and the company that we thought that there was an opportunity on. So it’s really just being honest with yourself because if you put yourself in the wrong path for your ambitions, or the company, or the market opportunity, you get a lot of conflicting incentives with investors, yourself, what you want to build. And that’s not really good for anyone, no one wins in that situation. And when you’re raising money, I now, am a steward of capital and it’s my fiduciary duty to go for a big outcome. And so that’s what we’re going to do.  

Rob Walling:
Often, when I talk to folks similar who ask me, “Should I raise funding?” I know that you get that question. I tell them, “Look, there’s no right or wrong answer. Know what you’re getting into at each layer. Know that it’s not undoable. Once you take venture, especially like you’re on the venture track, you’ve removed some optionality and that’s okay. Just know that.” So in my case, if I were thinking about it, I can stay bootstrapped for as long as I want. I have all the options. The moment I take any capital, whether it is from a TinySeed, or friends and family, or angels, or whatever, I’ve made a choice. I can no longer be bootstrapped, I have now made that choice and it’s a one-way door. And then once you do venture, it’s similar. So that’s where bootstrapping as long as you can, as long as it makes sense. I think it gives you, not only the optionality, but I can help you discover about the business. Some businesses you’re two, three years in and finally you’re like, “Oh, now, I see there’s a venture opportunity.” Sometimes it takes that long. 

But if you took venture or you took a big round of funding early on, three months in where you’re still trying to find product market fit, you just burn through that cash. You’ve removed your optionality and you’re now like, “Well, I got to grow fast, so I got to spend all this money.” And then finally, a product market fit, no money in the bank. Right? So that’s why I tend to be pretty pro bootstrapping, not just because I don’t see venture as an incredibly viable option, I’ve never been anti venture, but I just think too many people think it’s the default. When I say 1, 9, 90, I want people to have an order of magnitude of when I speak at events, and I say that, people are surprised. I thought everyone raised venture. No, and everyone shouldn’t, right?  

Braden Dennis:
It’s ’cause those are the big headlines you see and those are the kind of vanity metrics that a lot of founders, especially in certain areas are showing off. Raising money in itself is not a milestone, it’s a tool. I love the Craig from Castos, it’s a tool to live in the future. Like that’s exactly… I don’t think I’ve heard of a better saying on what funding is ’cause in itself, it’s not a milestone. It doesn’t create any intrinsic value. And in fact, it might be destructive for intrinsic value for any potential for you to have a successful exit or outcome. Because if you try to sell it for less than what the cap you raised at, then there’s a lot of issues with that, especially if you’re signing traditional venture capital documents, you sign over a lot of control. You create a board, you create… it’s not a milestone, it’s really not. It’s a tool and decision for the company you want to build.  

Rob Walling:
Yep. I often tell people “It’s not the finish line, it’s the starting line. It’s a new starting line.” I’m like, “Okay. Now, we’re going to scale up.”  

Braden Dennis:
And to add on that, it’s one of the only irreversible mistakes is messing up your cap table.  

Rob Walling:
That’s for sure. We’ve seen some come through TinySeed, man. Where it’s like, “Wait-”  

Braden Dennis:
We fail, we make mistakes daily. It’s like in our culture to fail, to ship fast, to move fast, to fail fast. That’s the only thing you can’t mess up is your cap table.  

Rob Walling:
Yeah, it’s so permanent. When we got on the call today, you and I were chatting beforehand. And I had this whole outline of like, “Oh, let’s cover these things. I think these are the most interesting parts of your story so far.” And something you said to me is, “I just made a really hard decision as the CEO of this company and it’s to shut down our API business.” So do you want to give folks context around, you have a web interface, you have an API, and you’ve had a lot of traction with the API. But I believe yesterday, you just decided we’re not accepting new customers. Right? Just talk us through that decision because it’s a hard one. Being a founder is making hard decisions with incomplete information, it’s a big strategic decision. But it sounds like you’re convinced it’s the right way to go.  

Braden Dennis:
Yes. And to give you even more context, I basically realized the writing was all on the wall yesterday and made the decision this morning. That’s how quick I’ve had to make the decision. And some people say, “Maybe sleep on it. Maybe that’s too impulsive.” But as founders, we’re seeing signals for months, and months, and months, and months. It’s not like crap at the fan yesterday, I’m shutting it down today. Right? That’s that founder gut decision and making the decision fast and concisely. Whether it’s wrong or right, you’re going to navigate and you’re going to move forward with it, I think, is really important. ‘Cause the writing’s been on the wall for this for a while. Say six months ago, we saw a lot of interest from fintechs on, “Hey, can we bring FinChat into our platform?” Say, you’re like a broker, a stock trading platform. You’re like the Robin Hood of country X, Y, and Z. 

And we learned the wrong lesson really quick, which was huge six figure deals, quarter million… We signed a deal for a quarter million dollars a year. And for us, we grew up selling $9 a month subscriptions. This is star struck. We hit gold. This is product market fit. The inbound is exceptional, and so we ran with it. What we learned over the next six months and up including until this morning is every deal was very custom. The sales cycle, it was not just slow, it was impossible with the legalities around it, them being so regulated. And our ability to actually execute something that we’re really proud of, we became consultants. And what that did for a team of, at the time, seven, eight now, 12 people, is you completely lose focus on the company that we wanted to build. We know we still want to go up market. We tasted up market, we like it. We like going up market and we learned some good lessons, but we know it’s just not going to be that product. So we decided we’re not taking any more inbound for this. 

Also, I’ve had probably the worst six months of my whole time building this company during that time, and my co-founders agree. Even though we’re making lots of money from it, we were really not enjoying that part of it and we were really stressed out that we were going to be able to deliver that at scale. And so we just said, “Screw it.” There’s a larger opportunity upmarket for an enterprise option here on the FinChat platform, not off platform, which is way more scalable and it’s something we actually know we’re good at. So that’s kind of like my thought process around here, but the learnings and decision making at speed, I think, are what has gotten us here and will continue to get us forward in the future.  

Rob Walling:
Yeah, that’s a good way to summarize it is learning and decision making at high velocity, high speed. Einar Vollset and I talk often about what do the TinySeed founders that we talk to have in common, the ones that are really doing well. And there’s a decisiveness, there is doing a lot of things quickly. And usually, for the most part, working on the right things. Maybe it’s not 100%, but maybe it’s 75 or 80. And if you’re doing enough things at high velocity, something’s going to catch. And that is something that you and your team are exceptional at. And I don’t actually know if it’s you or if it’s your team ’cause I don’t see the inner workings of… You have three co-founders, we’re actually going to talk about that in a second. So four of you total. And the thing I’m surprised by, I’ll say this, let’s dive into the four-co-founder thing. 

One of the things we talk about in TinySeed or even just in MicroConf that we see in state of independent SaaS is that I believe the number is 90% of our MicroConf TinySeed crew is one or two-person companies, which makes sense. One or two co-founder companies, I should say. And then it’s another handful… It might even be more than 90. Actually, it might be like 92, and then there’s like 5% that are three co-founders. And then just one or two that are four people. Because usually, if you get four people together, they don’t make decisions quickly. There’s too many cooks in the kitchen, right? And there are other things that are, not a mess, but there are other things that make it an antipattern or an exception to what we see. 

That hasn’t been the case with you, with FinChat, with Stratosphere. Is that there are four of you, but it seems like you function pretty well, at least from the outside. And it seems like you move very quickly, you make decisions fast. And also, you execute very quickly. Right? Talk us through that sentiment of why start it with four? How has it worked out? And would you do that again? Just all your thinking around it.  

Braden Dennis:
Great questions. Well, first of all, my co-founders, there’s four of us, and these guys are my best friends, including my CTO, who we’ve literally been best friends since we were 10 years old. And so we have kind of complete alignment, and when I get everyone on a call this morning for making this hard decision, it’s just like, “Yeah, of course.” Like “Of course.” We’ve been in it, we’ve been involved. There’s no one catching up on the crap that’s been hitting the fan. There’s no one that’s just tuning in for the first time on making a really hard decision. And I think that that’s really important, just constant communication, constant talking. And one thing that we do is we have a monthly set founders call, which is important because it’s four of us. But every few months, sometimes more if it’s called for… I just call the guys together and just get a realignment of what we want in terms of an outcome. For those three different stages of raising money, not raising money, kind of raising money, it’s like, “What do you guys really want?” 

Because if we’re not all aligned on that, then you’re going to run into a lot of problems. Even if it’s just two co-founders, even… Four co-founders, three co-founders, two co-founders, you got to be aligned on what you really want to build in terms of the company size. Do you want 100 employees. Or do you want zero employees? These are really important decisions to think about before you start building. I just think we get along so great. Everyone has their own really unique talents to offer. At the end of the day, as my role as CEO, they’re leaning on me to make the hard decisions. And have built that trust over a long time that they know I’m going to do, at least, what I believe is the right thing.  

Rob Walling:
And what’s the distribution of work? ‘Cause one of your co-founders is a CTO, as you said. So we know he’s writing code and building stuff. And you’re the CEO, so you’re doing, I’m guessing, operations and a lot of the decision making and driving it forward. Sales calls too, it sounds like?  

Braden Dennis:
Lots of that. Too many of that.  

Rob Walling:
Well, can you ever do too many sales calls?  

Braden Dennis:
Check out my calendar and maybe. Yeah.  

Rob Walling:
What do your other two co-founders do?  

Braden Dennis:
So Adrian’s our COO, he’s done a lot of operations. He helped build out that data team. Since he’s an accountant, he was the perfect fit. I’ve been actually moving over a lot of the operations to unlock more of my time to him to move into a more COO type role. And then Kevin is chief product officer. But him and Ryan are basically CTO one and CTO two. That’s how it works. So two developers that are technical and have a deep understanding, but also have a lot of chops for people skills and building teams. They like that stuff and they’re good at it, so it’s helpful.  

Rob Walling:
Braden Dennis, you are BradoCapital, B-R-A-D-O Capital on Twitter. And FinChat.io is what you’re building. Thanks so much for joining me, man. It was a great conversation.  

Braden Dennis:
No, thanks for having me. I’ve been listening to the podcast for… Oh, shoot. I don’t know. Years and years, and I’ve enjoyed it very much. So happy to be here.  

Rob Walling:
Yeah, it’s great to have you on this side of the mic. 

Thanks so much to Braden for showing up this week and giving his time to help educate the mostly bootstrapped founder community. If you haven’t checked out our YouTube channel, it’s youtube.com/microconf. I’m releasing a new video there every week. It is completely custom created, bespoke, as they might say across the pond. And it’s different content. It’s similar to the podcast, but it’s tighter focus, right? It’s 10 or 15 minutes focused on a single topic, and it’s like having a second podcast. That’s youtube.com/microconf if you want to check it out. Thank you for listening. This is Rob Walling, signing off from episode 705.

Rob Walling:
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When you choose to listen to podcasts, I know you have many options, so I appreciate you listening with Startups For The Rest Of Us. I’m Rob Walling, and in this week’s episode, I’m going to answer some listener questions. I’m going to mix it up this week. I’m going to break all the rules, going crazy, running with scissors up in here, and I am going to answer only text questions. 

I have text questions dating back to May of last year, so that is eight or nine months, if I’m doing math correctly on the fly. So, I’m going to dig in to a few of those just to get into the backlog. But I’d imagine that in the next listener question episode, I’ll get back to the old way of doing audio and video questions first. As always, head to startupsfortherestofus.com, click ask a question in the top nav if you want to send a question into the show. 

But before we get into the episode, I want to invite you to MicroConf Early Stage SaaS Sales Strategies. It’s an online event we’re hosting March 12th and 13th of 2024. It runs from 11:00 AM to 1:00 PM Eastern Time on those two days. And there will be sessions all focused on early stage SaaS sales led by Rachel Leow, Craig Hewitt, Daniel Ebert, Sam Howard. I’ll be MCing, and we’re going to cover strategies to boost your close rate, build a sustainable sales process, and figure out how to overcome the challenges of selling as a technical founder. We’ll also have daily Founder mixer sessions where you’ll get to meet other attendees to network and chat about what you’re working on. Tickets are inexpensive and they are available at microconfremote.com. And with that, let’s dive into the episode. 

Let’s dive into my first listener question. This one’s from just a few weeks ago from Lee. Lee says, “Hey, Rob, on a recent episode of Startups For The Rest Of Us, you mentioned that you don’t like when people use Apple or Basecamp as examples for comparing to their startup. Comparison to Apple seems obvious to me. But why Basecamp/37signals? They seem way more of a model for bootstrappers to emulate. Thanks for that question, Lee. So, the reason I don’t like when people use any type of outlier company is usually you are not in their position. The issue with Basecamp is not that they’re not a solid, mostly bootstrap company, they took a small bit of funding in the early days from Jeff Bezos. I’m not sure if you heard that whole story. 

But the problem is that Basecamp or the founders can come out and say anything. And they can say things like, “We don’t market,” or, “We don’t have any type of marketing analytics,” or, “We don’t check opens on our emails.” They could say, I don’t know that they’ve ever said this, “But we don’t do cold outreach. We don’t focus on SEO. We don’t care about marketing. We just built a great product.” And some of those things they’ve said, and some haven’t. I’m not trying to put words in their mouth, but they can say whatever. 

They have built one of the most successful bootstrapped businesses of all time. People estimate it’s doing what? A 100, 200, 300 some hundreds of millions a year in ARR is estimated. Jason Fried on the MicroConf stage said it throws off tens of millions a year in net profit and that was six, seven, eight years ago. And you know it’s probably grown since then. But the problem is they, as Jason Fried said, I said, “What were the keys to success?” He says, “We did some things right, but timing and we got a little lucky. Luck and timing were one and two.” And I think that’s a great and honest assessment of why Basecamp succeeded. 

If you started your SaaS in what ’04, ’05 and you get a little lucky, then you too cannot market and not check email, open and click rates, and not check analytics numbers. I don’t remember all. But it was things like this that I’ve heard them say. And so, then developers who don’t want to market, or who don’t want to focus on email opens and click rates, who don’t want to do blocking and tackling that 95% of the successful businesses I see doing, they use these quotes or that sentiment to justify it because they say, “Well, look, Basecamp’s successful and they didn’t do it.” The problem is you’re not Basecamp. 

It’s the same thing with Apple. Hey, Steve Jobs said X, Y, Z. And it’s like, but you’re not Steve Jobs. Keep in mind when he said that he was worth a $100 million. And he already had a massive company and he was co-founder with the guy who invented certainly the invention of that decade. But you could argue that the invention of one of the top few inventions of the past 50 years, the personal computer. So, that’s why I have an issue with it. But keep in mind I like and respect Jason Fried. And DHH sometimes says things that are pretty inflammatory that I don’t agree with, but they’ve built a hell of a business and I have respect for what they’ve built. 

The issue is they have really strong opinions about things. And I sometimes think that they would’ve been successful either way, whether they had or had not done those things, but most people are not. Most founders, especially those that “just want to build a great product,” need to get out of their own head, they need to get out of their basement, and they need to start talking to customers, asking them what they need, trying to solve a problem, building shipping iteratively. There’s all different ways you can do it. Basecamp never did that. And that’s cool. They truly scratched their own itch. And that was a thing early on where they were saying, “We scratched their own itch so everyone should.” And it’s like that is one good approach. But there are seven different approaches for finding ideas and problems to solve. 

I actually outlined all of these in a recent YouTube video. They’re doing really well on the MicroConf YouTube channel, Microconf.com/youtube if you want to check it out. And I think it’s something like seven ways to find SaaS ideas or proven ways or something. I have written that up as well. It’s going to be a chapter of my book that is the precursor of The SaaS Playbook. So, it’s the earlier stage stuff of finding ideas and validating. But anyways, that’s why I don’t like it when people use Basecamp as an example because usually it’s to justify an opinion or justify an approach to business that I just don’t see working for anyone else. And I want to state like DHH, Jason Fried, they are TinySeed mentors. They invested in one of the TinySeed funds. So, there’s nothing against them or the way they handle things. It’s just I think as someone just getting started, imagining that since they did it worked and it will work for you, I think is a mistake. 

I got a really nice note from a reader of The SaaS Playbook. He says, “Hi, Rob. This is not a question, but I wanted to send you a big thank you for The SaaS Playbook. I just read it in one go and I’m sure I’ll come back to many of the topics when relevant. I absolutely loved the book and how succinctly and to the point it’s written. I’m a B2C founder myself. Most of the insights are still very relevant. Although you’ve convinced me that my next company should probably be B2B. I’m trying to do that one founder at a time.” One B2C founder at a time trying to convert you. So, thank you for that note. 

If you haven’t read The SaaS Playbook, it’s available at Saasplaybook.com. It has actually just crossed 20,000 copies sold, which just feels incredible. And it’s picking up momentum. And probably every day, every other day I’m seeing folks talk about it on Twitter or Reddit and recommending it. And it’s that word of mouth that really drives book sales at this point. So, I appreciate it if you check it out. And if you have already purchased the book, would love it if you’d head to Audible or Amazon, and just give it a five star review or five star rating. You don’t have to type in a review because that also helps people find it. 

My next question is from Anonymous and he says, “Hello, Rob. I admire your work in the small SaaS space. I find myself stuck in a comfortable and happy job and I’m wondering how best to join the scene. I’m living my childhood dream at my day job. It’s a stable job, lucrative and enjoyable. It’s in a hobby I really enjoy. It’s basically the perfect fit. Between ambition, a desire for more money, and an earlier retirement, and seeing the success of some friends and family who were entrepreneurs, I would still love to own something. I could buy something and focus on automating the activities away, but MicroAcquire looks to have turned into a bit of a wasteland of cheap AI flip jobs.” 

Wow, I haven’t been on there in quite a while, so that’s interesting to hear that is as his sentiment. Back to the email, “I could be a consultant to bootstrap businesses, but my day job is more lucrative on an hourly basis and there are zero missed invoices. I have considered booking a ticket to MicroConf. I’m highly confident I can be of value to the community. I am sure I’m not the first person you’ve met who is interested but tempted by comfort aside from just take the leap of faith. Any thoughts from your experience?” A couple thoughts. I think you should come to MicroConf and you should be around founders. 

One of the reasons MicroConf is so different is that the vast majority of people have a real business. It’s not a bunch of wannapreneurs like so many of the SaaS or startup conferences you go to where it’s people walking around looking for permission, asking for funding. MicroConf is real entrepreneurs building real products to sell to real customers for real money. It’s our people. It’s the folks who would listen to Startups For The Rest Of Us, and take that leap and buy a $1,000, $1,200 ticket, and fly somewhere and make a hotel reservation. These are people who are willing to take action and do it. And so, I think if you’re looking for some motivation, being around those types of people for two and a half days, hearing the talks, having the conversations, I think is highly motivating. If that doesn’t get you unstuck, I don’t know what will. I don’t know you and how you work mentally or how you process all this, but I think that would be a big win. 

And there are still some tickets to Atlanta here, and it’s just about two months. That’s at MicroConf.com/us. That event will sell out. So, I wouldn’t wait if you’re going to do it. The other thing is something that I’ve said when I’ve had similar questions like this in the past. I guess from my perspective, it was a burning desire and need, and that got me through the hard times because it’s going to be a lot of work. And it’s going to be a lot of things you don’t want to do in order to get to the place that you want to be. And so, if you’re not highly motivated to do it, I just don’t know why you would stick with it through the ups and the downs, and whether it’s nights and weekends, or watching your savings drain if you quit without a product already in place. 

I’m trying not to view it just through my lens of how I did it, but I’ve talked to maybe a handful of entrepreneurs, half a dozen, 10, 12 about this topic. Asked them, “Do you think you could have made it without a burning desire?” And everyone’s been like, “No, it was too hard. I wanted to give up, but X, Y, Z thing got me to the next stage or kept me pushing on this product, or pivoting, or whatever it is.” For me, it was a desire to quit my day job, to have equity, to see what it was like to be an entrepreneur, and I didn’t like working for other people. And that’s usually the story that I hear about folks who start as bootstrappers. And then at a certain point, the dopamine comes from doing interesting things, creating, shipping things into the world and having an impact. 

And you start to be like, “Oh, well a couple hundred grand a year isn’t as interesting as a million a year. Oh, @2 million a year, $3 million a year.” And you start to get good at it, and then you start to love it and need it. And if you went back to work for someone as just a director of something or other, a manager of something or other where you’re, I’ll just say more of a cog in a wheel. I’m not saying you are now, but if you went back to a job, it would be tremendously unfulfilling like the volume was turned down to two after volume being turned up to eight, nine or 10 for so many years. But I don’t know, there may be entrepreneurs out there who didn’t have that burning desire and just kept going because they just did. I just have a hard time myself with that paradigm. 

So, if you’re listening to this and you’re a successful entrepreneur, and you have bootstrapped a startup or done something super interesting, and you’re in a similar situation where you weren’t super motivated to do it, but you did it because you wanted to and then it worked out, please write in questions at Startupsfortherestofus.com. I’d love to hear about your experience and how you made it through. I would almost think that if there are folks out there, and there probably are that are out there that have this experience, they almost launched a side project that maybe took off and they got a little lucky. And it’s okay to get lucky. I’m not taking anything away from that. I wish I got lucky with more things I did. But that’s okay. So, maybe that’s what you need original poster. I’m keeping this person anonymous. 

But maybe that is what you need, is to launch some things that are fun that if they work out, hey, great. And if they don’t, then you just let them go. Kind of the typical indie hacker project where someone launches it, puts it on product hunt, Hacker News, Reddit. And then if it doesn’t catch, which most don’t, they just abandon it or they autopilot it and add their new things such that they have this portfolio of products each doing $300 a month. So, yeah, I think that’s how I would think about it. And I definitely, if you love your job, I wouldn’t go and try to freelance, or be a consultant, or whatever. I don’t think that’s going to make any happier. I think it’s going to be product income or starting an actual, a startup where you’re selling a product, not just dollar for hours, that would make any kind of difference in your life. 

So, thanks for writing that email. I think it’s an interesting question and one that hopefully I’ve learned some insight onto. But obviously there are folks out there, if you’re out there and you have had success when you were in his situation, I would love to hear from you. My next question is from Pedro about an early access landing page. “Hey, Rob, thanks for the great content. It’s been incredibly helpful for me right now. So, my question is related to early access landing pages and the development timeline. What are the pros and cons for using early access landing pages before any development? So, the page wouldn’t have a ton of content and it’d just have an email capture form. Versus a more dense landing page with screenshots, feature lists, and sometimes even pricing details. In both cases, the customer conversations would be done. There is a problem to be solved, the product is not done yet, and the goal is to get prospects beyond the ones we are talking to during validation. Thanks a lot.” 

This is a good question and I’m not sure there’s a right or wrong way to do this. I’ll tell you the way I’ve always leaned, but it’s just because it’s been the easier way to do it. I have tended to attack something, a problem that is pretty well-defined and that I can just have a catchy headline that says, “I plan to fix this.” I believe the headline when we launched TinySeed, which was just a landing page and email capture was something like, “Startup funding is broken for bootstrappers,” or, “Startup funding is broken. Here’s how I intend to fix that.” And then it was pros, it was 800 words or a thousand words of talking through how venture capital doesn’t support bootstrappers, but some people want to raise a little bit of money, but they don’t want to go on the venture track. And here are thumbnails of Anner and I looking intensely at things. And I realized that’s a different example because it’s not an app, and so I wouldn’t have included screenshots or features, but I did the same thing certainly with my books. 

My books were usually just… Well, my first book was a headline and two sentences, that was the whole thing. And then an email capture. And it was something like finally a book written for people where venture capitalists aren’t putting a bunch of money in your bank account. And I think it didn’t say people, it said startup founders or developer founders, or something like that. Books are also different. But truthfully, The SaaS Playbook, go to Saasplaybook.com right now and look at that. That is essentially what you’re talking about, which is it’s the cover, it’s pictures of me, it’s pictures of the interior, its features and benefits of the book. That is what we did this time. I had more money, I had more budget, and I knew what was going to be in the book. The book was done by then. And so, I did pay a design firm to design that whole website. And then I’ll go back to Drip. And Drip was just a headline, three or four sentences of copy and an email capture widget. And I think that’s what we launched with. 

So, all I’m telling you is that’s what I’ve done and I don’t want to act like that’s right or wrong. I think it’s easier when you’re first getting started, if you are tackling a simple problem like all CRMs suck and here’s why, here’s how ours is different. Or some other simple obvious pain point that’s pretty easy to communicate in a handful of sentences. I don’t know. I like to keep it simple. I like to keep it simple as well because then people might be intrigued by it and then I can talk to them and say, “How do you think I’m going to fix CRMs? What’s broken about your CRM?” If you give them screenshots and show them how you’re doing it, you are putting your opinion on that. At this point, it’s not customer development. So, I think that’s part of the question, it’s like the more vague you are, the more customer development you can do. If you are actually trying to pre-sell a bit more information is probably warranted. 

So, in all honesty, I could go either way. I think the danger of having screenshots and a lot of info is that means you are taking an opinion and is it a hypothesis that you are certain of? Because if you’re not, then I would tend to hold that information back and let people confirm or deny my hypothesis, confirm or deny my opinions before I become that opinionated about them. You don’t want to be certain of stuff that customers aren’t telling you that you’re just making up in your own head. But the more certain I am of it, I probably would start building out a landing page. You’re going to eventually need that full featured SaaS website. I say need. A 100% need it, but it’s a good thing to have. And I think as you’re developing the product and you become more confident in it, fleshing out that landing page to see if it’s resonating with people and to see if you’re marketing it well, I don’t think that’s a bad idea. So, thanks for your question, Pedro. Hope that was helpful. 

My next question is from EJ. EJ writes, “Dear, Rob. Hope this message finds you well. I’ve been following your entrepreneurial journey with great interest and your story about purchasing a Microsoft business has particularly piqued my curiosity.” I think he’s referring to HitTail, although I purchased several small products, but HitTail is the one I tend to talk about the most. And when I acquired it, I believe it was doing about 1,500 MRR and it was completely flat and had been for a long time. And I eventually grew it up to about 30K MRR At its peak. It was a high churn business, so it was in the 25 to 30K for, I don’t know, quite a long time until I wound up selling it. 

Back to his email. “I understand that platforms like MicroAcquire exist to facilitate these acquisitions, yet I find myself grappling with several questions about the entire process. My primary concern lies in assessing the value and potential of a Microsoft business accurately. In a marketplace where information asymmetry is prevalent, how does one ensure that they’re making an informed and fair purchase rather than falling prey to an overpriced or underperforming business? In your experience, what are the key indicators to look out for or the red flags to avoid during the evaluation process?” So, there’s more questions, but I’ll answer that. The answer is you don’t and you just have to get good at trying to identify red flags. In addition, these days, personally, I would buy through a broker, Quiet Light, Effy International, Empire Flippers. They tend to do, I think, a bit more vetting than MicroAcquire. I’m not saying you shouldn’t buy on MicroAcquire, which is now called Acquire.com by the way. This email is that old. It was before the rebrand. But yeah, there’s definitely going to be some risk. 

If there wasn’t risk, then it would be priced accordingly. I was buying stuff and getting a little bit scammed or lied to back in the 2005 to 2012, 2011 maybe. Was that when I made my last acquisition? Something like that. And sometimes I got lied to and sometimes I didn’t, and I just made sure that I paid a low enough purchase price that it really didn’t come back to bite me. And I also did a ton of due diligence and as much investigation of it as possible. Of course, it’s asymmetric information and I think it’s trying to learn the ropes of what do I really need to look for? 

The key indicators to look out for are red flags to avoid, there’s almost too many to list. I mean, I would look for a book, or an ebook, or an entire YouTube channel, or someone who is the Rob Walling of acquiring businesses. Is there a podcast or some resource? Because I could imagine writing an entire book on this process of buying micro businesses through either the brokers I’ve named or Acquire.com, or I used to… What was the other one? Flippa, Flippa.com. I don’t hear about them as much anymore, but that’s the thing. It is getting more experienced at it so you can gut feel. You start to read a business and you do see that, oh, this is why that one’s a piece of crap and hasn’t sold. 

The other thing is you’re talking about assessing the value and the potential of a SaaS business. Usually for me, the potential was how am I going to market this? The potential is that there’s a marketing channel that I see or an avenue I see that the current person is not exploring that I think will work, and that I have some confidence that I can learn, or that I know how to do right. And without the ability to grow it, I never bought a business. I always bought ones that I wanted to either take from flat line to going up or I wanted to accelerate their growth. The next part of his email says, “Furthermore, once the business has been acquired, the transition phase presents a new set of challenges. How does it want to effectively manage and grow a live product, especially when they’re still in the learning curve phase? Are there specific strategies or resources you found particularly helpful? During this stage?” 

No resources, but the strategies are you get in and you spend a ton of time learning the code base, learning what the existing marketing is, learning where the traffic is coming from, who’s converting and why, looking at the funnels, looking at the bottlenecks. I remember having the instrument several products because there was no… There may be was Google Analytics, but nothing else. So, you just had no funnel measurement. And so, I would see people drop off at this one signup forum that was 10 questions long instead of just asking for a username and a password. And I would see that the pricing was way off. 

So, no resources. I don’t know anybody who talks about this. Maybe someone can write in with suggestions. But the strategies are I would get in and learn the business and literally take ownership of it. Imagine coming into a new company and there is either a product or something else that you have to get in and start driving. And you don’t own it. Let’s say you’re the software development manager and you have to learn the code base. How do you dig into that? You start by one bite at a time, eating that elephant. And so, for me, I would tend to identify what are the things that need to be fixed first and then move through that list. And so, with HitTail specifically, it was unstable. It was buggy and the server was crashing. So, I was like A, I need to learn the code base enough to fix the bugs. And that took a lot of time. It did. It took dozens and dozens of hours digging in just to figure out how this thing worked. 

I actually did the same thing in DotNetInvoice. There were math errors in this invoicing software. And it’s kind of like you have one job and you can’t have math errors in your invoices, and yet there were. And so, it was going page by page through it and being able to figure out, fix the bug, ship new versions. And then, let’s see, with HitTail it was getting it on stable servers, so we did a migration. And then I wanted a redesign of the marketing website and of the app, and that took a couple months with a designer, and then I had to retrofit it onto this old code base, and then it was marketing. And that’s when I said, okay, now I’m going to juice up. I didn’t want to juice up SEO and ads, and whatever, content marketing, and integration marketing, and anything else until I felt like the product was stable and the design was amazing. And that one worked out. It’s not to say that that’s the plan for everything. 

DotNetInvoice had some bugs that I had to fix. That was different. That wasn’t SaaS. It was downloadable software that you ran on a web server. The product looked good for the time and it needed some bug fixes and better support, and then it was just marketing. And I was looking at all the avenues that I could to lmarket.net invoice and grew that from, it was doing a few hundred dollars a month, like three, probably two to $400 a month when I acquired it. And it was usually between about three and $5,000 a month by the time I was able to plateau it. I never got a pass there. But that was a great little side income while I was doing consulting and sometimes had a full-time job as well. 

So, yeah, you just have to dig in and do the work, honestly. I don’t know any other way. Maybe someone out there is smarter than I’m, and they can do it without digging in and doing the work, but that’s just what I did every time. But one thing I did like about it is once I spent money on it, my back was to the wall and that was a helpful motivator to me of like, well, I spent the money. Now I need to figure out how to make this work. And that is also why I bought in spaces that I had a little bit of familiarity with. Like HitTail was an SEO keyword tool. I knew SEO. And DotNetInvoice was invoicing software for .net developers. 

You got the source code. And so, if you didn’t, you either cared about privacy or you cared about having the source code. And so, I was able to talk with the developers and people who were buying it. And learn from them, and converse with them, and figure out how to grow the marketing funnel. And then the last question in the email says, “Lastly, I can’t help but consider the intentions of the current business owners. While I understand that there could be numerous legitimate reasons for selling, I also wonder if there might be instances where the business might have undisclosed issues or skeletons in the closet that the seller is keen to avoid. In your experience, how prevalent is a scenario? And what precautions can one take to safeguard against situations? I understand these are complex questions. Any insights you can provide would be immensely valuable.” 

Yeah, I’m sure there are undisclosed issues or skeletons in the closet, especially if you buy on a marketplace. I’m not saying marketplace buying is bad, but it is, I think, more risky than going through a broker. I’m not saying that brokers validate and verify everything, but there is at least some recourse with a third party involved. So, if something was undisclosed, I would at least know that I could go back to someone and this brokerage has a reputation to uphold. And so, even if the seller disappears, I have some recourse. Yeah, the idea here is probably the same answer that I said to the first question, which is you have to know what you’re doing. You have to know what you’re looking for. And that takes time and experience, which is tough because how do you get that time and experience? The time is looking through a lot of deals and learning what makes them good and bad deals. And the experience for me came from buying smaller. 

Well, my advice would be to buy smaller ones today and then you’ll learn what didn’t work and apply that to the next one. I actually started with an $11,000 acquisition, and that was in, I think it was ’06, 05, or ’06 when I made that. That was a lot of money. That was all the money I had in the business bank account. So, I should have done something smaller. I was building things on the side, so I did have some experience. But that’s how you want to do it. You want to take these small steps and really learn from others. And that’s where I think the information put out by these brokers by Empire Flippers, maybe Acquire.com puts out info. I don’t read their stuff. I imagine they have eBooks on the topics. And Quiet Light, and FE International, and anybody else you can get your hands on, information in that space that’s going to help you learn, is something that I would be consuming if I was actively thinking about this. 

 But yeah, it’s risky. There’s always a chance someone’s not going to disclose things and they’re going to screw you. You’ll never get to a 100%. It’s always scary. What I don’t know is do you get to 80% where you’re 80% certain you’ll be fine? 85%? I don’t know what that number is. But the only way that I know to get better at any of these things you’ve asked about is to put in the time and gain some experience. And without that, I think you’ll just be sitting on the sidelines. So, thanks for that question, EJ. I hope it was helpful. 

My last question for today is from Misha and they ask, “What are your thoughts on choosing tech to build a startup in the MicroConf Slack community, which is Microconfconnect.com? I keep seeing the same two to three questions asked in various channels. For example, my database is slow. The usual, very specific responses pile up, but the core of the question ends up being someone who is new to software development and is seeing a symptom. Often the tech stack is Node.js or some Python weirdness, not Django or some .net thing, et cetera. At this point, why are people not just using Rails or Django? Tons of educational material, plethora of people to hire and more being trained in bootcamps. A library for 99.99% of problems, one would face easiest way to deploy and scale, and most importantly, super stable frameworks. Is this just a matter of helping folks understand the technical and business challenges with making the right choice for what they are building?” 

This is a interesting question. I guess it’s like A, you can have database slowdowns with any tech that you use. If you’re scaling, if you have bad code, I wouldn’t always blame that on the technology. I will agree with you though that if I were to build a SaaS app, which I’m never going to do again, very likely be something like Rails or Django, maybe Laravel. These are probably the top three that I see. Node.js is fine, and I know there’s developers out there screaming at the speaker right now. But I really like these super stable server side frameworks. I don’t like JavaScript, NBC frameworks that… Like React and such that have a bunch of spinners. 

I know there’s unit tests and all this, but it seems like a lot of the problems that I hear about with bootstrap founders who hire developers to build things wind up in this front end. Maybe that’s what Misha is saying is, it’s not the technology necessarily, but there are certain technologies that maybe lend themselves to, well, just different types of issues. Whether it’s performance issues, or whether it’s writing spaghetti code, or whether it’s… Since there’s so many bootcamps putting out people who are less experienced, then that means maybe the code quality overall is lower. 

I don’t know what it is, honestly. But I really like HTML rendered to a browser and then some JavaScript sprinkled in. And I know it to say, “Hey, here’s a old man doing the old man thing.” But it’s like, no, there’s just some stability. That’s a personal preference. I think, Misha, your question of why wouldn’t everyone just use one of these two frameworks? It’s like, well, all the frameworks… These two frameworks don’t cover everything. I know they’re stable, but what if I know PHP? What if I’m a .net developer and I want to build something nights and weekends? That’s all I know. I can spend the time to try to learn a new language. I’m not going to be that great at it. Or I can use what I know and I can build quickly. That’s usually I think what’s happening. But that’s also another thing, and it’s non-technical founders starting a SaaS. 

It’s just hard. I’ve talked about this on this show many times where if I was a non-technical founder trying to start a SaaS, I either wouldn’t or I would try to find a co-founder. A technical co-founder who can head up and own the code. When I say wouldn’t, I mean I would go back and try to stair step my way up, certainly not by building SaaS, probably not by building software. Because thinking that you can just hire a developer to write code and build a product, is like thinking, I can hire a carpenter to come build a house. You can, but you also need an architect, and you need a designer, and you need other skill sets. And how do you know the architect is any good? And once the foundation is poured, it gets really hard to come back and undo that work. 

And the analogy is not perfect. I get it. But thinking that any developer can build a SaaS app is incorrect. In fact, the vast majority cannot. And yet, people hire dev shops that just don’t… They don’t build quality code. They cut corners because you are not going to know any different. That’s the problem, is you can’t evaluate whether the developer is good or not, and you can’t evaluate if they’re rushing. Because even good developers can ship crappy code, low quality code if they’re in a big hurry and they’re being pushed to hit deadlines. There’s a reason that the majority of the MicroConf community are technical. It’s not that we don’t want technical people. In fact, we want more non-technical people because, hey, we need more marketers here. How often have I heard of a developer founder who needs more marketers? So, I’d love to have more marketers in the MicroConf community. 

Same thing with TinySeed though. Last time I looked, I think it’s like 10 or maybe 15% of companies we funded with TinySeed don’t have at least one technical co-founder. It’s a super minority. And there’s a reason for that because getting to the point to where a TinySeed would fund you, it’s obviously not easy. And doing that without a developer who is heading up that side of the business makes it even harder. And in fact, probably the number one issue that tends to face companies that we funded who don’t have a developer co-founder, is they are perpetually dealing on and off, but perpetually dealing with the headaches of that with, “I had a lead dev and then they left, and now I have to replace them.” And it’s like, that’s not the best. It’s a tough situation to be in. And those folks are bearing the burden of having to be the ultimate where the buck stops for a code base, but they’re not a developer. 

Your tech lead leaves and now you have two juniors in a mid-level. And you now have to go find that next tech lead, but you don’t know if they’re any good. It’s an uphill battle. And as appealing as SaaS is, and the fact that it is the best business model on the planet, I believe it is just really difficult. And this is why I talk about doing the stair step method of entrepreneurship, not to go straight to SaaS. And this is why if I was a non-technical founder… I mean these days, I wouldn’t be writing the code. If I were to start a SaaS app, I would try to find the best SaaS developer I knew, whether they lived in my town or not, or I just knew them through MicroConf. And I would work my network. And maybe I would hire them, maybe they’d be a, they wouldn’t. That’s irrelevant. 

Probably if I wanted to keep them around for a long time, then they would get equity, because I would want us to have that shared motivation, because it’s hard in the early days. But I wouldn’t go hire a freelancer, or a contractor, or an agency, or I’ll say just a… Random is not the right word, but you get the picture of AW2 employee who can leave any time and leave this code base. It’s like leaving an open heart surgery patient in the middle of surgery. And SaaS apps unfortunately, you’re always performing open heart surgery on a living patient. And that’s one of the reasons why this is so challenging. So, Misha, I’m not sure I have the best answer of why everyone doesn’t just use Rails or Django, but I sure appreciate your question. And I do agree with you that I think there are some tech stacks that are better designed or better suited for building SaaS applications. So, thanks for writing in. And that wraps another episode of Startups For The Rest Of Us. Thanks for joining me today and every week. This is Rob Walling signing off from episode 704.

Rob Walling:
Whether this is your first or 301st episode of Startups For the Rest of Us, welcome. It’s great to have you here this week. I’m your host, Rob Walling. This week I talk with Jordan Hansen, founder of Cobalt Intelligence, about his really interesting journey of becoming an accidental SaaS entrepreneur. 

Cobalt Intelligence is a SaaS that allows you to do business verification with Secretary of State data, using an API. And in the conversation you’re going to hear how Jordan just got there, almost by accident, that he really didn’t want to launch a SaaS. But he wound up building what is a pretty incredible business and has actually taken funding from TinySeed. You’ll hear us discuss that in the episode. 

I want to address that upfront, actually. I hope that, given this podcast has been going for 700-something episodes, I hope that you know that I don’t use this podcast as a commercial for TinySeed, nor for MicroConf. Obviously, I am motivated to promote things that I’m working on. If I’m running an event, I want you to show up. If I’m running an accelerator, and you want funding, I would love for you to apply. 

But the reason I bring folks like Jordan on and Matt Wensing, Derek Grimmer, Ruben Gomez, and other TinySeed founders I’ve brought on the show in the past several years is because their stories are interesting. They’re knowledgeable. They know how to communicate what made them successful. They’re willing to talk about both failures and successes. They tell their story well. There’s so much to it, and if a company or a founder has all that and can bring the thunder to this podcast, that I think can help keep you motivated or give you some strategies and tactics to succeed, I’m not going to exclude them from that because they happen to be part of MicroConf, or they happen to be part of TinySeed. 

Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale. This event will sell out. If you’re thinking about coming to Atlanta, April 21st through the 23rd to see me co-host this event with Lianna Patch, and to see speakers like myself, Rand Fishkin, and several others, head to MicroConf.com/US to grab your ticket before they sell out. We had an amazing event just a few months ago in Denver, and I expect the event in Atlanta to be no different. So MicroConf.com/US to grab your ticket today. 

And with that, let’s dive into my conversation with Jordan. 

Jordan, welcome to the show.  

Jordan Hansen:
Hey, thanks, Rob. It’s good to be here.  

Rob Walling:
Yeah, it’s great to have you. So Cobalt Intelligence, your H1 is “Keep up with your pipeline. Automate and integrate SOS, court, and other public data into your MCA underwriting process” – wow – “so you can move forward quickly and confidently.” I-  

Jordan Hansen:
Does that feel long?  

Rob Walling:
Well, no. I don’t know what SOS and MCA is. So it’s like you have these obviously industry-specific terms in your H2, your subtitle in essence. So either that’s a really good decision because you’re speaking exactly to your customer, or you’re alienating people. But that’s for you to let us know. Translate that for us.  

Jordan Hansen:
Yeah. The good thing is I can answer this with confidence because I hired Lianna Patch, and we worked together. She crafted these headlines exactly like this. Whether it’s the right decision or not-  

Rob Walling:
I’d feel pretty confident-  

Jordan Hansen:
I [inaudible 00:04:36] to Lianna.  

Rob Walling:
At that point.  

Jordan Hansen:
Exactly.  

Rob Walling:
Translate for me what I just said then, because there’s a bunch of entrepreneurs listening to this right now, who are like, “I am not sure what this product is”. It’s CobaltIntelligence.com, if folks want to check it out.  

Jordan Hansen:
What we do is we help people in the finance industry. I say banks, but most of the time it’s people doing alternative lending. They’re not banks because they don’t have the volume we look for. But when a bank or a business needs capital for a pizza restaurant, and their oven goes down, they need money to replace that oven immediately. 

If they go to a bank SBA loan, it’s going to be a long time to be able to get that cash. They’re going to go work with an alternative funder, which normally can get them that cash, working capital, something like that, a lot quicker. They have to do the underwriting on this business so they check things like the SOS, which is what we call, it’s the Secretary of State. When you start a business, you register your business. We’re going to do things that check. “Okay, is this business in good standing? When did it file? How old is it? How much history it has?” And then court judgments. Has there been a bad history of credit? That kind of thing, that’s where we’re going to help with these funders. Right now, they’re doing that manually, and we help them just automate that process.  

Rob Walling:
So manually, meaning I am a business in Maine, applied to get a loan from us, or 500 businesses in Maine applied today to get a loan. There’s a lot of volume, you were telling me about.  

Jordan Hansen:
A lot of volume.  

Rob Walling:
I’m going to go to the Maine Secretary of State website, which I know is one of your favorites, and I’m going to log in. I’m going to type in, oh, this business name. Do they exist? And are they in good standing? And do they have a tax bill? That kind of stuff. And you’re saying you have that data for all 50 states, that they can just plug into via – I know there’s a web interface – but it’s mostly an API. Is that right?  

Jordan Hansen:
That’s right.  

Rob Walling:
Your product is mostly an API, yeah.  

Jordan Hansen:
It’s an API. The fact that it’s public data, a portal doesn’t offer a whole lot to them because if they have to go to my portal, then they may as well just go to the state. Again, that’s why banks aren’t great. I remember just talking to a bank last week and they said, “A thousand a year, we could probably do that.” I’m like, “No, our plans start at a thousand look-ups a month.” And they’re like, “Oh, that’s a volume. We need higher volume.” They’re processing hundreds of applications a day.  

Rob Walling:
Okay. I want to get into a little later, because you’re a developer, and you built this yourself. I want to talk a little bit about how you get all that data, because I’m sure people are wondering, “Is this freely available? Is just JSON blobs that are on GitHub that you’re downloading?” 

But before we do that, talk about where the company is. As I often tell people, you can give revenue, you can give team size, just whatever you feel comfortable with to give the listeners an idea what stage you’re at.  

Jordan Hansen:
Yeah. Right now we are three or a team of three, and we are profitable, so we feel pretty good. Two of those are US-based, both engineers as myself, engineer-founder, and then another engineer to give an idea of how much salary that is. We have one offshore marketing person. And we’re doing, thankful, thankfully, we’re profitable as of it’s been about, I guess, the last 10, 12 months we’ve been profitable.  

Rob Walling:
What’s your main channel for finding new customers? Seems like a pretty specialized market.  

Jordan Hansen:
Yeah, it’s interesting because I didn’t know this market existed before. I started building, I was building things constantly, and I just was building them in public, blogging about it, and then making YouTube content is where it started. And then people started reaching out and say, “Hey, I could use this data in my business.” That’s really what we’ve kept it doing. We just continuously are making YouTube content. It’s shifted how we focus that, but it’s still our main bread and butter is content, whether it be blog content or YouTube.  

Rob Walling:
Yeah. That actually takes us back to your origin story, is that you had a good job with golden handcuffs, working at Lenovo. Were you a developer, a senior engineer there?  

Jordan Hansen:
I was, yep.  

Rob Walling:
Yeah. You didn’t want to do a SaaS because you knew SaaS was a drag?  

Jordan Hansen:
It sucked. Oh my gosh, it was terrible.  

Rob Walling:
Because you built one within Lenovo, and it was just a fiasco. Is that what happened?  

Jordan Hansen:
Yeah. It was fine. No, the product was good. We had built a good product. That’s why they hired me in fact. They didn’t have any, they only had on-prem software they were selling. They wanted to build us a cloud-based software. I had done that before. They hired me to focus on that, and they built the whole team around us to build this software. But it was a good product. We did a good job. But it was so hard. They’re Lenovo, so they had a lot more security restrictions, a lot more red tape that we had to get through. But I was like, “I’m never building a SaaS, never.”  

Rob Walling:
That’s why I say stair step. For folks who haven’t built one, they just don’t know how hard it is that first time. And being at a big company doesn’t make it any easier because you have, like you said, all the security, there’s just so much more. 

Paul Graham had this expression when they got acquired by Yahoo, and he said, “We got in there.” I don’t know, they’re 20-somethings at the time. This is in ’90s. He said, “Once we started working at a bigger company, it felt like running through water.” 

Have you ever tried to run in the ocean?  

Jordan Hansen:
It’s so hard. Oh, yeah.  

Rob Walling:
I can’t get anything done. What would take a week at a startup will take two months at a big company, and it’s infuriating. I’m not saying Lenovo is good or bad. I’ve just worked there.  

Jordan Hansen:
That was a good team. Honestly, we were probably almost like a little company within the bigger company, so I feel like I loved it. They were good people and a really good team. And we made a lot of really awesome stuff. But it still was, like you said, there was still a lot of, we had to go security checks all the time.  

Rob Walling:
It’s challenging, yeah, yeah.  

Jordan Hansen:
Yeah, it was hard.  

Rob Walling:
So you’re working the day job at Lenovo. Am I right that you were creating blog and YouTube content around web scraping just as a hobby?  

Jordan Hansen:
Yeah, I needed something. I remember listening to a book by John Sonmez. I don’t know if you’ve heard of him.  

Rob Walling:
Yeah.  

Jordan Hansen:
Anyway, he has this book, Soft Skills for Software Engineers, and he said, “You should write a blog.” And I was like, “Everyone says to write a blog.” 

But I was determined. I really wanted my own business. I had one in college, and I was like, “I know that’s where I want to be eventually.” But I didn’t want it to be just a dream. “I got to take some action.” So I just started writing a blog post a week about web scraping, about getting data publicly. 

And the blogs, they sucked at the beginning, and they probably sucked a lot during the way too. But it forced me to find the cool stuff. I had to like, “Okay, what am I going to write this week? Let’s find something I can web scrape.” And that really is how it started.  

Rob Walling:
Why web scraping? Is that something you had done at a job, or you just decided to do it?  

Jordan Hansen:
I had a friend that hired me to do a contract job for his business, and it was around web scraping. I thought it was fun and interesting, and I was trying to pick something that wasn’t, a little more on the fringe. It wasn’t something that everyone was doing. I felt maybe intimidated to do just software because there’s really good software engineers. I’m pretty good, but I don’t know if I’m the best. But I felt like this was something a little more, that not every single software engineer could say they were good at.  

Rob Walling:
Yeah, I like that, picking a specialty, a niche from the start. So you’re blogging, and were you doing YouTube?  

Jordan Hansen:
Not for a while. I did probably blogging for a year, every week for probably a year plus. And then I switched over to YouTube as well. 

I just started… Honestly, my YouTube videos at the beginning, we were just down doing that Tennessee retreat, and we had breakout mastermind groups, and people talked about some wins you had. And I just harped. YouTube is so, so good. My videos at the beginning, it literally was an hour and a half of me writing code. That was it. 

Now, I wasn’t entertaining, definitely not, and I probably had 30 to 50 views on it. But I just kept making them. Because I was building stuff every day, I’d wake up early in the morning, it was like 5:00 A.M. or 6:00 A.M. I’d record before my day job and just code whatever stuff and put it all, just throw it up on YouTube, no editing at all. 

The thing is, it just builds. People started following more and more. And then I get people reaching out, like, “Hey, I need this data”, or “I need different things”. Why not do it?  

Rob Walling:
That’s interesting. How much… Just hearing you say, “I shipped a blog post every week for a year”, that’s something most people won’t do. 52 blog posts is nothing. That’s nothing easy. And then to create videos, you’re like, “Oh, I was just recording.” You kind of matter-of-fact it when you say it, but it’s a lot of work. You weren’t making money off it. You didn’t have a huge audience, not like you had tens of thousands of people. You probably had hundreds, I’m guessing, reading and following. So it’s not that much. Why did you keep doing it for that long? What was the internal motivation that kept you going?  

Jordan Hansen:
That’s a good question. I really think it was because I was that determined to find… I wanted a side business. I wanted a business. I wanted my own… I wanted to be a Rob Walling one day. 

I didn’t know who you were at that time, but sorry, don’t be offended. 

But no, I wanted to have my own business, and I felt like I love the people I worked with, but I wanted to be my own boss. I did not like being told what to do. Lenovo was probably as good as it could have gotten for a software job, but I wanted that, to have built my own thing.  

Rob Walling:
You have the genetic flaw we call entrepreneurship.  

Jordan Hansen:
That’s right.  

Rob Walling:
I often call it unemployable.  

Jordan Hansen:
That’s right.  

Rob Walling:
I remember becoming unemployable. I still had to work for a few years after that. But the moment where I was like, “Oh, I’m never doing this again. The moment that I can quit this job, I’m done, and I’m never going back.” 

Okay, so you’re doing it nights and weekends. You’re shipping these videos. So how does that turn into launching a SaaS that you said you didn’t ever want to do?  

Jordan Hansen:
Again, I was there at Lenovo, and I had a plan. I was like, “I’m going to get to a point eventually where I can quit.” I started saving my money more. 

As the videos came out, I would start to get some people doing one-off contract work. They’re like, “Okay, can I get this done? Can I get this done?” And I occasionally signed people up for recurring… They had me on retainer, essentially, to collect data for them. So I had some income coming in. I was making some money there, and I was selling occasional things. I would get some sponsored videos and posts too occasionally. So I probably had, I don’t know, 10 grand to 20 grand a year on the side that was coming. Not a lot, but I kept saving the money, and I was like, “Okay, with the goal to quit.” 

That’s kind of how it took me. Now, I didn’t get to the SaaS part. Even when I quit my job at Lenovo, I was like, “Okay.” I told my wife, “Hey, we have enough money in the bank that we should be good to live how we are for two years, I think, with the revenue we have coming.” And so she’s like, “Yeah, totally, let’s do it.” 

I quit. Again, no intention of doing SaaS. I was just going to do contract work, build something. But recurring revenue was really, I wanted that. I had done things before where I had sold a one-off, and I hated it, just because people came back to you, especially when it’s software, they want tweaks. I hate getting in that pricing discussion. I just wanted recurring revenue is really what I wanted.  

Rob Walling:
Was that 2021?  

Jordan Hansen:
That was 2021.  

Rob Walling:
This was going on, yeah. You took the leap with two years of savings in the bank. Congratulations. 

I know a handful of entrepreneurs that have done that. I was never able to do it, just to pull together that much cash to be able to do it. 

I would be super… For me, watching my savings burn down would be pretty tough. How did that feel? I’m sure the first day you quit, and you show up for your new job, which is working for yourself, got to feel amazing.  

Jordan Hansen:
It was amazing, right. Oh, so good. It was the best feeling ever.  

Rob Walling:
And did you, over the course of the next weeks or month, did you start to feel a little bit like, “Oh man, I got to make this work fast because I’m going to be losing tens of thousands of dollars over six months,” or whatever.  

Jordan Hansen:
There was stress. I don’t think it was intense stress. I had enough. Again, when I quit, it was a mix of savings, plus I had money coming in. I was like, “Oh, I’ll just keep having to build these customers, and I’ll have enough to take it over”, whatever it is. The problem was I was building products, but they weren’t really software products. It was more like a weird mix of, “Hey, I’ll send you an email a day with data.” It’s probably a SaaS kind of. I didn’t have any login. I’m just going to send you a CSV and invoice you once a month, and you’ll just pay me. That’s what I wanted to build. I was like, “No login, no SaaS, and we’ll just go from there.”  

Rob Walling:
You applied to TinySeed, and you were pretty early. I’m not sure I remember. I saw you sent me some notes, and I didn’t remember you being as early as you were, but…  

Jordan Hansen:
I don’t know. Maybe you read it wrong, and that’s what got me in because I felt pretty lucky.  

Rob Walling:
Did you apply in ’21 or ’22?  

Jordan Hansen:
I applied in ’22. In fact, I didn’t even know what TinySeed was in ’21, didn’t know what you were in ’21 until the very end.  

Rob Walling:
Yeah. Tell us how you got there then.  

Jordan Hansen:
Yeah. I started actually building a software business. It was just these products that I was building. As I got to more of this public data, I was just building up connections, and I was like, “You know what? This would be kind of cool to use and sell.” And then I had some people reach out and say they wanted it. That’s what exposed me to it. “So, okay, I think this is something where I could actually charge as a software as a SaaS or a software as a service business.” 

I started looking around for podcasts. I’m a big consumer of podcasts, and someone recommended yours. They were like, “Hey, this is one of the top ones you should listen to. I started listening to it like crazy. That’s where I got exposed to TinySeed, and it drew… I’m married with three kids. I’m 39 now, so when I quit, I was mid-thirties. I wasn’t going to be someone that’s going to go venture and work 80-hour weeks. I’m never going to do that. 

It was really a decision of… Funding was never on my radar, didn’t want it. But what you kept talking about, this lifestyle, you were saying, the type of business you were building, what TinySeed showed, promised that really appealed to me. I was like, “Maybe.” But I felt very imposter. Again, I didn’t want to be in the software business. I wasn’t someone who had been doing software since college. It was a whim. It was 2022, spring of 2022. I think you probably had said, “Hey, the application’s a piece of cake. Check it out.” And it was a piece of cake. You or Tracy, I don’t know who built that. I think Tracy built the application.  

Rob Walling:
Tracy did.  

Jordan Hansen:
It was so easy. I went and looked at it, and I was like, “Really? I can answer these questions.” I had to look up, I think, some of the definitions because I was like, “I don’t know what these software terms are.”  

Rob Walling:
Right, right. See, that’s something that I want folks to keep in mind. If you’re listening to this, and you feel like an imposter, but you have a business that’s doing revenue, and you’re like, “Oh, I should never apply to TinySeed because I don’t qualify”, or whatever. That’s not usually true. 

I also want to call out, this podcast and my interviews are not advertisements for TinySeed. You just as well could have gotten involved with the MicroConf ecosystem, never applied to TinySeed. And that’s okay too. The reason we have all this stuff, we have mastermind matching for people who want to pay for that. We have TinySeed funding and the accelerator for folks who want to participate in that. We have the state of independent SaaS for people who want to… We have in-person events. Some people want to go, some people don’t. 

I don’t have an agenda with… You’re not on here because you got into TinySeed. You’re on here because you have an interesting story to tell, and I think it can inspire people who may not want to build a SaaS, and you did, or may have a SaaS, but think they’re an imposter, which you did as well. You know what I mean? 

Now you’re much further than that down the road, with full-time employees and profitable and growing and all that. That’s the point of the conversation is to inspire folks to follow the path that you followed. 

You must’ve been surprised then. Do you remember what your revenue was?  

Jordan Hansen:
Yes. I had been selling, like I said, I had been selling other products. I had some recurring revenue, but it wasn’t the SaaS revenue. I had about $4,000 a month in that, which felt okay. But I felt like it was cheating to almost list it. I had to put a disclaimer because I only had $300 of actually the SaaS revenue. Had just launched it, very pre-beta, so barely anything was coming in there.  

Rob Walling:
We funded a few companies like this, where there’s a mix of revenue. But if it’s recurring, if the 4,000 was one-time, or it was truly consulting revenue for dollars for hours writing code, we would’ve said, “Get the SaaS further along. Please reapply.” 

But I remember there being… It was like, “Well, it’s recurring revenue, and it’s heavily related. It gets you to Ramen profitability, close to default alive.” We’ve invested in a handful of businesses like that, where it’s like, “Ooh.” Actually, we really like APIs anyways, just as a business model. We’ve had some pretty big successes within TinySeed. So we like them anyways. We like you, we like developer-founders, which you are. And we liked that you had traction in this space, where we’re like, “This is a niche of a niche. We don’t have any other A, no other TinySeed companies in it, but you can dominate.” 

I really like vertical software. We do at TinySeed because you can dominate it. You’re not competing with whoever – Microsoft, Google, Facebook. You don’t have to be the best marketer. You just have to be better than the other five in your niche. Obviously, you are. 

I want to give folks context, who think, “$300 MRR? How did he get in?” There’s more to it than that. You had more than 4,000 in revenue. It happened to not all be from the SaaS, but there’s nuance. This is when people say, “Should I apply to TinySeed?” And it’s oftentimes, if you’re in doubt, do it. And we’ll just talk. We’ll talk it out. I want to figure out here more about what the revenue’s from and just more about how the business breaks down. 

Now, as I said, I don’t want to make this a commercial for TinySeed. But I know you’ve gotten so much out of TinySeed, and I want to give you the opportunity to say that because it seems like you were… I don’t know if you were surprised by that, or maybe you’re surprised by how much you’ve gotten out of it. Just talk us through it.  

Jordan Hansen:
Yeah. I want to say Rob didn’t pay me. He didn’t ask me to come on and talk about TinySeed. If you’re listening to this podcast, you probably know not the hard salesman of this. He’s very low-key, and that’s how this was. 

But before this, I was a solo founder, feeling like an imposter, did not have a history of… I was a corporate job guy. There’s entrepreneur guys that I feel like they’ve been in software forever doing these things, and they were really comfortable with his ecosystem. I was not. Whenever I was having a decision to make, I was questioning it, even should I even stick with this product? That was a big decision I had all the time. And it was constant. I was asking my wife, but she didn’t know either. So I had no one I felt like I could trust to talk to about it. 

And I wanted a co-founder, but I had had co-founders in the past, and so I did not want a co-founder. I wanted the dream co-founder that would work. So applying to TinySeed, the money was good, but I needed someone to talk to. I wanted a community to talk to and say, “Hey, is this crazy? Is this not?” Honestly, it’s probably been a big… Getting into TinySeed was A, validation of my idea, that, hey, this actually is something I could focus on. 

I thought this, gone back and thought about this a lot. I don’t know if I would’ve focused on it. I probably would’ve chased another shiny thing. “Oh, someone else asked me about this, so I’m going to try to build that now.” The fact that I could now focus on it, which I feel like most businesses, when you focus on one thing, that’s where the growth happens. You just have to keep going. It’s going to suck for a while, and it’s going to continue sucking, probably for a long time. But keeping with it really just, that’s where the dividends come.  

Rob Walling:
It sounds like it made a big difference. And it’s not, as you said, the money’s the money. It’s fine. The community, the mastermind we match you in, the other folks that you can hit me up… You and I just had a call about your strategy for the next six months right before recording this podcast episode. You can just hit me up, get on my calendar at any time.  

Jordan Hansen:
Huge difference, yeah.  

Rob Walling:
And there’s 250 founders in TinySeed. We have 40 or 50 mentors, and you can hit them up. That’s really the value, I think, of… And to be honest, as an entrepreneur myself, I’m still a startup founder. TinySeed and MicroConf are startups. We have found product-market fit, but we have to worry about pricing. We have to worry about moats and this and that. That’s one of our moats. Anybody can raise money and hand out checks. Who can build a community like TinySeed? Not that many. And who has the alumni network? And who has the mentor network of the B2B SaaS founder  

Jordan Hansen:
It’s a special thing. It really is. They’re some of my best friends now, fellow TinySeed founders. When I go to the events, it’s a blast. You hang out with them. We just had the first one where we could bring some family, and my wife came. And she’s not really the most social person sometimes, but she was loving it. She was like, “Oh, these people are amazing.” I’m like, “Yeah, this is what I talking to you about. This is why I come home, and I’m like, ‘Hey, that’s my best friend, Jason. Hey, that’s my best friend, John. These are my guys I hang out with all the time.'”  

Rob Walling:
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Yeah, that’s cool. 

All right. In true Startups For the Rest of Us fashion, I have a question for you. 

When did you know you had product-market fit?  

Jordan Hansen:
Product-market fit, that’s a tough one. You hear people, I heard your podcast with Noah Kagan. I don’t know, this came out just before we were, the last one I listened to anyway. And he’s like, “You’re going to know.” I guess I kind of know. People are paying me, and I’m living. I feel very lucky for where I am. But man, I’m just constantly faced with doubt. What else can I do? Am I there enough? I don’t feel like we’re exploding yet, but since we joined TinySeed, we’ve probably been four to six, so a lot of growth since we’ve joined, which has been amazing. It’s easy to have those multiples when you only have $400 when you join. Doesn’t take much to multiply. But I would probably say when I knew I had product-market fit, it’s never, not yet.  

Rob Walling:
See, I think you’re being modest. The fact that you have people paying you thousands or tens of thousands a year means that you’ve built something that people want and are willing to pay for. Now the question is, you usually have product-market fit with your core customers who are not canceling. The question is how many of those exist in the world? And can you reach them at a scale? And what’s the switching cost? There’s all this other stuff. 

We might say, and as we usually say, their product-market fit is not a binary. It’s not a one or a zero. It is a continuum. Product-market fit also, per my conversation with Ruben a few weeks ago, you can have strong product-market fit with a certain group or with a certain product. And then you launch this second piece of it, and it’s like, “Oh, we don’t have it with this new customer type. There’s multiple ICPs, ideal customer profiles.” 

I think you have it strong with a certain group of folks, and I think you’re just in the process of figuring out can you expand that? Yeah. Or can you strengthen it with them?  

Jordan Hansen:
Certainly, maybe some of the things you’ve noticed is when you get on a phone call with someone, and it’s the easiest sales call of your life. They’re just like, “All right. I’m ready. Let’s go.”  

Rob Walling:
Oh, yeah. Yeah, that’s what it is.  

Jordan Hansen:
Then you know okay, okay, there’s something here. I don’t have to convince these people, I don’t have to sell the vision. They get it. They’re already looking for it. When that happens, that’s probably what it feels like.  

Rob Walling:
I teased it earlier, about you have all this data, you have an API. Where does this data come from that you have in your database that you’re basically selling access to?  

Jordan Hansen:
Yeah. Like I said, it’s mostly public information. Pretty much all of it is public information. Our customers, they do buy data from places that aren’t public, but I worry… You worry about credibility of that data. 

Anything we get, it’s something that we have some kind of integration with a state. A lot of times we even purchase the data from the state. Sometimes we just have integrations built into those states. But it’s all public data in fact. And we also have where we do Freedom of Information Requests, where we’ll just ask the state, they provide that data. Legally, they have to provide it. It’s public data, all this business data. That’s the data we’re providing to our customers. We’re just automating it and maintaining a large software infrastructure that goes through automating that collection and that data.  

Rob Walling:
I want to talk about what I think you’ve told me has probably been the hardest part of the journey, and it’s about YouTube because you had traction. You were publishing videos. You still have traction, but that was a nice source of customers. And then someday, somebody comes a-knocking. Walk us through that story.  

Jordan Hansen:
Yeah, it’s a tough one. I showed you this graph early, before this conversation, and there’s a notable spike. Like I said, most of my videos before a certain time, they were not very big. Most of them were just I got a hundred views here and there. 

But at some point, I started gaining traction, and the video… It was earlier last year, in 2023, in the spring, it just started. I don’t know what it was. It was a video had already been out for probably a year plus. But YouTube picked it up in the algorithm, and we went from 800 subscribers to 2000 subscribers to 3000 to 8,000 subscribers within two months. 

Usage went up like crazy. But some of the problem that happened was the data, the stuff we were talking about, did not overlap very well with our target customers. We had to make the business decision.”Okay, this is more distracting than it is helpful.” It was so hard because you build up some ego and pride and the fact that people are reaching out to you. We were getting a lot more comments, and they were saying… 

It was just at the beginning of this rise where we started to take… We took all the videos down. We had 350 videos published. We took probably 300 of them and put them down. They’re private now, and I feel bad. People still comment, and they say, “Hey, can we get access to these videos?” And I say, “I had to make the business decision to take them down.” 

It was a source of leads too, because while most of it wasn’t overlapping, most of it was distracting. The overlap existed. We probably lost a little bit of source of leads as well. It felt good to be the man that knew stuff, that could talk about things, and just that little bit of credibility. It disappeared for a second. 

I remember discussing it with my wife, and I think with you too. Yeah, we did. You and I met and talked about it, to say, “Okay, I think I need to make this decision.” But I was really proud of myself that… It was a hundred percent the right decision for the business, and I’m proud of myself that I made it, even though it really ended up in being… 

Since then, we were 8,200 subscribers, I think, and we’ve lost subscribers. Now, we’re still making YouTube content, but it’s a little bit shifted and focused more on our customers. Now those people that subscribed originally for a different type of content, they’re churning out, which is fine. I understand. Not offended at all, but my pride takes a little hit.  

Rob Walling:
Sure. Because these numbers, this is the thing with vanity metrics, and I’m going to say YouTube subscribers are vanity metrics more so-  

Jordan Hansen:
A hundred percent.  

Rob Walling:
Email subscribers are not vanity metrics, unless if your open rate’s really low, whatever. Certain people beat their lists up. But email subscribers are the highest form of audience in my opinion. And podcast subscribers are actually very, very high because it’s usually, it’s podcast listens, it’s downloads. If you have 30,000, then you get 30,000 downloads, and we approximate those as listens. 

YouTube subscribers are like Twitter followers, where you can have 30,000 YouTube subscribers, and you publish a video, and you get what? A thousand views on it or something. That’s pretty common. Unless it catches the algorithm, it doesn’t even get shown to all your people. 

That’s the problem with Vanity metrics is you have these 8,000 subscribers, and that’s a number. And you’re like, “I want that to go up into the right, because we want all numbers to go up to the right.” 

But you realize that there’s this focus problem, there’s a mismatch. That’s something that most, especially with content, I don’t think people think about that enough. “Oh, my content is getting eyeballs, but is it achieving? What’s the end goal?” The end goal is bringing more people into the business, assuming it’s a business channel. On YouTube, it’s Cobalt Intelligence. So it is truly your business channel. It’s not like you’re building a personal brand around Jordan. You’re building it around the business. The goal really is to promote the business. 

Now, some could argue, “Well, look at HubSpot”, or “Look at Salesforce.” Look at these other companies. They do just put out broad, broad, broad stuff. Well, that’s because they’re public companies with a deca-billion dollar valuations.  

Jordan Hansen:
And they sell to a huge horizontal audience.  

Rob Walling:
Huge swath.  

Jordan Hansen:
They catch one little person over here, over there, and it could be someone valuable.  

Rob Walling:
Thousands, if not tens of thousands, of customers versus Cobalt, which has a fraction of that number. You don’t need that many because you charge so much more. So you know that lack of focus can actually be, it can be detrimental to the marketing, just because you have people seeing it.  

Jordan Hansen:
I had to make the decision because I love those subscribers. It felt good, and it was nice, the ego, the pride. Like you said, it’s a metric, it’s a vanity metric. While I did like that, I decided I liked money more. Really, that’s what it came down to. It’s like, “Hey, do I want the subscribers? Or do I want more dollars?” I like dollars more today at least. Maybe one day that changes.  

Rob Walling:
Jordan, as we wrap up, if you can describe your journey, because your journey feels, I guess, I say it’s unusual. But it’s probably not. It’s actually not that uncommon for folks to… It’s like accidental entrepreneurship almost. You knew you wanted to be an entrepreneur. Maybe accidental SaaS founder. Reflect on the last several years and how things have panned out for you.  

Jordan Hansen:
Yeah. That’s what I would hope the most. Whenever I talk to people, I just don’t think it’s as hard as people think it is. More importantly is that they take action and actually do something. So often, at least that I’ve visited in that trap, where I didn’t do anything. 

I just feel lucky, even meeting with other TinySeed companies. I didn’t choose this industry really. I stumbled upon it, and I’m just feel grateful that I have people that are willing pay. But not only that, the biggest way that we are increasing our revenue so quickly is the fact that we can charge a lot of money. Honestly, people are willing to pay for it. If we had a product where we could only charge $15 a month or $20 a month, revenue growth, it would just be insanely difficult. Now I can land one customer, and we add 20% to our revenue. 

I just feel really lucky that I happened to be in this, not only with TinySeed that’s been helpful to focus, but also just happen to have a product that’s good. And I don’t take that for granted at all. I recognize that I’m lucky to be where I am.  

Rob Walling:
Jordan, thanks so much for joining me on the show. If folks want to keep up with you on Twitter, you are jordbhansen with E-N at the end. And of course CobaltIntelligence.com if they want to see what you’re working on. Thanks so much, man.  

Jordan Hansen:
Thank you.  

Rob Walling:
Thanks again to Jordan for coming on the show. If you’ve bought my book, the SaaS Playbook, and haven’t yet left a five-star rating on Amazon or Audible or wherever you get your books, it would mean a lot to me. If you log into the site, and click that five star, I don’t even think you have to write a review. I think you can just rate it, and it goes a long way towards helping more people discover the book. The book has crossed 20,000 copies sold, which feels amazing. As you know, my mission is to multiply the world’s population of independent, self-sustaining startups. The more folks I can get this book into the hands of, the more I can continue leaning into that mission. 

I hope you enjoyed this week’s show. This is Rob Walling signing off from Episode 703.

Rob Walling:
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I love the smell of startups in the morning. You’re listening to Startups For the Rest of Us. I’m your host, Rob Walling. Thank you if you responded to my tweet about episode 700. That was very meaningful. A lot of people weighed in on that thread and I just really appreciated all the well wishes and all the folks who said that this podcast has impacted you on your journey and it’s made a difference in your entrepreneurial career because that’s why I’m here, that’s why I do this every week. 

Today, for the first time in quite a while, I’m doing a solo listener question episode. I have some voicemails piling up. I’m going to be covering topics ranging from which episodes of this podcast are good for beginners, whether someone should focus on revenue or profit, how to compete in a competitive space and being concerned about that, as well as when do conditions warrant lowering your prices. 

But before we get into the episode, I want to invite you to MicroConf Remote: Early Stage SaaS Sales Strategies. It’s an online event. We’re hosting March 12th and 13th of 2024. It runs from 11:00 AM to 1:00 PM Eastern Time on those two days. And there will be sessions all focused on early stage SaaS sales led by Rachel Leow, Craig Hewitt, Daniel Hebert, Sam Howard. I’ll be emceeing. And we’re going to cover strategies to boost your close rate, build a sustainable sales process, and figure out how to overcome the challenges of selling as a technical founder. We’ll also have Daily Founder Mixer Sessions where you’ll get to meet other attendees to network and chat about what you’re working on. Tickets are inexpensive and they are available at microconfremote.com. 

Let’s dive into the first question of the day. As always, voicemails, audio or video, go to the top of the stack. You can always send in a question by going to startupsfortherestofus.com. Click Ask a question in the top nav.  

Samuel:
Hi Rob, Samuel from Sweden here. I’ve been following you the past years and you’ve inspired me to build my own products and launch some stuff. But now also I would like to introduce this thinking to some of my friends who are really skilled but not into this entrepreneurial bootstrapping thinking. So I wonder what episodes would you recommend me to introduce them with? You’ve done a lot of episodes, but maybe you have a few that could summarize it and get them going. Thanks.  

Rob Walling:
It’s a good question and my answer is, it depends, of course. Honestly, is a podcast the best way to introduce someone to a concept like this? I think it might be a book or a blog post for that matter. So if you want to send them a blog post, I would Google The Stair Step Method of Entrepreneurship and send them that. If you think a book would be better for them, and obviously that can be audio or PDF or Kindle or a paperback, it’s going to be up to you. Start Small, Stay Small is old and it’s a bit dated, but the philosophy is really laid out well in that book. And I’d say 75% of what’s in there still holds true today. It’s the mental side of it. It’s transitioning from developer to entrepreneur. And that book is cheap. It’s 10 bucks on Kindle. And there’s an audio version on Audible. So whatever they like to learn in, that might be the starting point. 

The Saas Playbook, in my opinion, is a much better book. It’s, I’m a better writer. I have more knowledge. It covers more topics. It covers topics I think are overall maybe more relevant to today’s space. And again, that’s similar, it’s 10 to $25 depending on which format folks want to dig into. 

Now if instead they watch a lot of YouTube, then you could go to microconf.com/YouTube and we have a playlist called Building Your First SaaS: The Ultimate Crash Course. It’s a lot of videos, but it kind of gets you in the mindset of what we do here. 

I personally think books are just, they’re a more compact way to do it and they’re probably a more approachable way than recommending episodes of a podcast. 

With that said, if I really wanted to dig in and recommend episodes of the podcast, I would go to the greatest hits tab in the top nav of Startups For the Rest of Us. There’s some interesting solo adventures in that list that I think do a decent job of communicating what we do and how we think. I know it looks like there is episode 222, this stair-step approach to launching products that’s back from 2015, so it’s almost 10 years old. But that’s certainly going to be kind of the podcast version of the blog post I recommended earlier. 

So thanks for that question. I hope my answer was helpful. Now for my next question about focusing on revenue versus profit.  

Cat:
Hi Rob. My name is Cat Wildman. I run a startup called Powered by Diversity. We’ve been running since September 2020 and I went full-time in 2022. We closed 2023 just shy of 200K pounds profit. Not profit, revenue. My question is about profit though. So in 2024 we’re targeting 500K and we’re tracking to meet that target already. 

Now my question is about valuations and profit. So I have been going on top line. So you know you’re ready for series A when you’re at 1 million pounds recurring revenue. We’re tracking to get that not this year but the year after. And we’ll get there. However, I had an acquisition offer in 2023 and they were valuing us on profit. 

My question to you is, we are growing, though we are never going to have a massive batch of cash in the bank because we’re spending it all to grow.We spend everything that comes in on achieving that top line revenue target. So what is the startup to do? Are we going to end up… Is this world of SaaS up moving away from top line valuations and into profit? Do we hit our top line valuation and then sit and become really profitable and then sell? What is going on with this profit versus top line? Because I really don’t know what to do because when you look at our P&L, we’re not very profitable at all. I think our profit, our cash at the end of 2023 was like 8.5K because we spent it all in order to get to the 200K top line revenue. And it’s going to be the same in 2024. Please help me.  

Rob Walling:
It’s a good question, Cat. It’s something that we have touched on in the past on the show, but it’s not something that I think I’ve covered probably in a couple years now. 

And so here are the rules of thumb. These are just rules of thumb. There’s always exceptions to this. I am going to give an exception almost right at the start. But in general, once you get past, it used to be a million ARR, this is SaaS only. I’m not talking about building info products or courses or building a gym or a coffee shop. I’m talking about building B2B SaaS. It used to be north of a million ARR, now it’s, I’m going to say it’s closer to 1.5 million. It’s somewhere in that range. That’s when buyers will start to evaluate you based on revenue and growth are really the one and two. Actually, growth is number one and revenue is number two and churn I think is number three in terms of what they’re valuing you based on. 

Not everyone will do that though. And in fact, there are these micro private equity firms or value buyers that will buy you based on net profit no matter what because they know that you haven’t been going for profit and they want to push the price down as much as they can and get a deal on it. When you’re sub a million ARR, I don’t know that I’ve heard of very many. There’s exceptions, but as a rule, you’re going to be selling for a multiple of net profit. 

I have an exception already. We had a company we were looking to back with TinySeed, we made him an offer. He verbally accepted and then he got an acquisition offer. I’m going to make up numbers here, but say he was doing 80,000 ARR, so it’s early stage, a pretty good fit for TinySeed still. He sold for 10X that, and it was just a top line thing. And why did he sell for 10X that? Well, the multiple’s almost irrelevant at that point because that’s what he needed to give up on the business. And he got all cash. It was a good offer. 

So it’s not an always thing, but it’s kind of the general rule of thumb the way it works is net profit up to about a million and a half ARR. And above that, if you’re dealing with the right buyers, so it’d be strategics or the bigger private equity who are not value buyers, they’re going to look at you at a revenue multiple based on growth. And if you are looking at value buyers or you’re below a million or a million and a half ARR, then yeah, you’re going to be looking at net profit. And that’s why if I was growing a company looking to exit in the next few years, I would not be worried about profit. I would be pumping every dollar I had back into the engine to get it to grow faster and grow bigger. 

And even if I wasn’t looking to exit, even if I was looking to pull profits out in the long term, if you can get that in a healthy, organic, sustainable growth and you can get your company to 2, 3, 4, 5 million, you do have so much more leeway there to then pump the brakes to back off on the growth and just get a lot more cash out of the business. 

So thanks for that question, Cat. I hope my insights were helpful.  

Speaker 4:
Absolutely love your podcast. Such an eye opener to so many questions that I’ve had and continue to have as I progress down this journey. Can’t wait to attend my first MicroConf conference when you are next in Europe. I know audio recorded questions get bumped up to the top of the queue, so hopefully you’ll be able to answer this one soon. 

Similar to yourself back in the day, I’m currently a consultant looking to scratch my own itch and create a SaaS platform for myself and my peers. But let me be honest, I’m crapping my pants. I really work in a fast-paced world of business process automation and AI and the niche solution on delivering is even faster. I’ve built some sort of following, a few thousand people on LinkedIn through blogging and newsletters and talking to my peers in depth about their challenges and I’m developing an MVP of what I know what I think is going to solve their problem from the conversations that we’ve had. 

The solution logic is a little tricky for me and that’s taken quite a long time, quite a few weeks to get this MVP up and running. I’m constantly looking over my shoulder as the market seems to be progressing at the solution that I have. But I feel that this solution really hits the nail on the head to solve my problems, my client problems and my peers. But do I continue developing myself or do I find some developer resource who can help me arrive faster at a workable MVP to present to my first potential client who’s a huge corporation, 33,000 employees? So there’s someone I have contact in there that potentially could buy this solution if it works and I can demonstrate it. And also, what are your top three elements to be differentiating myself in this market full of startups and companies with lots of backing and funding?  

Rob Walling:
All right, so there’s a lot there. I appreciate you sending that question in. So to answer the first part, which is, “Do I bring a developer on or do I continue building it on my own?” Without more details, I just can’t tell you what to do. The way I would think about this decision though is, “Am I making enough progress on my own and do I think that the code I’m writing or whatever I’m doing to build an MVP, because an MVP does not have to involve code at all, but is the solution I’m building going to satisfy these needs in a way that I could quickly transition to a scalable solution if I needed to? Or am I writing (beep) code and it’s going to crash or not scale because I’m kind of teaching myself, I’m a hobby developer as I go?” 

And it just depends. Without knowing your market and your space and more information about your financial situation, if you don’t have the money, don’t bring a developer on. Just let it take longer. Teach yourself. I used to go to library and check out books on Perl and PHP and HTML because I didn’t have the money to hire someone. But if you have the money, then maybe. And at that point, then you need to look for a reputable developer because the worst thing you can do, and the thing I see non-technical founders make over and over, is hiring developers to build stuff and they don’t know how to hire developers because they’re not technical and the code is crap and then it’s not scalable anyways and they’ve spent a bunch of money. 

So my answer is, I don’t know. It depends on too many factors. I think this is where you have to make a hard decision with incomplete information. And if you’re making progress on your own and you’re building it, if you feel like you’re going to build something that’s going to solve their needs, then I don’t know why you wouldn’t keep doing that. So many people build nights and weekends. However, if I had a bucket of cash and you know some developers or you can find a referral to a reputable developer or an agency, is it something you should consider? Possibly. It’s really hard to know and it depends on a lot of factors. 

Your second question was about differentiating yourself in a competitive space. And frankly, as a startup, you don’t want to punch pound for pound at big competitors. What are their biggest weaknesses? Their biggest weaknesses are they don’t listen to customers if they don’t move fast enough. Usually, they don’t have the best developers, designers because they don’t want to work there. So their software is usually pretty crappy, there’s a lot of politics. And usually, their customers don’t like their software, don’t like how much they charge, don’t like how they sell, don’t like that they get locked into these contracts. There’s all this stuff that big companies do that you need to figure out how to use against them, use their biggest strengths against them. 

So you need to move fast. You need to build amazingly easy to use software. You need to sell it in exactly the way that your early customers want to buy it. Not forever. You’ll adjust that eventually. You’ll raise prices eventually. Right now, I would come in, I’m assuming if they’re big players in the space, that big brand names that they’ve raised their prices over and over and over because that’s the playbook and it leaves a ton of room below them, to be cheaper. And cheap is not your number one value prop I would say, but it is part of that package. You have to do all this stuff. And you find these hated competitors and you basically look to recruit refugees from them who just want out. So that is the number 1, 2, 3, and 4 things I would be doing to use my big competitor’s strengths against them. 

My next question is from Dylan about when it’s warranted to lower prices.  

Dylan:
Hey there, Rob, this is Dylan Pierce from Cleveland, Ohio. Thanks for taking the time to answer my last question. It’s been a few months and your answer was really helpful. 

So my new question for you is, have you ever had a scenario where you realized that you had to lower your pricing? I know the mantra is to always find ways to increase your price, and that makes sense. Differentiation your bootstraps, you can’t necessarily compete in the race to the bottom. But what are some signals where you found that your market, you just absolutely need to lower prices to be competitive? 

So some background for me, I’ve built a product that integrates with eCommerce platforms. This product uses computer vision and it’s typically reserved for banks and FinTech or startups that have a developer team that they can integrate over APIs and have that complexity to onboard. Whereas my solution is a simple plug-and-play app and it adds this functionality with the eCommerce use case in mind. 

I’ve been noticing recently that there’s been churn due to competitors that have much lower pricing but take a different approach than I do, less quality. But at the same time, I also rank number one for the key terms I care about. So I am considering lowering pricing just because of the pushback I’m getting from new leads as well as retaining existing customers due to a lower priced, in my opinion, a lower quality approach. But in the end, it seems like the sensitivity to quality isn’t so high. So at what point would you consider lowering prices? What are your thoughts on that? Thanks.  

Rob Walling:
I love this question because it’s not something that we tend to talk about very much on the show, because frankly it is so rare in my decades of doing this and then advising and investing. I can think of definitely two companies. I mean, I’m talking thousands and thousands that I’ve seen and that I’ve advised to raise prices and all that. I think two for sure that I can think of by name, and there’s got to be at least one or two more. So it can happen. There is absolutely a time when the signals are pointing to you lowering prices. And usually, the signals are pretty much what you’re saying. If you’re getting a lot of churn because your customers are going to a competitor and they’re siding price as the number one issue, or if you’re losing deals, if you’re doing more high-touch sales, sounds like you’re not doing that, you’ll get a sense that like, “Ooh, we’re too expensive.” 

Now, you’re always going to have complaints about price. And in fact, if you’re not getting any complaints about price, then your price is too low. But in this case, yes, can there be signals? There can be. And it sounds like you might be in that position right now. Churn and losing deals are the number one and two, right? It’s people putting their money where their mouth is. And if their switching costs are low out of your product to another one, that makes it even more painful. If switching costs are high, it’s a little less motivation for you to need to lower prices. 

But obviously, you can either raise prices too much. You can just keep increasing, increasing to where you kind of lose product market fit or where you’re the most expensive product in your space in your category and you don’t provide any additional value, then yeah, you’re overpriced. Especially the more of a commodity you are, it really is a race on price. The more of a brand you are that people just know you and you’re the best and no one gets fired for buying IBM, these days it’s Salesforce or HubSpot, Intercom. These are these expensive tools and it’s like, “Well, how can they charge so much?” Because they can. Because they’re a brand and they’re trusted and they integrate with everybody and no one gets fired for using them. 

So in your case, would I lower prices? I would certainly consider it if I was losing deals and if I was churning to these other competitors. Even if it’s an inferior product, I would certainly try to figure out a way to better communicate that. But if you’re doing low touch sales and you are viewed as a relative commodity to these other apps, it’s something I’d consider. 

Here’s the other thing, is can you think about lowering prices on the low end? So your entry level plans, the published plans so to speak, such that you are an obvious… You’re at parity with these other solutions or maybe you’re 10% more or whatever. But then as folks graduate up to tiers, as they get more value from your product, as they get more usage out of your product, that the price does increase with the value that you provide. That’s how I’d be thinking about it. Thanks for your question. I hope that was helpful. 

My next question is from anonymous about pursuing career growth versus staying and building on the side.  

Speaker 6:
Hi Rob. I’m relatively new to the startups for the rest of this universe, but I’ve been loving the podcast and the SaaS Playbook. They’ve helped make what has long been an abstract goal of self-employment seem realistic, actionable, and attainable. 

Now to my question. I’ve been at my current company for almost a decade, which as I’m sure you know is an eternity in software time. I’ve learned a ton and I’ve had lots of opportunities for growth, which is why I’ve stayed. Lately though, I’ve been feeling like I’ve reached the extent of my growth potential here and the grass is starting to look greener elsewhere. I think a move to a different company would let me learn a lot more about how other businesses function and grow and might help spur more of my own startup ideas by exposing me to other teams and industries. I’m also concerned that staying at the same company for much longer will limit my future employability. Startups don’t seem to like seeing 10 plus years of tenure on a resume. 

On the other hand, I have stability, flexibility, and institutional knowledge here, which means more free time to develop my own ideas and hopefully start on the stair-step approach or start bootstrapping something meaningful. If I make a move, that means that I’ll have to put in more intense time at work learning about a new product, code base, and team, and I’d be starting over on trust and stability. I know it’s hard to give specific advice based on a high-level overview, but I’m wondering if you have any general thoughts on this type of situation. Pursue career moves that might pay off long-term or use the current stability and flexibility to focus on building on the side right now? Thanks for your time. I really appreciate your work.  

Rob Walling:
Yeah, I appreciate the question. And you’re correct, I can’t give you direct advice about this because it’s your life and it’s your career. The way I think about it though is timing and timeline. If you move to another job now, I think in the long run it will benefit you. It’s likely to benefit you for the reasons you said of being exposed to new ways of doing things and new code bases and all that. 

The question is, do you have the months? I don’t think it’s years, but you’re definitely going to lose months of building back that trust and learning code bases and this and that in your life right now. I don’t know how old you are. I don’t know if you’re planning to have a child in 12 months. And so you have some kind of timeframe. Or if it’s like [inaudible 00:21:36], it’s looser, like, “I have 3, 4, 5 years to make this work,” then I think playing the long game, I probably would look for another job. You’re also likely to get a raise when you do that. You get exposed to new things. 

So all things being equal, I tend to want to do the thing that’s going to expose me to new experiences. That maybe makes me a little uncomfortable because I don’t love change myself and changing a job always came with uncertainty. Sometimes that uncertainty was a good thing and sometimes it wasn’t. Sometimes the job change was good and sometimes it wasn’t. I would lean towards being exposed to new people, expanding your network because now you have your old network, all the people you work with at your old company, you have the people you work with at your new company. It’s beneficial. But again, to me, it comes down to what is your time pressure in terms of your life timeline that you need to fit within in order to have enough revenue and what timeframe to quit the day job. So I hope you don’t take that as direct advice, but just a thought experiment of how I would think about it. 

My next question and the final question for the day is about cap tables.  

Steve:
Hey Rob, this is Steve Davis, a long time listener and a periodic correspondent. I was wondering if sometime you could do a deep dive into cap tables. It seems to be something that can cause people trouble later in their business. And I know you’ve had some great ideas like everyone earning in and such. So I hope you cover this sometime. And again, thank you for years of both insight and entertainment. Have a great holiday season. Bye-Bye.  

Rob Walling:
Thanks for that question, Steve. It’s good to hear from you after emailing with you a bit over the years. 

So for this one, I don’t know that I need to do a deep dive. It honestly doesn’t feel that complicated to me. I think I have three rules that I’m going to give you. First, I’m going to define what a cap table is for those who don’t know. It’s short for capitalization table. All it means is who owns what shares in your company, who owns what percentage of your company. And at the start, it’s one line. You can put it in a Google sheet. Most startups that I’ve seen are managing it in an Excel sheet or a Google Doc and it’s like, “This founder owns this much or we just know that that it is in the operating agreement” or whatever. 

When it gets complicated is if you take outside investors, if you create a stock option plan, if you take safes, which are a promise of future equity at a certain cap, then it starts to become muddy of how much. It’s not muddy per se, but it can be confusing if you don’t have it all mapped out of how much you and everyone else on the cap table owns and will own when that equity converts. 

So my simple, easy to remember, Rob’s patented rules to managing your cap table, number one, is everyone vests, even founders. So if you start a company with one other co-founder, both of you should vest into your equity. That just means that you have to work there for years in order to receive 100% of your equity grant. Usually, it’s a four-year vesting period. Standard is four with a one-year cliff, meaning you get zero equity until 12 months. Sometimes with founders, you wave the cliff and people get it from month one. You can talk to a lawyer and see what they say, but a big mistake that founders make with their cap table is not having people vest. You start a company with one other person, they walk away after six months. If they own 50% of your company, company’s DOA at that point. You will never raise funding for that company. You’ll be working to put money in the pocket of that founder who left. It’s catastrophic for the company and it’s not something you want to do. So everyone vest. 

Number two is, it’s a loose world of thumb, but don’t sell more than 10 or 20% of your company in a single round. So for example, we have seen companies apply to TinySeed that we wanted to fund. And if the founders, by the time they reach us between one, two or three of them, however many there are, if they own less than 80% of their company, we start to ask questions. And if they own less than 70%, it’s a bad sign. So we’ve seen some folks come in where it’s a single founder where sold 70% of his company to an early investor for not enough money to be honest. That’s tough. It’s really tough, because again, it makes the business… I’m not saying it’s DOA, but it’s like do you want to put in five or 10 years of work into this thing to basically line the pockets as someone who wrote you a check several years ago for not that much money? 

So loose rule of thumb, even tight rule of thumb is I would be super suspect if I was selling more than… If you’re doing a bootstrap or funding round, it’s like 10 or 15%. Sometimes you can sell 20%. I’ve seen it venture, it’s more 20 or 25. But in our space, in the MicroConf indie space, it’s in that 10 to 15% ranges where I would be sticking if I was going to raise funding. 

And the third point or rule is understand your safes and your convertible notes. So this is where you understand what it is and how it works. Safe is a promise of future equity. Convertible note will convert in the future and give whoever gave you that loan. Convertible note is technically on the books a loan that you’re paying interest on, but then it converts to equity at a certain point. Usually it’s your next funding round or it’s after X amount of years. 

We’ve seen a founder, we’ve seen multiple founders who didn’t understand their safes and were telling us, “No, I see. I own 90% of the company.” And we’re like, “No. When that safe converts, they own 80%, 90%.” In one case, I think it was actually 100%. It was a bizarre case. But really understand, like don’t DIY your own legal. This is where you don’t do your own legal yourself. 

Here are things I don’t skimp on. Tattoos, LASIK surgery, and legal, and shoes actually. Those are the four. I’m sure there are more than that. But these are things that are important to get right the first time, because if you screw them up, it’s not good down the line. So if you’re going to raise any type of funding, but certainly if it’s going to be safes and convertible notes, understand what that’s going to do to your cap table. 

And when you’re in these early stages before you’ve… Let’s say you’re going to raise venture down the line, you really need to own the vast majority of your company before you get to that pre-seed and seed round because if you don’t, you’re going to get diluted down to nothing by the time you get to the point where you have a liquidity event. So thanks for that question, Steve. I hope it was helpful for you and for other listeners. 

One of the callers today mentioned the SaaS Playbook and I realized the other day it’s crossed 20,000 copies sold. So it is quickly catching up to my best-selling book of all time, Start Small, Stay Small. What’s interesting is I posted to Twitter probably six or eight weeks ago that the SaaS Playbook had crossed 10,000 copies sold. Turns out, I did my math wrong. I actually missed an entire swath of books that had sold and it was probably closer to 14,000 or 15,000 when I posted that. And since then it’s crossed 20,000, which is incredible. 

Start Small, Stay Small, I had always had in my head that it had sold like 15,000, 16,000, 17,000 in that realm. I logged in to just Amazon KDP and it was well over 20,000 just there. It doesn’t include Audible, it doesn’t include all my direct sales. So I’ve now realized that I should probably keep better track of this just so I know. I like to know the numbers. Start Small, Stay Small as a self-published book has now sold more than 30,000 copies. Pretty incredible. I want to get an exact number on that. I need to go back through my records. But as a self-published book, I’m going to be honest, it feels pretty incredible. 

Now, that book has been out for 14 years now. So for the SaaS Playbook in eight months, 20,000, so it’s catching up quickly and still selling, I don’t know, 800 copies a month, 1,000 copies a month right now. It feels really good. And it feels like I talked about playing the long game in episode 700. This is all that coming to fruition, right? To be able to write a book, given the years of experience that I have and both the hard knocks that I’ve learned, but also now learning through the hard knocks of others to be able to put it in a book and then be able to get the distribution and get the word of mouth. I mean, not a day goes by that I don’t see some type of mention of MicroConf or the podcast or SaaS Playbook somewhere out there on social media or Reddit, Hacker News. 

So I really appreciate you being part of this community, this community of misfits as we call it these days with MicroConf, and this community, this audience of this podcast, and just taking it all in and helping promote. I guess it’s this mission that bootstrapping is actually, in a lot of cases, in most cases, is the right call. We don’t have to be prisoners to this narrative that the venture industrial complex tells us that we’re not important if we don’t raise funding, we’re not important if we don’t sell for a billion dollars. That we are actually changing a lot of lives for the better. Whether you’re bootstrapping or you’re helping others bootstrap, this community is incredibly supportive and I find it incredibly motivating to be part of it. So thanks for showing up this week and every week. This is Rob Walling signing off from episode 702.

Rob Walling:
Another week, another episode of Startups of the Rest of Us. I’m your host, Rob Walling, and in this episode I talk with Matt Wensing, the founder of Summit, about his long journey, multi-year journey, finding product market fit. While I’m not recording a series of podcast episodes about product market fit, this does remind me of Ruben Gomez’s episode maybe, what, four or five ago, where he talked about the long journey to finding it and then finding it with a certain subset of customers and certain features and then realizing, oh, the API is a completely different product I now have to find product market fit for. And in this episode, Matt Wensing and I just talk about his journey with Summit over the past. I think we talk about it in the episode. It’s took four years, four plus years of building, talking to customers, launching, finding out he kind of hit the mark, made some revenue, found out that wasn’t the right tool. 

So then he went back to zero basically and started again building new features. You might know Matt from Twitter or from his podcast that wrapped up just a few months ago called Out Of Beta. Before we dive into that, applications for TinySeed are opening on February 12th and close on February 25th. If you’re not familiar with TinySeed, it’s the accelerator I run for ambitious, mostly bootstrapped B2B SaaS founders. Even if you’re interested in applying outside of the window of February 12th to February 25th, you can join our mailing list to be notified when applications open again, visit TinySeed.com/apply to get on the mailing list or to apply. I want to invite you to MicroComp Remote Early Stage SaaS Sales Strategies. It’s an online event we’re hosting March 12th and 13th of 2024. 

It runs from 11:00 AM to 1:00 PM Eastern Time on those two days. And there will be sessions all focused on early stage SaaS sales led by Rachel Leow, Craig Hewitt, Daniel Ebert, Sam Howard, I’ll be MCing. And we’re going to cover strategies to boost your close rate, build a sustainable sales process, and figure out how to overcome the challenges of selling as a technical founder. We’ll also have daily founder mixer sessions where you’ll get to meet other attendees to network and chat about what you’re working on. Tickets are inexpensive and they are available at microcompremote.com. So with that, let’s dive into my conversation with Matt. Matt Wensing, welcome back to the show.  

Matt Wensing:
Thanks, Rob.  

Rob Walling:
It’s great to have you, man. So last time, I think you’ve been on the show two or three times, but last time was in November of 2022, episode 633 titled Building SaaS Plus A Two-Sided Marketplace. And in that episode we talked through how you started Summit was originally Sim SaaS and it was SaaS simulation and forecasting tool. You renamed it to Summit, which is a really good call by the way, usesummit.com if folks want to check it out. Then you pivoted or narrowed focus or whatever you want to call it into low-code calculators, simulations, forecasts. Then you were calculators for sales and marketing I believe. And today your H one is everything you need to start scoring leads and you have just, it’s been like what, three years, four years? And you’ve traveled a lot of H ones, sir. So that’s what I want to talk about today is how you’re feeling about where you are, how it’s working, how it’s been, how it’s going. Yeah,  

Matt Wensing:
That’s great. I love that Traveled H ones. Yeah, I’d like to think that the way back machine would be an honest way to look at everyone’s H ones through that light. It’s a favorite thing of mine, but it’s been a while. And during the last, I guess call it 14, 15 months since we last talked on this show, we have really done two things. First of all, we added sales and marketing as our target market. Sales and marketing are gigantic. I mean each of those words contains millions of people and hundreds of job titles I would say we’re even more focused in marketing now. And what we learned in 2023 was shortly after we talked, I started doing sales and selling really to those teams that we had found in the sort of early days of figuring out sales and marketing as a use case or a target market, and working with them just realizing that what we were doing was relatively high touch. 

It was working with some pretty strong brands, et cetera, that have pretty robust marketing teams. And when they do things, it’s a project and they take it on as a project, and that just means that there’s a lot of collaboration needed, a lot of conversation, et cetera. And so in that sense, what we had was a good fit because it was this broad platform for sales and marketing. As I said, calculators that are low code, no code, you can build them without an engineering deployment or degree. And that was a really great fit for that sales motion. But what we decided at the end of the year, and this was just a short three months ago now, was we look back at 2023 and said, okay, we’ve done this work for these clients. We want more customers and we want to acquire more customers more quickly. How do we do that? And that meant we wanted to reopen self-serve. 

And what we found was just this broadly appealing, broadly positioned and broadly expressed platform. It was perfect for those sales again and those conversations. But when you come to a website and it says that if you go through self-service, it’s not really clear what you’re getting. It’s not really clear what’s on the other side. So we really needed to really pick a lane to run in for self-serve to be viable.  

Rob Walling:
So that was just a few months ago. And I guess how is it because everything’s an experiment until it’s not, right, and so how’s it going today? How do you feel about the H one? How do you feel about the move back to self-serve in terms of growth, in terms of your confidence in that decision?  

Matt Wensing:
Yeah, so what we were trying to fix, maybe we’ll talk about that. What we were trying to fix ultimately was a top of funnel challenge, I would say. And what that meant was, and there’s a lot of ways to solve that. So in some sense we just said, “Hey, we can just tweet more buy ads, LinkedIn, whatever it is, we can get the name out there and we can send people to the site.” 

 But then it was sort of then what? And so we didn’t have a lot of confidence that if we invested in those grow the funnel activities, that people would come to the site and they would have this eureka moment around, I know what this is, I know what it’s for. And in fact, I was kind of thinking about wanting one of these. It wasn’t an existing product category. That’s how some people would put it. 

And so by choosing an existing product category, which is lead scoring now, we solved a bunch of problems that really I think would’ve wrecked the ship if we had opened up self-service without doing that. And that means that what we’re seeing now is okay, people come to the site, they comment on our posts on LinkedIn saying, I know what this is sort of thing, and this is really cool and I like this. And they tag their sales team member in on it and say, “Hey, we were just talking about this. That’s really exciting.” And we’ve had enough people go through the onboarding, at least in the first, we just announced this, I think January, let’s call it 15th or so ish. We waited for Christmas. So we launched it literally three or four days before Christmas. We didn’t tell anybody because it’s not when you want anybody either filing a support ticket or struggling to onboard themselves. 

But we also didn’t want to come back to, I mean, you know the feeling. Coming back the first week of January to an unfinished project is just a terrible feeling. So we got it out there and it’s been live, it’s been announced for about a week. We’ve had a few dozen people I’ll share go through the onboarding and we are learning where they stop, where they continue, et cetera. Now we also have a seven-day trial, so very early in terms of data, but so far the data is this, people come to the site, they click the try it free button, they start going through the onboarding, and that’s awesome because that wasn’t happening before. So now it’s like, okay, great, we have some volume coming in now it’s an optimization game or a what’s broken game or a leaky bucket problem, whatever you want to use to say let’s get them all the way through now. 

And now I’m kind of in a world, it’s funny, we’ve known each other for a while, TinySeed batch one. And so in a lot of ways now that we have this existing product category and people are coming and they’re coming through our funnel in some sense, a lot of the advice that I was hearing my batch mates get in the first batch, TinySeed, where they’re like, oh, got this many people signing up, but this many people are completing whatever, what do I do? That’s all very relevant for us now in sunset.  

Rob Walling:
And that’s the perfect time for people to join TinySeed is once they have a little bit of traction. You were in batch one and we took some flyers, we backed people. You were one of the early, you didn’t even have a product in market, I don’t think.  

Matt Wensing:
No.  

Rob Walling:
And what we realized pretty quickly is, A, it takes a lot longer than we all think. You thought you’d have product market fit in six months and it’s a few years later. And then as TinySeed, the advice I can give, give someone an early stage advice, but it’s like what’s the advice? It’s like go learn stuff until you figure it out. And once you figure it out and you’re at five grand a month, maybe six, seven, eight grand a month, TinySeed I think is really designed for that stage, which is why we do that. The SaaS playbook is 100% written for that as well. 

It’s like you have some customers, you have a loose, loose product market fit and you’re trying to strengthen it. And that is the more I can be really prescriptive at that point stuff before that, I have this whole book, it’s like 30,000 words written. It’s called Idea to Launch or Idea Attraction, something like that. But it’s a lot of like, and then you have to go with your gut feel and there’s a founder vision that you then have all this noisy noise coming at you and you’re trying to figure out which of these do I listen to? And it’s hard decisions with incomplete information, really incomplete.  

Matt Wensing:
So that’s the data side. Empirically, I don’t have results that I’m going to be doing flips about. It’s not sales zero. We have some trials going on, which is great. But the bigger thing is as a team, and maybe this is more of founder CEO hat on, for the team to have that clarity around this is the initial sort of killer app or use case that we’re bringing to market. We can run that prescriptive playbook, if you will. We can look at problems and we don’t have to question, well, maybe no one in the world needs this. Right? That’s a very sick thought to have or makes you sick sort of thought to have in the early days. So you’re like, I just don’t know if people even want this thing. 

So to have that in the rear-view I would say is the biggest benefit. And honestly, now the only thing that comes up is people, past customers or people who’ve heard this story before will go, “Wait, wait, I thought you were way broader. I thought you did way more than that.” And I have to just tell them, and I’ll use this podcast as an opportunity to say, we still have all that. But we just realized that if that was the front door, people were just going to stand there and go, “Wow, I don’t even know where to begin.” And that’s not good.  

Rob Walling:
Right. And niching down to either roles, like you said, marketing or sales or niching down to use cases is because the paradox of choice or even the paradox of understanding of how do I come to the website, I read the H one and I’m like, that’s not a category. I don’t … What is this? And then I have to read your H two and then I have to read your, and that is not, that’s like death because people aren’t going to spend the time to understand it.  

Matt Wensing:
Exactly. And I think what you get is when you’re very broad, you get people who are just, I’m willing to try anything. So music is a fun category. It’s like imagine if you were like, we help you create awesome music. If that was your H one, you’re going to get some cool kids if you will, to try out whatever the heck it is because they’re musicians. But it’s not until you say like, oh, we improve the quality of your audio tracks specifically at this frequency or whatever. It’s like, okay, now the mainstream who uses Ableton Live and all these other things, GarageBand, they’re like, oh, I know where that fits in. And actually I need one of those and then go back to Wayback Machine. 

And I love this. Look at WP Engine, great example. They’re like the experiential platform for blog hosting on the internet now or whatever. But back in the day, it was safe, fast and secure WordPress hosting, and I think they might’ve even gone back, but they had to be narrow to start. I think we all had to be narrow to start. We were broad to start to find our narrow, if you will, to find that use case. And then we had about four days of meetings in Q4 and said, you know what? This use case makes a lot of sense. Let’s go all in on that. And so far so good.  

Rob Walling:
So there are definitely people listening to this right now who are where you were six, 12, 18 months ago, which is I’ve launched something and it’s not getting the traction that I want fast enough. And people don’t quite get it. And there’s 100 different paths you could go down. There’s 20 different things you could try. You have customers telling you stuff, you have advisors telling you stuff, you have your own gut, you have team members, you have all, I said it earlier, noisy noise, which is a dumb phrase, but you just got a bunch of noise and a bunch of coming at you that you have to filter and then make decisions. So how did you do that? Because I’ve done a couple talks about this, about it’s very fuzzy and I like to hear different people’s takes on it because much product market fit, everyone seems to have a different definition of it. Everyone seems to have a different approach for what you’ve been doing for the past couple years. So what was your process like and who did you listen to and how did you know who to listen to?  

Matt Wensing:
Yeah, we started out the year, I would say customers obviously number one. And that came from, I would say there are actually times to not listen to your current customers. And I say current, underlining current because those customers are not the ones that are going to get you to your dreams or where you’re trying to go. Forget dreams, the next milestone. It’s like, oh shoot, we’ve got to change customer base. We didn’t have to do that. So we got to say, great, whatever we’re hearing from customers, obviously they’re humans. We have to deal with the fact of their current priorities are not tomorrows and it’s all changing, but we got to read between the lines, do a good job of interviewing them, really understand how they work. And being in Slack channels with a dozen or more customers all year last year, I learned a ton about how marketing is being done in 2023 and now 2024. 

So that helped. And then I would say the other thing we did, and I’m just going to add, there’s a wide variety of frameworks and ways you can think about this. The one that really helped us here was follow the workflow. So what we found was it was, okay, we’re building lead magnets for people in a high touch way. They’re using our platform to build these magnets. We’re helping them. It’s a mix. It’s high touch. What we really said after that is like, okay, we know we want to launch self-service. We know we want this to be turnkey. Let’s follow the workflow. And what happens after a lead gets captured by a lead magnet? What’s the very next thing that people want to do with it? And we say, oh, well, they have to triage, they qualify it, right? Is this a good lead? Is this a bad lead, et cetera. 

So for us it was sort of like it’s just the next step in the workflow for us is where we found this. And then we started to look at that. Okay, okay, is that universal? Is there an app there? Is there a use case? Oh yeah, lead qualification. Oh, is there a mathematical component to that? We’re all these calculator … Oh yeah, scoring. Well shoot. It’s kind of like right there. And then the more we ask, we’re like, okay, existing category, it’s kind of sleepy, meaning I like to say it’s the Baltic Avenue of the monopoly board. It’s not the boardwalk or the park place where there’s just obviously it’s super fancy and everybody’s in on it and it’s super competitive. It’s kind of like, okay, yeah, it’s a category, but it’s not super competitive. So it felt like also a step in the workflow where we could bring a better product to market and stand up well in any kind of comparison with other products that are out there, differentiation, all that. 

So I would say the three things really, customers understand their workflows following those to a step in the journey that was adjacent to us and then saying, can we compete at this step? And once we said, we were like, okay, that’s really cool because that step is actually very narrow by comparison to build a lead magnet from scratch, which is like a no-code exercise of a blank canvas. This is, hey, I’ve got an email address and I need to turn it into a score from zero to 100. And everybody basically needs to do the same thing. And the only difference is you have a different definition of a ideal customer than I do. So you’re like, okay, that has a nice scalability to it. So in this case, it was following the workflow. In other cases, it’s a different tool. That’s why these things are fun. It’s like just have a toolbox full of these ways of looking at it.  

Rob Walling:
And so lead scoring, if folks aren’t familiar with that, can you tell who uses that and what the purpose of it is?  

Matt Wensing:
Yes. This was another interesting thing. There’s actually two things people think about when it comes to lead scoring. First is the traditional definition. If you have HubSpot or something and you look at an article that says how to do lead scoring or close partner of ours, you’ll see an article that says, hey, somebody came to your website, they sign up for a webinar that’s 10 points. They downloaded an ebook, that’s five points, et cetera. And you build a score based on the behaviors of visitor or prospect, and that score just grows over time. The other one is what we just hinted at. Hey, Rob comes to my website. I need to know if Rob is a qualified prospect, should I even reach out to Rob? Is he worth my time? Just based on what data is in Clearbit or what data the world knows about Rob. 

And so Summit offers both. So we can both take an email address and you define your ideal custom profile. We match them up and we say, Hey, Rob is a great fit based on what you’re looking for. Actually Rob is not who you’re looking for because it’s a Gmail address. Or he works works at a massive company and you’re selling to SMBs, whatever it is. So I like to put those on two axes. One is behavior scoring. Is Rob acting like he has the intent to purchase something? And the other one is just persona fit scoring is Rob the shape of person we’re looking for? And obviously the best case is high intent, high fit. And then you can kind of think from there of low intent, low fit.  

Rob Walling:
And I’m familiar with lead scoring because we built it into Drip. It was a feature for us, but it wasn’t like this. So you actually go out to Clearbit and you augment the leads and then you get job titles, this and that. Since we were an email marketing platform, we basically did it based on folks interactions with your website. We had JavaScript on your site, how many emails they opened and clicked. And you could define, we had predefined lead scoring of like, hey, for every open, it’s one point added and for every click it’s three or whatever. But you could then go in and change that. 

So it’s pretty configurable, but that’s different. That’s activity based lead scoring. It said nothing about your ICP, it’s just their really into what you’re writing. That’s what we had and we had planned to go out and augment and we never got there. It wasn’t important enough for us. But the reason I bring that up is it was a feature of Drip, and I’d imagine it’s a feature of CRMs or HubSpots or Salesforce. I don’t know. I’ve never used it, but I’m sure it’s in them. So how are you thinking about that as this is your whole product as lead scoring, but it can be a feature of other. Is there danger there?  

Matt Wensing:
Yeah, there is danger there. And I’ll say that if our company, if we didn’t still have that broad platform in the background, this would be a risk. And the risk is, I raised venture money, we raised venture money, we’re going big. I don’t think you can build the kind of scale company that I want to build based on just this product category, which as you said, is for many people as a feature. Now there are companies that are out there, competitors, you can look them up if you type in lead scoring, you see a lot of their ads where they’re charging 500 bucks a month, a thousand bucks a month, $3,000 a month for lead scoring. And frankly, we’re doing kind of the same thing for a lot less and more scalably. We have that benefit of releasing something recently and all the modern tech that you get to bring to bear on the problem. 

So it is a category, it’s not just a feature, but it’s pretty small. It in terms of it is not a venture scale category. So if somebody came to you and said, “Hey, I want to build an entire company, the lead scoring, I want to raise five million bucks.” That doesn’t make sense. It’s not big enough. But given our goals as a company right now, the way I talk about it internally is, Hey guys, we want to be, we are a platform, but what good is a platform without a killer app or game or use case? I said up until now, we’ve basically been the, hey, here’s a PlayStation and we also include this ability to build your own PlayStation game. And you’re like, very few people-  

Rob Walling:
[inaudible 00:20:51] this is not fun at all.  

Matt Wensing:
And some people think it sounds extremely fun, and that’s like the 0.0001% and then 99% repeating of people go, I was looking for a game I could just play. I’m just looking for fun. So I said, look, we’re selling our first game. We hope this is a killer game. It’s bundled into the platform. It’s like the cartridge that comes included, and that’s enough. We think we can sell enough of that game, if you will, to drive enough console sales to extend the metaphor to get ourselves to the revenue milestone we have next. And that means that, hey, when we get to that milestone, it’s sort of like, Hey, what game do we want to create next? Do we want to create something completely different? Probably related, but then we can branch out. But the risk would be, yeah, hey, this is the whole platform is about this. 

And fortunately we didn’t have to do that. Believe it or not, the lead scoring product, if you will, is literally just an app that we built using our own platform and technology. So when you get a license or a subscription, you’ll see that app suddenly show up in your own library of things. And it’d be like having a file included with Figma or a song included with iTunes or whatever it just comes with. And that means that we really, the product itself to build probably took two or three weeks using our own platform. What took a lot longer was a lot more work was the marketing and the messaging and the positioning to narrow that focus.  

Rob Walling:
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Matt Wensing:
Three.  

Rob Walling:
Okay, so you’re pretty small and lean then. And you’ve mentioned that you’ve raised venture and you want to go venture scale. I want to call that out. I don’t know, 80 plus percent of the listeners are folks who want to bootstrap and probably about 80, 75% and 20, 25% are open to raising some kind of funding, at least according, I think it’s a state of independent SaaS where we ask that. But even most of those would do more of a TinySeed round or an angel round and don’t want to go venture scale, but there’s that 1% or 3% folks who want to go venture. 

I want to call that out because if you’re listening to this and you’re thinking about bootstrapping, this is a tough path to go down to build a big platform. And you have different goals than someone who maybe wants to exit for 10 million. And so you want to go, like you say, venture scale and it means like, no, this is 100 million, this is a billion. No, whatever. It is a huge number. What brought you to that decision? Because you bootstrapped your first company. We’ve talked about that here on the show. You had an eight figure exit. Congratulations, sir. And so why in this new one, you took TinySeed funding in the very first batch and then you’ve raised one or two rounds, I believe from venture. What was the impetus for you to make that decision?  

Matt Wensing:
I think I practically swore off the idea of venture when I first left my last business. I think a lot of people do because they go through it and they go, wow, it wasn’t a short journey. A lot of stuff happens downstream of it. I think with certain investors like yourself with Bryce Roberts who have more of a revenue focused mindset, fortunately you can actually leave a lot of that thinking, let’s say behind, but for me it was, okay, I’m just going to build this thing. And the more I investigated the market and the more I built to address what I found, I sort of found that gap and I realized this gap is actually really, really big and it’s very horizontal. And so now actually when I look at it, I go, okay, we’re solving lead scoring, which is a mathematical problem in the marketing space, if you will, but the need for math in the marketing space is kind of endless. 

And so it’s this really thin layer that just goes out forever, if you will. And I really spent the first several years of this, well, I say I spent the first six to 12 months of this going, I’m not doing that, I’m not doing that again. I’m just going to have my little nice little shoe store in the corner. Or as others say, my nice little Italian restaurant, there’s a coffee shop, that’s what we’re going to do. But then I found this thing and it was really broad and horizontal, but then it took raising venture capital and it took years of market discovery to figure out, okay, how big is it? No, really, how big is it? Who needs it? Where do they need it now? And really to deliver something to the market that can create revenue today but still holds onto that big vision. 

I think that’s the challenge of going the venture path in 2024 even is, unless you’re going to be the raised gobs of money and [inaudible 00:26:40] this doesn’t matter, I think that’s gone. I think the real challenge even the venture folks have now is how do I have a gigantic vision but then ship something quickly that gets to revenue quickly? And that’s a whole different muscle right? Now we know how challenging that is. Doing both is, it’s very hard. It’s very hard.  

Rob Walling:
And I want to call out that you have raised venture, and when people hear that, usually they think scale up, hire a bunch of employees. That’s usually the path for it. You have not done that. And in fact, if you had, you probably would’ve run out of money. I mean, the odds are pretty, if you’d scaled up to 10, 15, 20 employees too early, that’s the problem with, so some people say, well, don’t raise funding too early. And I say, but you can raise it early. Just don’t scale up too early. Because if you’re still trying to find product market fit and you’re still kind of narrowing or pivoting or whatever term we want to use for it, and you’re at 15 or 20 people and you have to just reorient the Titanic every six months, it’s not even that many people, but 15 versus three-  

Matt Wensing:
Way different.  

Rob Walling:
Worlds apart, right?  

Matt Wensing:
Yeah, I agree. We stayed small. I mean, the most we’ve ever had is four people, which was contractors and a couple employees working on it. And that has allowed us to explore this market opportunity for years. It’s allowed us to build a technology, a no-code platform from scratch, which just takes time. It’s not even just that it takes time to write the lines of code. It’s knowing what lines of code to write based on the market, and there is no one source of information out there that you can just go to get all the answers and then build the thing to spec in three months. And so the bigger the opportunity, you kind of need more time to steep in market and in those conversations and ideas to figure out where is it really? Because when we go in, we want to go in, we want to go all in, but we’ve got to be really sure. 

And I think the going all in part is just like you said, you hire enough people, you’ve basically created this complex system of scaling that back is super hard. Imagine you have 10 or 15 people and you’re like, I don’t even know if we can reduce this to two or three people at this point because I don’t know how to do seven of the things that are being done by other people. You’ve created, unfortunately, this thing where you remove one or a large enough chunk and the whole thing just kind of implodes. And that’s where these companies get, it’s not like when you have 1,000 employees, you can suddenly scale it back to 100 and still keep going. You can very easily set off a spiral.  

Rob Walling:
And so we’ve talked a little bit about ICP, you use that phrase ideal customer profile. Who is yours today? If someone’s listening to this, we have marketers who listen to this, sales folks, we got developers, we got whatever. But if someone’s thinking like, well, is something I could use, whether it’s your day job or in their own company, who do you think it’s ideal for?  

Matt Wensing:
Yeah, this is ideal for a company that is investing already pretty heavily in customer acquisition. So if you’re still not really doing that or you’re founder-led sales, I think when you’re doing founder-led sales, you’re sort of just, I’ll talk to anybody, right, at that stage. Beyond that, you get to the point of saying, we’re acquiring leads. And I’ll give you an example. Ideal customer who is a customer of ours already that I was talking to yesterday, they’re spending a good amount on paid acquisition. And they’re essentially, if you want to look at buying leads, buying email addresses to not have a quick and easy way to qualify those at scale. So you’re getting hundreds a month, thousands a month, you are going to waste resources in outreach, phone calls, discovery calls, et cetera. And you might be like, oh, what does an email cost you? 

Well, even emailing an unqualified lead cost you something because it’s not just the penny cost to send it or whatever, the micro pennies, it’s the, this is spam, this is irrelevant. I am not interested in this. Or even just somebody wasting your time with the call. So it’s companies that are, I would say, acquiring customers pretty aggressively in terms of paid acquisition or they have a lot of inbound organic and they want to give VIP treatment to customers that are just phenomenal opportunities, but they no longer have time to, you get a trial sign up and you’re at that stage, you get a trial sign up and you’re like, ooh, I’m going to go type in that web address. I’m going to look them up on LinkedIn. You kind of this manual little grunt work to figure out who this is. And you’re like, pop in champagne. 

It’s somebody that’s actually a big logo. You can’t do that anymore. When that doesn’t scale, then you’re a good fit for this. When you get to the point where you’re like, I have more email addresses than I can do that lookup for, I wish I had a way to just start to, again, sift through these and figure out which ones are worth my time, worth a personal touch. And I think these days with automation and AI and all the, it’s even more valuable then to give that personal touch to people who are really great fit and that’s who we’re a great fit for. So I would say put it on numbers perspective, scaling up. So million plus AR, probably sales hires have been there for a while. You kind of know what you’re doing and now you’re investing in SDRs or customer acquisition lead gen to get more people in the door.  

Rob Walling:
Matt Wensing, thanks for joining me on the show, man. People want to keep up with you. You are on Twitter, x.com/mattwensing. I don’t call it XI, I’m going to call it Twitter until, because they still redirect.  

Matt Wensing:
They do.  

Rob Walling:
I just want [inaudible 00:31:57] x.com and it goes to twitter.com. So I’m like, no, it’s still Twitter. I’m not changing this thing, the icon. You know what tripped me out is on my iPhone to get to Twitter, you pull it down and now if you search for T-W-I-T-T-E-R, it doesn’t show up. You have to type in X. So they’ve done it on the iPhone already and I’m waiting for the internet to catch up.  

Matt Wensing:
Out of my cold dead hands.  

Rob Walling:
I know, that’s how I feel. Anyways, man, thanks so much for coming back on the show.  

Matt Wensing:
Thanks for having me,  

Rob Walling:
Rob. And once again, usesummit.com if folks want to check out Summit. Thanks to Matt for joining me again this week, and thanks to you for coming back this and every week. As a reminder, I published a book middle of last year called The SaaS Playbook. It is selling really well. It’s about to hit 20,000 copies. I’m pretty stoked about that. If you haven’t bought The SaaS Playbook, you can buy it directly from me, SaaSplaybook.com or head to Amazon. And if you have bought it and you’ve read it and you think it’s worth a five star review on Amazon or Audible, I would really appreciate it. It helps more people find the book. It helps me continue to drive my mission forward of multiplying the world’s population of independent self-sustaining startups, and it helps keep me motivated to keep writing books and keep producing the show. This is Rob Walling signing off from episode 701.

Rob Walling:
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Welcome back to Startups for the Rest of Us. I’m Rob Walling and I am your host for this momentous 700th episode of this podcast. Today I want to talk about playing the long game. And what’s interesting is it’s a thought that I had three, four weeks ago that I threw into a topics Trello board that I maintain, and it hadn’t occurred to me that episode 700 was so close. But instead of having my friends send audio into the podcast, having my son interview me, which I actually think someone suggested and I think I’m going to do that, couldn’t pull it together for episode 700 or any of the other stunt episodes. If you go back and listen to episode 100, 200, 300 of this podcast, we did a lot of those things and they were really fun. 

For this one, I just wanted to do a Rob solo adventure and talk a bit about playing the long game. Before we dive into that, applications for TinySeed are opening on February 12th and close on February 25th. If you’re not familiar with TinySeed, it’s the accelerator I run for ambitious, mostly bootstrapped B2B SaaS founders. Even if you’re interested in applying outside of the window of February 12th to February 25th, you can join our mailing list to be notified when applications open. Again, visit tinyseed.com/apply to get on the mailing list or to apply. 

I’m going to admit I’ve actually struggled to sit down and record this episode. Normally for these solo adventures, I make a couple bulleted points and I just go. I riff. This one, I’ve struggled with… I’ve actually outlined it quite a bit, and so this episode 700, I can do it just as a normal Rob solo adventure, but there’s something that I want to convey in this episode that holds perhaps more weight than that, and it’s about this concept of playing long ball, or playing the long game. As I came up as an entrepreneur, I learned direct response marketing, and back in the old days, they talked about two types of marketers, brand marketers, which is like Coca-Cola, Procter& Gamble, Crest Toothpaste and Dove Soap, and how those marketers could spend a kajillion dollars on a Super Bowl ad just to get the exposure, whereas direct response marketers needed to have a measurable return on their investment. 

So if they took out ads for 100 dollars, they needed to make 110 or 150 or $200 on those ads, and be able to measure that to stay in business or to convince themselves they were making money because they didn’t have infinite runway. And as a bootstrapper I, of course, without infinite runway, quickly became a fan of this direct response marketing, not the brand marketing that folks seem to have been talking. I mean, this is early 2000s, and in the startup space, everyone was talking about building a brand and having Kid Rock at your launch party and literally taking out Super Bowl ads. And I just couldn’t afford any of that. I needed to make $2 for every dollar I put into the machine. And so what that does for you is it gives you a short-term mindset, and that can be both good and bad, right? 

It’s good because it motivates you to build a viable business and a business that generates revenue and profit from the start. That is a superpower of bootstrapping. But it’s bad because it teaches you to think in the short term. And for me, I rarely looked out more than a few months in my entrepreneurial journey. I never looked out 10 years and said, where might I be? Where might want to be? I always looked ahead and said, what’s the payback on these ads that I’m running right now? Can I make my money back in two months or three months? When will the SEO traffic that I’m going for justify all the time I’m investing or when will I make it to 10K a month? I think it was 8K a month actually, so I can quit my day job. And if I’ve learned anything over the past, whatever, a couple decades of being an entrepreneur, it’s to hold two things in tension, that both things can be true at the same time, right? 

It’s to get away from my programmer mindset, very left brain, on or off, binary ones and zeros, and to think, you know what? I kind of need to do both. I need to think in the short term, because I need to make enough money that I can quit the day job or that I can justify all this effort I’m putting into it, not hanging out with my friends, perhaps not hanging out with my family, working nights, being tired around a day job. I have to think in the short term, I need to accelerate revenue so that I can quit that day job or do whatever the other goal is. And also now, and again, I should take a step back and think about what is the next six months, 12 months, 12 years look like? When I talk about playing the long game, I do think about it as a fractal. 

So if you’re familiar with the fractal, if you go to a tiny, tiny piece of the California coastline and you look at it from 100 feet up and then you go to 1000 feet, 10,000 feet, 30,000 feet, the idea of a fractal is that a small piece of it repeating can start to look the same. From 30,000 feet, it can look the same as at 100 feet. It’s a different perspective, but it’s essentially a never-ending pattern. And the idea is that fractals are infinitely complex patterns that are… I’m reading a definition now, self-similar across different scales. Self-similar is interesting. But you get the idea at 100 feet, 1000 feet, 10,000 feet, 30,000 feet, a piece of the California coastline can look different. I feel that way about playing the long game. And what I mean by that is up close, the long game might be a year spent getting your SEO efforts in order. 

Maybe it’s two, and that can be the long game in the short term. But then the long game might be a decade or two, as your whole career unfolds, and you realize as you go that there’s a single thread tying everything that you do together. And looking at that thread and being deliberate about saying, what do I like about this and what do I want to lean into? What am I good at? What skills do I have? What do I enjoy? And doubling down on that when you have the opportunity, you don’t always have the opportunity if you’re working for someone else, you may not, but as you have the opportunity to guide your own career, I think that that’s a higher altitude fractal looking at a decade or two versus a year or two. And one example I want to give in terms of SEO is Ruben Gomez with Seinwell. 

He’s an often requested guest on the show, and a year or two before he launched Seinwell, which is an electronic signature app, he started his SEO efforts. He didn’t have a product, he put up a landing page, he put up a small website, he started working his SEO Magic. There’s secret sauce in there, so I’m not saying everyone could do this, but if you’re just starting out, you don’t go after electronic signature, you don’t go after electronic documents, you go after a smaller niche. That’s why I talk about it and start small. Stay small. You find a niche where you can compete as you’re learning. My first SEO efforts were with Dot-Net Invoice, and it was invoicing software, so I was trying to compete for those terms, but also it was for Windows servers, it was for vb.net, C#. There were all these kind of long tail terms that no one was competing for, and I didn’t need to make a million dollars a month. 

At the time, making three or $4,000 a month was absolutely life-changing. It was a few hours a month I was spending, and while I couldn’t have won for electronic signature, I certainly could rank for the Dot-Net invoicing software or asp.net invoicing application or any of those long tail terms. And so I’m saying this because what I see a lot on social media, Eye Roll, Exhale is a folks bragging about how quickly their success came, probably not telling the full story when they do, but then other folks trying to model that and wanting to seek that. And nothing is wrong with that. I was once an opportunistic young founder as well, and I wanted the success next week or next month. But in most cases, that’s not the way it goes. In most cases, you’re going to put a year or two in just to get enough SEO rankings that when you launch your electronic signature or .net invoice app, it wouldn’t have taken two years to do that. 

But when you launch that app, you have looked ahead and you’ve planned ahead to set yourself up for success. Another example is from season two of TinySeed Tales where Gather, which was focusing on one in two person architecture and interior design firms, they went up market and they wanted to go to five to 20-person teams. And we talked about it and they knew it was going to take months and their estimate, I don’t remember time, I think it was six months or nine months, took them 18 months to get there. And it was a harrowing 18 months. If you go back and listen to that show and then the follow-up, they almost ran out of money a couple times because they thought that they would start to accelerate and grow faster than they did. And playing the long game is leaning into that and saying, “We are going to make it. We are making progress, and there is something up ahead.” 

Now, again, at a certain point, there’s a chance it just wouldn’t have worked, right? When should they give up? Well, we would’ve evaluated. I would’ve asked them, do you have any more ideas? Do you have any more cash in the bank? Do you have any? What are the alternatives? And at a certain point, you have no options, and that’s usually when you quit or when you give up. In the fractal, those are the 100-foot view, right? 1000 foot view where you’re down and you’re looking at a year or two. I think about things that I had no idea how long they would take. But one of them took seven or eight years, and that was an angel investment, my first angel investment I ever made, which was into WP Engine. And frankly, any angel investment, you should think, I’m not going to… it’s probably going to go to zero, and if I get anything back, it’s going to be 10 years. 

That just seems to be the thing. And I didn’t really realize that in 2010, 2011, when I scraped together a couple… 20 grand I think, which was an enormous amount of money for me at the time to write Jason Cohen a check, and I was honored to be part of it, and it paid out a tremendous payout for me. And it’s probably the third most lucrative asset I have ever owned. Maybe I’ll record another podcast about… I have them in order in my head, but angel investing specifically in WP Engine is probably the thing that made me the third most money. The first one, of course, is building and selling software companies. I bet you don’t know what the second one is. But I’ll be honest, I didn’t know it was going to take seven, eight, nine years. I did assume that when I wrote the check, it was going to go to zero. 

And the interesting thing is Sherry and I wrote a lot of angel checks around there. I think we I think it’s 20 or 21 private investments that we’ve made, and most of them are made between 2010 or ’11 and 2014/15. And it’s such a trip now to see those either shutting down or providing returns. I just had no idea, but it really did take that eight to 10 to… well, it’s almost 14 years now, isn’t it? Yeah, it’s incredible. It’s incredible just putting in the time and how things compound. But that leads me to the question of another long ball. Why did Jason Cohen reach out to me? It was a closed round. And if Jason Cohen approached you and said, “Hey, you want to invest my next startup?” Your answer is yes. You figure out how to get the money. Again, I had never made an investment. 

I didn’t really have the money to invest, but I just figured this was going to work. But how did I know him at all? Well, I’d been blogging since 2005, and this is what, six years in, because I wrote Start Small, Stay Small, and he ordered a copy of that book and read it. And when he emailed me about investing, we didn’t know each other. This is, again, 2011, this is before the first MicroConf. He had never spoken at MicroConf. We had never met, I don’t even know if we’d emailed. And he said, “I’ve been reading your blog,” which of course I was reading his at the time, and he said a lot about virtual assistants, “You know about bootstrapping. I’d love to have you in the round, it’s closed round, whatever.” You can scrape together. So how did I know him? Well, he knew me because I was putting in the work. 

I was playing long ball. I was blogging and writing books. How do I know Darmas Shah of HubSpot? Because today, if I emailed Darmas Shah and he didn’t know me, he’d be like… he wouldn’t respond, right? He has so much going on that if you didn’t know him from the old days, he’s not going to respond. This is the same, Ben Chestnut from MailChimp, why do I know him? Eric Reese, Patio 11. Sam Parr of My First Million. Why do I know any of these people? And it’s because I’ve been doing things for 15 or 20 years, and enough of them in public. That’s the key. Now, I’m not saying that you need to go build an audience, start a podcast, start a conference, write books. I’m not saying it’s any of those things. There are people like a Ruben Gomez, like Sean Ellis, Brian Balfour, who they aren’t the audience building folks. 

I know Brian Balfour now has a podcast, but that’s not how they got famous. They got famous by being internet famous in our circles, by being really good at what they do and talking just enough about it that we realized these people are really smart. They did conference talks where we would catch a bunch of new ideas, because they were thinking outside the box. We hear him on podcasts. There’s other ways to do stuff in public. Ruben is another example. Even like Derek Reimer of course was on the Art of Product podcast. Before that, people still kind of knew who he was because he built Drip. And now he doesn’t have Art of Product anymore, and people still know who he is. He’s not doing a bunch of blogging. He’s on Twitter, but you wouldn’t say he’s trying to build an audience, but people learn no and respect you by the things that you ship into this world, and that can be content, but it doesn’t have to be. 

And here’s the thing with doing all of this; you are putting value out into the world, especially if you’re teaching educating. And please don’t be obnoxious and start teaching and educating from day one and saying, “I’ve done this and this is how everyone should do that.” Like, “Oh, I tried freemium and it doesn’t work, therefore freemium doesn’t work.” And it’s like, come on, this topic, there is prior art. Can you at least read some of the prior art and not try something once and then write it off, or not try something once and then say, this is the only way to do it? Because it’s just obnoxious and annoying. However, coming at it from a beginner’s mind and saying, “Ooh, I tried this experiment and this is what worked. What do y’all think about it?” Or, “I tried this experiment and this is what didn’t work and I’m learning and I’m on my journey.” 

There are ways to couch this and talk about it, that as you do become an expert, you can then talk like an expert. But you don’t need to fake it till you make it. You need to fake it till you make it internally to feel confident, but you don’t need to fake it… I hate people when they fake it online, and I know it’s like that person doesn’t know what they’re doing and they’re acting like it, right? So all that said, I think doing some stuff in public, and it doesn’t just have to be content is beneficial for you in the long term. And you might be wondering; Rob, did you know that when you started blogging, blogging in 2005 podcasting in 2010, MicroConf, 2011, TinySeed 2018 and Drip was in the midst there too and hit tail. There’s all these other overlapping things. 

Did I know that the 2005 start of my blog that it would lead me to write four books, put out 700 podcast episodes, start micro comp, all that? No, absolutely not. And I didn’t know what this podcast would turn into when we started it 14 years ago. Almost. I think by the time this comes out, it’ll be within a month of our 14-year anniversary. And no, I didn’t, but I realized along the way that I was onto something. That’s the thing is there’s this book about a startup founder. I don’t remember the name, and the book wasn’t very good, so even if… I remember it not being great, but he built and sold a startup really quickly, and this is probably written in the early 2000s. And it might be even be called Lucky or Smart, that might be the title of the book. 

But in it, he has a quote that I’ve remembered forever. This is 20 years old, and his quote was, “People ask me, were you lucky or were you smart?” And his conclusion was, “I was smart enough to know that I was getting lucky.” I’ve always loved that. That’s how I feel about my career. That’s how I feel a bit about playing long ball is you’re going to wander, you’re going to put in hard work, 700 episodes of a podcast, four books, whatever you want to call it. All these events, 30, 40 in-person events we’ve run. It’s been hard work. Has it required skill to market and building on it? Yes, Of course. Have I gotten a little lucky? Absolutely. And along that way, I’d like to think that I eventually became smart enough to know that I was getting lucky. I’m going to admit Mike and I did… 

I don’t think we realized what we had with MicroConf for the first seven years. We started in 2011. It wasn’t until 2018 that it really hit me what we had built and how hard it is to build a community like that and how you unique of a community it is, and how many people’s lives we changed through this podcast and that event. It makes me feel very weird to say that sentence. I don’t want to feel like I’m bragging. I don’t want you to feel like I’m congratulating myself for patting myself on the back. But I think that was to my detriment for those years that I kept saying, “Oh, it’s nothing. No, it’s not a big deal.” It is like the person you compliment and they can’t take a compliment. That’s kind of how I was with MicroConf. It was just this thing that we did and we show up and the podcaster just show up every week and ship. 

And in 2018, I had left Drip, I sold it in 2016, left in ’18. And we received a seven-figure cash offer to sell MicroConf. And we seriously considered it. And I’ve talked about this on the podcast before, but this was a turning point because I had basically sold everything really to fund Drip and then sold Drip. And so the only things that I had left were a blog, robwalling.com that I hadn’t written an article for in years. This podcast. And those are the things that we had left. And so the idea of selling it all and just moving on into the tabletop gaming space, which is what I was going to do. It sounded kind of appealing a fresh start, and I think it would’ve been one of my deepest regrets in my life if I had done it. I took six months off in 2018 and I went on a founder retreat. 

I talked to Sherry a lot, but I gave a ton of thought about what is the next chapter of my life, potentially the rest of my life look like my professional career anyways? Do I want to be known in the tabletop gaming space, become a game publisher, whatever it is, whatever I was going to do there? It’s a hobby that of course, I would turn into a job so that I wouldn’t enjoy. But on this founder retreat, I went away for a few days and I realized this is what I’ve been doing for free. This is what I’ve had to do for now 13 years. Because I think about starting the blog in oh five as kind of the start of all this for me. I know it wasn’t when the podcast MicroConf started, but it was that idea of I want to be involved in this space. 

I love being an entrepreneur. I love talking about entrepreneurship. I want to talk with other entrepreneurs and just be around them all the time. And there was no community. And so first we built an audience, then we built a community. And it was at that moment in 2018 on this founder retreat where I thought, I’m going all in on this before this. People don’t remember. MicroConf was just an event. We ran once a year and then twice a year in the US and Europe. That’s it. We didn’t even have a Slack channel that lasted year round. There was no state of Indie SaaS, there was no MicroConf YouTube channel, there was no mastermind matching. All the stuff that we’ve launched that people now think about MicroConf as this community. All of that started in 2019, and it was that decision in 2018 that I made with incomplete information, by the way. 

But there was a bit of founder gut and there was a bit of founder vision, right? Hey, this is where I want to go. And also the realization of I think now this is my legacy. And over that next year or two, that’s where this statement of my professional mission in my life is to multiply the world’s population of independent self-sustaining startups. That became the thing. And that’s when I realized, oh, MicroConf does that. What else can we launch out of MicroConf? And we started thinking about the video vault and the YouTube channel and all this and that. During that time, it became obvious. I was writing personal angel checks to Bootstrap SaaS founders, and that’s where the idea of, well, if we raised a bunch of money, we could do that at scale. Because again, in five, seven years I had written 20 checks, that’s kind of the money we wanted to put into startups. It takes so long to come back. 

TinySeed, we’ve written 151 checks. So you’ll see over the past four or five years, we’ve been able to help and impact so many more founders on that mission to multiplying the world’s population of independent self-sustaining startups. And so if you’re listening to this, you might be thinking, how do I know that I’m in the right game, that I’m playing the right long game in the messy middle days? If I’m in the middle of all this, is it obvious? In my experience? It wasn’t until it was, and in fact, in hindsight, it should have been obvious. Someone should have told me, “Dude, do you realize you’ve been doing this basically for free on the side as a hobby for more than a decade?” 

And by this I mean blogging, then writing books, MicroConf, which was essentially run at breakeven. It made a little bit of profit, but the podcast certainly didn’t take sponsorships, actually drew money. It feels like someone should have come along and told me, but eventually I did realize it right in the messy middle, I did this retreat and had this whole realization of like, oh, that’s where it is. And so is it only in hindsight that you can realize that you’ve been playing the right long game? I’m saying this to you as a listener. Are you thinking about what long game you’re playing? Whether it’s that fractal of I’m working on the SEO effort that’s going to pay off, or I’m working on this pivot or this move-up market, or am I thinking more about my career over the long term? What seeds are you planting today that can take you through for the next five, 10, or 20 years? 

What things would you prefer? What seeds would you prefer to be planting? Where do you want to be in that 10 or 20 years? And it’s a big question. It’s often hard to know. It’s that whole metaphor or the analogy. I forget which one of those it is, but it’s the airplane taking off from New York to LA, and making course adjustments along the way as you gather new information. That’s how I think about playing the long game, is you’re not going to know it at the start. And I don’t know that you… you could choose. I tell you what, consider yourself lucky if you choose the long game that you want to play. Because I don’t know that I did. It was more of like, eh, the people are blogging. I’m like, Paul Graham and Joel Spolsky are blogging. I’m going to start writing and see what happens and publish a blog. 

And I spent much time and it was super nerve-wracking. And eventually I took the next step. So I wasn’t choosing it along the way, but at a certain point I did realize, ooh, I really like this and this is fun, and I like this more than most of the other things in my professional career. And so, if you are very certain what long game you want to play, that’s awesome. Congratulations. I wish I was as lucky as you. It definitely took me many, many years to kind of realize that I was already playing a long game. I was in the middle of it, and I looked around and realized; oh, this is the one that I want to keep playing, right? It was really driven home for me in 2018. I will say that during those years though, really starting in probably 2002, 2003, I did start stacking skills. 

And when I think about playing a long game, I do think about are you acquiring new skills along the way, or are you stagnant? I’ve often used the metaphor of which tools do you have in your tool-belt? In marketing, it was like I learned SEO, and then I learned AdWords, and then I learned display ads. Is it a tool belt or a skill belt? Trademark 2024, Rob Walling. Which skills do you have in your skill belt? I hate that word already. I’m not going to be able to use it with a straight face. But you get the idea of… I was thinking back, things that I learned in order are the following hard work. I learned upfront that my parents taught me, “You’re not going to get anything without hard work.” So that was a skill that was instilled in me from time I was very young, and I’m glad they did. 

If you haven’t learned that yet, hopefully me saying it today convinces you of it. But then the next skill I learned really was web development. Two years out of school, out of graduating from… I went to public university in California, and then I learned how to hack together a UI and HTML by reading some books and some online tutorials, and then kind of launched some small efforts that didn’t do anything. And I learned how to blog. Five years after that, I then realized I needed to learn how to do conversion copywriting. I learned it from info marketers, but no one in the startup space was talking about it. And I realized in order to sell anything, I needed to know how to write copy to get people to click or buy or do whatever. So that was about a year later around the same time, how to structure a marketing website. 

I learned SEO. A year or two later, I started messing with pricing, because I had either built or acquired a couple products. I learned AdWords, then how to acquire small products, on and on, until… then, I started leveling up, right? Audience building, writing books, podcasting, in-person events and whatever it is I do today, just being on camera and such. All of this was me stacking more skills into that tool belt. And hard work, luck and skill. These are the three things. I can control hard work. I think most of us can. You put in more hours? Not to the point of being stupid, like a Silicon Valley startup, 90-hour weeks. That’s not what I mean, but you know what I mean. Focused, attention and just doing the work and putting in the time. Luck, much harder to control. Let’s just be honest. You can get luck, or you can’t. 

We can talk about making your own luck, luck surface area, yes, all that’s true, but that is the one you can least control. I think hard work’s probably the one you can most control, and then skills are in between. If I’m playing a long game, am I building skills and learning along the way and getting better at something? Like I just described that long series of things that I learned. Those all point towards me playing this game of building startups and then teaching others, encouraging others, educating others, and now investing in others who are doing the same thing. So I never could have guessed 20 years ago that this is where I’d end up. But I do think that as you’re going along on this journey, thinking about does my next step tie into my last step? Or am I just bouncing all over the place and not building new skills that relate to each other in a way that if I do look ahead five or 10 years, that I’ll be better off playing this game? 

All that to say 700 episodes of a podcast. When I get interviewed, people ask me, how have you done it? How have you never missed a week? And the answer is, I don’t know. I just kept recording. Once we were six months a year in, it was just a thing we did. And I know that’s not helpful, but I will say the feedback loop, what was helpful is there was a feedback loop. We didn’t just record into the void. We didn’t record a podcast over and over with no comments, no feedback, no listeners, no responses. There were signs along the way. The audience was becoming a thing. Hundreds of people after the first year, it wasn’t a lot, but I think we had maybe 600 listeners after the first year. And I had 25,000 RS subscribers at the time and a few thousand on my email list. 

And I was like, this is so not worth our time. But it was fun. I enjoyed it, and people were listening and that had an impact. And then at a certain point, it just became, especially in… I think there were several times between 2010 when we started this in 2018, where I thought just throwing in the towel and ending it. And I have never thought that since 2018, since having that big reckoning with this is what I do now. And I don’t think we should feel that way necessarily about companies we start. I think all of us exit, right? Everybody sells eventually. And I don’t think that we should be so attached… like starting a software company and then being that attached to it, I think see the talk from Dr. Sherry Walling a few years ago where she talks about how founders look at their logo and it stimulates the same part of their brain as when they look at pictures of their kids. 

So kind of literally lending credence to the idea of, oh, my startup is my baby. And it’s not super healthy. It leads to emotional entanglements that I think are not the best. But with a podcast or with something that I do think I’m going to do for a long time, am I going to sell the podcast? It’s not a SaaS app. So I think I’m able to manage that. It is more a reflection of me than I think a SaaS company should be for most founders. All that to say, thanks for being along on this journey. I almost didn’t record a special episode this week, because it just happens to be an episode with two zeros at the end. But I do feel like reflecting on progress and giving thoughts are warranted, and I think celebrating your victories… As much as I tell you to celebrate those victories, whether it’s on your own or whether it’s with that spouse or significant other who has been by you, your original investor, your first investor, as Sherry says, if I tell you to do it, then I need to do it too. 

And so here’s to 700 episodes of this podcast. Thank you so much for being along with me on the journey from the early days of Mike and I recording them together, to the transition that I thought might implode the podcast back in 2018, through the interviews, the solo episodes, the format changes, the audio quality changes, all manner of craziness. I really appreciate you sticking around. It means a lot to me. I wouldn’t keep recording if it didn’t impact people. These days, I don’t do things that I don’t think are impacting the broader entrepreneurial space and that are impacting folks like you. So thanks for being here this week and every week. This is Rob Walling signing off from episode 700.

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m Rob Walling. I’m your host this week and every week. This week I speak with Derrick Reimer. He’s a fan favorite guest on this show. He’s the founder of SavvyCal, what I call the best scheduling link on the internet. And today we answer a handful of listener questions from a single listener, a bit about UX design, how to prioritize and build features that scale. We talk at the end. There’s a bonus question about podcasting and just how to get better at that. All in all, it’s I think a really informative and casual conversation between Derrick Reimer and myself. 

Derrick and I have known each other for, I don’t know, 14 years or something. So these episodes flow very naturally and I feel like hopefully the content in this episode in thinking about product decisions and UX paradigms and just we relive some moments from building Drip as well. Hopefully these are inspirational as well as provide you with some actionable things that you can implement in your own entrepreneurial journey. 

Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale. This event will sell out. If you’re thinking about coming to Atlanta, April 21st through the 23rd to see me co-host this event with Lianna Patch and to see speakers like myself, Rand Fishkin and several others, head to microcom.com/us to grab your ticket before they sell out. We had an amazing event just a few months ago in Denver, and I expect the event in Atlanta to be no different. So MicroConf.com/us to grab your ticket today. So with that, let’s dive right into my conversation. Derrick Reimer, thanks for joining me on The Startups For the Rest of Us.  

Derrick Reimer:
Thanks for having me back. It’s always a pleasure.  

Rob Walling:
Yeah, it’s good man. It’s good to catch up with you. I have several questions today from a longtime listener, Alan King. He’s a multi-time MicroConf attendee and he pinged me with some questions and eventually I said, “You know what? Just record them as audio. Derrick’s coming back on the show anyways, I like having him on.” 

So let’s talk through them. A lot of these are going to be around UX design, attacking different verticals stuff based on your experience and knowledge. So with that, let’s roll into our first question.  

Allen King:
Aloha Rob, Alan King here with funjoin.com. I’m a loyal listener, big evangelist and fellow Jedi Master in practice of course. What are the top three things that a senior UX designer needs to consider when scaling a product like Drip?  

Rob Walling:
So when Alan asks this, I think less about scaling throughput of billions of records and rows, I think as an app scales to many users with disparate experience and technology level or I think of even how do you scale this to different use cases. So how did Drip serve bloggers and SaaS founders and we had some media brands on it. We had e-comm, that’s a form of scaling. And even just functionality, if you know you’re going to become a complicated app or you kind of already are, how do you allow that to happen without having a terrible user experience. Salesforce, I’m looking at you. It’s like that kind of stuff where it’s just bloat and all that. How do you think about this and whether we do top three or whatever it is, what are the things that you’re thinking about? And I know the answer because you and I did this for years, but I’m fascinated to hear what you’re going to say.  

Derrick Reimer:
Yeah, this is a big question and a really tricky one because as you mentioned, just as an example, something like a Salesforce, it’s really difficult and some of the most successful software products in the world in terms of revenue or market share actually do a pretty poor job at this and end up having to fall back on a lot of training or handholding or just at a certain point, a lot of these products end up having their own kind of university or training program with certified people to just help people wrap their minds around how to actually use the thing. So I mean part of this is there’s always going to be this tension of at a certain level of scale and complexity, you’re just going to find there’s more and more support burden and training and supplementary things that need to go along with it. 

But I still think it’s a worthy ideal to try to architect your product as well as you can so that people don’t feel like they have to constantly be reading the docs or asking support or whatever. So all that to say, I think a couple of things come to mind. I remember when we first hired our first outside designer besides me at Drip post-acquisition, one of the first things he did was starting to think about the design of the application more as a design system. I think before that point, each interface that we built was sort of an ad hoc thing. It was sort of its own creation. I think in the early days of building a product, that’s that’s how I’ve found things naturally happen. You don’t really know how the product’s going to take shape. What do the setting screens look like when there’s five pages of them and a bunch of different sections? 

I mean early on you usually have a page of settings and so you kind of start with just what you need to begin with and you design that interface ad hoc and then you realize, “Okay, I need to add another tab here and what are the pieces that are actually reusable?” So we’re not having to constantly rethink, “Okay, now we have a new setting section. How do we approach designing this? Are we using check boxes or toggles? Are we using native dropdowns? Do we have a custom dropdown that has more information stuffed into it?” 

And before you know it if you’re not thinking in terms of a design system, then you can end up with a hodgepodge of different choices that don’t really speak the same design language. So it can be kind of confusing and it could also be a lot of effort for your team to, if every single interface requires you to kind of think from the ground up. How this is going to look, what components you’re going to use, it just becomes really difficult to maintain, difficult to scale and costly because you’re doing a lot of repeat work. 

So something that, I mean a design system, I think it doesn’t necessarily have to be what you see some of the bigger companies or bigger startups doing. I think Airbnb is an example that they have a huge website that’s just all of their component libraries and everything is parameterized and it’s like they almost built their own custom library of stuff. I think other companies tend to do this. When you’re small, that’s way overkill. And I think we had something sort of that we could gradually build out. So I think he started with a single page, Brian, our first designer, started with a single page, let’s just standardize our buttons, form elements when we display a table, unless it’s a really, really custom thing, we can just use this standard design and banners and icons. So we just started to standardize these elements. It made the process of building new interfaces a lot quicker. So that’s probably my first thing.  

Rob Walling:
That’s solid gold advice right there. And it’s funny, because I had forgotten that. So I jotted notes of my own things and it’s super tactical things, but when he says top three pieces of advice that is, that’s the top three, to have some type of design language. And I remember because the way we got that far was you were the only designer and so everything you designed, you’re like, “I remembered I put it over on this page, copy paste.” But the moment we had two designers, that doesn’t work anymore because they don’t remember that you put the toggle over here, you had the multi-select or whatever. 

So that’s what it was his job to go through and look at all the work you did and say, “Let’s put it into this single kind of internal knowledge base thing.” If I remember, I don’t remember what the software was, but it was something, and like you said, it was pretty lightweight and it was built out as we went. That was something that you and I think for the betterment of everything, we were pretty resistant to heavy process and we’re not going to build out all these UI components, custom Drip dash whatever, right? Like we don’t have the bandwidth for that. Even with the team size, we did  

Derrick Reimer:
A couple kind of tactical things to add to this bullet point I think too, and these are things that I’m thinking about as I’m building SavvyCal. We’re still very small. I do most of the design work, but I am keeping in mind ideally I want my developer to be able to take a first crack at an interface and be able to pull things off the shelf that we already have designed and I may need to go through and do a design pass on it to make it kind of pixel perfect or whatever. 

But it’s similar to when you’re thinking about architecting a good code base for the user experience side of things. You can think about it similarly where you kind of abstract, you take pieces that are reusable and you’re not repeating yourself over and over again. So depending on what your front end technologies are, if you’re using React for example, then you can start to build out a directory of React components that are kind of generically named that you can use and those would hopefully bundle in kind of the style parameters that you’re using. 

I love Tailwind CSS. There’s a reason why it’s become so wickedly popular I think is because it gives you sort of the fundamentals for building out your own design system and it kind of eliminates, at a minimum, it gives you sort of units for putting margin and padding on things, which seems small, but being able to just say, “We always use a margin three to space elements out in a form”, it’s a lot better than making sure that you put margin 13 pixels or whatever it would end up being. You end up with some 12 pixels in there and some 16 pixels. And if you’re just making these little visual tweaks all the time, then you’re ending up with a lot of inconsistency. So things like utility styles like Tailwind CSS can help you constrain the number of choices you’re making all the time.  

Rob Walling:
Very nice. You want to dive into your number two?  

Derrick Reimer:
Sure. Number two, this is sort of a little bit amorphous, but thought about, it’s just understanding how customers are actually using the product. Because I think I find myself occasionally getting bitten by this where it’s like I hear a use case and I kind of know fundamentally what we need to accomplish, but it’s so easy to get the flow wrong where you realize the way that people are actually expecting to use this is they want to… I’ll just give an example. People will often say, “Okay, I’m going to share a scheduling link with somebody and I want to propose sometimes”, but they usually go through the process of wanting to maybe edit the link and then go preview it and then from the preview page go and propose times. And if I don’t have a propose times button on the preview page, then I’m requiring them to click back through to a different part of the application to get to that thing. 

So there’s these friction points that that’s not a huge deal, but they can start to add up over time to where people gain this perception that your software is clunky or the things that they’re expecting to be there are not in the place that they’re expecting them to be. And a lot of times these insights don’t come unless you’re actually trying to get this qualitative data from customers. And there’s a few different ways that I’ve seen people do this. 

We used to use Full Story I think was that software. I mean it’s a little dicey from a privacy perspective. I think there’s some things you can do to black out the screen to hide personal information or whatever, but we used to literally have a TV screen up in the office, remember this?  

Rob Walling:
Yup.  

Derrick Reimer:
And you could just walk by and watch customers actually step through the interfaces. And it was so fascinating to see when people would just get stuck on a page and the cursor would kind of move around and you could tell they’re confused and that kind of stuff is gold for figuring out what are the friction points, how can you make this more intuitive?  

Rob Walling:
I like that one a lot. And I think you had said before we hit record, you’re like, “Some of these feel like they might be obvious or they’ve been said before” and it’s like, yeah, kind of in different ways, but this stuff bears repeating. It’s that important. It’s like we as technical folks, I don’t even mean developers, I just mean product people who know how to use products. We have a very high ability to just learn stuff really quickly and most of our users do not unless you’re serving other product people. And it’s so easy to forget that my dad doesn’t know when I say, “What’s your web browser?” He’s like, “Do you mean my Firefox”? He doesn’t know what that term means, and he’s 80 years old. So that’s just the way it is and we can easily forget that we have the curse of knowledge. 

I want to piggyback on that a little bit with something that’s similar but different. It’s not exactly what you said, and I want to give an example and the thing I’m trying to communicate or my point here has also been said on this podcast, but it’s listen to your customer’s problems but not their solutions. So learning how they talk about it, what they’re actually trying to do, what are you trying to do with that? What are you actually trying to do with that? What’s the big picture you’re trying to do with that? Because usually they’re not even in the right neighborhood of the application to do what they want to do and they want you to add a checkbox and a dropdown on this page. You’re like, this makes no sense to me. But it turns out, oh, if we go to this settings page, we can add something. 

They’re completely different side if you actually know what they want to do. And I want to bring up the example. One of my favorite examples, Derrick. All right, so if you log into Drip or if you use any type of email marketing software where you have a sequence of emails, we used to call them campaigns. And so you have a table view and let’s say you have five or six emails in a row and it’s like one is welcome and then second is, Hey, you downloaded a sample chapter in my book and the third is what did you think of the sample chapter? And they’re sent days apart on a schedule, right? Pretty simple. It’s in a lot of piece of software. We used to get a lot of requests for people saying in between the first email and the second email, can you add a button or an option to where I can put an if then L statement? 

If they have this tag then I want to send them a different email or skip the next one in the sequence or add a label or just do something. Can you add a checkbox that allows me write in there? And it was always like, this is interesting. This person obviously has a problem, they have a problem, but their solution is catastrophic. As a product person because there’s no way. If we listen to their solution, it would’ve just been a spaghetti code mess or a visual… Talk about technical debt. Visual technical debt is brutal. It’s hard to solve. And we heard those for months and months and we were like, I don’t know what the solution is, maybe we should build one of these things. I don’t know. And you remember what the solution was after a year of hearing these? It was building workflows.  

Derrick Reimer:
Workflows, yeah.  

Rob Walling:
It was completely different paradigm. It was us saying, wait a minute, we need a visual builder where people can put a box on a thing that sends an email and then have a split and if then, this and that. It was a whole other feature and we still kept the campaigns in the table view as well, right? The sequence because a lot of people were like, it’s a clean view and if you’re just sending stuff in a certain order, it’s really nice to have that sequence actually embedded in a workflow. There were competitors of ours where if you wanted to send 10 emails a day apart, remember you were adding 10 different boxes to this visual. It was very cumbersome and ours was actually a more elegant solution. So that’s what I want to bring up. There’s just one example. If you listen to this podcast, you’ve definitely heard that paradigm before.  

Derrick Reimer:
And I think that’s especially applicable to what Alan’s describing here where I think he’s kind of getting at, he’s working on a product that serves a lot of different kind of use cases. So you’re going to hear, especially in this case where you’re pretty horizontal, you’re going to hear really strong opinions from customers phrased in the way that they’re used to solving the problem. And the trickiest part about building a horizontal product is that you’re trying to look for what’s the abstraction between these kinds of disparate requests that are sort of pointing to the same thing but they’re pointing to it in a different way and can we figure out a solution that sort of satisfies the verticals that we want to hit on, but without it being too specific to one where you end up with something that only applies to a small number of customers. And it’s hard, it’s very difficult, but that’s the challenge.  

Rob Walling:
So to wrap up this topic, I actually have two more tactical things maybe that I want to throw out. One is pay more attention to naming than you think you should. Just naming anything that appears in a top nav, any label on anything. You and I used to sit in front of that whiteboard at the first Bitwise building in Fresno and when we were building automations and tags and events and labels and custom feed, all that stuff, we wrote it all out, whiteboard, whiteboard, we were in there for hours saying, “Okay, first what are the paradigms? Let’s get our head around them, how technically what they’re going to do, what are they going to do in the UI? Just mentally, all right, I think that makes sense.” Name value pairs versus things with a date, that’s a custom field versus an event. 

And then we said, “What do we call these? What do we call them?” And we would, hours just agonizing we’ve got to brainstorm. Well, what does the rest of the industry call them? Do we want to be in line with that? If MailChimp calls them this thing and Infusionsoft, which is now called Keap, I believe if they call them this thing, what if that’s a really bad name? Infusionsoft named their stuff poorly and so a lot of times was just like, that’s not actually what this is, but they did it and so people thought that that name meant that thing and so we were trying to stay in line with them like tags. Okay, everybody knows what a tag is.  

Derrick Reimer:
I’m actually curious if you feel like, because that was something I remember, what was it like a campaign in MailChimp was actually a broadcast and we called them broadcasts and then our campaigns were sequences and theirs were called what autoresponders or something?  

Rob Walling:
Yep.  

Derrick Reimer:
And I remember there was friction around that. I actually don’t know the answer to this. Do you regret how we chose to originally name things or do you think is there wisdom in just staying in line with the bad industry names for certain things or is it worth fighting back and naming well?  

Rob Walling:
Here’s the thing, I think the advantage Alan has is I don’t think there’s a MailChimp or a Salesforce in his space. I don’t know of one, so he probably has more flexibility than we did naming. But to answer your question directly, I couldn’t have lived with myself if we called broadcast emails campaigns. That is not what that is. But it would’ve bothered me every day I logged in because I would’ve been like, “Yeah, so in order to have MailChimp people get an easier way when they start using our product, we did this.” Now with that said, have you logged into Drip lately? You go to campaigns and then there’s a dropdown list with I think three different things and there’s single email campaigns, email sequence campaigns, and I believe it’s like a website campaign, something like that. I’m messing up the naming, but you get the idea. 

They grouped them under that same thing, probably because MailChimp and others did it. So I don’t know, man, this is that hard part of you’re a product person, you’re so opinionated and taste, I want to really love what we build, but it’s the intention with industry norms, ease of onboarding, ease of support. That’s exactly what we’re saying here, right?  

Derrick Reimer:
Yeah.  

Rob Walling:
All right, last thing I want to chime in. This is so tactical, so we’ll go real quick on it. Hiding features. If you have features that people request and you’re like, “Boy, only one vertical uses this, or even this whole screen or this whole section”, you can build versions of your application that just hide a bunch of stuff from certain people or only show it to a certain, there’s a feature flag. There’s a flag on their record. If I had three verticals or four verticals I was serving that really were different, we had a lot of verticals using Drip, but we figured out a way to generalize everything. 

If I really needed the naming to be different and let’s say realtors have clients and so-and-so has customers, whatever. It’s naming of labels or of top nav stuff, I would consider having just a different type of account and this is a realtor account versus a brick and mortar account. I don’t know, we didn’t have to do it, but having that bit. 

But the example that I actually want to bring up of hiding features is the feature we didn’t want to build but people were requesting it. You know what I’m going to say. RSS to email, I hate that. Where it’s like, well I have this blog and I’m publishing stuff anyway and I want an email to go out for each one. And it’s like that’s not a very good way to do email marketing, but a bunch of people wanted it, so we built it and only the people that had requested it, we checked checkbox and they saw it. And then over the course of years and we had a KB article about it, I think by the time we left 50 people had access to it out of tens of thousands of users.  

Derrick Reimer:
It was such an interesting one because yeah, if the demand had been lukewarm, we probably would’ve just said, “Sorry, we don’t have it.” But I feel like at the time, maybe it was like AWeber or one of those kind of older school ones, everybody who was using that publishing workflow relied on the RSS to email and it was just a hard blocker for them.  

Rob Walling:
Yep, for them to switch.  

Derrick Reimer:
I actually don’t know, maybe people are still using that, but I feel like RSS has sort of become less integral to the publishing workflow and now there’s Ghost and there’s the email sending platforms are trying to become more of the publishing platform also. So the trends have shifted and yeah, there probably still remains a small contingent of people who love that magical feature that just automatically sends emails when the RSS feed updates, but it was a real nightmare to maintain. q  

Rob Walling:
It was a pain. And so you might ask, “Well why did you build it then?” And it’s exactly what you said. We were literally losing deals over just that and they were significant deals. They were hundreds of dollars a month, obviously thousands of dollars in ACV at a time when we were, I think we built it when we were 20 to 30K MRR and I knew that there were thousands of dollars of MRR, at least a few thousand that we could get with it. And so it became that I don’t want to build this, but I am going to grit my teeth and build this, but I’m going to hide it just to try it. I just don’t don’t want to support it for what wound up being thousands, tens of thousands of people. I don’t want to promote it as a good email marketing practice. 

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With that, let’s roll into Alan’s second question.  

Allen King:
Also, do you have any suggestions on best practices to scale new products that serve different verticals once your main PMF has been secured and profitable?  

Rob Walling:
We’ve already talked a little bit about if it’s not an independent product, but actually keeping it as one how you might think about either generalizing things or having different account types that show different functionality. I will be honest upfront, I wouldn’t add multiple products unless I really, really, really needed to. I would hold off. This is that thing of translating my product into other languages, into Spanish and German. It’s just usually, can’t I just find more customers of this type? Have I maxed out the entire market? And I find that folks who want to launch additional products, it’s just so much more work than you think it is. So that’s kind of a blanket thing. I’m not saying don’t ever do it and we can still answer the question, but that’s kind of my overall opinion on this topic.  

Derrick Reimer:
Yeah, I think as we riff on this we can maybe come to some thoughts about how to do this well, but I agree that it sounds like he already acknowledges that it’s really difficult to serve a lot of different verticals and keep everybody happy at the same time. So my gut is just from a strategic standpoint as he’s thinking about, all right, we’re continuing to grow the business, we work really well for a bunch of these people. I’m sure he is finding some of these market segments are just, the customer type is just not the type that he wants to serve, hopefully. 

Hopefully he has some clarity around that even though they’re making it work, does it feel like you’re fighting against, they’re constantly kind of dissatisfied to the point where the way you want to take the product and the vision you have for it just doesn’t really seem to overlap with what this one particular use case is? Then I would urge you to consider just narrowing away from that and trying to identify who are the few, and hopefully you can find enough commonality between their use cases that you can have a roadmap that is generally speaking to the needs for all of those segments. So those are my initial thoughts on just narrowing focus a bit.  

Rob Walling:
Yeah, narrowing focus I think is what I would try to do as much as possible and to not serve. I mean by the time, again, if you’re serving four or five verticals but it’s all within the same app and generalizable, that’s fine, but it’s when you start, you have 10 different kind of use cases and you really need 10 different apps or this component. I think of HubSpot with modules and Salesforce and modules that you add on and remove. And maybe that’s the answer is that there truly, I was talking about having account types earlier that just hide and show stuff automatically, but that can easily turn into a paid add-on for this extra module and that’s a pattern that we see with enterprise software. 

To me it just feels complicated when you’re early, that feels complicated. I don’t see most companies below seven figure ARR trying to do that. And is that a sign that either you’re trying to do too much, you’re taking just a little too big of a bite at the apple or you’re not saying no to enough things? And just being like, “You know what, we have one customer type or two or three that work and unfortunately we’re just not going to serve this other market.” 

I don’t know, without more information. I obviously can’t give specific advice, but it’s an unusual pattern. There’s a little yellow flag for me if you’re trying to solve the problem in the way that you’re describing it where it’s like I want all these modules. And again, I’m assuming Alan’s early stage, we don’t know his revenue.  

Derrick Reimer:
I think what we kind of touched on earlier where if the main difference is just nomenclature for example, then that feels like something that’s solvable. Even if it’s like, I’ve seen products do this, I think Stripe does this with their checkout product where it’s like do you want the confirmation button to say purchase product or should it be subscribe or should it be, they have different ways to customize what the fulfillment button says to indicate the type of thing. It’s something we’ve considered with SavvyCal. We generally refer to things as meetings, but that’s not always the intention. It’s not always a meeting. Maybe think of it more like a session or I don’t know. There’s just different kind of ways to identify the thing and if that’s really the main difference, but all the other mechanics are the same, then that seems reasonable to try to figure out a way to allow that level of customization. 

But to just give another example, that’s something that we bump up against. We have a certain type of customer that loves our core functionality, but then they want this whole sort of buy a pack of time slots and then you can eat away at your balance of credits that you’ve purchased for a certain number of meetings and maybe you want those recurring and it starts to just spider out into this whole separate thing. It’s not something I’m necessarily opposed to doing, but that sort of thing we’ve really been careful in gathering customer requests and insights and really thinking hard about it. Can we see a world where it makes sense to add this onto the existing product? 

In some ways it almost feels like a completely separate product or a completely separate module where it’s like, okay, now you basically have sort of a commerce tab of some kind where you’re storing a lot of information about customers who have bought a certain number of time slots and now you need to manage state around that. So it’s a huge kind of build out that we’re very hesitant to do unless we feel like we can actually be competitive in that area and it won’t wreck the user experience for the rest of the product, which is a big consideration. You don’t have to feel like, it’s easy to get to the place where you used to be the simple elegant solution and now people start saying, “Well, it’s sure feeling complicated over there” and you never want to get to that place if you can at all help it.  

Rob Walling:
Yeah, and that’s where I think, I like that example you brought up because I think of Squarespace, which started off as a website builder, but now Squarespace Commerce is a big thing and it’s a decent shopping cart. It’s not the most sophisticated, but I use it to sell the SaaS playbook. So SaaSplaybook.com is hosted on Squarespace, and then I have other sites that don’t have commerce built in. And there’s a selling thing in the left nav, and if I click it and I don’t have the commerce, it just says, “Oh, you could sell stuff if you wanted, click here to upgrade. And if I have a cart and I have sales and I click in, it’s my whole dashboard. And you could easily make it that if I didn’t have selling, it just didn’t appear in the left now. That’d be the thing is how modular can you make this and I mean it goes without saying, keeping consistent UI and UX paradigms per the first thing to do.  

Derrick Reimer:
Yeah, I actually have one other thought that just occurred to me too. If you already have some existing patterns on how you build external integrations with other platforms. I don’t know if Alan has any of those at this point. I’m sure he does with calendars or whatever. So you think about how you generally build those into your product. In SavvyCal for example, we have on links, we have sort of a little automation or integrations area and you can basically install an external app. So if you want to send booking information over to HubSpot, you can click a little dropdown, say add an integration and then send contacts to HubSpot. And you install that and there’s a little bit of configuration, choose your account, connect to your HubSpot account or whatever. 

And now you have this sort of modular connection between a scheduling link and your CRM. And it is interesting to think about can you apply those similar patterns, similar ways you would think about integrating with external products, but do that with your own internal modules as well? And I think there’s a lot of patterns you can sort, even though I think you wouldn’t want a whole separate app that you log into. Ideally it would be a module of some kind inside of your core monolithic application, but can you treat it as you would almost an external integration if it’s separated enough?  

Rob Walling:
I think that’s a very elegant way to think about it. All right, let’s dive into Alan’s third and final question, but he actually sent me a relevant super bonus question that maybe if we have time, we’ll answer at the end.  

Allen King:
Lastly, does Derrick Reimer have any processes that he’d like to share for creating articles, change logs and updating content when it becomes dated? I’m a big fan of his knowledge base and his SavvyCal product as a whole. I love the work you both did on Drip and I’m very grateful for all the work you’ve done for our community. Looking forward to MicroConf this year. Thank you. Thank you. Thank you. Aloha from Hawaii. Peace, see you soon.  

Derrick Reimer:
So I use Help Scout’s knowledge base feature, which is pretty nice because it integrates deeply with their Beacon widget. So when someone clicks the help tab in SavvyCal, it opens the beacon and they can start to type a question and we can surface knowledge base articles to them. And if those don’t satisfy their question, then they can send an email to us. So that kind of integration is pretty nice. I think Alan’s using Intercom maybe, and I think they have a very similar type of thing. I took a peek at Alan’s knowledge base. It looks like you’re off to a really good start on that. 

But yeah, we generally, when building any feature of substance that’s not a tiny thing, I usually default to wanting to publish some kind of knowledge base article, something very specific to the feature. And the title is usually something, it’s not like I’m trying to describe an entire subsystem in one article. We keep them pretty granular, almost phrased like the answer to a question if someone was asking the question. And for most projects we just drop a ticket in the project management system for that. So the project’s not considered done until we have a little KB article. 

And I also have, speaking of component libraries, like a lot of the settings sections that we have, we just default to having a little info icon in the product that requires a URL to a KB article. So it’s a good forcing function for us to make sure that we have somewhere to send them if they were to click the info icon to learn more about the feature. And I also like to, I use Headway for our change log and we have a little widget in the app. It’s that standard pattern when there’s something new, it’s like a little red dot with a number on it and you can click it and it shows the little top five things in the change log. 

And that’s just a helpful way to surface new stuff. I mean, it’s hard to keep new customers abreast of features and also existing customers who aren’t necessarily receiving onboarding sequences and things, it’s hard to keep them aware of new stuff happening. So I feel like that’s a good touch point for sure. And similar to the KB articles, we generally as part of the launch plan for any feature, bias towards just dropping something in the change log. And I try to keep those really, really concise, like one or two sentences and I have a little template, so I usually try to include a screenshot, something that represents the feature. And yeah, it’s not a huge burden because we plan on keeping those short. Try to speak to how this improves the customer’s life. So describe the functionality of the feature and also why they should care. And just a couple sentences and yeah, that’s just kind of integrated into our process.  

Rob Walling:
Ladies and gentlemen, a masterclass in how to maintain your KB. Thank you, sir, we should record that, sell it as a course. It’s just a really good thorough answer. Very concise.  

Derrick Reimer:
And I think another note on keeping things up to date, I mean is that’s hard. I think there’s probably some stuff in our knowledge base that’s a little bit outdated and if it’s just small changes to the UI, I don’t think it is a huge stumbling block. So we are not necessarily keeping on top of every single screenshot to make sure it looks identical to the current UI. But what we do is empower support agents to make any changes to the knowledge base at any time. So if they are sharing a KB article, which we often do in support, we’ll explain how something works, but then we’ll also include a link to the knowledge base article. It usually has just a little bit more expansive detail than the specific response. I think our support guys are used to looking at the knowledge base article to make sure it’s relevant and if they notice something that’s out of date, they’re spending a lot of time in the product helping diagnose things for customers or explain things. 

So they usually will spot if something’s out of date and they can just grab a new screenshot. I like to use CleanShot, but there’s a bunch of different apps that’ll do that. That basically lets you take a screenshot and draw an arrow. That’s the default way that we do stuff. Put arrows on product screenshots, and those are really easy to replace. Things that are a lot harder is like if you have videos that have a lot of shots of the product, there’s a much higher cost to updating those. For that reason, we generally skew towards text and images, which are easier to update.  

Rob Walling:
In the early days, getting a loom or equivalent recorded for your support or for your KB is way faster to do. Over time, it is essentially a type of debt, video debt, documentation debt. We did that with Drip in the early days, right? Instead of writing a long KB article, I just recorded a video and it was great and it got us going, and then we had to go back and redo. Basically I paid someone to redo all those and basically turn the videos into written. And that’s why most KBs are written because the video is just hard to maintain. It doesn’t mean you shouldn’t do it, just know that you’re going to run into some issues down the line. 

I like what you pointed out about keeping things up to date that you kind of do the best you can because even again, when we left Drip, it was doing tens of millions a year with tens of thousands of customers and there was still stuff that was, it just gets out of date and you just don’t pick it up. So it’s one thing I would, you do your best and just know that there’s going to be stuff that’s out of date at any, it’s not going to be perfect and it doesn’t need to be, and you can still be wildly successful. 

All right, you want to take a crack at this fourth super bonus question about podcasting? I love talking about podcasting. Yeah.  

Derrick Reimer:
Oh, sure.  

Rob Walling:
His question is what magical wizardry secrets or dark, scary, painful pitfalls would you give to your virgin podcast selves before you got started actually podcasting? I have a couple of things that come to mind. One is, fewer people are going to listen to you or care about your podcast than you think, especially in the early days. And that’s a good thing because you’re not going to be very good when you start. I’m talking to me, by the way. Just to be clear, me 14 years ago, it’s just not, you can go back and listen to the first five episodes of this show. 

They’re not very good. We don’t have the energy, we’re not concise enough, there’s just a bunch of things wrong with it. The audio quality isn’t very good, et cetera, et cetera. And that’s okay because I put in the reps and eventually you get better. So fewer people listen to you in the early days. I stressed about it in the early days. “I’m on the mic, I’m so nervous, oh my God.” We’re all going to be nervous. It’s fine, realize that fewer people listen to you, and hopefully it helps you just be more of yourself. 

Second thing I want to say is the only way I know to get better at it, some people are naturally good at it. I will give them the first time they get on the mic. They’re amazing. Most people that I know are not, the only way I know to get better is to practice. It’s just to do a bunch of reps. And again, if you go back and listen to the show by the 10th or 15th episode, it’s like, “Oh, that’s not terrible.” By the 30th it’s like, “Ooh, these guys kind of know what they’re doing.” Practice and listening to other podcasters, I would say both because just doing the same thing over and over doesn’t make you better. But I would listen to other podcasts and say, “Ooh, this is very entertaining. All of a sudden, why am I entertained by this? Can I do that? Does it fit to adapt that approach to my show?” 

So practice and developing taste of what a good podcast is, I think is a thing. The third one that took me a very long time. In fact, if you go back even, I don’t know how many years, but you go back six or seven years, I still wasn’t doing this until again a few years back. But it’s to have just a little more energy than you naturally would. Like if you and I, Derrick were on this call and just talking about SavvyCal strategy or talking about Dungeons and Dragons and the nat 20 that Darren rolled last night on his persuasion check, we would just be talking and having fun. 

Somehow, when you do that and talk naturally, you sound subdued and with low energy. It’s just this weird thing that cameras and microphones do. And so now at this point, I naturally switch when I’m in front of a microphone, I talk just a little bit different than again, if you and I were hanging out. And it’s just a one notch above in energy. That was a very difficult and painful thing for me to, it was felt very unnatural, like I was faking it, like I was not being me, like I was being hyped. Why am I acting like this person who’s excited when I’m not actually excited when I say, “Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling.” That’s how I say it now. 

But when I say it, I’m like, “Oh, that feels weird.” When I listen back, I’m like, “That’s a good intro.” And when I listened back to intros from 10 years ago, I’m like, “That intro sucks. It’s boring.” So there’s something about energy and learning how to channel it in a way that feels authentic. To me, I am not on this mic if I’m not being me and trying to be authentic, but you have to be a little more energetic than I think you would naturally.  

Derrick Reimer:
Yeah, I think because I’ve heard people go too far in that direction where it’s like, “Hey, I’m trying to have a radio voice”, and they talk that way the whole time and it’s like, “Ooh, that’s too much. That’s too much.”  

Rob Walling:
Yeah, it’s terrible. It’s not authentic.  

Derrick Reimer:
So it’s the authenticity piece. And I think, yeah, it does take practice to figure out how to do that. I mean, I don’t know any other way other than reps and listening back to yourself. I was a very reluctant podcaster from day one. I mean, Ben Ornstein can attest to this, that he basically had to pull teeth to get me to agree to just first start guesting with him. And then he was like, “You want to kind of do this for the foreseeable future?” And I was very hesitant because I didn’t feel like I had a natural knack for it. I didn’t think I sounded smart or funny on audio. It took a lot of getting past my own barriers, and it helped to start to hear from people like, “Hey, I really enjoyed, that was great.” And I was still not convinced for a long time that it was any good, but I just kind of persisted through it. 

I think this is sort of a hack, is having a co-host that you have good rapport with. Is it the kind of person you could just have a 30-minute-long phone conversation with and it would feel pretty natural, or is it stilted? Because if you can’t have a normal conversation, it’s going to be hard to have a good podcast recording together. Because a lot of times podcasts, especially interviews and even more conversational ones, they often end up being kind of like, I talk for a while, then I mute, and then you talk for a while, and then you mute. 

And I have found trying to steer it more towards feeling like a conversation, even if I’m responding with uh-huhs and things, that can all be cut in editing, so you don’t have to keep all the kind of conversational connective tissue in place. But I find that the more I do that in the course of a conversation over a podcast, the more authentic the edited version feels. And to that point, good editing. I would say, if you’re wanting to seriously produce a podcast, have an editor edit out the awkward pauses and things, because that makes a huge difference. I’ve listened to the unedited version of a podcast I’ve done, and then the edited versions, and it’s way better with good editing.  

Rob Walling:
That one didn’t even occur to me because editing is just something we’ve done from day one. And you used to edit a lot heavier in terms of cutting out ums and ahs. There are just a lot fewer ums and ahs these days. You do it long enough and you stop doing that. I want to revisit something that you touched on that is something I do and hadn’t occurred to me that I would need to say it, but I call it game tape. When I used to play football, ran track, we would watch tape of ourselves. This tape, it was, yes, it was on a video recorder of some sort. It was before digital. It was the nineties people. 

But we watched game tape and be like, “Ooh, yeah, I shouldn’t have done that. Oh, I could get better doing this.” To me, I’ve listened to every episode of every podcast I’ve ever recorded, even the interviews, as far as I know, as long as if people let me know that it went live, I go and listen to it. 

And I don’t do it as some ego thing or to say, “Ooh, aren’t I smart?” I actually listened to it to say, “Huh, I should have communicated that better.” Or, “They asked me a question that I didn’t know the answer to, and I can feel myself kind of vamping and I eventually usually get to something. But the first 60 seconds of that was a non-answer, so I’m going to do better next time.” And the other thing for me is I will listen back and be like, that was a really interesting framework that it just occurred to me on the show. I said it once, I never said it again. And it’s like, that should be in a book or that should be revisited on the podcast. I’ll actually pull nuggets out of old conversations that just happen to be on tape. And so listening to game tape, I think the number one reason is to get better. And you’re going to cringe the first few times for sure, but then you’re going to realize, “Okay, so I say um too much. How do I work on saying um less?”  

Derrick Reimer:
Yep. And something that I discovered too is that I would often leave a recording session feeling like that was terrible. And then I would go back and listen. And I usually had some takeaways on things to improve, like you just described, but I also usually came away with the feeling that that was not nearly as bad as I thought it was. And that was a reinforcing thing of, you know what, yeah, you’re not going to be perfect at it. Nobody is, but this is not as bad as your brain was telling yourself that it was.  

Rob Walling:
That’s a really good point. I agree with you there. Any TinySeed founder that comes on this show, I kind of force them in a nice way. I say, you need to listen to this interview because, and the reason I only do it for TinySeed founders is I feel like I have some sway over there. You know what I mean? Or some input into how they operate professionally. And so I’m sure not all of them do, but I really, really encourage people to do it, to listen to the interview, just to be like, oh, that part was good and that part was bad. And try to evaluate it and be honest. And of course, you cringe a little bit, but that’s how you get better.  

Derrick Reimer:
And to tie it back home too, the same applies for your product. Watching people use your product, you’re going to learn a ton, and it’s one of the most painful things you can ever do.  

Rob Walling:
That’s so painful. Dude. No doubt. Thanks for those questions, Alan. I hope, yeah, I hope our answers were helpful to you in your entrepreneurial journey. If you’re smart and you’re like Alan, then you’re coming to MicroConf in Atlanta here in just a couple months. It’s April 21st through the 23rd, and tickets are actually going pretty fast right now, and this will sell out. I don’t know when, I don’t know what month it’ll be, but if you’re considering it, you want to head to MicroConf.com and pick up your ticket. I’m speaking, Rand Fishkin, Asia Orangio. Lianna Patch is co-MCing with me, and I think we have another super special guest that Xander’s waiting to announce. So yeah, grab your tickets. And Derrick Reimer sir, thanks so much for taking the time today.  

Derrick Reimer:
Yeah, of course. Thanks for having me.  

Rob Walling:
Dropping mad knowledge. Folks want to keep up with you and they want to see the best scheduling link on the internet, they can go to SavvyCal.com and of course, follow you on Twitter @DerrickReimer.  

Derrick Reimer:
Indeed.  

Rob Walling:
Thanks again to Derrick for coming on the show. It’s always great to have him and hang out for 30 or 40 minutes. I hope this 30 or 40 minutes has provided you with some tactic or strategy or maybe some inspiration to think about building and growing your business this week. I’ll be back in your ears again next Tuesday. This is Rob Walling, signing off from episode 699.

Rob Walling:
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You guessed it, you’re listening to Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode I sit down with Noah Kagan. He has launched, I forget the number, I think he says it in the interview, but five, seven-figure companies, it might be six, it’s a lot. And he has written a book called The Million Dollar Weekend. The book is available now in all formats, head to milliondollarweekend.com if you want to learn more. 

Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale. This event will sell out. If you’re thinking about coming to Atlanta April 21st through the 23rd to see me co-host this event with Lianna Patch and to see speakers like myself, Rand Fishkin and several others, head to microconf.com/us to grab your ticket before they sell out. We had an amazing event just a few months ago in Denver and I expect the event in Atlanta to be no different. So, microconf.com/us to grab your ticket today. 

And with that, let’s dive right into my conversation with Noah. We’re actually going to join it mid-conversation. He and I had been chatting for, I don’t know, four or five minutes and I realized it was good content so I just hit record and we rolled right into it.  

Noah Kagan:
Yeah, we can talk about that. I don’t think people give enough thought to good decisions over long periods of time.  

Rob Walling:
Yeah.  

Noah Kagan:
Consistent. You can make a good decision once but then, if you have to do that in competitive landscapes over 10-year periods or longer, that’s challenging, man, it’s tough.  

Rob Walling:
There’s this quote from Steve Martin where he used to go see comedians, he has a great book called Life Standing Up, Born Standing Up.  

Noah Kagan:
It’s so good.  

Rob Walling:
Yeah, love it. And my favorite quote from there is it’s easy to be great, it’s hard to be consistent. Because he would come and see a comedian just blow the doors off one night and then, next month, they would just bomb for the next month. And he was like, “The hard part was getting good enough that he could consistently be amazing.” And I think that’s what you’re talking about, right?  

Noah Kagan:
Well, that’s what we were doing with sumo.com even. That went from zero to six and a half million ARR in maybe two years or three years. Super quick.  

Rob Walling:
Was it just email capture?  

Noah Kagan:
Yeah.  

Rob Walling:
Was it the widget?  

Noah Kagan:
So, the original idea-  

Rob Walling:
What was the product?  

Noah Kagan:
The original premise was appsumo.com has no MRR, ARR stuff, we want to try to have something recurring, what have we built for ourselves that we can sell to others. And so, the original vision for my partner, Chad, his idea was we should build the WordPress plugin store for websites. So, you can put in one plugin and you can have all the marketing tools you’ll need and then the idea is can we launch tools within two to four weeks and we launched a highlighter tool. We basically tried to go to any of the largest businesses and I think this is a good way to do business today. It’s like, “What are you spending a lot of money on? Can you automate that or create software on it?” 

So, we went to New York Times and all these giant websites and they had these different features like a highlighter and then email collection and we’re like, “Huh, we’re doing a lot of email collection,” and then we launched the popup called the email capture and it just exploded. The demand was so easy at that time.  

Rob Walling:
I remember this. This was back when Drip was just email capture, right? Drip was the first, all it was was an email capture widget and auto responders. And then we … That was 2013 and it wasn’t until 2014 that we actually became a competitor to Mailchimp. And Sumo was around that time, wasn’t it?  

Noah Kagan:
Yeah, it was SumoMe and then we bought the domain after seven years for a million and a half and then we launched so many different things. We had a heat map and then we had scroll boxes and then we had, I don’t know, a lot of different analytics around the plugin and it’s interesting in business. I think what ends up happening in most businesses, they try all these new things and then, over time, they’re like, “Oh, I should just do the thing that people really wanted me for.” They do all these things and, really, at the end of the day, it was just capture emails for small businesses or solopreneurs and Mailmunch kicked our ass with that because they were 20 bucks and OptinMonster and they did WordPress. 

And then we got, as you were talking about your business, we got our asses kicked because we tried to then do mid-market and then we try to do e-commerce. I think it’s really hard to stay consistent and just do the thing well that’s working. And that’s something I’ve definitely learned over, I guess, now 15, 20 years of startups.  

Rob Walling:
Yeah, I have too. Tell me about sumo.com, I had no idea you sold it. Is that public info?  

Noah Kagan:
It’s not public yet.  

Rob Walling:
Okay.  

Noah Kagan:
We just closed … When did we close? Maybe two weeks ago. This podcast, by the time it comes out, I’m thinking it’ll be public. Man, I was really disappointed in myself and I was really sad just how badly I ruined it.  

Rob Walling:
What happened?  

Noah Kagan:
Well, first, when you get a product that works, you know. People are like, “How do you know if you have product market fit?” You know. You don’t have to ask people to buy.  

Rob Walling:
100%. You don’t need to send a survey out about would you be not wanting to, you see the graphs. I’ve been there, dude, you’re like, “This is a rocket ship.”  

Noah Kagan:
Yeah, people are excited to pay you for a problem that you can clearly demonstrate value. Now, we launched the product and then things just worked and I think one of the key things that helped it worked is that the first year we were just free so we just had this insane install base. So, then we said, “Hey, pay 20 bucks a month,” it just crushed.  

Rob Walling:
I remember that. You had your JavaScript snippet on hundreds of thousands-  

Noah Kagan:
Every site.  

Rob Walling:
… of sites, I thought it was crazy.  

Noah Kagan:
Yeah, it was about a billion users a year so far is what we ended up getting it across the websites. But the mistake, I think, the learnings for others which is fascinating was deviating from who our core customer is. That’s probably the number one mistake we made which was we got to the six point a half million and then you’re like, “Well, I got to get bigger,” and it’s like, “Why?” “Because that’s what you’re supposed to do.” So, then we raise the prices from 20 bucks a month to a hundred to 500 to thousands because then we went upmarket. And then we’re like, “Well, Shopify’s getting bigger, let’s go over there. We can go help these customers.” And really, appsumo.com and our core customer is the solopreneur, that’s probably more of a blogger, an agency, a marketer, we’re not e-commerce people, that’s not our customer base. And so, ultimately, if we just would’ve stayed on that price point and that customer, it could be a $20 million ARR, maybe more in that space. 

And so, I think that was one. And then, secondly, me and my partner just had disagreement in visions and my approach to that or my response to that was to run away a little B. I just ran away from it versus, hey, let’s agree on what we really want to do here. And so, I call it the seagull theory, I basically was like … He wanted to go mid-market and e-comm and I was like, “I just like affordable products. That’s why we have appsumo.com, I like good deals. $20 a month, good price.” And we just disagreed on it and we could not get to the same page so I ran away and built SendFox and some other tools but I did the seagull theory or seagull mentality where I just flew over their team and I (beep) on them and complained about things and then flew away. 

And we all do that and it’s more how do you get aligned with your visions and then how do you actually be … Are you here to help or complain? If you’re complaining, just sit the (beep) out. Ideally, if you’re going to go be a part of it, go and be a part of the solution. So, that’s definitely been something to … What’s the heart? There’s a quote I like which is what’s the thing unsaid and say that and then work through those things.  

Rob Walling:
And so, did the business decline? You sold it, was it like, “We got it, we’re just going to walk away.”? Did it decline?  

Noah Kagan:
Oh, dude. So, we peaked at six and a half million and we were getting offers, I think, around 30 million. I think we’ve had a $30 million offer and I was like, “That would’ve been real nice, I would love to fly private.” And my goal was, by 50, to only fly private if I can, God willing. And it just started declining and you just … I’m sure other people who have companies feel this way, we tried everything. You’re like, “Okay, try to optimize pricing more, call all these customers,” and, because we were competing against so many bases, so many different competitors, we were just losing against all of them because they were either better at WordPress, better at mid-market or better over at Shopify and e-commerce. 

So, what we ended up doing was skeleton crew that software and just let it cash out over the next, probably, five years because it was still doing, what was it doing, it was two or 3 million a year and declining over years. And so, only until recently, we saw that the revenue to the server cost was getting close enough that we’re like, “It’s becoming a liability and maybe someone can do something with this.” So, it was an interesting experience selling it because it makes you face your mistakes and I do think it’s interesting, what are people’s intentions. Because I didn’t build AppSumo to sell it, I didn’t build AppSumo to go public, I don’t need that ego, I don’t want that money, I want to have a cool job, that’s it. 

And with Sumo, I think it was more just disappointing, really. Yeah, you can tell. I’m like, “Ah, it’s so frustrating,” I know, all of us have felt that and so we went out to different brokers. The selling process is really interesting, there’s a lot of different types of buyers. There’s these vulture buyers who are just actually really savvy, frankly. They’re really savvy and they’re totally-  

Rob Walling:
Yeah, value buyers.  

Noah Kagan:
They’re value buyers and it takes a long time to sell. You see these articles or tweets, yeah, I sold my thing two minutes, da, da, da on acquire.com or through Quiet Light Brokerage, it doesn’t happen that way. So, you put out a prospectus, you have to get your finances actually really up to date, which we didn’t do because we haven’t really touched that business in probably five years which was nice to cash out, but I’d say the bigger takeaway was how do you actually find someone more strategic. So, we were able to find, I don’t know if they want to be public yet, but a Wix, wordpress.com business that’s doing really well and they wanted email marketing and marketing tools. 

And what was really impressive about these guys, and maybe by the time they want to be public with it, they’re very patient. They’re like, “Yeah, we’ve been doing our SaaS business for 20 years and we are okay if this takes another 20 years for it to get SumoMe,” it’s what it’s called, “Back up.” And then the strategic buy, yeah, they were willing to pay, I think it was around one X ARR for the business.  

Rob Walling:
Okay. And it was a declining, basically, flatlined business at the time.  

Noah Kagan:
It’s still declining. It’s declining, give or take, one to 3% a month. So, I think we’re … I don’t know, I don’t want to share their number, now it’s their numbers but, yeah, it was declining. So, it was a seven figure sale which, to me, it was just sad, it was just sad. The promise of what it was, what it could have been and, ideally, we learn from those mistakes but it still hurts.  

Rob Walling:
It does. It feels like almost snatching defeat from the jaws of victory in a way. Because, when you launched, I remember how many people had that JavaScript installed and I thought, because we were tangentially competitive with Drip because we were an email capture widget as well, but then we pivoted into becoming a full-blown email marketing provider. But I remember being like, “He’s going to do it, this is great. There’s no way he can’t be successful with this.” And in fact, you were successful with it because, six and a half million, $30 million offer, is amazing, it’s what everybody would dream about. 

But it’s harder than people think. Even with momentum, even with good people, even with a smart founder, it’s hard to run a tech company for 10 or 20 years and not just ride it over the top.  

Noah Kagan:
Yeah, I think it’s that and being patient with the plateaus. Everyone hits plateaus. At AppSumo, appsumo.com, another product market fit … And to be clear, I’ve done a lot of business that did not work. With AppSumo, we build, we call them the originals, and I was telling you, tidycal.com, our Calendly alternative is crushing, it’s five X growth this year. And that’s one of about 10 products that we’ve launched on the original team. ShortySMS, fail, EmailBadge, fail, MeetFam, fail, SumoMarket, fail, all these different things that did not work. And that’s part of the business is that you got to keep experimenting. 

But AppSumo, my point that I was saying, with sumo.com, we launched 300,000 first year, second year, 3 million, third year, 4 million and then it was basically three to 5 million for the next three years and then this year it’ll be around 80 million, 13 years later. And there’s numerous facets to that but I think the big takeaway for others, make sure people super want what you have, stick with your customer. So, whoever the customer is, just stick with them and understand them. And I would say, with sumo.com, for others, what was interesting how we grew so fast, one … You know we bought a lot of WordPress plugins?  

Rob Walling:
I did know that.  

Noah Kagan:
That was probably one of our biggest hacks because you could buy … So, the idea is buy WordPress plugin and then promote Sumo but the takeaway there is what’s something that others aren’t doing that’s cheap or unexploited that you can take advantage of to get distribution to your ideal customer base. That was probably the biggest one and then personally reaching out, what you did, what ConvertKit did. We’d go to Tim, we’d go to Pat Flynn and be like, “We’ll do everything for you, you don’t have to do anything,” which became … It’s a little bit of the norm now in some of the SaaS.  

Rob Walling:
Yeah, but it was novel 10 years ago. And I think … What was the other thing you did? With AppSumo specific, I remember you sponsoring email newsletters before there were really sponsors of email newsletters. Right?  

Noah Kagan:
Yeah.  

Rob Walling:
I remember you being in some random newsletter and someone’s like, “Oh yeah, Noah offered me 500 bucks to post this here,” and I’m like, “This guy knows what he’s doing, man.”  

Noah Kagan:
That strategy, to be clear, and that’s something everyone go … Well, don’t compete with us but copy it in your respective areas but we still do that day, it’s the prefluencer strategy. And so, we do it at AppSumo, we have a team of five now dedicated to video ambassadors. And so, the idea is we go out, we give them a flat fee and then a percent of their sales. And ideally, you don’t want to go to people … I have a million subs on YouTube and I have a relatively sizable audience, don’t go to me, go to the person whose audience is hyper engaged on a really tight subject. And even if you want to be even more creative, go to different languages. So, we have people crushing it in Spanish, crushing it in Portuguese. And when we want to do things now, we have a hundred and then, by next year, maybe a thousand people that can be doing this. 

We did the same thing with sumo.com, I did the same thing at mint.com, we did the same thing with appsumo.com. That strategy works because, when you’re going to Facebook or Google Ads, you’re paying market rate and you want to figure out how to not pay market rate. So, a lot of these smaller people have much more affordable pricing for very unique and great promotion to the right audience.  

Rob Walling:
So, I want to talk about AppSumo a little more, I want to talk about YouTube, I want to talk about your book. So, for folks who are listening or watching, Million Dollar Weekend, it’s mdwbook.com, that’ll take you to … That’s currently taking you to the Amazon page, is that what it’s going to do?  

Noah Kagan:
Yeah, we did buy so by the time this episode comes out. You can go to milliondollarweekend.com and take the 48-hour challenge to change your life. We’ll get into that, we’ll get into that.  

Rob Walling:
Yeah, yeah, we’ll do it. We’re talking about AppSumo. So, I want to find out, because from the outside, I remember when you started it, I remember you did your first bundle back when you were doing bundles and 20% of the deals came from micropreneur.com, a referral link in a forum and so you reached out to me, we did a phone call. I remember I was standing out by my swimming pool, 2010, ’09, ’10, had to have been around then and you were like, “Dude, what is Micropreneur?” It’s a precursor to what MicroComf is today. But I was like, “Who is this guy?” And you’re like, “I was employee number 30 at Facebook, I’m doing these deals,” and it was just this crazy serendipity to be able to meet each other like that. 

But then AppSumo took off, you went to … I know you went from bundles to individual daily deals and you have the whole thing going now. You grew it, you put a CEO in charge and you moved on to other things and then you came back as CEO. Are you CEO of it today?  

Noah Kagan:
Yeah, I’m CEO.  

Rob Walling:
Okay. Tell me about that. Maybe that interim or what’s the story there? You stepped away from it, were you bored, did you want to do other things and then why did you come back.  

Noah Kagan:
So, we all get bored of success … It’s not success. We get bored of what’s working because it’s not exciting. I remember telling my business partner, I said, “Chad, how is it that you like to do all the things that are boring and I like all the novel stuff? I like starting new businesses.” He’s like, “Everyone likes starting new things, Noah, it’s not just you.” And I do believe it’s a superpower for consistency. Now that I’m 41, if you can stay consistent and keep doing what’s working, you will be successful, period. And it’s so easy to get distracted, it’s just so easy. Even yesterday, on our YouTube team, there’s a guy, Dylan, who just started, he’s like, “Hey, we should try this new thing,” and I was like, “What’s our goal? Don’t get distracted.” We lost a thousand dollars on this thing and I was like, “It’s a thousand-dollar lesson, let’s stay focused.” 

And with appsumo.com, I got bored because I didn’t want to keep doing … I remember, at the time, I felt like a used car salesman. I’ve got a deal, it’s a car, you got a good price. But it was just more I was bored and that’s something to work on, how to find something that you don’t get bored with like your wives or husbands. And there’s something interesting in that about what areas are we not getting bored at and how do I replicate that in my business which is what I get to do today. And we brought on Amin and we said, “Amin” … And I’ll give a little context there. We said, “Amin, make $120,000 a month revenue and don’t (beep) up, that’s all you have to do here. Don’t do anything creative.” 

And a lot of people have asked us, “How did you find an Amin which is the CEO for your business?” This is the big point. One, we spent a year recruiting and then we spent 18 months training, that’s literally the main part. People are like, “Oh, you’re going to” … It’s how much time are you putting into it and the way that most businesses, whether you’re team of one or a team of 10, AppSumo is a team of hundred, how does your bench look? So, if you look at a professional sports team, they all have benches and they all have minor leagues or colleges and so what does that look like in your own business and is it being developed or not. 

And so, at AppSumo, I’m pretty regularly thinking who’s the CEO of these different department, who’s the CEO and who’s going to just take it, not give him permission, I can see who’s taking it. And so, Amin took over and then we started SumoMe which became sumo.com and, over the years, we grew it while, Amin, for the first two years, he just did the exact same thing. It was a few deals a month to make 120,000 and then, once sumo.com actually broke even, we’re like, “Amin, you could do whatever you want now, we don’t have to worry about that money,” and then he was able to do a few things that I can talk about that was really able to help get AppSumo to where we are today. 

During that time period though, my partner took over Sumo, Amin took AppSumo and I just was like, “Oh, I guess I’m going to” … I was making two to $3 million a year, I’m just going to do a podcast and then I’m going to build some little side projects like sendfox.com, kingsumo.com at a charity bike ride. But this is probably the most shocking part for others and it’s interesting, it was the most unsatisfying three years of my life. And I didn’t want to come back to work, I don’t know, it was just … I wasn’t challenged, it wasn’t hard, it was nice little projects. And there was a big takeaway that I’ll share in that moment but I just felt lost. And that’s not a boohoo, by the way. 

If someone’s getting rich complaining about it, tell them to shut the hell up. I’m like, “Okay, well, why don’t you” … It’s better to be rich and complain than be poor and complain and so at least everyone should get to that opportunity. That is literally what Million Dollar Weekend is about, it’s you can create that for yourself. Not the complaining part but the being rich part. But the most fascinating thing was Amin’s running the business, everything’s pretty good, I’m doing these little tiny dabbles, let’s call them, and sumo.com is floundering so we folded that team back into AppSumo and doubled down on what was working which was AppSumo. And Amin called me one day, I’m on a bike ride across America and he quit. And my reaction was like, “Hey, do you mind waiting until I get back from my bike ride to quit?” 

And I think this is a cheat code in all startups, who do you call, who’s your advisors. Can you call Rob Walling? Can you call Noah Kagan? Can you call … I have Andrew Chen, we have Moody Glasgow, I have this guy Roger [inaudible 00:20:41] he’s the CEO of Indeed. We have elite advisors that you could actually pay a thousand dollars an hour or a little more and get access to 10,000-hour people. That’s such a super cheat code that people don’t use enough. So, I called Andrew and I called my buddy Adam from mybodytutor.com and Adam was like, “Who’s paying for the bike trip you’re on?” I’m like, “Well, AppSumo,” and he’s like, “Well, you should probably take care of your business and not go on a bike trip then.” 

So, I sent the bike home and flew home the next day from my bike ride and then I tried to find another CEO and ultimately I was like, “Okay, I guess I’m” … And this is what we were chatting a little bit before the show, I’m really just afraid, I’m afraid of who I can become, I’m afraid that I can actually do it. And there’s a really powerful thing for all of us is what’s the hardest thing we’re avoiding today in our lives. And for me, I didn’t want to (beep) up the business, and I thought only Amin can do it and I thought I got fired early in my career and that’s been a big part of my story. It’s these guys are better than me, there’s no way I can do it either. And I just had so much fear around it. And then I was like, “Okay, well, at least you go do the hardest thing possible,” and it’s been number one best business decision I’ve ever done  

Rob Walling:
To come back as CEO?  

Noah Kagan:
Yeah.  

Rob Walling:
Huh.  

Noah Kagan:
Yeah. And it’s also been the hardest. There’s definitely a lot of days where I’m like, “I am quitting this thing,” but the hardest thing tends to be the things you’re most proud of and the most rewarding. And I think everyone can reflect on that. When you had that moment when you were like, “Oh, this is tough and I’m putting in a lot of work,” but you’re also the most proud of those experiences. And everything I was doing before that, those three years when I was retired of sorts, I just wasn’t committing, I was just like, “All right, let me just dabble,” and I think that’s just such a good thing. What’s the hard thing, go commit to it and it ends up turning out to be, almost all the time, a good thing, you don’t regret those moments of working hard. And it’s been three years and I’ve definitely made a lot of mistakes, a lot of mistakes in that time period.  

Rob Walling:
And the business is doing 80 million a year now which is incredible. Where was it at when you took it over?  

Noah Kagan:
It was doing more.  

Rob Walling:
Was it really? Oh, my gosh.  

Noah Kagan:
Yeah.  

Rob Walling:
Oh, dude.  

Noah Kagan:
I know. I know you wanted some hero story-  

Rob Walling:
I did. I wanted you to say [inaudible 00:22:41] … Yup.  

Noah Kagan:
… Noah Kagan came and saved the business.  

Rob Walling:
Yeah.  

Noah Kagan:
Let me caveat that. So, in terms of our, and this is something that … Whenever you’re hearing people, you really got to understand what the actual numbers are. So, there’s gross sales, which is what I’m sharing, and then there’s net revenue which is your refunds and credits or whatever have you then you have net revenue. And you got to be mindful, okay, net revenue, what is gross profit around these numbers then what is your net operating margin, net operating income around that net revenue. And so, what was interesting is we had such a COVID bump, we had such a fat COVID bump, it was great. People wanted to work online, people wanted to save money and so it really was an advantage to us that came back down. And then I made the mistake thinking that I’m super smart, I think I’m bright, but I made another mistake where I didn’t listen to the customers again. 

So, we strategically said let’s not just do deals, let’s have us a marketplace of products. So, I ran really fast in the wrong direction. I think we can all … You know how that goes. It’s like, “Oh, this is a great idea, I know it’s going to work,” and a lot of these problems can be solved coming back to basic principles of, one, AppSumo motto is test and invest, that is an App … We have an AppSumo playbook and that’s one of our core principles which is did you test it before you invested. And when we break that, I’m like, “Oh, this marketplace where we go from 600 products to 13,000 is definitely going to work,” it didn’t and then we went from 15% margin to around 2% margin of the business.  

Rob Walling:
Oh.  

Noah Kagan:
Yeah.  

Rob Walling:
What happened? Hiring?  

Noah Kagan:
Yeah, we spent a million to do promotion for the marketplace. Our teammate costs per month, we call them teammates, not employees, today it’s about 1.2 million a month, I think we got it up to two and a half, 3 million. So, it was definitely not following some of the principles of test and invest and then double down which is part of our AppSumo playbook. And this year though, we’ve definitely gotten back up to, I think, around 12% margin, reduced a lot of the distractions that I was doing and then just focused on the core of the business, what our customers want. And again, I talk to customers and partners every month and they were all saying, “Hey, we don’t want this marketplace. We just want you choose the best deals possible of the latest tools for us, for solopreneurs.” 

And I think that’s just such a core thing for all business, who’s your customer, what do they really want and how do you just keep serving that and really understanding what they want and you could test it. Can you test it this weekend, can you test it with a little bit of money, can you test it with not having to spend a bunch and that’s possible. So, definitely, it’s been a fascinating experience and hard experience over these three years.  

Rob Walling:
I bet. And is that where it stands today? Is the core driver of AppSumo revenue and profit is these weekly deals?  

Noah Kagan:
Yeah, yeah.  

Rob Walling:
Okay, yeah. Back to the roots.  

Noah Kagan:
It’s insane. I will say, one of the key things, the key takeaway for others out there, and I talk about it in Million Dollar Weekend, is just market selection. Are you in a million dollar market? Are you in a thousand dollar market? Are you in a billion dollar market? And it was lucky, I would say, that we chose software 13 years ago and the amount of software there that’s gotten created went from, my first year, there’s probably 20 projects to choose from, 20 businesses to, now, there’s 10,000 different software products. And so, market selection is almost one of the most important things, how many people are there and are they willing to spend. 

And so, we have other business units now, we have the originals which is basically affordable alternatives to popular software. So, Mailchimp, we have SendFox, Calendly, we have tidycal.com.  

Rob Walling:
So, you have your Kirkland. These are your Kirkland brands, right? Your house brands, yeah.  

Noah Kagan:
We call them [inaudible 00:26:07] originals, yeah. So, we think of it as … And it’s our number one way of getting new customers in the AppSumo ecosystem, number one is our originals team. So, that’s a real big takeaway for others out there. Do you have some way to get the ideal customer into your product through something free? Maybe it’s through templates, PDFs, courses, whatever, or a paid product and so ours is TidyCal which brings in, I think, it’s around almost 25% of all new buyers come through TidyCal into the AppSumo ecosystem.  

Rob Walling:
It’s crazy.  

Noah Kagan:
Which is amazing, yeah.  

Rob Walling:
Yeah.  

Noah Kagan:
And a lot of our business now, the amount of sophistication is really interesting. Pricing sophistication, business intelligence sophistication, timing of deals, the structure of how we negotiate maybe rev share so our partners get more as they do better. There’s a lot of things that have compounded that we just were ignorant and just learning and improving over the past three years.  

Rob Walling:
And so, you’re CEO of AppSumo for the past three years and you have this YouTube channel that you … I’ve watched it because MicroConf, similarly, has doubled down on our YouTube channel. And we’re not at a million but we-  

Noah Kagan:
A lot of people.  

Rob Walling:
Yeah. We started during COVID, we had … What’s trip is we announced in 2019 we were going to do a lot more digital stuff because, before that, we were really an in-person event. And so, we said we’re going to do online, we’re going to have a video vault and we wound up launching it right as COVID happened, not because of COVID, it was already on the schedule. And we grew, it took us about a year to get to 10,000 subscribers and then we unlocked some stuff, some secret sauce, if you will, and the next 18 months took us to about … We’re at 70,000 subscribers as of yesterday which is good-  

Noah Kagan:
Congrats, dude.  

Rob Walling:
Thank you. It feels-  

Noah Kagan:
It’s a lot of people.  

Rob Walling:
It is. And our space is not nearly as big as yours because we are SaaS, we’re Indie Hackers and SaaS and so this market itself is a lot smaller but it feels really good to have that reach. But I’ve watched you do something similar, although at a different scale, add a zero, basically, to the numbers I just said. And watched you experiment with different video types and some would get more views and then you went all in on where you follow people onto their jets and you go to the neighborhoods and ask them how they became billionaires and all this and you’re flying all over the place in a, I’ll say a Mr. Beast way in a way that it feels very tightly produced and very deliberate, very intelligently thought through on how to optimize it.  

Noah Kagan:
Yeah.  

Rob Walling:
But I guess I have two questions around this. Why did you decide to do that on YouTube as opposed to some other medium? There’s social media and there’s podcasts and all this stuff. And did that coincide with you coming back as CEO of AppSumo? Were those two decisions made in tandem or were they not coupled and it’s just coincidence that they both happened at the same time?  

Noah Kagan:
Yeah. One thing I want to take a step back on for everyone out there is all of AppSumo started with me and $50 in a weekend. And the YouTube channel started the same, it was me shirtless, which you can see the video, in my 800-square-foot house where it’s falling down literally, and I just started with my phone and I just uploaded the video. And the reason I’m saying that is, from Million Dollar Weekend, the number one thing that people take away is this mindset of now not how. Don’t worry about the lighting, don’t … I’m in a $20,000 studio in my house now but I started with my phone that everyone has, everyone has the same exact phone as me and they can just record it and you get going. 

And over time now, AppSumo has a hundred people and we have two people dedicated to business intelligence. We have different pricing stuff that’s going on all the time, we have an email team of, maybe it’s five people, that is testing so many different things in email but that just started 50 bucks in a weekend and got going and you keep going with it and you keep improving it. And that’s the part that you have to get started right now with YouTube or whatever it is to get to those points. I think people want to just figure out the ending and it’s like, “Yeah, that’s only going to get there if you get going. You can’t cook if you’re not in the kitchen.” And so, I think that’s just such an important thing for anyone out there whether it’s a SaaS business, which me and you have done a lot of, or whether it’s a content business or whatnot. 

So, I think the key thing around the YouTube content, similar to AppSumo, is what’s the thing that’s working and how are you doing more of it. And so, for AppSumo, we analyze what product categories and we have an algorithm around what products our customers are excited about and then the business development team goes and gets a lot more of those. And so, with the YouTube channel, I commit to … It’s called the law of 100 which is do a hundred of it and then quit or make the decision to quit because we quit too soon. I quit my podcast, I’ve restarted it and I’ve stuck with it, but I quit it too soon, I quit it around 30 to 50 episodes. If I just would’ve got to the 100, I would be at really high numbers. 

And so, whatever you’re doing, a hundred sales, a hundred days, a hundred videos, a hundred emails, whatever it is, just get it to a hundred of them and then you can make a more informed decision and you can keep improving along the way. You can improve your cameras, you can improve the lighting, you can improve your scripts, you can improve your thumbnails, you can improve these different parts of your business. Now, I tried growing all the different social channels. So, when it happened, I tried YouTube and then Instagram and I hate TikTok so I don’t really do any TikTok, LinkedIn, Twitter and blog and all these channels can work to be clear, a podcast as well. 

All of them can work but what I recognize is who’s the customer I actually like, what channel do I have maybe some advantage in and which one has the opportunity because I want to have an unfair advantage. I don’t want to compete fairly, it’s just not-  

Rob Walling:
Of course not.  

Noah Kagan:
Yeah, I want to win where not others are winning and it’s easier for me to win. And so, as I noticed, I can’t do all six and win, I can do one and win. So, I told the team we’re not doing anything but YouTube and the reason I did that is I was trying all of them and I saw, okay, we’re doing this much work and here’s the reward, meaning views or whatnot, and I enjoyed making content there. And so, that’s what I’d recommend for others, it could be podcasts. I tried podcasts, growing it for years, it was really hard, there’s just only … And now, with YouTube and Shorts, you can grow a podcast in a different way but it’s still challenging, there’s only so much podcast time. And then Twitter, the audience isn’t growing. And LinkedIn, it’s very competitive with all these different agency people. And Instagram, I don’t take photos and I don’t do TikTok. And blogging, I think that amount of search and traffic is declining. All right, it leaves a site that gets what a billion people a month and it is a little harder as you get to higher levels of video. 

We’re spending on, per video, I don’t know, maybe 30,000 if you look at salaries and editing and thumbnail designer and consultants and all this different travel stuff and I can talk about that. But in terms of that, it was just basically doing that analysis and, I will say, we did three videos a week for 50 weeks and almost none of them were really getting views. And so, the point for everyone, besides the law of 100, is find something you just, even if it’s not working great, you’re still satisfied. I was still having fun, I was like, “Even if this is not getting an insane result, I’m still having fun.” And then we were basically desperate, we’re like, “Hey, we’re not really growing, why don’t we just try something 180?” 

And so, we tried a video, we saw it on Instagram or somewhere where a guy went to someone’s door and we’re like, “What if we made a whole video” … Because we were always curious what rich people did in these houses so I was like, “I’ll just go knock on their doors and ask what they do for a living.” And that video, it’s crazy because it took two full days of filming to get 10 minutes of content. It’s so interesting because people are like, “Oh, you just go knock on the door and” … Dude, most people will reject, most people say, “What are you”-  

Rob Walling:
Yeah. What are you doing at home?  

Noah Kagan:
Yeah. They’re like, “Please get the hell out of my house,” I would. I’m paranoid about people coming to my house. That video, through some desperation, frankly, because the ways I operate AppSumo, the ways I operate my book, the ways I’m operating our YouTube channels, we have one goal. And so, we were at 170,000 subs and we wanted to get to 250 and we had about 40 days left and so we just had to do something more extreme to see if we could get it to work and that video got it to a million views. And then you’ll see that almost, double down, this is another AppSumo motto, I think these ones people know but no one does. No one actually does it the way we do, very few do. They do something that works and then they go do new things. And this is part of Amin’s, I would say, influence with me which was, this is working, double down and, not just once, but until it stops working. 

So, now, there’s a lot more people copying or going on the streets asking rich people or knocking on doors so we’re shifting and I can talk more about that. But you can see the channel, it was jets, yachts, first class passengers, streets of New York, streets of Monaco, streets of Switzerland, streets of Austin, [inaudible 00:34:29] but it was working and so it was doing a lot more of that and I think that’s a really core part of any business. And whenever I meet entrepreneurs that made their business and growing fast or they’re asking how to grow it, I’m like, “How did you get your last customer? How’d you get your first customers? How much of that are you doing?” They’re like, “Oh, yeah, I’m not really doing as much of it,” “Just do that.” 

So, that’s been really the growth strategy content wise. And so, we basically just found two types of content that works like these asking super rich people or interviewing older billionaires, frankly, and asking them their regrets. And so, lately, it’s really just doubling down on that content.  

Rob Walling:
Does the YouTube channel feed … What’s the end goal of that because it’s not … We have 70,000 subscribers and our most popular videos maybe has 150,000 views and I see-  

Noah Kagan:
nice, man.  

Rob Walling:
Yeah, no, thanks. Again, add a zero to those numbers if you’re listening and that’s what Noah has. But I see the payments from YouTube and we don’t even break even on our production costs so I know you’re not doing it for that. So, would it-  

Noah Kagan:
We’re not breaking even.  

Rob Walling:
There’s no chance but what is-  

Noah Kagan:
No, we’re not breaking even.  

Rob Walling:
But is the feedback into AppSumo? Is that the …  

Noah Kagan:
So, there are businesses, we’re fortunate, I think, a lot of YouTube, similar to you in that a lot of YouTubers that have to have a course and then they have to sell these other things but we have a business, AppSumo, that’s our sponsor, really, for the channel and we don’t do a good job integrating at the end of the day. I do think that most businesses should have some presence and I think most people connect with a person, not a brand. If you think about Nike, Nike’s not popular because of the swoosh or their shoes are really that great, you connect with it because it’s Tiger or LeBron or whoever the person is. 

And so, I do think we’ve surveyed and around 30% of people that buy AppSumo who know who I am. They’re like, “Oh, I think I’ve seen your videos or I’ve seen the stuff.” And what we started doing this year and what we’re going to get better at is I’m like an affiliate of AppSumo and so I have tracking on my content and so how do we do things that drive either new signups or awareness or direct sales into AppSumo. But yes, it’s not well integrated in our business.  

Rob Walling:
Not yet but you can get there.  

Noah Kagan:
Well, I think people-  

Rob Walling:
You can build the audience and then you can do it.  

Noah Kagan:
Yeah, people seeing AppSumo logo, seeing me wear the AppSumo clothing, I think our business … Not I think. Our business is very direct marketing ROI based so how much are we spending and then how much are we making back within six months or less and everything. And we spend about a half a million dollars a month around that and it’s all profitable. The problem with that is that it doesn’t expose our brand. So, moving 2024, one of our core strategies is brand awareness. So, how do we get people who are solopreneurs or curiepreneurs or wantrapreneurs and getting them like, “Yeah, I need some help with tools or maybe education around getting my business going, I’m going to go to Rob and then maybe I’ll check out AppSumo and see what tools they have available.”  

Rob Walling:
Well, I want to get to your book because we’re wrapping up on time. So, milliondollarweekend.com, the book is Million Dollar Weekend and you cover a ton of topics, getting better at rejection, it’s all about being an entrepreneur. It’s about starting a company, as you say, a million-dollar company in a weekend. Idea generation, growth playbook, lifestyle design, even have a section about managing your calendar to be more productive. Folks can obviously check that out if they want to dive into those topics. 

What I’m curious to hear about you is a little more of a meta question because I’ve written three books plus an ebook, and I’m working on a fourth, in essence, with my wife about selling companies. Why a book now? You’ve been an entrepreneur for so long, people have known your name, why do it? Because writing a book is a pain in the ass, I don’t know if people-  

Noah Kagan:
Dude, it’s so hard.  

Rob Walling:
Brutal, huh? And there’s no feedback loop. You do a YouTube video and it goes live in a few weeks. You write a book, it’s (beep) two years, man. It’s like, “What is happening?”.  

Noah Kagan:
It was three years, I know. And people buy books, people don’t read books. And selling a book, right now, I’m personally messaging Facebook people. So, a lot of … I’m posting. We built a launch team. And I do think one of the things I’ve done well with AppSumo and YouTube, I reply to people one-on-one and that’s something I talk about in the book and something I still do in all of my businesses which is most businesses are actually comprised of individuals, customers like Ruben, one of our mutual friends from Bidsketch, I don’t know what his new thing is called.  

Rob Walling:
SignWell.  

Noah Kagan:
SignWell, yeah. Ruben was one of the first AppSumo customers. Thirteen years later, I DM him how’s the fam and I think we disconnect some of that and that’s been a part of the book where … I posted, “Hey, I’m building a launch team, is anyone interested?” and then I DM every single person who said yes, asked them to buy the book and I have them join our launch team and it’s individual and that’s missed out on. 

Now, in terms of the book itself, it’s about 15 years ago I thought of writing a book on a bike ride. I was like, “There’s no book out there.” I’m frustrated, I’ve never seen a book that I can give to my cousin, I can give to a friend, I can give to a reader, I can give to a customer of AppSumo that, if you want to get a business going and change your life in 48 hours, which everyone has, everyone has a weekend, there’s nothing that can do it. If there is, let me know, I wouldn’t have written the book, it would’ve saved me a bunch of time. And I thought that was an interesting opportunity. And so, that was 15 years ago but I wanted to start more of my own businesses, I wanted to test it to see if it actually worked for others and then I wanted to be at a place where I felt like I could really share the message with the best collaborators possible. 

It’s easy to write a book, it’s hard to write a great book, it’s nearly impossible to get a book to change someone’s life is what I’m noticing. And so, I’m doing everything possible to stack the deck, is the way I think about it, in that this book will impact people to … Maybe they don’t need to be a millionaire, I think everyone should be a millionaire, it’s awesome but maybe they want to be a grocerynaire, maybe they want enough grocery money for the weekend, maybe they want to just turn their interest in woodworking into an actual business or they want to create a software product or SaaS business but they’re a little bit stuck. And what was crazy about entrepreneurship is there’s an unlimited amount of content out there but, if it’s so unlimited, how come others aren’t succeeding in starting a business? That’s the main thing that needs to get solved. 

And so, the book starts off with fun and really overcoming the two giant things that hold everyone back from success in entrepreneurship which is starting and asking and how to make those enjoyable so that people can overcome them in a fun way and then use that with strategy to then lead it to million-dollar opportunities and getting businesses going in a very short period of time.  

Rob Walling:
And that’s the USP of the book is that it is, not just your take on entrepreneurship, but it is that very constrained timeline and it’s your approach that I’ve heard you talk about over the years about getting used to rejection, about seeking problems before … People don’t want solutions, they want … What is it? They don’t want software, they want a solution to their problem or something like that, they don’t want another tool.  

Noah Kagan:
Yeah, no one cares about your idea.  

Rob Walling:
Yeah. No, yeah, idea.  

Noah Kagan:
Yeah, no one cares about your idea.  

Rob Walling:
Totally. So, I have this quote, when entrepreneurs come to me now, I say don’t tell me your idea, tell me what problem it solves and for whom. That’s my new thing, I say that to everybody and so it’s just right in line. What’s funny, dude, is, 15 years ago, I don’t know that we would’ve thought this but, as you progress, we all come up with these similar learnings. The rules of thumb are similar across SaaS, across entrepreneurship, across a jerky company that you talk about starting in a weekend as a challenge, right?  

Noah Kagan:
Well, your audience is a lot of SaaS people, I’ll just tell you openly. So, the frustration I have today, I hate QuickBooks, I hate DocuSign … Shout out, SignWell, Ruben, you can check out. But I also hate subscriptions and I hate Loom. Well, I think Loom is cool but it’s five videos and then you can’t use it anymore, you have to pay and I’m like, “Hmm.” So, what most people do now is that they’ll consume more content, they’ll wait on the sidelines, they’ll do more research and what you can actually do is find out, within 48 hours, everyone has a weekend, whether if you have a family and kids like you, whether you’re single, whether you’re old, whatever that is, it’s non-exclusive to actually see if you can get that business started. 

And so, for instance, let’s say you wanted to start a SignWell competitor which we’re evaluating … Shout out, Ruben. I love you, man. But I hate subscriptions and I’m frustrated with DocuSign and doing PDFs so can we create something like that at AppSumo within a very short period of time. And the idea for everyone, if you want to do that, you could literally message people and say, “Hey, I’m building a software today. It’s going to do this, here’s what to expect, can you prepay me for an early version of it?” And you could truly find out whether you can get customers for that or not. 

And then, if you get customers, great, go build it. And if you can’t, then you can try to understand in a conversation what problems they do have that they’d be excited to pay you for. That’s the fun, frankly, and the interesting challenge of entrepreneurship.  

Rob Walling:
Noah Kagan, thanks so much for joining me on the show, man. Folks who want to keep up with you, youtube.com/noahkagan, milliondollarweekend.com?  

Noah Kagan:
Yeah, I think it’s YouTube.com … Just go to milliondollarweekend.com, we have a 48-hour challenge in there, there’s a ton of resources, you can see my income streams which a lot of people like to see and there’s just a lot of things to get going. People have so much fear and you really can change your life in a short period of time without money and that’s the part that people are like, “Oh, (beep) maybe I can do these things.” Same as me being a CEO, I was like, “I don’t know if I can actually do this,” and the reality is we can, we just have to go get started.  

Rob Walling:
The dirty secret is, most of us, a good chunk of the time, feel like we’re in over our head and are scared.  

Noah Kagan:
Yeah, it doesn’t matter how successful or famous or rich you are. And I do believe and I see it all the time still that there’s a lot of ordinary people doing really well and the only difference between them and someone else is that they’re starting. And through that iteration of posting the video, of seeing if they can get someone to buy, of doing a service, of maybe even using a WordPress plugin as their software provider or using backend AI stuff, ChatGPT, whatever that is and then getting the customer, it’s like, “Huh, what else can I take this?”  

Rob Walling:
It’s an awesome note to leave it on, man. Thanks again for joining me. Thanks again to Noah for joining me on the show. It’s great to have you back this and every week. I’m really enjoying recording this podcast again, it’s so fun to be reinvigorated after taking time off over the holidays. And I’m approaching episode 700, hoping to cook up something special or maybe it’s just another episode and it happens to have two zeroes at the end of the number. This is Rob Walling signing off from episode 698.

Rob Walling:
I’m Rob Walling and you’re listening to Startups For the Rest of Us. In this episode, I talk through seven predictions SaaS bootstrappers should pay attention to in 2024. Obviously, these predictions might apply if you’re not bootstrapping, if you’ve raised a small amount of funding. I just like to differentiate between those folks who are trying to raise $50-million dollars in venture capital versus those of us in the capital efficient bootstrapped and mostly bootstrapped space. 

After I run through these predictions, I’m going to go back at the end of the episode, and I’m going to go back as far as I can stomach, probably 2013, and look at predictions that I made every year and go through them quickly, and talk about whether I think they were accurate. What we’ll find is a lot of them weren’t accurate the year I made them, but within a year or two those things came to fruition. It was really fascinating looking back at give-or-take 10 years of predictions. I believe there was a year or two that I didn’t make predictions, but I’ll save that for the end of the episode in case that is less interesting to you. 

In addition, if you’re interested in chatting with me at an upcoming MicroConf local or you have a strategy or a framework that you think other bootstrap SaaS founders should hear, we are always looking for founders to come out and share their expertise during all of our conferences and events. If you’re interested, head to MicroConf.com/pitches and share your idea with us. 

So with that, let’s dive right in to my first prediction, and it’s that in 2024 there is going to be a lot of opportunity in vertical SaaS. This is more of a continuation of a trend that I’m already seeing. If you look at the TinySeed companies that we have funded, we’re just over 151 at the time of this recording, a lot of them serve a particular vertical. So when people say, “Vertical SaaS, what does that mean?” Well, an example of accounting software designed specifically for construction firms. Construction firms is the vertical, it’s the niche. Versus something like QuickBooks that can serve every vertical, or think of podcast hosting or podcast recording, that is a horizontal SaaS, meaning you can use it in any niche. 

Just a few examples of companies that we’ve funded in the most recent batch, one is called TrainerMetrics, which focuses on fitness centers. We have Tiny Easy out of New Zealand that focuses on … Think of CAD software, but it’s for tiny house designers. Talk about an interesting and relatively small vertical. Retail Metrics is analytics for independent brick-and-mortar retailers. Mawi is project management for constructions firms across Latin America, and on and on. You can go to TinySeed.com/portfolio anytime to see these companies. 

But if you look across our entire portfolio, Anar and I have been talking about running the numbers, the majority of the companies we’ve funded, and I think it’s the supermajority to be honest, a majority is 51% and a supermajority is more than two-thirds, 67%, I think it’s even more than that, if I were to guess, I think it’s in the 75% to 80% range, of companies that we have funded over the past several years have been vertical SaaS. There’s so many reasons why vertical SaaS is more optimal, especially for bootstrappers. I called a lot of them out in Start Small, Stay Small back in 2010 and I talk about why it’s good to go niche, is really what I say there. But these days almost all of those reasons still apply about it being less competitive, about you don’t need to be the best marketer in the world, you just need to be a better marketer than the other folks in your niche. So I see this trend of vertical SaaS alive and well and continuing strong in 2024. 

My second prediction ties back to a company I just named, is that SaaS will continue to grow, and it will even pick up space in emerging markets. For instance, Latin America. That’s an area where we, TinySeed, have funded several companies who are serving the Latin American market. The interesting thing that we found is their price points often have to be lower just because of the way currency works and salaries, and the reason you can hire a developer for half the price or a third of the price down there is the cost of living is lower, so folks don’t have as much money, disposable income, and businesses don’t have as much disposable income. But it’s also much easier to market, or it can be cheaper to market and find customers, and it is also cheaper to hire in those areas. 

So if you’re based in Costa Rica, as Mawi is, they have a real advantage over a US company trying to come in and compete against them to sell to Costa Rican and other Latin American construction firms. They also know the space, they know the geography and everything, but we’ve seen a really nice uptick in B2B SaaS applicants who are in these more verging spaces. If you don’t know the space the first time you see it, you think, “Oh, well the money’s not going to be there. The price points aren’t going to be there.” But the further we’ve gotten into it, we’ve seen there’s real opportunity there. So that’s why I made it prediction number two. 

My third prediction is about Twitter. You might call it X, I still call it Twitter. Let’s be honest, Twitter is really struggling. The valuation is way down, it’s I would say under-monetized, it’s just not making enough money. It has been tanking, maybe in the bootstrap SaaS space or what do you call it, VC Twitter and tech journalist Twitter, it is still, I won’t say booming, but it’s still alive. In most other spaces, like all the other verticals that used to use it, I think of Dave Kellett who is the cartoonist I often mention on Comic Lab, he says it’s pretty much a ghost town now and it doesn’t work for them. So these comic artists that are trying to promote their self-published work, it’s completely useless in essence. 

So Twitter is by all accounts struggling, and my prediction for 2024 is that there is going to be a big moment of reckoning. One guess is that the bank or the equity funds that lent Elon the money to buy it will basically call it due and foreclose and repossess. You don’t know what their contracts say, but there’s going to be something there where they’re not going to just want to sit on this asset that is basically depreciating quickly. I forget what the exact valuation difference is between when he bought it and what it is now, but it’s really pretty scary. So there is a reckoning coming for that. 

I think that Twitter might change hands again in 2024, that is probably the ultimate prediction. Whether it’s that the bank forces a sale, and I say the bank, it’s the financiers, I don’t know if it’s technically a bank, but the financiers that lent Elon the money are going to call it due and either take it over or force a foreclosure sale to someone else, or Elon’s going to decide it’s not the problem. I don’t know. But I think Twitter is going to have a major event probably resulting in a change of ownership. 

My fourth prediction for SaaS bootstrappers this year is that subscription fatigue will continue to be a thing in B2C, but it will not be a big deal with B2B. You’re going to see complaints on Twitter, you’re going to see complaints on Facebook, whatever other social media you’re on, but it’s not actually going to make that big of a difference, because that’s what I’m seeing across the 171 investments I’ve made is that SaaS is still very much alive and well. It is the best business model on the planet, and that subscriptions are very much alive and well, and that businesses are happy to pay for it if you can take the headache away from them, you can solve a real pain point for them. 

So in other words, I’m saying that Once, which 37signals is doing at Once.com where they’re saying, “We’re going to write software that you don’t pay a subscription for.” That Once will not penetrate, that’s my prediction, they will not penetrate past the handful of nerdy developers who basically want to manage their own servers. I never want to go back there. I don’t want to build software like that, I don’t want to install and manage software like that. That is how we did it 20 years ago, and while I think there is a very small niche of people who will embrace that and say, “Yay. I get to pay a one-time fee and not have to subscribe.” I think that subscription fatigue in B2B, while we may hear people complain about it, is not going to broadly impact the adoption of SaaS. 

My fifth prediction is that no-code/low-code will professionalize, is the word I’m using, and what I don’t mean to say it’s not professional today, because obviously there are professional no-code and low-code developers, and obviously these technologies run a lot of apps, but what I mean is no-code and low-code are behind code in the sense of what about code review tools? What about unit testing? It’s funny, when I say “code review tools,” well, there isn’t any code, but you get the idea. There are automations that can be complex, and the reason you have code review is to make sure the code is going to work as expected and it’s maintainable. 

So what about no-code review? No-code and low-code review tools. What about the ability to have unit tests, version control to be able to roll back to prior versions? That is something that came about with development that these things … Version control before, I think the first time I ever used it was probably 2001 or ’02, and before then I know it exists, I know Visual Source have existed before then, I know that there was version control, but it just wasn’t as broadly used as it is now. It’s just an expectation. Unit testing really become prominent until, my memory is it was about ’06, ’07 maybe, and code review was not really a thing that we did back in the day. Actually, we did have to start doing it, I worked at a credit card company and for PCI compliance another developer had to look at your code before you checked it in. I remember that being such a big shift, and this was again in the aughts. 

So these things emerged over time, and code had been written since, what is it, the ’50s or the ’60s? Where we started writing codes with punch cards, I say “we,” I’m not that old, but where folks started writing code and code review unit testing and version control was nowhere near as ubiquitous as it is today. No-code and low-code have the advantage of being able to learn from code, from the software development best practices and the patterns that have been developed over decades. No-code, low-code have the advantage of seeing the arrows in the back of the pioneers, of folks who wrote code for many, many years. I think that will accelerate the professionalization of no-code and low-code. 

My sixth prediction is about AI, and really it’s that the obvious AI stuff, we’re going to be through that this year. We’re going to start to get into novel and surprising integrations with a lot of the tools we use, or novel and surprising new apps that aren’t just a thing that again is so obvious to build. So I think additionally, automated customer service is going to be something that’s going to continue to not be very good. I think it will get better with AI, but I was super frustrated on a website, I think it was a bank website the other day, and I just couldn’t get to a representative, they just wouldn’t let me. I was like, “I know that AI can not do this for me.” 

So I think it’s going to continue to roll out and it’s going to be spotty and not great, but I do think that AI is going to help us as software people build faster. It’s already doing that with Copilot, but it’s going to continue to accelerate the development of software. I don’t believe AI is going to take a bunch of developer jobs, I think this is the rising tide that raises all the boats. Unless you’re a real … developer and you don’t or you resist AI, or you don’t want to use it, it becomes this tool of augmentation that I think developers and builders and product people and all of us are smart to adopt. 

But my hope is that the hype of it … When we look back at mobile apps in the Apple App Store in what, was that ’08, ’09 as that emerged? Then SaaS started to become a thing, there was crypto around this time and blockchain was maybe 2015, ’16 as it first started. There was even the drone, there was VR/AR, there’s all these waves where people rush in, and AI certainly has been that for what, 12, 15 months now? Each of these has their lifecycle, and they have the hype cycle at the start, then it dies down, and sometimes, like I believe with AR and VR, it becomes cool. It’s a neat thing that you can use, although VR and AR are still not as widely adopted as we’ll see in some of my predictions a little later in this episode, but other times people just don’t adopt it. 

So blockchain, is that actually being used? If blockchain went away today, are there major parts of our world that wouldn’t function? Probably not. The adoption there just didn’t happen, versus mobile phones where the mobile app store and all the mobile apps that we have have just become parts of our daily life, for better or worse. The hype cycle, you can argue was it real? Did it change everything? It did change everything, but it just becomes a day-to-day thing. That is my expectation of AI in 2024, there will continue to a ton of VC money being pumped into it. It’s the new wave that allow more efficiency to be done. I hope the hype cycle does continue so much that tens of millions or billions, I should say tens of billions of dollars keep getting pumped in. Maybe they do. But I think AI is certainly here to stay, and this year we will see I think a continuation of that argument of like, “Is it hype? Is it not?” But see some real productivity gains and some real pushes forward. 

I know some people say like, “I’m not even using ChatGPT anymore.” You know what? I don’t use it that much either, but when I use it it has been really helpful to me. I was doing a brainstorming session with ChatGPT earlier today and it gave me a ton of new ideas and thoughts that I just couldn’t find in a search engine, and just weren’t in my head. When I framed the prompt very specifically, it gave me some great information. So I’m neither bullish nor bearish on AI, I think in general it’s a good thing. I think there’s obviously some ethical issues, and I think people just get a little too bent out of shape in both directions in terms of hating it or love it. I also felt that way about NFTs, blockchain, all that. But all that said, AI’s going to be a thing, and people are still going to be talking about it throughout 2024. 

My seventh and final prediction for 2024, I have no inside information, I think Stripe’s going to finally go public. The question is what does that mean for SaaS companies? Does it mean that they get on that 90-day cycle, that quarterly earnings treadmill, which I believe is the reason they haven’t gone public is because the Collison brothers are very smart and they don’t want to be on that push. They want to be more in control of their company, and the ability to manage it and not have to have Wall Street constantly breathing down your neck to tell you, “Increase earnings. Increase earnings. Increase earnings.” Because that of course leads to what are they going to do, raise their rates? There’s all kinds of things that they can start doing that are really going to piss people off. 

So that’s my big question is if they go public, will they be under the gun? So Google in the early days, if I remember, I remember them going public around 2000, 2001, you can correct me if I’m wrong, but in the early days I remember them thumbing their nose at the whole, “Every quarter has to be better than the last quarter.” But eventually that happened, maybe it took five years, maybe it took 10 years, I don’t actually remember. I haven’t owned Google stock since probably the first year it was public, so I don’t pay that much attention to it, but I do remember there was a shift from the “Don’t be evil” to “Wow, we’re really going to squeeze the money out of everybody.” When they really started screwing a lot of the organic SEOs and they started removing data from the ability to be able to rank in Google. It was obvious it was a big cash grab. 

So the question is if Stripe goes public, as I’m predicting, will that start now? Or will Stripe be able to hold out for a year or three years, five years before the cash grab mode that Wall Street eventually forces almost every company into begins? 

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All right, so those are my seven predictions for bootstrappers in 2024. Now I’m going to go back, I’m going to roll the calendar back to late 2012 where I made predictions for 2013, and I’m going to zip through these and just talk about whether I think they were right, wrong or right eventually. Like the person who predicts five of the last two recessions, eventually you’ll be right if you keep saying the stock market’s going to go down. So in 2012, making predictions for 2013, I predicted it would be the year of Pinterest, which it may or may not have been, but it’s just irrelevant now. So it’s funny to read that. 

That WordPress will become more prominent, and I would say that’s pretty dead on. Think about this, this is 11 years ago, WordPress was a going concern, but this is like a year into WP Engine, it was still very early and we didn’t realize that WordPress would run, I won’t say the majority of the internet, but it runs a hell of a lot of the internet. So I think that was a prediction that was pretty good. Subscription WordPress plugins will start, I do think this has happened, although it’s not as ubiquitous as I would have thought. I knew a lot of WordPress developers back then and I knew folks were tired of the one-time model and they were trying to get into the annual subscriptions, and some tried to get into monthly as well. It’s definitely happening now more than it was back then, but it has not grown like wildfire. 

Another prediction was more Google changes will hammer the SEOs, and I don’t just mean algorithm updates. That was me talking about Google just cash grabbing, so this is around the time that was happening. That was true, yeah. I stand by that one. Finally, for 2013 I predicted the startup bubble would become more evident, inflated valuations will continue to rise, either it bursting this year or next. That absolutely did not happen. The only bursting, there was a public market bursting for a month in January of 2016, and then up, up, up, up until 2020, and there was a big drop for a very short time. Then it just went up, up, up, and the big one that has actually lasted in the startup space is 2022. So think about how far off I was on that. I often find bear predictions, meaning predicting something’s going to go down, are usually way too early. 

So now let’s look at 2014 predictions. Ooh, this is where I start talking about Twitter, and so many of these were accurate they were just early. So my first one is Twitter will become profitable and piss off its users in the process, but it’s a solid opportunity for paid placement and promotion. So I don’t think Twitter has ever become a solid opportunity for paid placement and promotion, Twitter didn’t become profitable for several years after this, and I do not believe Twitter became profitable in 2014, but it was profitable for a couple years after it went public. I believe it was public for eight years before Elon Musk took it private, is that right? It was profitable for two of those years. So I’m a little early, but I think it’s a reasonable prediction. 

I predicted an Apple Watch would be released, although I called it the iWatch, and the Apple Watch did not release until 2015, so a little early with that one. I think there were some rumors or some buzz, so think of this it’s like December of 2013 I’m making this prediction. Next one for 2014 was that Concierge will become a requirement for SaaS apps in crowded markets. This was before White Glove, Concierge, customer success was just becoming a thing, so I 100% stand by this. It’s a little easy, I was on the bleeding edge of it as a SaaS founder myself and someone who interacts with a lot of folks through the podcast and through MicroConf, but I definitely called that shot and I stand by it. 

Kickstarter will have a major multimillion dollar failure. I don’t remember if that happened. I know there have been several of them, but who knows if it happened in 2014? Apple will continue to lose market share. I think I meant the iPhone. As history repeats itself 30 years later, that did not happen. Integration marketing will pick up steam as more companies offer APIs and become more connected, and I do think that has been a thing. I think that’s happened and integration marketing has continue to serve bootstrapped and mostly bootstrapped SaaS founders. 

All right, for 2015, Twitter will become, I made the same prediction again, Twitter will become profitable and piss off its users in the process. I figured if I wasn’t right one year, because obviously I wasn’t right in 2014, so I made the same prediction again for ’15. Another prediction was that video ads, namely YouTube ads, will be a big opportunity for cheap clicks in 2015. Man, I know YouTube ads are a still an opportunity for cheap clicks today. So I would say that’s a win. VR will actually be a hit with the early adopters set in 2015. There’s no way that happened. Until the Oculus Quest 2, even now is VR a hit? I play because my kids play and I want to be in games and hanging out with them, but I think it’s still iffy. It’s nowhere near as ubiquitous as I think … I think when I put “hit” in quotes, I think I envisioned more adoption than we’re seeing today. It’s getting there, it’s just taking a long time. 

Another prediction was we’ll see our first sub, $100 a year, consumer level, five terabyte cloud storage service. No idea if that took place. Certainly predicting that storage is going to get cheaper was a pretty safe bet, Walling. So maybe make yours a little more ambitious next time. The last prediction was we’ll start seeing 3D printers in houses of our early adopters friends. I think that one’s accurate, I certainly got a 3D printer probably in 2015 or ’16, we’re now on our second one, and we’ve had them around for years and loved them. I know a lot of my friends now have resin printers and the PLA printers, I’d say I was right about this one eventually. 

For 2016, I like these, so the first one is single round bootstrapping, AKA fund-strapping. That’s what I have in the notes for that outline. Single round bootstrapping, AKA fund-strapping, will become a common viable option. What can I say? I’m like Babe Ruth calling shots here. Yes, did it happen? That was my 2016 prediction, did it happen in 2016? Not as much as it happened in the years following for sure, since I think I make this prediction again in 2018 after I left Drip and started talking about why we started TinySeed. I started TinySeed because I wanted to take advantage of what I was already seeing in the space. I didn’t say I was seeing that in the space because I started TinySeed. I think some people get that backwards. We’ll hear from me about this type of prediction again in a minute. 

Another prediction for 2016, Twitter will become less relevant, returning to its roots, journalists and the Technorati, ripe for an acquisition. So again, that didn’t happen in ’16, but it happened eventually. Public markets continue to value companies lower than their private valuations, and that was true, although I think there was, what do you call it, an aversion for a while. But then certainly by the time we were at 2018 to now, maybe not to now, but to 2021 that was happening. Companies would go public at a lower valuation than their private valuations. My last prediction for 2016 was that VR will actually be a hit with the early adopter set in 2016. No, didn’t happen. 

Four predictions for 2017, there will be another high profile acquisition in the bootstrapped space. I don’t think that happened. I remember revisiting this one and saying it didn’t happen. Second one is startup crowdfunding will fizzle out. Lower and startups will use it, the best will continue to use their network and angel list. Kind of, right? I guess these days the fundraising environment isn’t great, and we saw a few higher profile crowdfunding rounds of startups, and frankly those haven’t gone well, at least the ones that are in our Twitter-sphere. So I would say, again, this was a 2017 prediction, so it’s now seven years ago, but that is what has played out in my opinion. 

I predicted a 20% or more US stock market correction, which did not happen. That didn’t happen until what, 2020? Then it recovered, and then really I think it was 2022 when that happened again. My fourth and final prediction for ’17 was the first consumer purchased package would legally be delivered with unmanned drones somewhere in the world. I believe I was making that prediction in December of 2017, and I think it happened that month. So I got a little lucky, also I was probably reading some rumor tables when I made that prediction. 

Now for 2018, 2018 will be the year of non-institutional startup funding, angels crowdfunding and ICOs. That was probably pretty close. AI machine learning will continue to be marketed as the next big thing, but will not deliver again in 2018. That was accurate. Now, eventually it delivered obviously. What would you say? It was 2022 I think was when OpenAI had the big ChatGPT reveal, but this one I was correct. I predicted in 2018 there would be an enormous crash in Bitcoin’s valuation, but longterm I was still bullish. Oh, yeah. Boy, there was a massive crash, so it was up around, it looks like it peaked almost at 20,000 in December of 2017, and it was down to 17,000 and then in ’18 it’s like 12,000 at the start of the year, and by the end of the year Bitcoin was at 3250 give or take. There’s peaks in the valleys, but so this one was correct. Me being still bullish I would say is correct, because as I’m recording this Bitcoin is at 44,000. So that was a good call back in ’18. 

My fourth prediction for 2018 was cryptocurrencies will be regulated by several large governments. I don’t remember if that happened in ’18, but it certainly started … We started seeing that in ’18, ’19 and ’20, and it would impact … A country would ban mining, and then they would regulate it in a certain way, and we would see the price of Bitcoin and other cryptocurrencies impacted. 

All right, now for 2019, four predictions. Crypto will have ups and downs, but no major boom in 2019, but I’m still bullish longterm. I think that was correct. When I look at the chart, it really was relatively flat. I guess it entered 2019 at $3400 US, and it left … No, I was incorrect. I guess it ended at $7000 US. So it did have, it doubled, it actually went higher than that. So bullish longterm, probably correct, at least at that point. But no major boom was not correct. 

I predicted 2019 would be the year of AR. Way early, still hasn’t happened. I predicted there’d be a Facebook antitrust issue, and there would be a rise of a new social network, and I would say no on the Facebook antitrust, and there were some legal stuff but not in the way I was thinking, and the rise of a new social network I believe … Did TikTok start getting big in ’19? So there’s a chance that I actually predicted that. I had no idea it would be TikTok, but I figured there’d be room for another. My other 2019 prediction, no joke, that Twitter would be acquired. So I predicted it in 2019 and it happened in 2022, so only three short years too early. 

Okay, just one more year, because I skipped 2020, ’22 and ’23 for making predictions. So my ’24 predictions were at the start of this episode, and 2021 predictions, which think about this, I’m making predictions December of 2020 so COVID is still rampant and vaccine’s not out until, I think it got vaccinated May of ’21, and some people got a couple months earlier, but really the vaccine was not available, no in-person events, sheltering in place, all kinds of madness. So I’m making that prediction with that in mind, and it looks like I have five predictions. 

First is privacy concerns will transform email marketing back to a more primitive form, and I would say not really. I know that open rates are harder to see now, I know that there’s a lot of stuff making email marketing harder, but I don’t think it’s been transformed. I still think it’s valuable and super viable, so I’d say no on this. I predicted in-person events will resume in ’21 with adjustments like social distancing and masks. That was true, that was me being optimistic because running MicroConf, I really wanted to get back to in-person events, and we started running them in I think it was September of 2021. So that did happen that year. 

My third prediction was that funding in the bootstrap startup space would continue to be de-stigmatized, I guess was it still stigmatized in 2020? I know that just a lot more people were open to it, and people don’t judge bootstrappers for raising money like they used to. They would call them sellouts and that kind of stuff, and I just don’t see that happening. My fourth prediction was that VR will become mainstream, probably not. I use it and I have friends who use it and I use it with my kids and we play games and this and that, but I just don’t think I would describe it as mainstream. 

My fifth and final prediction for 2021 was that the world will get back to normal faster than expected post COVID-19. My memory is that’s not true. I remember it taking a long time for things to feel back to normal, that even once we started traveling I was vaccinated, I wore masks. Having masks at events, it just didn’t make it feel normal. It took a long, long time for that to revert back. It was still six, nine, 12 months after that I remember people still … There would still be enough people at events wearing masks that it felt weird to be at the events, and it reminded you that COVID-19 was still such a thing. So I would say I did not hit the nail on the head with that prediction. 

If you made it this far, this is truly just a nostalgia play for me to walk back through some of these and to think, “What was the world like in 2012?” Or was it December 2011? Yeah, December 2012 when I’m making these predictions for 2013, to say WordPress is going to be prominent, and to look back now and be like, “Oh, my gosh. Doesn’t it run almost 50% of the internet?” But it really was different back then, it’s hard to get back in that head space. I don’t plan to do this every year, every prediction episode by the way, I just happened to stumble upon these old prediction episodes and I know that we used to revisit them every year, we’d make a prediction and then we would, in the next prediction episode, we would look back and rate our predictions, and then we’d make the new ones. I think I’ll probably just start planning to do that rather than going through all this. 

But nonetheless, I enjoyed the walk down memory lane. Thanks for joining me this week and every week. If you keep listening, I’ll keep recording these. My eighth prediction for 2024 is that I’ll ship 52 episodes of this podcast to you this year. This is Rob Walling signing off from episode 697.