Startups For the Rest of Us

Rob Walling:
Welcome back to Startups for the Rest of Us, I’m your host, Rob Walling, today I’m joined by fan favorite, Ruben Gamez, and we talk about some things that Ruben has learned over the past year or so running SignWell. As I talk about in the episode, SignWell is an electronic signature app that’s growing quickly, he’s having a lot of success with it. But in this episode we talk about product market fit, and maybe some of the myths around it, or the oversimplifications that we use when we talk about it. And I really like the way Ruben thinks about everything he talks about on a day-to-day basis, but especially things like product market fit. That kicks off the conversation, and I think you’ll find it enlightening if you’ve never experienced it, or if you’ve never thought about it in the way that Ruben talks about. Then we talk about doing sales as an introvert, because I get that question on the podcast a lot. 

Then we dig into decision making, that was an audible, that just came up in the middle of the episode, but I let this one run long because I really enjoyed that piece of it, and I think it’s something that more founders can learn from, and it’s not something that I’ve talked about much on the podcast in the past. And finally, we talk about hiring, getting good at it, why Ruben is so good at it, and why he has a high hit rate, and has built teams that get stuff done without a lot of drama. Do you want to reach tens of thousands of potential customers? Between our MicroConf events, Startups for the Rest of Us, our YouTube channel, our email newsletter, and all the other ways we interact with our large and growing and loyal audience of startup founders, we have a lot of options for you to reach B2B SaaS founders with your product or service. Drop us an email at sponsors@microconf.com. 

And one more thing. We’ve recently reopened the doors for our online community, MicroConf Connect. MicroConf Connect is our virtual hallway track. It’s a vibrant community of SaaS founders helping each other, and discussing wins, challenges, and frankly, how to grow faster. A couple months ago we paused new signups to improve the platform based on your requests. With MicroConf Connect 2.0, we’re rolling out three membership tiers packed with new perks, like weekly coworking, exclusive discounts, a searchable content library, and more. Whether you’ve been a member of Connect or not, you really should check it out, microconfconnect.com. And with that, let’s dive into our conversation. Ruben Gamez, thanks so much for joining me again.  

Ruben Gamez:
Hey, thanks for the invite. Good to be back.  

Rob Walling:
Yeah, back by popular demand. I’m really on a roll here, I had Asia Orangio on a few weeks ago, plan to have Derrick Reimer on in a couple weeks, and Ruben Gamez, I believe the three of you tend to be the most requested guests on this show.  

Ruben Gamez:
Nice.  

Rob Walling:
So, glad you took time here in the new year to hang out with me. In the last several times you’ve come on, we’ve answered listener questions, and obviously there’s plenty in the mailbag, so to speak, but I really wanted to have you talk about some learnings that you’ve had over the past year or two, and catch people up. It’s been a while since we’ve just riffed on things. In the past, you and I have talked about product market fit, about rules of thumb, about funnel metrics, about sale… All kinds of stuff. And you and I chat fairly regularly, once a month, and have for years. 

And so, I have some idea of what you’ve been going through, and I feel like your learnings, and the way… Not just your learnings, it’s the way you communicate them, is very unique in our space. And I sent a tweet out the other day, someone was saying, maybe you should have Ruben back on the show, or they were just saying, Ruben is the goat. And I said, yeah, his doing to talking about it ratio is like 10 to one, right? It’s like 10 x what everyone else on the internet is. And so, that’s why I want to just take the whole episode today to talk through product market fit, is one thing, and we’re going to talk about how product market fit is not as simple as we all make it out to be. That almost every conversation around it, including a lot of stuff I say on the show is it isn’t abstraction, it’s an oversimplification. 

And I want to take the first part to dig into that. And then, I want to talk about, you’re a developer, an introverted developer, for that matter, but you’ve done a lot of sales calls, and you’ve closed big deals. And I want to hear how you’ve done that, and how you’ve thought about it, as well as building your sales team. And you’re one of the most gifted bootstrap founders I know at building a team. At hiring in a very, I’m going to say picky, and I mean that as a compliment. You’re a good judge of people, and you have a high hit rate, a high rate of hiring people who work out. And when people don’t work out, you let them go. And those are unusual skills, I will say, in the bootstrap space. So, sound good?  

Ruben Gamez:
Yep, sounds good.  

Rob Walling:
Let’s dive in, man. So, first point is going to be around product market fit, but I think the overarching topic really that you said is, the whole goal of what you’ve been working on for the past year with product and positioning and all this stuff is increasing your average revenue per customer. And to catch people up, you run SignWell, signwell.com, which is an electronic signature platform, and you have both the web app side and the API side. And so, I guess the first question is, okay, so you’re trying to increase average revenue per customer. Why?  

Ruben Gamez:
Oh, good question. Because, generally speaking, customers that pay more, churn less. It’s easier to grow, it’s easier to grow faster that way, you just need a lot less customers. And depending on the category, it can actually be less competitive. In our category, it tends to be less competitive because we deal with e-signatures and e-sign laws, and once you start to go up the market, there’s more on the compliance and security side. So, there are less companies, the bar is higher, which means the competitive set, when companies are in that group where they need to work with a company that has these things, is just smaller. So, for all those reasons are why we’re focusing on customers with, they’re going to move that up for us.  

Rob Walling:
And to be clear, we’re going to call the user facing interface, your web app, and then the API is, people know the difference between those two. So, there’s two separate offerings, and your pricing is very different for them. So, the web app, you have a free plan, you have a personal plan that’s $8 a month if paid annually, and a business plan, $24 a month if paid annually. So, these are relatively low price points. Versus on the API side… We’re not talking about you raising prices five or $10 a month. We’re talking about several hundred if not thousands, literally thousands a month on the API side.  

Ruben Gamez:
Yes. Also, even on the web app side, on that side of things, we’re just selling to larger teams. So, even though the per user price is smaller, we’re bringing in companies that are… More and more companies that are in the 50, 70, 100, 200 user price point.  

Rob Walling:
Got it. And this is what I want to talk about, because you said this right before we hit record, and it’s something that I don’t think is talked about at all, about product market fit specifically. And you said, yeah, we found product market fit or strong product market fit, because you and I both know it’s not a binary, it’s a continuum. I like to think of it as a number of one to a hundred, or zero to a hundred, or whatever. And you mentioned that with the web app, we found product market fit a while ago with individuals, but we didn’t have it with teams. 

With 50, 60, 70, 100 person teams, we just didn’t have the features. So then you were looking for product market fit on the web app team side, the enterprise side, and then you moved over to the API, which does even bigger deals, and you realize, oh, there’s not just one product market fit continuum, there’s all these different use cases. And with each individual one, we have to then go find it. So, we’re going to talk through each of those mental models, or each of those phases, but to kick us off in true Startups For the Rest of Us fashion, I want to ask you, when did you know on the web app side that you had product market fit?  

Ruben Gamez:
Yeah. For us, it became… All the numbers just started to look different at some point. Our conversion numbers improved, our retention numbers, churn was lower, and growth… Ultimately, really what you’re looking for, and what you’re looking at is growth and word of mouth to pick up in a way to where it feels like, we’ve talked about this before, but you’re being pulled. And more, it started for us to feel like we’re having to keep up instead of having to grind and work and push. The feeling was different from that side of things, and this is just broadly talking about it. But it was generalizing it was just more for the segment to where it’s self-serve, it’s smaller, it’s like one person, or just a couple, two or three, and we serve those really, really, really well. It was still not that great of a solution for teams, for even 10, 15, 20 person teams, and that was pretty rough. 

So, not just that, but even on the smaller side, this is the thing with the horizontal product, it’s hard to… You’re just serving so many different industries that if you look and you say, okay, what are our top 10 best customers? We want more of those. You start to break them down. One of the easier things to do with some products is that you could just put them on a spreadsheet by revenue, and then you start to see, okay, so these are all this industry, or this vertical, or whatever, this customer segment. For a horizontal product, a lot of times it just looks like it’s all over the place. It’s like you might have accounting firms here, and then education, nonprofits and all sorts of different industries, so it can be hard to work with if you’re looking at it from that perspective. 

So then, we really started focusing on use cases, and you’ll find that, oh, education and HR, internal corporate, have this use case of they need to send one document to many people, they batch documents. So then, you can group industries that way. That’s how we look at our top customers by use case, even our bottom customers, performing an audit. What are the worst performing? Which ones use it the most frequently, but also the least frequently? And what percentage of the bottom, of the worst performing, make up our revenue? So, just to get a feel for are we adding features that are really meant for that bottom tier, or are we moving in the right direction?  

Rob Walling:
Yeah. And what I want to call out here is, the oversimplification that I was referring to, that I think everyone’s guilty of, and certainly me on this podcast is… Well, I should say, the most common oversimplification is acting like product market fit is binary. I have it, or I don’t, and it’s just has never been my experience, it’s not how it works. But let’s say it’s a continuum, the way that I like about how you described it is even with that, it’s a different product market fit with individual customer segments. And that customer segment might be a vertical, it might be hair salons versus realtors versus bankers versus SaaS founders. But as you said, when you’re a horizontal SaaS it’s oftentimes, the verticals, it’s not verticals, it’s use cases. It’s HR, as you said, HR teams at almost any company that’s 100, 200, 300 people might have the same use case, it doesn’t matter what vertical they’re in, because they all have the same need to hire people and send out things in bulk. And that’s something I think is undercommunicated, or just isn’t talked about enough in our space.  

Ruben Gamez:
Yeah. I think use cases are a big deal. They matter for not just product market fit and figuring out what features to build, but also who to go after, how to do even your onboarding and what that first run experience is like. Because if you think about it, we have use cases to where some industries just have more of a sales type use case, to where it’s simple documents, they just need signatures and that’s it. And the time to value for those is really fast. So, that means they also do one-off documents, and maybe in high frequency or whatever. 

And that just looks very different from an onboarding perspective, from a sales perspective, from the features that you’re going to build point of view, compared to ones where maybe they’re collecting a lot of data, maybe in the government forms, HR stuff. So then, if you think about the time to value, that’s longer because they have to set up documents with all these fields, they have to set up templates, they have to maybe do a bunch of training and all this stuff. And that also tends to change how we reach them and how we sell to them.  

Rob Walling:
And then you mentioned on the API side, which is a much higher ticket sale, so to speak, just higher annual contract values, that even on that side there are multiple use cases and you had to work on them in order, individually. Talk about patience. This is where folks either who have never started a SaaS, don’t realize how long it takes and how patient you have to be, or people who are working on a SaaS, and are like, but I’ve been coding for months and we’re just not going to get there. It is taking longer than [inaudible 00:13:49]. It always takes way, way longer than you thought. Because you think that you understand this full view, and usually, once you get to the top of that little summit, which is I’ll say product market fit with one use case, you realize, oh, there’s four others that I now have to build and it’s different features, and each one is a few months, so I’m talking eight months of… Or whatever, I’m making up numbers. 

But that’s usually how it feels. But the other thing you said was the further up market you move, the fewer prospects you have, the fewer customers you have, the less data you have to work with to make these hard decisions with incomplete information. So my question, because I get this a lot on the podcast, is how do you make those decisions? It’s not like it’s super clear cut. In retrospect, when the biopic is made about you and SignWell, and Aaron Sorkin’s going to write it, in retrospect, it’s going to be so clear that from day one you knew the exact vision and where you were headed.  

Ruben Gamez:
But yeah, looking back, it’s always super clear.  

Rob Walling:
It is. So, what is it? How are you making… You’re in the midst of this. How are you making those decisions these days?  

Ruben Gamez:
Yeah. So, you are working with less data, typically the more you charge, that’s just the game. So, because of that, you have to go deeper with each of these customers, and understand them at a… You have the time and you don’t have a lot of data by volume, but you can get a lot of data by depth.  

Rob Walling:
Qualitative versus quantitative, right?  

Ruben Gamez:
Yeah, exactly. Right. And you do qualitative even with volume, but a little bit less. And you’re just depending on the numbers being so high for you to understand the full picture, but you don’t have that. So, you have to talk to customers, and you have to sell, and you have to do… Every time you’re interacting with a company, you have to try and gather data that will help you in this journey. And then afterwards, after you sell them, not be afraid to come back and be like, I’ve done this on the API side and with teams, with companies that we don’t have a lot of, but we know this is a good customer and we want more of. 

And it’s just, we need to understand as much as possible about this customer, how they buy, what triggered the process of buying? Who was involved? What were the conversations like behind the scenes? What are the things that are important to them? What were they worried about when getting started? All this stuff. And the more you know that way, the less people you need before you start to see patterns. You still are, it’s not going to be perfectly clear or anything like that, but that helps a lot.  

Rob Walling:
And so, you take this qualitative data, and at a certain point you just have to go with your gut?  

Ruben Gamez:
Yeah. So, part of it is where you want to go with the company, and what you see. Because you just have to think about, okay, we like this type of company, how many more are there out there? And the thing that I think a lot of people miss is, oh, what can we… So, everyone focuses on what they can build. It’s like how long is it going to take to add these features, and will there be more companies that will use these features? How big of a market is it? And the thing that I think a lot of companies overlook is that they don’t think about how easily they can reach them. How good are they at selling to them? You can have a really big market. So, for us, an example is real estate. And this was early on, we saw, okay, this use case has more of a back and forth than some of the other use cases. 

So, this back and forth is good for real estate and a couple other industries, but not many. That market is really big. There are e-sign companies that are just real estate. And looking into it, and researching it, there were things that I found that I felt made it harder for us to reach them and sell to them. And it’s not necessarily just a general thing, these are hard to… Sometimes it’s like that, like, oh, they don’t like to talk to sales, and they don’t hang out online, and all this stuff. 

But none of that matters if you have a way to reach them, like, well, we have good relationships with these organizations, or a superpower for us and our company DNA is doing this, which is a really good way of reaching. We didn’t have any of that. So, because of that, plus we were lacking just expertise when it comes to how to sell to real estate, and how all that works, it didn’t feel like a good… And we purposely ignored building those features. And we still have a good amount of real estate customers, but there’s a lot more that we can do to better serve that. And we don’t have product market fit for that segment, those types of back and forth use cases.  

Rob Walling:
And you’re just willing to do it.  

Ruben Gamez:
And we’re okay. You have to decide, right? Prioritizing is a huge part of it. There’s only so much you can do, you have to pick and you have to decide what you’re doing. But also, what you’re not going to do.  

Rob Walling:
That’s the big conversation. And I don’t like it when people use Steve Jobs and Basecamp as examples, Apple and Basecamp. But there is a quote that I like from Steve Jobs, where, I believe he told it… It’s Tim Cook quoting Steve Jobs. And he said, one of the things he told me is, “There will always be 1000 good ideas, and usually we have time to pursue one.” And so for every 100 or 1000, or whatever the number is, we have to say no. And we will be great by saying no to a lot of things. And that’s prioritization. Maybe he’s overstating it, maybe he’s exaggerating, you can do more than one thing. But the reality is, in the final days of Drip when I was there, we’re doing tens of millions a year in revenue, team is 125 people or so, we were getting close to… I think it was about 175, 200 feature requests per month. How many can you… Even with 18 engineers?  

Ruben Gamez:
Yeah, you’re not going to do all that. Right. No, you have to find a way to prioritize. Yeah.  

Rob Walling:
Exactly. And some of it, and some people prioritize with a spreadsheet, and some people like Derrick and I, and I think you prioritize, I would say it’s gut feel that acts I’m just either smarter than I am, or I just don’t give a (censored), and I’m just picking (censored) randomly with a dartboard. It’s neither of those. It is this, there’s an intuitive side, there’s a right and a left brain, a creative and a science side. And the spreadsheet is science, and that’s helpful. And so, when we hired the first product person, aside from Derrick and I, he was very much in that left brain spreadsheet mode, and that balanced us out a bit, I will say. It was helpful to have that voice on the product side, but that voice alone would not have made the right decisions.  

Ruben Gamez:
Yeah, gut’s a really big part of it. I always felt like you’re really good at this, and you’re decisive, and you tend to more often make, from what I’ve seen, make the right decisions. Not always, but a lot of the time. More than a lot of other people. One thing that I’ve wondered about the way that you do it is, do you feel like you’ve developed that, or are there things that you’ve done or that you do that you think help improve that gut feel?  

Rob Walling:
This is a really good question, and I’ve thought a lot about it, because one of the talks that I’ve given is… I forget exactly the title, but I gave it in South Dakota a few months ago. And it’s nine traits of the best startup founders. And I couch it in the first five minutes of, here’s what I define as best. I’ve invested 171 companies, I have pretty in-depth data about 171 SaaS founders. And I can tell when the founders are having an outsized impact. It’s not just you’re successful, because sometimes you’re successful and you got really lucky and it’s not actually the founder. You and I have seen that. But given the relationship I have with the TinySeed founders in my private investments, I have patterns, there’s pattern matching that I see across my… There’s a framework I have of it. And one of those things is they generally tend to make the right decision more often than not. And, as you said, it’s not 100%, but it’s somewhere in the 60 to 80% range I think. You can be as low as 50 and it’s still probably not that bad. 

This is Rob popping in a day or two after Ruben and I recorded this episode, and I thought back to that statement that I just said, about how if you’re making 50% of your decisions correct or right or mostly right that you’re doing well, and I disagree with that. That number is too low. That’s basically like flipping a coin. As I thought more about it, I think if you’re above two thirds, maybe 70%, 75%, you’re doing pretty good. And I think the better you get at this, I think really experienced founders who know what they’re doing are probably in the 80 plus, 85, 90 plus. It’s like eight or nine out of 10 are at least in the ballpark. 

And as Ruben and I talk about measuring right or wrong can often be hard, it’s usually not just two choices, there’s creative choices, and oftentimes there’s 6, 7, 8 different paths, and you don’t know how they all would’ve panned out, and multiple options can be “right” or turn out poorly or whatever. So, it is all a bit hand wavy and fuzzy, but I just didn’t want to leave it on record that I said, oh, if you’re a founder making 50% or more of your choices, that you know how to make good decisions, because I don’t believe that’s the case. And now, let’s get back to the episode. 

I often list several founders off the top of my head who I think are really gifted founders, and are really good at it, and could do it over and over, and it’s Hiten Shah, it’s Jason Cohen, it’s Steli Efti, so there’s a bunch of folks who’ve been MicroConf speakers. They just tend to make the right decisions. And so, I’ve thought a lot about, well, how do you get better at that? Because it feels like this very intuitive thing, but I used to not be good at it, and I used to second guess myself a lot. And I think the ways I got better at it were by talking to people, either having advisors or having mastermind compadres, like yourself, who think about things differently than I do, and who make decisions differently. I used to make impulsive decisions quickly. You think a lot more in depth about decisions. And that steered me into balancing. What’s my weakness? I know myself to know, oh, a weakness is I’m uncertain, I’m not decisive, I think about things too much, and then eventually I just (censored), I’m just going to make an impulsive decision. 

That’s how I used to do it, say 15 years ago or more. And you balance me out. Just watching Hiten Shah execute, he was an early influence on me because he was a MicroConf speaker, and he was ahead of us, in terms of Crazy Egg, and just with KISSmetrics. Watching Jason Cohen execute. So, some of it I could do from afar, because Jason Cohen and I, we’ve done Zoom calls over the years, but it’s not like we talk every month. But you just observe him, and you read his blogs, you hear him talk about his decision-making. And it’s like, I want to be more like that, he seems to make some good decisions, and being-  

Ruben Gamez:
Some pretty good decisions, yeah.  

Rob Walling:
And being around you on a more ongoing basis, again, we have that monthly touchpoint for more than a decade, that also helped. And then, here’s what the interesting thing, even with TinySeed founders today, watching founders, there are a lot of founders that I work with, and I’m like, wow, you make really good decisions, and I’m still learning from them. They might be better at me than making decisions. And so, I pick up on little things… I’ll say, explain to me why you made that decision. And when I hear them talk it through, I’m like, ooh, that’s smart. That’s a neat framework, or a neat way of thinking about it. So, that’s the answer. The answer is I do believe you can develop this, because I certainly didn’t have it, and I would agree with you, these days, I do have it. And that’s not overconfidence, it’s I generally make the right decisions. 

So, I definitely think you can learn it, but I do not believe you can learn it in a vacuum. I think you need to be listening to the right people. And by listening to… Do they have a podcast? Or can you read Jason Cohen’s blog? Can you read my book, the SaaS Playbook? Hopefully I help you make some decisions. I have a thing in there about risk versus certainty and decision making. It’s like, are they putting stuff on the internet in a way that you can follow them, or do you know them personally? I know you [inaudible 00:25:51], that’s actually really good at making decisions, and I’ve learned from him even in the past five years of working together. So, does that all make sense? And does that align with your… Because I feel like you’ve always been pretty good at making these types of decisions, to be honest. But do you feel like you’ve learned it, or got better at it, or was it a natural thing?  

Ruben Gamez:
Yeah, what you said I think makes a lot of sense, and there’s a lot of overlap with how maybe I think about it. I’ve studied, of course, just decision-making, and things you could do to make better decisions. But being exposed to ideas from others that may be different, observing people that are making good decisions, and trying to at least consider and analyze that a little bit about why did they do this? And knowing yourself I think is a big one too. A lot of this stuff is really about just getting out of our own way. Knowing what we tend to do that messes us up, and then counteracting that, and however you need to do that. I think that’s huge. And then, being truly open to-  

Rob Walling:
To learning and getting feedback?  

Ruben Gamez:
Yes, yes.  

Rob Walling:
To asking, if I’m making a decision and I say, hey, five smart people I know, tell me what you think about this decision? And they all tell you the same thing. And then you say, oh, I’m going to do what I thought originally anyways, that doesn’t help you.  

Ruben Gamez:
No, no. Right. There are people, and we see them sometimes, there are people that ask for feedback, or put things out on Twitter or whatever, seemingly to get feedback, but not really. People give them feedback, and if they don’t like it, if it doesn’t align with what they’re thinking, they shut it down. You can’t get good that way, you can’t get better, you can’t improve in that way.  

Rob Walling:
Yeah, I like that. That’s a good way to think about it. So, I want to switch up topics and talk about sales as an introvert. Because you have had to do a lot of sales calls as you’ve moved into this upmarket position, especially on the API side, I’m assuming on the web app side too. A question I get now and again is, I’m introverted, and I don’t really want to do sales, but I have to do sales, how do you do it? Or should I just not? Should I automate everything? You and I stand the same on this. You do what it takes.  

Ruben Gamez:
Right.  

Rob Walling:
If I want to build a multimillion-dollar company, if I want to have an eight figure exit, I’m going to do what it takes whether I want to or not. And so, I don’t like sales, I’m not a good salesperson, I’m introverted as well. I don’t like talking to people I don’t know, Ruben. I have a small circle of friends. And so, how have you gotten over that?  

Ruben Gamez:
Yeah, there are just things that you do because you have to do to move things forward, and they tend to be easier if you know that they’re not going to be permanent things. You’re doing them to get to a place where you can bring on somebody who will do that, who truly enjoys doing that. So, sales for me is, I can kind of enjoy at times, or parts of it, and I can see how people can be so into it that that’s what they want to do for a living. I don’t want to do that for a living, it doesn’t give me energy, it’s one of these things that takes energy away from me, to where I need to recharge afterwards. Being that it’s important for the things that I want to do with the business, I’ve just made it an effort to learn how to do it better, and I’ve put myself in situations to where I’ve had to practice it. 

So, that’s another part. And then, I’ve just talked to other… Same process that I do for anything else that’s new that I’m trying to understand and learn and get better, practice taking in information and then talking to people who are doing it, and learning from others. So, learning from Jordan Gaul, who’s doing a lot of that, I’ve learned a lot from him. Matt Wensing, who’s really, really good at it, and has given me some great tips and advice in the middle of negotiations and all that. And even hiring expertise, and we have a sales advisor that worked in our industry and did exactly the stuff that we want to do, that I’ve hired to help us out and give us advice on this. Yeah, those are the things that I’ve done to help.  

Rob Walling:
So, it’s valuing the business… Not even valuing, but prioritizing the business or the growth over your personal preference of what you want to do. And it’s not what you want to do eight hours a day, 365 days a year. It’s, now and again, I have to do a sales call, and I don’t particularly want to do it. But I’m going to grind it for now, knowing that I’m going to hire this out eventually. But right now it really needs a founder. And then taking information in and iterating, and getting good enough at it… I don’t think you’d call yourself an amazing salesperson, would be my guess. But you’re good enough.  

Ruben Gamez:
Exactly. And I think, even for things like this, to where it’s not my favorite thing in the world to do, I think it really matters, the energy that you come at these things with. It really does. If you’re going into it just dreading it, and thinking about how much it sucks, and all this stuff, then it’s going to be rough. It doesn’t have to be that way. So, I tend to think about things at a higher level in the way where I’m not thinking maybe so much about the specific sales conversations and the tactical stuff. If I’m thinking about the type of energy that I want to bring into something, so I’m not all pissed off and dreading it, I’m thinking about it being a puzzle. All this stuff, these are puzzles. And I love figuring things out, and it’s about figuring this out, and figuring these things out. 

So, there was something I read recently, they were talking about… I don’t remember where it was, maybe it was a podcast. But I like the way that they phrased it, to where they’re saying, once you’ve made the decision, go all in, and go into it with a positive energy and attitude as much as you can. It makes no sense making the decision and then afterwards just trying to fight it. If you’ve decided you’ve decided to do this thing.  

Rob Walling:
Then do it. Stop waffling.  

Ruben Gamez:
Yeah.  

Rob Walling:
Go in.  

Ruben Gamez:
Yep. Exactly.  

Rob Walling:
Yeah. And I like what you said right before that, essentially gamifying it. To you, it’s like, huh, I don’t like sales, but you know what I do like? I like my MRR going up. I like having a challenge that I really am not good at, and that I’m going to be good at in a week, or a month, or six months. And I’ve often thought about building businesses like that. I built several businesses, pre-Drip that I kind of didn’t care about. I had these little, you remember, little eBooks about bonsai trees. 

Or I’m trying to think… I had duck boat plans, where you could build your own duck boat. And it’s like, they were quality things that I stood behind, I wasn’t just shilling crap. But I liked the product, I wasn’t passionate about the product or the niche, but I gamified it in the sense of how high can I rank in Google for all the terms? How fast can this grow? And it wasn’t… One of them did $500 a month, it wasn’t even MRR, it was just in sales of this $30 ebook. But it was still this fun challenge that I could work on. And I was learning, and if I screwed up with those, screwed up and Google booted it out, it didn’t matter. But it was still a fun challenge.  

Ruben Gamez:
Yeah. There were legitimately fun things about those.  

Rob Walling:
Yep. So, I want to mix it up and talk about hiring and firing. And really, I think the overarching thing is building a team and building a functional team that gets (censored) done, and that I never hear an excuse from you, of like, yeah, I don’t know, there just aren’t any good developers out there. Or, my team’s really dragging us… We’re not making progress because of my team. You just never say that. Because I think you tend to be pretty picky about who you hire, I think you tend to fire pretty fast, and somehow you find… Even during COVID where we were at, bootstrappers were at a disadvantage again, because everyone was remote, and usually being remote is this big advantage. Even during COVID, you still kept making forward progress. 

So, what is your mental model around this? Why are you… Again, I was telling you offline, you’re probably in the top 10, 15% of all the bootstrap founders I know, in terms of hiring, firing, motivating, building a team, basically the overarching thing of your team. It’s not just software, it’s the whole team. They just get (censored) done, you have good people who are competent, who are doing customer success and support and all this stuff. And a lot of founders struggle with this, and I don’t know, it’s like, Ruben, are you a natural at this? Or do you just have a framework or two that you think could help a listener who might have no idea what they’re doing?  

Ruben Gamez:
So, I didn’t know that I was as picky… I felt like, I’m a little picky, but I didn’t realize maybe how much more picky I was than the average founder hiring, or company hiring. Until recently, where I was working with Dynamite Jobs, I think, is that what they’re called? I’m not sure.  

Rob Walling:
Yeah, they’re called Remote First Recruiting now. Yeah, it’s Dan and Ian from Tropical MBA. We use them at TinySeed and MicroConf as well, to help hire.  

Ruben Gamez:
Yeah. And they do a good job of putting the job descriptions out there, and taking calls, and doing an initial interview and then sending you people that they think are good and qualified, and getting feedback if that needs an adjustment, and then sending you more people. It was something they said to where we, we were at about person 15 or something like that that they had sent, and Krista who had been working with on that, I don’t remember what I asked, but she said something like, well, actually, typically we send about three to four people before a hire is generally made. I was like, really?After the second, third, fourth person, that’s it? I feel like people are maybe a little bit too quick to hire, and maybe some of that comes from, we really need somebody and we need to fill that role. There’s some pain there. And not being willing to just wait to find the right person. 

I think that’s part of it. Also, when you’re hiring for a new position or something new, I tend to do the same thing for sales. Sales advisors are very involved in helping hire this person, helping… I don’t have the experience to have the gut feel yet for this being a really good person for this type of position. In certain ways. I understand if somebody’s well organized, and they have good attitude, and all this stuff, but there’s some gaps there, and I think it’s important to fill those gaps with help and expertise when you can. And then, I do follow, I like the book, Who: The A Method for Hiring, something like that, to where it’s a very specific process, to where part of it is, beforehand, I think an important thing that maybe some people skip out on is identifying what makes a great hire, and going down the list of the things that you’re really looking for, and then when you’re interviewing people, scoring them, they call it a scorecard, against each of these things. 

If it’s selling, their ability to follow up, their expertise with selling to the mid-market or enterprise or whatever, what people tend to do is, they’ll get somebody that they really like, and they think is really good, but maybe they’re not as good in the areas that they thought initially going into the whole process, that they needed, and they end up hiring this person, and then it doesn’t work out. Because it’s not… They just feel like, oh, this person’s a really good… And you’ll hear this sometimes, if you come across a really good person, then just hire them. But when you’re a small company, you do tend to have very specific needs, and there is less room for that. That, and then, one of the other things, even with hiring contractors agencies and things like this, I tend to keep track of companies… No, I should say, of people, that I think are really smart and good and doing interesting things. 

And I do that, often, I see them on Twitter or something like that, and so I literally have a bookmark for freelancers, writers, or marketers. And this is just random people that I think are really smart, doing super interesting things, that might be working at a company, might be working for an agency, might be freelancing, might be whatever, that I might at some point in the future want to work with. Maybe an external agency or something that can help us with things, or if they start something like that, or a freelancer, or hire them. Hey, this person, if they become available, and we’re looking for this type of position, they would probably be pretty good. I think it’s helpful, I’ll say, to always do that, even if you’re not hiring for that specific thing.  

Rob Walling:
Right, you’re just paying attention because you know that you’re going to grow.  

Ruben Gamez:
Yeah.  

Rob Walling:
It’s interesting what you say about being picky, because I used to be accused of that as well when I was a development manager at a credit card company. We’d hire these contingency recruiters that make an egregious percentage of the first year salary, 15% or something of 100, at the time, 120, $130,000 salary. But they only do it if you hire them. So, there was all this pressure on us, and the recruiters would get so mad, and they’d be like, what are you looking for? Can I see your resume? Do you have the stuff you’re asking for? And I was like, no, you can’t, A… And my boss got super mad when they asked to see my resume. But I said, no, I’m just not going to hire someone who’s not a fit.  

Ruben Gamez:
That’s funny.  

Rob Walling:
Yeah. And the thing I think about… Maybe I should write this out at some point. But when I think of… You were talking about evaluating someone. Let’s say I’m going to hire a designer. If I simplify it, there’s three skills a designer needs. This is oversimplification. But they need the actual design skills, the chops to do it. And whether I’m going to hire or just for a one-off job, are they a good designer? And you know how I can evaluate that? It’s easy. Go look at the (censored) designs.  

Ruben Gamez:
Their work.  

Rob Walling:
Yeah, just look at the work portfolio. So, designers are actually, in my opinion, easy to evaluate, because I can look and say, I like that, or I don’t. I think they’re skilled or they’re not. That’s the easy part. But there’s two other factors that are hard to evaluate. The first one, I guess it’s the second one of my three, is communication. Do they take feedback and iterate well? Do they communicate with you and say, oh, I’m going to be late, or… Whatever. Are you able to have a back and forth with them in a way that the two of you understand each other? So, communication, and that’s what I’m going after in an interview. I’m trying to suss out, I know what your skill is, I can see your design. So, I’m trying to figure out, can you communicate, let’s talk about some complex topics, and figure out if we’re on the same page. And the third one, I’ll just say, do they deliver? Meaning can they hit deadlines? That one is the hardest of the three to figure out.  

Ruben Gamez:
That is, yep.  

Rob Walling:
Because you can’t figure that out by asking them a question. It has to be either references, or maybe you ask, hey, when was the time you didn’t hit a deadline, how did that play out? And listen to how they talk about it. And if they’re like, oh man, it was two years ago that I totally missed a deadline, and here’s what I did. Or if they’re like, oh yeah, so a couple of weeks ago I did this. It’s like, huh? But even that’s not 100%. It’s just, we are trying to evaluate. And if anything of when I’m hiring designers, usually the thing that I miss is that they don’t hit the deadlines and they’re unreliable, because that is the… I just know there’s uncertainty in that. And it’s hard in an interview process, until I work with them, figuring that out. Similar, let’s say we’re hiring a customer support, email support rep, for a SaaS company. 

Again, I think there’s about three things. One is communication, for sure. Can they type the email or the live chat [inaudible 00:41:48]? Second is, will they get the understanding of your customer and your product? I think that’s the second thing. Can they [inaudible 00:41:55] that and get it all in their head? And the third one then I think is speed. Does it take them five minutes or 50 minutes to write this email? If I gave more thought to it, maybe I would pick different ones. But I think those are the three. Now, can I figure out communication? Probably. I could probably email them with them, I can talk with them during an interview. Can I figure out whether they’re going to understand my customer and my product? That one’s tough. I would do it on a sample project.  

Ruben Gamez:
Yeah. We have an application… We hired for that. We have an application for that. To where, sign for the product, do this task, upload a document, all this stuff, and then fill out this form that has these questions, from real customers that we’ve asked, to where they don’t know the product that well, but they have to answer the questions, and see if they can find the right answers, or understand, a lot of it is about understanding what’s coming at them.  

Rob Walling:
Yep. So, all that to say is, without those mental models or without any experience hiring, I think people… I’ve heard this phrase used of, resume and small talk. Where, I get on an interview with anybody, developer, designer, support person, and I’m looking at their resume, saying, oh, they worked at Google, they worked at Facebook, they must be really good at the… No, don’t do that. Or they were there seven years and they became a senior, blah, blah, blah. It’s like, so? I worked at a ton of companies with (censored) people, with dummies that rose to senior manager.  

Ruben Gamez:
Right, yeah.  

Rob Walling:
Don’t use that. That is one of the least important things. I look at tenure, I look at some experience, blah, blah, blah. But I’m trying to get into nitty-gritty, and ask them, I won’t even say hard questions, but just questions that actually get to the root of, what are the skills that they need to succeed at my company? Because guess what skill they don’t need? The ability to work at Facebook for three years is not a skill you need to work for me.  

Ruben Gamez:
Yeah, no, that’s a good point. There is generally some sort of exercise to try and evaluate the quality of the work. And depending on the position, you can, on the design side, you can tell, on the development side, even on that side, we do have people that go through a four-hour coding exercise and all that stuff. And that’s been, we’ve improved that to where it tells us pretty well where they are on at least the code quality point of view. So, that helps. And if you can work with them, of course, on a smart project or something like that, that’s the best, then you know. But that’s not always going to be the case. 

But, like I said, we hired both a developer recently that did that, and then on the customer success side, also for support, we’re having a lot of people just not being able to understand, or understanding but missing little details that matter and that result in a bad support experience, because somebody’s… It’s like, wait a minute, you’re not… And we’ve all gotten this, to where we send in the support, and then they just send in a copy and pasted reply, or link to support article, and you’re like, no, you’re not really answering my question. 

Yeah, that’s a big part of it, and then in the communication part, that’s partly why we have everyone write, in their application, we have them write why they were interested in the position, all the basic stuff, and then just get a feel for their writing and their communication. Generally, even in the exercise, there’s a feedback and improvement part. Can you change something? And this is about seeing if they’re open to criticism, and if they’re open to write some pushback and all that. And it’s not super strong, but you’d be surprised at how many people are just… The way that they take… It doesn’t have to be super obvious, it can be subtle, to where were like, ah, okay, there’s something there.  

Rob Walling:
There’s something there. Yep. And there are skills, like you’re saying, that are easier to evaluate, like communication, or response time, or understanding. And there are certain skills that in any role are just harder. They’re just harder. Like hitting deadlines and this and that. It’s like, I can’t figure that out in a interview, I need to do a sample project. And I think having that dichotomy or whatever it is, that mental framework in your mind as you go into interviews, I think can be helpful. Because I’m going to check the boxes for the ones that I can evaluate, and then the other one I’m looking out, this is why people do trials, 30-day trial, or a single project trial, if it’s project-based, to try to suss out that other one or two. And if there’s any wavering, you just cut bait.  

Ruben Gamez:
You know what’s pretty good, surprisingly good too? Is the question where I’m asking… You ask everyone what are you not good at, or what do you want to improve, and all that stuff. And they’re all like, oh, I’m too much of a perfectionist and blah, blah, blah. And then, the one where you’re asking about specific jobs, and who they work with, and if I ask, who did you report to at that place, at the job? Okay, so I ask so-and-so what they thought was something that… If I asked them, what’s something that they could improve in? What’s an area that they could work on? What do you think that person will…  

Rob Walling:
Right. So, your former boss.  

Ruben Gamez:
Yes.  

Rob Walling:
What would your former boss say that you could improve about yourself?  

Ruben Gamez:
Yeah. Being specific at each one of the jobs. It actually works really, really, really well. Sometimes you’ll get pushback toward, oh, I don’t know what they would say, and then at that point, it’s like, they don’t want to say anything bad, but I say, sure, I get that. But somebody like Christian on my team, he’s our lead dev, he’s great, but he also wants to know how he can get better. So, I go out of my way to let him know, because nobody’s perfect, how he can improve. So, what would they say, in your opinion, that would be… And usually though they know, because those conversations have been had, so then when they say the thing, it’s like, oh, can you give me an example of that? And it’ll usually come up like, yeah, it came up because of… And these types of things will give you clues into their strengths, and maybe the areas where they’re not so good.  

Rob Walling:
Right,. And another point you just made, without even making it overtly, is sometimes you have to ask a question two or three times. Sometimes you have to push a little bit. You don’t have to be a jerk, but I ask some hard questions, very tactfully of people. I’m the guy in our TinySeed interviews, it’s like, so I can see your churn is 12% per month, I’d imagine you want that to be quite a bit better, because that’s not good? Or talk to me about why it’s there. Talk to me about how you thought… So, basically, I could have said, your churn is (censored) catastrophic and your business is on fire, why haven’t you fixed it? That’s one way to ask it. Or you can ask it the way I just did. So asking… So you don’t have to phrase things like a jerk in order to ask hard questions. And that’s actually, Crucial Conversations is a book that you recommended to me years ago, and I learned a bit about phrasing and all that from there.  

Ruben Gamez:
Yeah. No. And coming at it… That’s a good point. Coming at it multiple ways, because people will try to give you fluffy answers. It’s like, oh, so for this project, give me an example of this, what happened? What was something that where you ran into… What was a tough time at the company or whatever? It’s like, oh, blah, blah, blah, so and so, we had a problem with whatever. And it’ll be very fluffy. It’s like, oh, tell me about that. And then they’ll kind of tell you, but it’ll still be high level. It’s like, yeah, I wanted to understand what happened there, tell me about your thinking. What kicked it off? And you sometimes have to push a little and just keep asking.  

Rob Walling:
Ruben Gamez, you are earthlingworks on Twitter, everyone should rush over and follow him there. Thanks so much for taking time to come back on the show with me.  

Ruben Gamez:
Thanks. Always great being on here.  

Rob Walling:
Thanks again to Ruben for joining me on the show, and thank you for coming back this and every week. This is Rob Walling signing off from episode 696.

Rob Walling:
It’s another episode of Startups for the Rest of Us. I’m your host, Rob Walling. Today I’m joined by fan favorite, Asia Orangio. She and I answer listener questions ranging from finding your ideal customer, moving from B to C, to B to B, and several other topics related to bootstrapping, and mostly bootstrapping startups. We’ve continued to have a great stream of incoming listener questions. As always, audio and video go to the top of the stack, but I am getting through a lot of the written questions as well. So head to startupsfortherestofus.com, click Ask a Question in the top nav from your mobile device or your desktop, and send us a question. If you want to hear me or me and a guest discuss it on the show. 

Before we dive into that, we are running the next edition of the State of Independent SaaS Survey and Report. Through MicroConf, we’ve run the survey a couple of times, and then we decided to take last year off, because the information coming through wasn’t changing. The survey is about 40 questions. It takes less than 10 minutes to complete if you have your metrics handy. And then we take that data from what usually winds up being between 600 and 1,000 independent SaaS companies. These are bootstrapped and mostly bootstrapped SaaS companies. And we compile a report with all the key findings and helpful industry benchmarks that you don’t get anywhere else. The survey closes soon, we could really use your input. All the data is kept anonymous, and every survey response we get, makes the report that much better. Head to stateofindiesaas.com to complete the survey, and we’re going to enter everyone who completes a survey, into a drawing for a free ticket to MicroConf US 2024, in Atlanta. That’s more than a $1,000 value. 

I know it’s a lot for me to ask you for 10 minutes out of your busy day, but it really would go a long way towards making this year’s report, the best yet. We are mixing it up this year, asking different questions, and pulling out different findings than you’ve seen in the past. So even if you’ve filled out a prior survey, it’d be amazing if you could head to stateofindiesaas.com and complete it. I wanted to let know about our MicroConf Mastermind Program. If you listen to the show, you know that I talk a lot on this podcast about how important masterminds have been to my own success. But finding the right founders for your mastermind group can be very hard. Over the past few years, my team at MicroConf has successfully matched more than 1,000 founders into mastermind groups by looking at revenue, team size, strengths, goals, and several other data points, to make sure your peer group is the right fit. 

Once you’re matched, you’ll also have access to our mentorship series. A three-month program where you can connect with some great minds in sales, business development, marketing, and more. If you’re looking for accountability, honest feedback about your business, and the opportunity to make new friends that care about your company and your success, you can learn more at microconf.com/masterminds. So with that, let’s dive into listener questions. Asia Orangio, thanks so much for joining me on the show again.  

Asia Orangio:
Yeah, thanks so much for having me.  

Rob Walling:
Another lister question episode. Back by popular demand. When I go on tour, when I go to MicroConfs, people are like, “You need to have Derrick Reimer back on the show, Asia Orangio, Ruben Gamez. Just have them on all the time.” So, it’s great to have you back.  

Asia Orangio:
Thank you so much. Yeah, speaking of Ruben, I got to go back and listen to that one. That sounds like a good one.  

Rob Walling:
Yeah, Ruben. If you go to startupsfortherestofus.com and there’s a little hour glass search at the top, just type in Ruben Gamez, and pretty much all those episodes, I wind up just re-listening to. I go back and listen to a lot of episodes as game tape. Not a lot of episodes, but I’ll go back a year or two and remind myself, “Oh yeah, that was the thinking then,” or “That’s actually a neat idea that I didn’t repeat 10 times, so I probably should.” Because, until I repeat it 10 times, none of us remember it. And a lot of the Ruben episodes have really good nuggets in them. You ready for the lister questions?  

Asia Orangio:
I am. Yeah, let’s jump in.  

Rob Walling:
Let’s do it. Our first question today, is a video question from John Mark, asking, “Would you adjust your target customer for an opportunity?”  

John Mark:
Hey Ron, my name is John Mark, and I’m building an app called Balance. It’s a budgeting tool targeted at first-time budgeters. I’ve been building it slowly over the last few months. And last week, Mint announced that they were shutting dow their budgeting platform, which leaves somewhere between three and 4 million monthly active users looking for a new budgeting app. I’ve seen a lot of other budgeting apps aggressively go after these users. Being small and not having a product that’s fully polished, I’ve got MVP features in place, but it’s pretty simple. I’m wondering if I should be ramping up to try to capture part of those Mint users. 

I’ve started to do a little research and started to talk to a few people. But they’re different from my target customer base. They’re typically looking for a free budgeting app. Mint was one of the few free budgeting apps that hold in your transactions automatically. And they might be using more advanced features than Mint, that I don’t have ready yet in my platform. And so my question for you is, would you try to carve off some of those customers? Even capturing 1%, which I know is a lofty goal, would still be life changing for Balance, and really get revenue coming in the door. 

I’m on pre-revenue. I wasn’t planning on releasing the MVP until Q1 of next year. I have felt the pressure a little bit and ramped it up from people looking to potentially support a smaller company, which Mint shutting down. And so I can get MVP out there in December, but it wouldn’t be… I don’t know if it’s quite the right fit for what Mint users are looking for. So I’d be curious on how you would advise in this situation, how you might handle a large influx of users that are close, but maybe not quite what you were targeting or what you were setting out for. Thanks for all you’ve done and all the other podcasts and resources you’ve put out there, they’ve helped me a bunch. Thanks Rob.  

Rob Walling:
What are your thoughts on this, Asia?  

Asia Orangio:
Okay, yeah. So, looking at this, this is a… It’s a go-to-market question. It’s a question around, “Is it worth my time to go after this customer base?” And usually when it comes to go-to-market in general, go-to-market being the practice of, “How do I deliver my product to an audience through channels, with a particular model, that enables them to buy it?” And when I hear this question or when I hear this context of a scenario, I think that there’s a couple of things to back into. So the first is, it sounds like John Mark is not necessarily convinced that… Like he’s unsure, it sounds like, around if this Mint audience is going to be a good audience for his product. I think that there’s two ways that I would recommend approaching this. It’s tough to say if the answer is yes or no. 

My heart hard assumption is that anyone who’s using Mint for free, may or may not actually be willing to pay for something. But that doesn’t necessarily mean though that those Mint users are not possibly using something else. So for example, I’ve been a Mint user for a very long time, but I also pay for YNAB. And they both give me different sets of data that I use that’s interesting to me. [inaudible 00:07:15] about to say, I almost would rather John Mark go and actually interview Mint users and find out for himself. He could do this using userinterviews.com. One interview on the B2C side, maybe might cost him 45 bucks. Maybe he throws 25 to 50 bucks at a person, I guess like a gift incentive. So let’s say on average he’s paying $90 per interview, he could do four or five of those and get answers pretty quickly on like, “Oh, are Mint users actually good users for me or no?” 

I don’t think that we can assume. My guess is if they’re not paying for it, maybe not. But that’s how I would approach the first part of this question that he has.  

Rob Walling:
Yeah, I think that’s a really good idea, is whether… What was it? Userinterviews.com, that you mentioned?  

Asia Orangio:
Mm-hmm.  

Rob Walling:
I was imagining, given how many Mint users there are, I’m going to on Twitter, I’m going go on whatever audience I have, and say, “Do you use Mint? Please let’s do a conversation.” Now maybe you’re in a bubble now, because if you’re a developer, then there’s a bunch of other developers on Twitter and you may not get the right swath of people. But I agree. So I’m in your boat where I’m maybe even more skeptical that free Mint users are going pay anything for anything. The reason that Mint worked is because they sold to Intuit. Mint was not a profitable company as far as I know. I’m pretty sure they raised a bunch of venture and then they were earning money and then they sold to Mint, somewhere like 10, 13 years ago. Is that right? around 2010, 20 whatever. 

Had they not done that… Like, they didn’t prove out that they had a successful business model. And the reason they worked was that Intuit then engineered it and made it lead gen, blah, blah, blah. But I mean, is it that successful of Intuit shutting it down? So I’m guessing that there is a lot of, whether it’s cost… Or there’s just, is this a bootstrapable business, taking on a bunch of Mint users? I’m pretty skeptical about that. Whether I talk to them or not, just on the face of it, I’m like… I’m not a believer. 

The other thing is if your product isn’t already there… I guess I didn’t look to see what the timeframe of Mint shutting down is. But my guess is if they’ve said they’re gonna shut down and people know this, usually you want to already be there, today or last month. It’s like, “Oh, my product is a perfect replacement for it.” But if you’re talking about spending a month or two to develop, and then trying to get the word out, my concern is things move fast, and are you too late? And is there already a good alternative to where you didn’t happen to hit the puck right at the right moment, and so the angle is going to be off, and it’s just not going to work?  

Asia Orangio:
So, it sounds like you’re taking it from the perspective from news hits, to, is it even worth my time? Am I even going to match up with this curve? And it’s very likely, maybe no.  

Rob Walling:
My impression. You and I are operating on limited information, right?  

Asia Orangio:
Totally.  

Rob Walling:
We’ve thought about it, you know, a collective four and a half minutes, right? Or a maybe a few minutes before the podcast. So it is hard without all the information, to make this decision. But on the surface the way he’s describing it as a product builder trying to kind of shoot a gap in a space where he’s like, “My product, I don’t know that I really want Mint users.” I mean, he says that in his question. “They aren’t really my ideal users, but oh, they down, there’s an opportunity.” That’s tough. It’s like, is the opportunity amazing and golden, or is it something that seems cool? 

And I think what you’re getting at, I think what both of us are getting at, is probably you need more information. And you’re saying, talk to customers. I’m saying, how about this? What if I run Instagram or Facebook ads to Mint users or people who follow me to wherever it is, to target, and say, “Mint user? Concerned their shutting down? Check out…” blah. Send them to a landing page, send them to a page to book you for a call. Send them to something. See if you can reach anybody through this just to get… Because you don’t need 10,000 people. If you get 50 people or 100 people, you know that you can get into… whether it’s conversations one on one via Zoom, or whether it is email conversations or whatever, I feel like you need more information to make this decision. I’m just giving a gut feel, leaning, based on a 90-second voicemail.  

Asia Orangio:
Totally. I also think too, it sounds like the MVP isn’t out yet. And that makes me think that Mint getting shut down, creates maybe an artificial pressure. But actually, as John Mark mentioned in his message, it’s very possible that these Mint users are actually not the ideal paying customer anyway. Especially if it’s largely free folks, which he actually mentions, yeah, in his message here. Yeah, I agree. There needs to be some type of validation. You can go the route of customer discovery. So of course, you could interview Mint users directly and get a feel for that. Then there’s also, Mint aside, who would be your best paying customer anyway, which is really the area in this space I’d probably spend more time in. And then there’s the other way that Rob was mentioning, which is, you could run a campaign and test this pretty quickly.  

Rob Walling:
So thanks for your question, John Mark. I hope our thoughts were helpful. Our next question is a voicemail from Daniel.  

Daniel:
Hey Rob, this is Daniel, tuning in from Germany. Thanks for your podcast. It’s a great source of knowledge and very inspiring to me. In one of the more recent episodes, you talked about certain anti-patterns that are usually a bad idea. One of them was to translate your app, which I agree with. I do wonder if this also applies to marketing, say, educational content on my website. So, for context, I’m working on a code review app called Codelantis. This is currently just a side project for me, and my primary goal is to get in touch with people interested in this particular field. Since I’m German, I could quite easily translate selected articles myself, and this would maybe help in terms of SEO and things like that. I’d be really curious to hear thoughts on that. Thanks for everything you do. Cheers.  

Rob Walling:
So just to clarify, my understanding is, and I went to his website, it’s codelantis.com. The H1 is “Understand and review pull requests fast with Codelantis.” The website is currently in English. And so I think what Daniel is asking, is, does it make sense, since he’s German, he speaks German, for him to start translating some marketing or educational content, some blog content, into German to potentially attract people? Because it sounds like it’s a relatively small lift. I mean, I don’t know, translating a blog post feels like a big lift for me. 

But anyways, I just want to clarify that, because I was trying to figure out… In the SaaS playbook, I talk about people who they hit their ceiling of 8K a month, and then they’re like, “I’m gonna translate this into Spanish, German, French and other things.” And I’m always like, unless your market is tiny, tiny, that’s not the next step. Do the hard thing, which is market and sell. Don’t use this excuse to go… It’s a form of procrastination, right? But Daniel’s asking, “Well, I’m German, maybe it doesn’t make sense to translate some blog posts and other marketing stuff into German. What’s your take on this, Asia?  

Asia Orangio:
Yeah. Okay, so I can see both sides to this. I think my ultimate strategic question would be, is this actually your next best growth opportunity? And we don’t have all the information, we don’t know what the MRR is, we don’t know all the things. But my first… This, I don’t think is a bad idea, at least short term. It could become challenging though, because while the founder may speak German, do you want to build out a marketing team and a support team that also speaks German, and also caters to the English markets? Globalization, on the one hand, especially now with AI, is actually very easy, and at the same time, not easy at all. Because you ultimately do need other people to support this additional language. It’ll just be you in the beginning, but then, assuming you grow and you build up a team, etc. they are also going to need to be able to support this other additional language. 

But, that aside, I think, again, I really go back to, is translation actually your next best thing to do? So I would be not knowing all the details, obviously, about the product, but I would actually be looking instead at, are there other channels? Are there messaging opportunities that I have that I’m not aware of? Are there onboarding activation? There’s monetization, retention. There’s a whole other world of growth opportunity that’s not translation. However, like globalizing in some kind of way, it could be an easy thing. But yeah, but then I also think, too, how much of the market is realistically looking for this? 

So it’s tough to say, but my guess is I’m soft on it. I feel like there’s probably other opportunity that’s maybe more pertinent, and also too, it’s another go-to-market question, right? Is supporting the German language… is that something that you’re actually gonna be committed to in the long run? And I think that that’s like… You know? Three years from now, five years from now, are you gonna have the resources available to support that? I think most people don’t think about that in that way.  

Rob Walling:
I love that. Yeah, I feel the same way as you do. I think I’d probably feel a little more strongly in him not doing it. I am pretty unconvinced that this is the next best thing for him to do. And I think the number one thing I thought of, was exactly what you said. Yeah, so you’re gonna get some Germans who come and use a product and maybe pay, and you’re supporting them in German, because you’re bilingual, and then you have some English users, and so now you have to hire support people who are bilingual. And when a German speaker starts using your app, aren’t they gonna want the app translated, too? Aren’t they gonna want your knowledge base translated, too? They’re gonna want email support. You know? 

It’s not always, but to Asia’s point, in the short term, you can kind of hack around these things, and in the long term, I just don’t think it’s good decision. My gut is that if English speaking is for developers, it looks like, or development managers, and it’s like the English market is plenty big, I would spend the time on that, rather than making things complex at this point. So thanks for your question, Daniel. I hope that was helpful. Our next question is a written question. So voicemails and video questions go to the top of the stack, except I feel bad, and sometimes written questions are so old. This is from May 9th, so this is a seven or eight month old question just because the video ones keep taking precedent. So I try to stick maybe one text question in each Q&A episode just to get through a few of them. 

So this question is from Vijay, and he says, “I would love to hear any insights on how to go from B2C/freemium to B2B. How to keep small and individual users happy, they’re coming to me via word of mouth, but still sell to big companies? I started something small for my own use and made it available for free, then I added a couple more features with a B2C paid plan. Most of my users are from big enterprises and Fortune 500 companies, and happily use free features. I’m not making much money out of it. My plan is to add more valuable features and make it worthwhile for enterprises. But, for now, I’m stuck with the B2C freemium model, and I’m trying to figure out a way to go B2B. 

And based on his email address, it looks like he’s at agilebin.com. The H1 is “Improve productivity of scrum teams, using Agilebin power tools.” Asia, what do you think? This is another kind of go-to-market, isn’t it?  

Asia Orangio:
Mm-hmm, yeah. And this is interesting because when we think about go-to-market, which I like to use Brian Balfour’s framework for this. So product market, model and channel. And what Vijay is experiencing is, he created a product for a market, there’s something about the model that’s not sustaining that, financially speaking. He’s not making much money from it, he said. He mentioned freemium. And so now he wants to move from that to selling more to businesses. And that usually means… A change in market usually means a change in other aspects of your rich market strategy. 

So now we probably do need to change the product in some kind of way, which he mentioned. So I’m glad that he’s aware of, “I gotta go and build more features and make that more valuable to businesses.” So he asked the question, “How?” And I thought that was really interesting, because there’s many facets to the how. There’s the, “How do I figure out what the right features are?” Then there’s “How do I go out and get maybe the first customers of this new version of it?” Or I’m gonna put it in finger quotes of a pivot, because that’s kind of what it feels a little bit like. It doesn’t sound like a hard pivot. At least, we don’t know all the details. 

But, the how is interesting, because I think the how, it sounds like Vijay should probably go and… I know I’m probably going to say “Research” a bunch in this session as per usual, but I’d be curious about his product discovery process. So how does he discover what the product should be for these other businesses? And in that process, he will naturally come across ways of how he can actually acquire them. But I think it’s got to start with, “Well, what are we ultimately building and selling?” And then also, “Who are we selling it to?” It sounds like these businesses, but those have to get pretty crystal clear before we’re able to even figure out what channels should be in the first place. This sounds like part of discovery. This reminds me of the book, oh gosh, Continuous Discovery Habits by… is that Teresa Torres?  

Rob Walling:
Yes.  

Asia Orangio:
By Teresa Torres, yeah okay. That’s the book I would probably put in front of Vijay, in terms of answering the question of how from a product perspective. But then from a market perspective, I think that that’s going to depend very specifically on what types of companies he’s looking at. My guess, he’s going to be looking at some form of sales, like outbound sales of some kind. Probably going to be looking at Demand Gen in terms of acquisition. But from there, yeah, it’s going to depend a little bit, I think, on how he thinks about this. There are opportunities based on what agilebin.com does. This also reminds me a little bit of Dropbox and how Dropbox grew. I mean, we hear about growth loops all the time, but I’m wondering if there’s like a, this might be slower and longer, but there are likely growth loops that Agilebin could probably consider. But my guess is he probably wants money in its pocket sooner than later.  

Rob Walling:
That’s the challenge of freemium, right?  

Asia Orangio:
Yeah.  

Rob Walling:
Because it moves revenue out, which if you have kajillions in venture, you can do it. And if you’re bootstrapping and trying to quit a day job, usually you don’t want to do it.  

Asia Orangio:
Right.  

Rob Walling:
So that’s a challenge. I like the way you thought about it. Brian Balfour, he famously ran marketing at HubSpot, I believe, and now he has this… What is it, in the Bay Area? The academy he has. It’s teaching people how to market.  

Asia Orangio:
Oh, is it Reforge?  

Rob Walling:
Reforge.  

Asia Orangio:
Yeah.  

Rob Walling:
Yeah. Yep.  

Asia Orangio:
I love Reforge.  

Rob Walling:
Yeah. And Brian Balfour’s awesome. He just launched a podcast in the last few months as well. But I like your talk about go-to-product market model and channel. Those are the four. Before you said that, I was like, “I think the things that Vijay needs to think about, are how much the product needs to change, how his marketing might need to change, and how his sales operation needs to change.” Which I think right now he has no sales operation. So it overlaps a bit with what what you said. And realistically, the first question I have is, “Do you want to go after Fortune 500 companies and big enterprises?” You’re talking procurement, you’re talking sales cycles of six, nine, 12 months. I say this from second experience with 171 investments, who the majority of them do some type of sales process. 

And if you’re up for it, then awesome. But really be sure you want to do that. This is no longer an indie hacker project, once you do that. Product-led growth, as some people throw around, is much like freemium, way harder to do well than everyone thinks. And the second thought that I had is, “Does your product… Could it serve the enterprise today? Would they buy it as it is?” It’s not, will individual users use it? But, will a team pay the money for it. And pay enough money. Because the moment someone says procurement or custom terms of service, or “I want single sign on,” or “I want…” You know? Whatever. Enterprise to be able to this and that. All right, cool. Minimum, 30 grand a year. That’s it. I’m not going to go through the pain or do any of that for less than about, usually I say 25 to 35 grand a year. Minimum, minimum, minimum. Because otherwise, it’s just not worth it. And there’s only so many customers who are going to pay that. 

So that’s the thing I think I’d be thinking about. I mean, when I look at it super tactically, I think you can have a dual funnel, right? I talk about dual funnel where it’s like you have this low end funnel. That can either be free or it can just be inexpensive. Think of Castos which is podcast hosting. And they have $29 a month plans and they have plans that are thousands a month, where they do all the editing and everything. And that’s cool. He has a dual funnel, people coming in on the low end and the high end. There’s enterprise sales on the high end, and there’s not on the low end. It’s self-serve. And Ruben Gamez has this with Signwell as well. There’s the main product, e-signature, and then the API is pretty expensive. It’s a, “Call us,” type pricing. 

So you can do that. And I think Agilebin could potentially be that. But I don’t know. If you don’t already have the interest from the enterprise, you got to think, I guess it’s just as you said, it’s a cold outreach at that point. Or a warm outreach in this case, where you look at what are all the domain names on the emails I have in this free plan. Oh, there’s 10 people at Netflix, there’s seven people at Target, there’s nine at CVS. Are you now reaching out to them saying, “Hey…” That’s PLG, right? That’s what Slack has done. Is that a potential first step of just seeing if anybody responds or anybody cares or anybody’s using it enough to consider that there needs to be some type of enterprise plan? That’s probably how I would be thinking about it. The alternative is just to abandon the low-end at all, not do it to a funnel. Just say, “I’m going shut down the free plan,” or at least shut it down to new signups for now. And I’m going to double down and go all-in on enterprise, figure what to build to do it. 

I think that’s more risky, and I don’t know in the near term that I would necessarily do that. It feels like the free plan is his marketing right now. That’s the marketing channel, so he owns the leads, as Patrick says.  

Asia Orangio:
Right. And it’s… What’s the saying? “Freemium is not a revenue model,”?  

Rob Walling:
Yeah, it’s just a marketing channel. Yeah.  

Asia Orangio:
Yeah. It’s more marketing. Something else that you mentioned that made me wonder, because it sounds like the tension is really not making enough. There was something… Yeah, “I’m not making much money out of it, So my plan is to…” et cetera, et cetera. That sounds like the tension point. And what I’m also curious about, is what if you switched away from freemium? That terrifies a lot of people. It scared a lot of people. But if there’s not that much coming in, if it does not feel like it’s as big of a risk, what if you move away from freemium and figured out how to make this work on the smaller end? There’s all kinds of trade-offs for this. But it makes me wonder, do we actually have a better product than what we think we do, and we’re just giving away a lot for free, basically?  

Rob Walling:
And moving away from freemium can be undone pretty easily, because you can just hide the free plan on the pricing page, wait a month or two, keep the free plan active, don’t kick everybody off, don’t start charging people yet, and just see what happens. And maybe do reach out to your free people, your folks who are currently on your free plan and be like, “Hey, did you know the pro plan is so amazing and you should really upgrade,” and blah, blah, blah, and see if you can sell it to anybody. That’ll start giving you an indication of “Have I really built something people want and are willing to pay for?” That’s my product market fit text expander. Not just building something people want. Building something they’re also willing to pay for. And I think that’s the biggest question that I’d be asking myself these days. So thanks for the question, Vijay. I hope that was helpful. 

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Our next question is a voicemail from Fred.  

Fred:
Hi Rob. My name is Fred. I’m a long-time listener, first time caller. My co-founder and I have a bootstrapped SaaS called Worktable, which offers a PC-based platform that makes webcam play easy for trading card games. As you mention periodically, engineers often hate sales, and we’re not exceptions. Yet, I’m particularly struggling with how to approach cross-channel marketing, if that’s the right term here. We have a warm lead, which is a charitable organization that serves children with prolonged stays in hospitals. They want to help the children they serve reconnect with friends and family, and a very common request is to play physical card games. As long as we can afford the cloud costs, we aim to serve them for free. Unfortunately, the goodness of our heart doesn’t pay the bills. Our hope is that they will give us an occasional shout-out to help us recruit paying customers who can enable this to continue indefinitely. The shout-out from them, could bring thousands of times more traffic than we’ve been able to generate ourselves. 

However, I realize just hoping isn’t enough. How do I frame this in my own mind, and in conversation with them, so that we all feel I am asking them for a win-win? Thanks in advance for your advice, and thank you for the thought-provoking discussions in the podcast.  

Rob Walling:
So this one’s interesting. This is why like listener question episodes. Because people come up with just stuff that I would never think of. What’s your take on this?  

Asia Orangio:
Okay, so there’s so many layers to this one. And I think that’s why it’s such an interesting question, and just scenario in general. So this first makes me think about what growth loops exist in the business today. And what I mean by growth loop, is there is some trigger that happens that generates either an awareness or an acquisition or some quality touch point with the person that you ultimately want to acquire. So for example, the most popular one that everyone knows about is Dropbox. When you sign up for Dropbox, you… What is it? If you share Dropbox, or you invite someone else, you get more space?  

Rob Walling:
You both get more space, I believe.  

Asia Orangio:
You both get more space? Slack is another really popular one. You create your organization on Slack. First thing Slack asks you to do, is to invite your team members, and then so on and so forth. The other most common growth loop that most people aren’t aware of, but most people have, are actually marketing websites. So you create content, it attracts people, ideal people come to your website, et cetera. Hopefully they sign up. It’s a tougher growth loop, because it’s not super predictable. It’s not like a one-to-one transactional type thing, but it is technically a growth loop. And what this made me think about, was, what are the growth loops that exist for this business when it comes to the charity specifically? So, when the charity is using, I think it’s video games. Is that what this is?  

Rob Walling:
It’s called WarpTable, and I had to Google it, but it’s software that allows you to play physical card games remotely. So think of Magic the Gathering or even I imagine Solitaire, or I don’t know, I have a bunch of games. So as long as you have a webcam set up and can see the cards on the table, and your opponent is on the other side of that, and they also have that, then… I don’t know exactly what the software does, but that’s basically what it is.  

Asia Orangio:
Yeah. So this makes me wonder. Well, first the request, it’s almost like a hopeful, “I want to maximize this as much as possible. I want to make sure this generates more customers for us.” And my first thought was, “What growth loops exist in the platform today, so that way when either the charity uses it or anyone from the charity, involved with the charity, et cetera, uses it, that it creates a natural growth loop? That was my first thought. And then the second thing that came to me was, it also kind of sounded like maybe Fred might have been stuck on positioning this to the charity. 

Like, “How do I position this in a way where they’re going to see the value and want to actually invest more in this or pay for it,” whatever it is. Because, unironically and maybe also ironically, Fred is like, “We are not running a charity, but we are helping charities.” Which I totally get that. I totally get that. So this kind of… It’s like a little bit positioning, and I also kind of felt like maybe also too, Fred is like, “I’m afraid to charge for it.” Especially if the kids love it.” So I don’t know. I could see scenarios where the relationship with the charity could be worked out where the charity does lots of case studies and does testimonials and things, and kind of makes it so that they become like marketing in a way. 

But I think that there’s also potentially product/platform opportunities or app opportunities, whatever that looks like, to ultimately generate, act as a growth loop. And then I think there’s this other part that’s like the conversation with the charity about, “How do I position this in way where they’re going to hopefully get it, see value, et cetera?” There’s many layers to it.  

Rob Walling:
Yeah, I agree. The way I think about it is, the charity sounds awesome. They’re helping sick kids. And I think if you’re going to do it, yes, ask for… I love the idea of case study testimonials as marketing material. And if you ask for one or two emails to their list a year, that they promote you or something on social, what’s their biggest social channel. But I would be super specific about it. I wouldn’t occasionally mention. Like, what kind of feels right to you and not too much? Is it two mentions a year across channels? Is it three mentions? 

And then, assuming the costs aren’t big to serve these customers, I’m just… It’s PC software, so I’m assuming again, it’s not like a kajillion dollars. I would probably just go into it hoping that it broke even. And at best be like, “You know what? If this never does anything, at least I did good for the world, and at least I did good for this charity.” I don’t see a strong reason not to do this. Now, if they weren’t a charity… When I first read the question actually, because I read the transcript first, I didn’t catch that they were a charity. 

And I was like, “No, don’t do that. Don’t give away your software so they could talk about you.” But then I was like, “Oh, it serves children with prolonged stays in hospitals. Oh, I would just do that out of the goodness of my heart.” You know? And try to help them, again as long as the costs aren’t high. Anything, any marketing or any value you get out of it, to me, I think is a bonus. But I wouldn’t have high hopes for something like this. Of like, “Oh, I’m going to sell a bunch of pieces of software. “Because I think you might be let down.  

Asia Orangio:
Very, very valid point. That makes me wonder, there’s a charity, but are there other customers or users who are maybe much better fits for these asks? So it is a little bit more of a quid pro quo. But yeah, that’s a tough one. That’s a tough one.  

Rob Walling:
It is. And you do have ask yourself, if you’re trying to get a startup off the ground, as you said earlier, is this the biggest growth potential opportunity you have on your radar right now? It probably isn’t. But then we have to ask ourselves, who are we as people, and what are you willing to potentially sacrifice in terms of a time investment or in terms of some revenue, or whatever it is that you’re going to sacrifice, with the hopes of helping a charity and helping kids in hospitals, right? And so I think each of us has our own answer to that. 

Most of the time on the podcast we talk a lot about maximizing our growth, maximizing our enterprise value, while maintaining healthy relationships, right? While not driving our family and other relationships in the ground. But in this case, I think there is even that third factor of kind of broader world, and whether you’re willing to sacrifice a little bit in order to help them out. So thanks for that question, Fred. Hope that was helpful. For our final question of the day, we have a video question from Patrick on how to advertise an unknown product category.  

Patrick:
Hey, Rob. Thanks for all the great episodes. Huge fan. Steve Jobs is famous for saying that… What is it? “People don’t know what they want, until you show it to them.” This can be a really good thing, because it means you’ve got a blue ocean new product like the iPhone. The problem I’m running into, is how do you run advertising campaigns for some things people don’t know exits? My product is in the B2B SaaS space. It’s called ThreadLive. It’s an email workspace designed for B2B sales and procurement people, and project teams that are spending hours every day managing emails. We got a Chrome extension that goes right into Gmail, so you can quickly mirror emails into our platform, and then manage them like you would a file, or share them with other people. 

Anyway, our initial focus is single player mode, MVP. And we plan to introduce collaboration features in the future. We’ve got a freemium model, and then after about two months of use, we’ll be charging $20 a month. So, clearly this is a product that needs many users to be successful, so we need a low-touch model. The problem is there just aren’t a lot of people searching for something they don’t know that they need. So, what do think is the best way to contact and market to these types of users? Thank you.  

Rob Walling:
So, before I kick it to you, Asia, I want to do my famous startups for the rest of us, comments, about, please don’t use Steve Jobs or Basecamp as examples. Because, Steve… when he was 23, guess how much he was worth. $1 million. Which is actually about 5x. He would be worth $5 million. When he was 24, he was worth $10 million. When he was 25, he was $100 million. You know what I mean? And so, if you’re in that case, then use Steve Jobs as an example. If you co-invented, or, say, co-founded a company with the inventor of a once-in-a-generation device, the Apple computer at the time, then use him as an example. If you bootstrapped to nine figures in ARR, and you were one of the first SaaS apps ever, and you did a really good job executing, but also got a little lucky, as Jason Fried said on the MicroConf stage, then use them as an example. 

Otherwise, you’re not in their shoes. You don’t have the resources. You can’t. Basecamp comes and says, “We don’t do marketing, we don’t track analytics, we don’t track opens.” And so should you? Well, are you Basecamp? Keep in mind who you’re following. So I just want say that, as anytime I hear the Steve Jobs, the Basecamp, or Henry Ford’s often quoted, and I’m like, “Oh, so you’re in their boat, then.” Because no, you’re not. Most of us aren’t, and we have to grind and we have to do things a little differently. And I want to be honest, Jason Fried and DHH are TinySeed mentors. They invested in our first fund. So I’m not throwing shade at them, but I’m saying they often give advice that fits them really well and worked for them, that I think it won’t work for 999 out of the next thousand startups. So anyways, with that, Asia, you want to take a crack at this one?  

Asia Orangio:
Yeah. Oh, I’ll throw in timing as well. I think, thinking about timing, and curves and all of that, and when certain things… But anyway, okay. So this question is really all about, I’m hearing there’s messaging challenges. I’m also hearing a little bit positioning, and if you follow the April Dunford model, of course, then you know that messaging is derived from your positioning. So it really starts with pretty solid positioning, and then of course we get into messaging. The thing about customers not knowing what they want, until they have it, the thing about that statement is that customers are never going to be good product managers. They’re never going to be able to tell you what features to build or what to do. They can really only tell you what they want. And it’s our job as product managers and product owners to extract that at scale at a very high level, and also get into the nitty details of, okay, how does this actually translate into value, based off of what the customer is asking for? And how can this be translated more globally across the whole product? 

But, even when we do that, what we find is there is some narrative or story that we were telling about how this product ultimately contributes value to people. And even if you don’t have a software category that this fits into, that doesn’t necessarily mean that you’re not going to have words for how to describe this to folks. Because ultimately, customers connect the most with what their pains are, what they’re struggling with, and what they’re hoping to achieve and to accomplish. Ideally using your product. But, if we were to get break this down two jobs to be done, which is a framework for interviewing customers and really understanding what progress they’re trying to make, what we’re going to find is that customers, ultimately, once they have their jobs, they come to you, you satisfy the jobs. And then over time, the jobs change. And new jobs pop up, and hopefully your product still surfaces or satisfies those needs, and otherwise they turn. 

But, all that’s to say, though, that most customers are not necessarily looking for, “I want the absolute best CRM,” and then they go to the CRM category and they troll through… Usually it’s, “Yeah sure, I want the CRM but there’s all these other things I want about this.” And so my question to Patrick would be, it’s okay if there’s not really a category for this. That actually is the least one my worries. I’m far more concerned with how does your customer describe it, and therefore how do we now use that to inform our messaging? And that’s what we use in our advertising, that’s what we use on our website. That’s what we use to really connect with a customer who’s trying to buy this. The first part of the question, that’s where I start with. 

So the second part is really all about… So, people aren’t searching for this, because there’s no software category for this, that people are not searching for it. But going back to what I was saying earlier, my thinking around this though, is there might not be a category for this that they’re searching for, but they probably are searching for, “I have this problem, I have this pain.” And what are y’all using to satisfy this problem or this pain?” And again, this is probably gonna be long tail keyword type work, but that’s the first thing that comes to mind. I think the second thing that comes to mind, is we are making the assumption that search is going to be the first way that people discover this as a product. So I think my other question of course would be, if we were to sell this to folks, what are some other ways that people might discover this product in the context that of course they’re using it in? So, this is a… What was it? It’s a Chrome extension?  

Rob Walling:
Yep, for email productivity.  

Asia Orangio:
Mm-hmm. This automatically makes me think about what, about, oh gosh, like the Google App Store, or the Chrome App Store. Is there discovery happening through that? I’m also curious too about, what are some of the…. are we translating this into other browsers? There’s many other ways to distribute, is what I’m getting at, beyond just search.  

Rob Walling:
I like those. Yes, anding you, because I agree with those, and I want to kind of pile a little bit on. You actually mentioned early on about product, and how as product owners, we don’t build what customers tell us to build. We hear what their problems are, and then we have to translate that into a solution, right? So I did a rant on this podcast probably within the last year on a solo episode where I talked about the Henry Ford, “If I’d given them what they wanted, they would have given a faster horse.” No, you wouldn’t have. Not if you’re a good product person. Because they would’ve said, “A faster horse.” And I would have thought, “Well, I can’t make a faster horse. But, could I make a train run the same routes as a…” You know what mean? 

And you eventually get to where it’s like, “Could I make a device that…” Because they don’t want a horse, they just want a faster X. So what is that? Is that a steam powered car? You know what mean? Like, you get there. And if you’re a good product person, again, yeah, you figure it out, right? The second thing I’m thinking about… I guess I want to piggyback on what you said, of it doesn’t just have to be search. But, what you do need is a massive traffic channel. Massive, to make this work. The only companies that I know, who have made this type of low price point freemium model work, get hundreds of thousands, if not millions of uniques per month. 

Whatever that channel is, usually it’s search, to be honest. Usually it’s content and search, or they have a media company and they an audience. But there’s a possibility that the Chrome extension and App Store has enough traffic to do it. I don’t know of a single example. I was trying to think as you were talking, about a single example of anyone who’s bootstrapped a business like this. Because the ones that I know where it truly was freemium and then 20 bucks a month, are the Dropboxes. How much did they raise? A kajillion dollars. Mint.com, throwback to 20 minutes ago, a kajillion dollars. Trello, Hootsuite, Spotify. You know what mean? On and on and on. Yeah, they’re all freemium. They made it work and they have less than $20… And even think of Netflix with the free trial, and then they’re now 20 bucks, and HBO, and this and that. I know that’s content, not software. 

But, all of them, just bank accounts, vaults filled with money, with rooms of money. So if you’re trying to bootstrap a business, unless you were showed amazing traction and growth, TinySeed would not invest in this business. Because, I don’t believe that you can bootstrap it. I say that a little more confident than I am. I don’t want say 100 % never going to work. 95 % sure, this is an inviable business without quite a bit of funding. 

And it’s because you need to last. You need to last for years. Because Dropbox, remember their early numbers were like “3% of our users used it for free for a year, and then convert to paid.” And that was a pretty high number, actually. So do the math on that, 3%. So let’s say you have 50,000 free users, which is actually a lot. That’s a lot of free users who are… 50,000 active free users. So after one year, that means you’ll have 1,500 paying customers. And at 1,500, doing internet math, live on the internet, times $20 a month, is $30,000 of MRR. 

That is not a viable business, because you’re never going to get to 50,000 active… because 50,000 active freemium user, even if you’re sticky, what is that? 250,000 total premium signups? I don’t know what… you know, I’m kind of making up numbers here, but you got a big drop off here, so you got to think about this funnel. And other than just having a kajillion search visitors hitting you every month and replenishing that, I don’t know how else you do it, unless it’s to your point, one of these other channels that you were talking about. 

Those channels just have to be really wide. You don’t do this with 10,000 uniques a month. You do it with half a million uniques a month. If you do it at all, you do it with half a million or a million. So, this is where I struggle. I mean, on this podcast, I kind of have said, I don’t answer questions about two-sided marketplaces, about bootstrapping them, unless you already have one side of them. Because everybody seems to want to do it, and it’s just like, it doesn’t work. Stop, please. 

The other thing is B2C. And I know this is not B2C. You know, it’s B2B because it’s email productivity. But, the funnel is like a B2C product. And unless you’ve made this work, or unless you know what you’re doing, meaning you are Ruben Gamez or Hiten Shah, or Brian Balfour, or you’re getting mentorship from someone like that and you’re really trying all the things, just setting up the funnel in the way that Dropbox, Mint, Trello, Hootsuite, did, just setting up that funnel, doesn’t make it work. Because it’s cargo culting, right? It’s picking one thing and being like, “Oh, this works because of that.” And it’s like, no, it works because all of it was there. If any one of those pieces hadn’t worked, the business was completely inviable. 

And the thing we don’t see, is it’s a survivor bias a bit. It’s like, what about the… Again, I mentioned Dropbox, Mint, Trello, Hootsuite, Spotify. What about the 99 others or the 10,000 others that just didn’t make it, because they tried this model, and later they pivot? So, I don’t want to be the naysayer. I’m positive, Asia. I want to build people up, but this is a business, from what I’m hearing, I’m just skeptical it’s going to work. But I’m not saying it’s not going to work in any form. It’s like, what would it look like to not do freemium? Or what would it look like to charge $200 a month, or $250 a month, and only sell to enterprise. You know? What else can we tweak to make this a much more viable business? That’s probably where I would start if we were to say, do a strategy session on this.  

Asia Orangio:
This actually does make me think though of businesses that, they’re in the process of monetizing their Google Chrome extensions. So Adblock Plus, I don’t know if anyone’s using Adblock Plus, but they have within the last, I would say, six months or a year, have aggressively moved to, “Hey, please pay us.” And it is shocking, but also not. Because obviously I’m in the SaaS world, so I’m using software all the time, all day, every day. But, it is shocking how much I don’t want to pay for it, because I’m so used to having it for free. And I’m just like, “Ugh, I don’t want to have pay another thing.” You know? 

But, I almost guarantee, if this had been more, if I had the free trial, and I saw how amazing it was, and then… If I had been trained in that way, I probably would be more like, “Oh yeah, I’ll pay for this.” Usually, freemium, it’s crazy in the numbers game, but you’re exactly right. In order for that to be viable, it’s gotta be a two to 3% conversion rate into paid. And there are businesses who of course achieve this, and actually beyond. I’ve seen it. But I would say most folks are much below that.  

Rob Walling:
Most are, yeah. Most are below 1%.  

Asia Orangio:
Yeah.  

Rob Walling:
That, I see. I see quite a few freemium. There is a significant enough number of TinySeed companies or companies that I’ve advised, that have freedom plans or have had freedom plans. And I see the numbers on them, to know that yeah, 3% usually you would celebrate that. One other thought, I wanted to bring up the five stages of awareness. And I did a MicroConf talk in Europe about this a couple of months ago. I think that talk will be available for sale here soon. But, if you have never seen this diagram, you can type in five stages of awareness, Eugene Schwartz. 

And really, Patrick’s question was not about his business model, and asking me to tell him he shouldn’t do it. His question was like, if no one’s searching for it, which you addressed, maybe people are, maybe in different ways, but, if no one’s searching for it, how do you get awareness? And realistically, you have to do what you said, which is go after the problem. Because they’re not searching for a solution, but they probably do have this problem. And five stages of awareness are unaware, problem aware, solution aware, product aware, and most aware. 

In a perfect world, you cater to the last two of those, or maybe the last three. That they are looking for a solution, they know the name of your product, and they really know the space well. As you go further up that chain, so unaware and problem aware, becomes way more expensive, way more time intensive to capture them. And that’s what I was saying with this, is, based on your freemium model and your price point, you need a huge funnel, very wide. And usually, that search can be other things. 

Of course, if you’re truly just trying to advertise, then you go on Instagram. I mean, how much stuff have I bought, where I barely had a problem, or I really was unaware that I have a problem? Like the Amazon flash sale. Oh, I didn’t realize that I needed another pair of slippers, but they totally advertised to me on Instagram. Or, I bought this thing called a flexiCam, which I kind of realized I had a problem, but I didn’t realize there was a solution. 

And it’s a see-through thing where you hang your webcam down in your screen, so you can hang it over a Google Doc. PlexiCam I believe it’s called. I just saw an add on Instagram, I was like, “Oh, yeah, I do have that problem.” I had no idea there was a solution. And so they ran an ad. Here’s the thing, ads are expensive. And that’s why I said, if you’re going to try to do this with ads or whatever, you don’t bootstrap this business. That’s my sentiment, is you do have to raise buckets of funding to be able to optimize that ad funnel. And then why does PlexiCam and Amazon, why do they work? Why can they run those ads? Well, it’s because they sell a product with a decent chunk… You know? That PlexiCam is $50, $70, whatever it is. So they paid off that ad spend real quick. Patrick’s in this case, said “Well, they’re freemium for two months. Only if they’re a heavy user, then they convert to 20 bucks…” You know? 

What are we talking? Six months out, before we get payback? That starts to be challenging. And it’s going to be further than six months, because you’re going to lose a bunch. So you’re talking a 12-month payback, a nine-month payback. And as a bootstrap, you don’t have the money to keep doing that.  

Asia Orangio:
I think too, it seems like there’s an assumption that people don’t actually know about email collaboration tools. But there are absolutely shared inboxes. Front is a huge one. There are shared inboxes that are geared to specific audiences, like support, for example. But email collaboration and shared inboxes, they’re not a totally new concept. It just might be new for maybe the people he’s targeting. But that doesn’t necessarily mean that people are not solution aware. His audience, they are probably solution aware. They just don’t know that his product is in existence. And that’s a very different scenario. 

That’s actually a much more favorable ecosystem to be in. Because, what you don’t want is people who are truly unaware. Like, they don’t even know that they have a problem and this is painful for them. And those are people you don’t want to waste your time on. But it’s very possible that they actually are problem aware. They don’t know that ThreadLive actually exists. And that’s the difference between solution aware versus maybe product aware. That’s the difference. But I would argue that they probably are aware of other solutions. They’re just maybe [inaudible 00:50:58], and they don’t actually solve the problem, so they don’t don’t buy them, they don’t do them. 

But this warrants much more discussion, I think. I don’t think we can assume that they are truly unaware of solutions like this. It’s just much more likely that they’re unaware of ThreadLive, specifically.  

Rob Walling:
I like that. Yeah, I like that clarification. So thanks for that question, Patrick. I hope it was helpful. Asia Orangio, thanks for another banger episode.  

Asia Orangio:
Did we do it?  

Rob Walling:
We made it through. For folks who don’t know, you are the founder of DemandMaven at demandmaven.io. And of course you are Asia Orangio on the Twitters. Thanks so much for joining me today.  

Asia Orangio:
Thanks so much for having me.  

Rob Walling:
Thanks again Asia, for coming back on Startups for the Rest of Us. I hope your new year is going well. I hope it’s off to a great start. I’ll be talking back at you again next Tuesday. This is Rob Walling, signing off from episode 695.

Rob Walling:
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Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. And today I look back at my 2023, and I reflect on the highs and the lows of the year. I’m going to talk through my experiences working on and growing TinySeed, and MicroConf and this podcast because those are the three things that I focused on throughout the year, as well as give some reflections on how I can improve and make things better for myself and those around me in the year ahead. 

If this is your first episode of Startups For the Rest of Us, or you’d prefer not to hear Inside Baseball about what’s going on with me and my professional life, maybe even a little bit personal, we’ll see where it goes, you probably want to either go backwards or go forwards. Skip back forward weeks, go ahead one week, this really is going to be me talking about my experience of this year. 

And I’m not sharing it just to make myself feel good or to hear myself talk. I’m sharing it so you can perhaps see what it’s like for someone who, I think by all measures, is pretty successful, but the things that I still struggle with. I think, at a certain point, I thought, if only I had an app that did $3,000 a month, everything would be perfect. If only I had a $10,000 a month SaaS company, then I could quit my job and everything would be great. If only I built a company to multiple seven figures in ARR and then sold it for life-changing exit, if only, on and on and on. And it’s just something to realize that there is the arrival fallacy that you’ve never arrived. And when you reach that next mountain, there’s always another one on the horizon. 

And so I’m sharing this, hopefully, to help motivate you, inspire you, and show you the reflection process that I go through at the end of the year to figure out how to make the next year better. So hopefully there are some nuggets in this episode that you can learn from, but my feelings won’t be hurt if you decide to skip to the next one. 

Before we dive into that, we are running the next edition of the State of Independent Saas survey and report. Through Microconf, we’ve run the survey a couple of times, and then we decided to take last year off because the information coming through wasn’t changing. The survey is about 40 questions. It takes less than 10 minutes to complete if you have your metrics handy. And then we take that data from what usually winds up being between 600 and 1,000 independent SaaS companies. These are bootstrapped and mostly bootstrapped SaaS companies, and we compile a report with all the key findings and helpful industry benchmarks that you don’t get anywhere else. The survey closes soon. We could really use your input. All the data is kept anonymous, and every survey response we get makes the report that much better. 

Head to stateofindysaas.com to complete the survey, and we’re going to enter everyone who completes the survey into a drawing for a free ticket to Microconf US 2024 in Atlanta. That’s more than a $1,000 value. I know it’s a lot for me to ask you for 10 minutes out of your busy day, but it really would go a long way towards making this year’s report the best yet. We are mixing it up this year asking different questions and pulling out different findings than you’ve seen in the past. So even if you’ve filled out a prior survey, it’d be amazing if you could head to stateofindiesaas.com and complete it. 

If I were to describe how 2023 has felt, how things have gone, it really is almost polar opposites. It’s incredible growth. I think this year had one of the largest audience growth years that I’ve ever had. It might be the number one year in terms of how much my audience grew, between publishing the SaaS Playbook and doing the Kickstarter for that in May. Sold about, I think, just under 3000 copies there. And just last month, past 10,000 total copies sold of that book. And to put that into perspective, it’s self-published book, Start Small, Stay Small, which I published in 2010, has sold a total of just under 15,000 copies in 13 years. And that’s been amazing. I mean, that book has made me… I’d have to run the numbers. Between selling on Amazon and Audible and then selling directly, it’s got to be 350, $400,000 on Start Small, Stay Small. And the SaaS Playbook already passing 10,000 copies sold, I will admit is beyond even the ambitious goal that I had. 

I was happy with the Kickstarter raising low six figures, $108,000, and selling, again, almost 3,000 copies. What I wasn’t prepared for was the continued strong sales. And I think I’m a bit naive. I’m a bit naive on that because I always underestimate, I think, the power of creating good content and the willingness and desire for people to share that. So I’m definitely stoked to have that many copies sold. 

And then, in terms of the audience growth, this year, if you combine MicroConf, TinySeed and this podcast, our email lists and the listeners of this show and the YouTube channel subscribers, it is absolutely past 100,000 people being reached on whatever, a weekly and monthly basis. Depending on how you count it, even if you dupe and assume there’s overlap, we’re probably past 150,000. It’s a lot of people. Everything’s working as it should be. As my mission that I think has become the mission of TinySeed and Microconf is to multiply the world’s population of independent self-sustaining startups. And in order to do that, we have to reach a lot of people. The more people you reach, the more people that you can help and educate, potentially advise, invest in, match together, connect with one another, and have an impact on. And so, for me, audience building and increasing our reach is not a vanity metric. It is a top line key performance indicator of how well we’re doing. 

And so you contrast 10,000 copies sold of the SaaS Playbook in the last seven months. You contrast our reach crossing 100,000 or 150,000, it depends on how you count it, say 150,000 person reach, and you contrast that with something I talked about in a podcast episode probably five or six months ago, I think it was during the summer where I said, “I’m not burned out, but I can see it on the horizon.” And I talked in that episode about a big piece of this… I don’t want to say burnout because burnout is a very technical term, and I have not been burned out this year, and I’m not burned out now, but it’s shorthand for being tired. Maybe I’ll say I’m tired or fatigued or world-weary, whatever adjective we want to use. 

And for me, a big piece of that in the summer was the grind of our content schedule. I record 52 YouTube videos a year. I record 52 episodes of this podcast a year, and then 52 episodes of the MicroConf podcast a year. So you’re talking 156 pieces of content that we push out that doesn’t include MicroConf remotes in-person MicroConfs, five TinySeed events. It’s a lot going on. And while one could argue… The MicroConf podcast, I only record intros. It’s not a full podcast I have to do custom information for, but it’s all work and is something that it doesn’t go away. I don’t take a vacation, or when I take a vacation, I have to record ahead. 

And so the way I started getting around that fatigue or tiredness of the grind was, A, we started finding some folks who could help fill in on the YouTube channel. So I didn’t have to record four videos a month, maybe it’s three. And I started batching recordings. So I would record four YouTube videos in a week, and then I was able to take three weeks off. And that worked until the fall. So this fall, I traveled more in a maybe 10, 11 week period than at any other single time in my life. And for those of you who travel a lot for work, especially if you have a family at home that you like hanging out with, I like my family. I like my house, I like Minneapolis. I like my dog. 

So while I don’t mind being away from home taking whatever it was, six, seven trips, two of them to Europe in a pretty tight timeframe with the time zone changes and all that, it starts to take its toll on you. And there’s a physical toll of the sleepless nights and taking melatonin to try to get on time and then flying back and waking up at four in the morning and trying to operate during the day. And there’s the mental toll and the emotional toll of not being around “my people,” my family at home, and the comfort and I think the stability of what we’ve built here in Minneapolis. 

And so this fall was tough, and it was a combination of things. It was a perfect storm of, we had multiple TinySeed events, we had multiple MicroConfs, and I agreed to speak at a couple of events. And now that I published the SaaS Playbook, I’m getting speaking invites again. And around all that travel, of course, I was continuing to try to ship YouTube videos or I would say continuing to ship YouTube videos and episodes of this podcast. As I commented on a previous episode, you’ll notice there were more solo episodes than usual, and it because I just didn’t have any time to plan to record with anyone. And when I was at home, I needed to hop on it real quick. And oftentimes I had to record an episode last minute right before a flight was taking off. So I didn’t have time to schedule it. 

And so the show must go on, as I say, and I feel like I was able to maintain the quality of the YouTube videos in this podcast, but it all takes a toll. And so that’s what I’ve been reflecting on as the fall has wrapped up, because I’m done with work travel until January. I have one trip there, and then I don’t believe I have any more travel until April, which is MicroConf in Atlanta. If you don’t have your tickets yet, microconf.com/us. 

And so any year where the podcast and the YouTube channel and our audience in general grew faster than any a year prior, where TinySeed was firing on all cylinders, we funded 40 something companies this year, bringing our total to more than 150 companies. And the MicroConf YouTube channel, I realized I got an email the other day that our YouTube channel passed 3.5 million total views, which is pretty incredible. And we ran… I’m trying to think of how many in-person events. I think it was six or seven successfully broke even, made a profit on those. We matched hundreds of folks into mastermind groups. Everything’s working, everything’s up into the right, and yet you can still feel fatigued. You can still be approaching burnout. And if you don’t catch it early and do something to mitigate that and make a change, then you’re going to hit it. 

Once you get into burnout, it’s really hard to undo. Usually, you have to take months off. Sherry and I have a chapter in our book, the Entrepreneur Guide to Keeping Your (beep) Together, about if you’re dealing with burnout. And it’s pretty drastic what you need to do. And so I don’t want to get there. So you have to make changes early because if you ignore it, it’s not going to go away. The ostrich approach to burnout, putting your head in the sand and thinking it’s going to get better by itself, it doesn’t work. And in fact, I’ve tried that in the past and it didn’t turn out well. And so my thinking at this point is, all right, all this has happened. How do I avoid this next year? Because I’m in a lull now, and I say that in the most positive way that I possibly can, relax, not traveling, don’t have a ton of work on my plate other than things like this podcast and the YouTube channel. 

And so as I look ahead towards next year, I think to myself, okay, how can I do this better? And so there are a few changes, and it’s a few changes I’ve talked with my team about already. One is to continue to lean on my team around me to help create YouTube videos such that every YouTube video doesn’t need to be me. And it looks like for the next couple months, I think I’m recording about half of the YouTube videos that I traditionally have, which is great. I’m also taking time off. I’m going to take between three and four weeks off over the holiday break here, Christmas and New Year’s, and then in the early parts of January because it is pretty quiet and the ability to just unlock, unplug and not feel like I have to be thinking about, I love SaaS and I love startups. I mean, this is my life. It is my life’s work. It is my life’s mission. It’s what I think about every day, but even something you love, you sometimes need a break from. And that is the case with me right now. 

And so after recording this episode, I have another couple calls and then I’m unplugging. I do have some calls tomorrow, actually. This is what always happens, is I plan to take time off and things sneak in that are important and that I need to do, but that’s what I’m thinking about and that’s the direction I’m heading towards is temporarily taking some time off to recharge the batteries. I’m going to not think about work or… Actually, what I will wind up doing is thinking about work, but at a very high level. I’ll be thinking about strategy and high level vision of what do I want 2024 to look like, where do I want MicroConf, TinySeed and this podcast to be at the end of 2024? What are changes that may need to happen that are beyond things that I talk about on this show, beyond just handing off a couple YouTube videos each month? 

Another one of those changes is the amount of travel. And I know that for me at this point in my life, I can totally travel a handful of times a year, but six, seven trips in 10 or 11 weeks, it doesn’t make sense. And it is 100%… Especially with the time changes, the eight-hour time changes were rough. And so that’s something I’m looking at for next year is, how do we adjust schedules to make things more productive for everybody? 

That’s the other thing is I say this as if I’m the only one that got burned out. There are other people on my team who have really struggled with just getting back into the mindset of being productive. Pretty much everybody got sick, and that’s a travel thing, I think, less than a being around people. But whatever it is, almost everybody on my team who traveled got sick. Knock on wood, I didn’t. But really took a toll on the team as a whole. And so it’s one of those things where you look at the calendar, you’re like, this isn’t that bad. Hopping a flight to Miami and then heading to Tennessee to do a talk and then heading back and then a week later doing something else. It didn’t look that bad and it doesn’t look that bad. But the way it felt, for me, now I know. In the future, I just have to say no to some things. I can’t do everything. We’re all still learning. 

And when I was younger or at a different time in my life, maybe if I wasn’t married, didn’t have kids, there’s all these things that could make it different and could make it feel different. But for me, as I evaluate what gave me life this year and what didn’t, the things that gave me life, were shipping this podcast, the reactions to the YouTube videos, publishing the SaaS Playbook, putting content into the world, putting things into the world that inspire and motivate and educate people so that they can change their lives. Because after all, that all serves my mission of multiplying the world’s population of self-sustaining independent startups. And that mission brings me so much excitement and joy and motivation. And so being able to ship that content… Content’s such a generic word, but it’s books and it’s podcasts, and it’s YouTube videos and even conference talks. Being able to inspire, motivate, and educate people has been super fulfilling. 

And so I have to figure out how do I keep doing that in a sustainable way such that I… I’ve been doing this, what? I’ve been blogging since 2005, so 18 years, almost 19 as of a few weeks from now,.and been writing books since 2010, been podcasting since 2010, 13 years, almost 14 years. I’m going to keep doing it. I hope you don’t think this episode is me saying, oh, I’m retiring from all this content because that’s not the thing. I’m actually figuring out how do I continue to do that at the pace and the quality that I have been, and maybe even improving the pace and improving the quality, but you get the idea. 

And then on the flip side, when I look at things that took life for me or that drained energy, definitely travel is one of them. And it was the pace of travel. It’s not ever getting on a plane because I’m going to Cancun with my family in a couple of weeks and that is going to energize me. Being on the plane will not sap energy at that point. And so it really is the pace of travel and the grind of it. And there are some additional things that wind up on my to-do list in my email box, in my Trello board that certainly don’t give me life that I’m also revisiting in the sense of, do we really need to do this? Can I hand it off to someone? Can I just not do this? So I have my shortlist there that isn’t as relevant to share with you on this podcast. 

So as usually happens at the end of the year, I’m cautiously optimistic about what the next year looks like because I feel like I’ve experienced some high highs and some low lows, some incredible challenges that I’ve overcome, but also some challenges that have really beaten me down, but I’m making a change. That’s the key, is if I were to continue doing the same thing and expecting different results, that would just be dumb. And so that’s my charge to you as you listen to this episode, is what do you need to change in your life to keep doing the things that you love to do less of the things you don’t? That really starts with just evaluation. What do you love doing? What’s brought you life this last year? What has sucked energy over the past year? 

And whether you get away and do a true founder retreat, which actually I have not this time, I just haven’t had the time for it, or whether you just spend an afternoon or a few days, evenings, weekend just thinking about these topics, make that list, do some journaling, make some bullet points in a notebook, and then figure out what changes that you need to make to live a better life, to enjoy your work more. If you don’t like your job, it’s no one else’s fault because you’re your own boss. You run the company. If you don’t love running your company, then change it. Figure out how to make it sustainable. Figure out how to make it enjoyable for you. 

If you are going to go on a full founder retreat, my wife, Dr. Sherry Walling, has written a book called The Zen Founder Guide to Founder Retreats, and it’s an ebook. I think it’s $20 on Gumroad. You can just Google it. And it’s super helpful. It’s a whole list of questions and practices for thinking through what gave you life and what didn’t, and it goes more in-depth on that. But whether you use that or you just do a very simple version like I’ve done this year, I wish you the best of luck as you embark upon this journey and you transition from ’23 to ’24. And I hope that when you’re done with this exercise, I guess whether you do it or not, I hope that you’re looking forward to 2024 with cautious optimism as well. 

Thanks so much for joining me this week and every week on the show. It’s great to have you here. And if you keep listening, I’ll keep making these. This is Rob Walling signing off from episode 694.

Rob Walling:
It started for the rest of us. Today I have a mostly bootstrapped startup founder on the show. He is the founder of Postpone at, postpone.app. We’re going to talk about how he’s grown Postpone from zero to mid six figures, and how he came up with the idea by scratching his own itch. We talk about some early growth tactics he used, a recent price increase that was stressful, but highly successful, the platform risk that he’s experienced with Reddit, and more topics for bootstrap founders like yourself. It’s a great interview. I hope you enjoy it. 

One more thing, we’ve recently reopened the doors for our online community, MicroConf Connect. MicroConf Connect is our virtual hallway track. It’s a vibrant community of SaaS founders helping each other and discussing wins, challenges, and frankly, how to grow faster. A couple of months ago we paused new signups to improve the platform based on your requests. With MicroConf Connect 2.0, we’re rolling out three membership tiers packed with new perks, like weekly coworking, exclusive discounts, a searchable content library and more. Whether you’ve been a member of Connect or not, you really should check it out, microconf. Connect.com. And with that, let’s dive into my conversation. 

Grant McConnaughey, thanks for joining me.  

Grant McConnaughey:
Thanks so much for having me, Rob.  

Rob Walling:
Longtime listener of the show, and now you’re going to be on it. Are you going to love listening to this episode and hearing your own voice?  

Grant McConnaughey:
It is going to drive me crazy, but I will force myself to do it.  

Rob Walling:
It drives everyone crazy. I view interviews and talks. They’re painful for me to watch, but they’re game tape. How can I get better as an interviewee, an interviewer, or someone who’s doing a talk? Your app is Postpone. It’s at, postpone.app. Your H1 is the Reddit, Twitter, Instagram and TikTok scheduler for creators, automate sharing your content across all your social media accounts, and grow a following. So folks know you are a TinySeed company. You started developing Postpone in January of 2021. How did this come about? Folks who listen to this have either no ideas or a lot of ideas. Did you have a cajillion, and you picked one, or was it just so obvious to you this needed to get built?  

Grant McConnaughey:
Yeah, sorry, and just to clarify, it was January, 2020.  

Rob Walling:
Thank you.  

Grant McConnaughey:
So started working on it a couple of months before COVID hit. It really started as a New Year’s resolution project. I wanted to grow a following on Twitter, write blog posts, and get some sort of following about software engineering and things like that. I have a lot of respect for folks like Adam Wathan who’ve built this incredible following on Twitter, and then found ways to build products that those folks are interested in. And it becomes this feedback loop where you’re just building cool stuff for people. They’re buying it, you’re growing an audience, and it’s just this self-sustaining thing. So to do that, I really wanted to write blog posts and share them on Reddit as well as Twitter and other places. If I found that there wasn’t really a Reddit scheduler that existed, or at least not one that I thought was very professionally looking, there’s a couple that existed. 

I remember thinking, “I feel like I could do this. Maybe there’s other folks who also want to post on Reddit and treat Reddit the way they do their Twitter account.” Threads wasn’t around at the time, but those kinds of social media apps. So I ended up just working on it, and had this idea of, “Why don’t I build the Reddit app? I will use the Reddit app to market my own blog posts. I will write about building the Reddit app, and it will become this self-sustaining thing where I build the product, I use the product, I write about the product.” S that’s really where it ended up starting, just something I thought I needed myself and hey, maybe other people will find value in this as well.  

Rob Walling:
So scratch your own itch, which cuts both ways. Sometimes that works and sometimes it doesn’t. Sometimes you’re the only one that needs it, or no one’s willing to, but you need it, but you really wouldn’t be willing to pay for it and other people wouldn’t, or you can’t reach the customer. There’s a bunch of reasons why it potentially might not work to scratch your own itch. If someone comes to me with a scratch your own itch, I usually say, “Great, now, find 10 other people who need it. Do some validation.” It’s not a hard and fast rule, but it gives you a little more certainty that it might be actually valuable. Did you do any validation, or did you just dive into the code?  

Grant McConnaughey:
So the timing of Postpone is really a big part of the story as well. I started in January, 2020 because I was managing, and just really missed building stuff. Then March, 2020 rolled around, and as we all know, COVID hit, we’re all staying at home. So the project turned into this something to work on for fun, and I really didn’t do a lot of validation because I just enjoyed working on it. I enjoyed having something that I could write about. So there wasn’t a lot of that validation, but over time, more and more people would find it, and then that’s where I would start. I didn’t seek validation, but it eventually came after building it for months and months just for fun really.  

Rob Walling:
Your day job was at Zapier. Everyone who’s listening to this would know it. So you were an engineer at Zapier, and then nights and weekends you were building Postpone. Did you launch in March so did it only take you a couple of months to get to enough of an MVP that you felt like others could use it?  

Grant McConnaughey:
My whole goal for the year was to make a single dollar online. It’s really just an excuse to sign up for a Stripe account, have a small enough goal to just do something that someone could send me some money for, and have some project that people hopefully find value in enough to pay for. Yeah, so I tried to get it out as quickly as possible. That MVP is embarrassing. I would love to go back and see a screenshot of it. I know that it would be so bare bones, but it did the MVP. It scheduled Reddit posts, told you how they performed, the very basic feature that you would expect in something like this, and got it out in about 10 weeks.  

Rob Walling:
So that’s where. Some software developers talk about when they look at the stair-step approach, and they look at a step one business, very simple thing. They say, “What if I can just ship the whole thing, or ship an MVP in four weeks, five weeks of nights and weekends especially?” I often say, “I don’t know if I’d validate then. If I can just ship.” So that’s actually a pretty quick way to validate. Maybe I’d have one conversation, or maybe I’d do a little less. But it’s not like, if I have to go six months, I need to know that there’s going to be some type of traction for this. Getting it out in 10 weeks, 10 weeks is not nothing, but especially nights and weekends, it’s pretty impressive. What was the reception like? Did you launch it on, did do Product Hunt, or Reddit, or Hacker News?  

Grant McConnaughey:
I did Reddit, Product Hunt, Twitter, Indie Hackers. I posted it everywhere. The reception was frankly crickets. You can put all this work into it, and do this big grand reveal, but at three or 400 followers at the time, there was mostly just, “oh, that’s cool. Yeah, good for you.” So it took quite a while to actually even get that first paying customer. I remember, I think it was July, so it took a few months to even get to that point of just… Kept working on it, talking about it, and got that first person to pay me $8 a month for a subscription at the time. Boy, that was one of the most exciting $8 I’ve ever made in my life when that finally happened.  

Rob Walling:
I love that. Do you have a memory of seeing the email, or getting the ding?  

Grant McConnaughey:
Yes. I was in my car, and saw it at the grocery store. I was like, “Holy cow.’ Someone in the world thinks something I made has enough value that they’re like, “Here’s eight bucks for that. Thank you.”  

Rob Walling:
Something I should have asked at the top was to give us an idea of where the business is at today.  

Grant McConnaughey:
It’s grown a ton since then. These days we’re up to still just a pretty small group of three of us, a scrappy group. I’m the only founder, but have since found a software engineer who’s excellent. I’ve worked with him before, and a support person. We’re now in the mid six figures, ARR range, and growing pretty well.  

Rob Walling:
Did you think when that $8 came through, “You know what, in a couple of years, mid six figures, I’m calling my shot. I’m Babe Ruth in it,” at a point?  

Grant McConnaughey:
Never. It took me two years to even accept that this is, I need to go all in on this. Very risk averse, and really got it to the point where it didn’t feel as risky anymore because it was making a true salary amount of ARR. So I felt I could go all in. So I really took it the slow, steady, and risk averse way. That’s my style.  

Rob Walling:
The style of many. So folks know the context. You launched it in March, you got to 1K MRR by the following January, so it took nine or 10 months.  

Grant McConnaughey:
It did, yeah. It took several months to get the first customer in the first place, and just slowly, slowly every month getting four customers, then eight customers, and then 20. It just kept growing.  

Rob Walling:
You did something, I would almost call this a growth hack. I know people don’t like that term. But you did kind of a growth hacky does not scale thing right at the start. You want to tell us about that?  

Grant McConnaughey:
Yeah, so Reddit has a decent API that has a lot of great endpoints that you can get Reddit data. It’s really valuable, really good stuff. So in the early days, this is June, July, 2020, wrote some scripts to see who are the users who are submitting the most posts, because in theory, those are the folks who would most benefit from a scheduler like this. And tried to find who those common posters are across a bunch of different subreddits, and just sent cold DNs to see if they would be interested. As you can imagine, most cold DMs, most people didn’t say anything. Maybe 1% sent me a not so happy reply, but then every now and then a few people per day would be like, “That’s really cool. That’s awesome. I’ll check it out.” And it was a good fit for them. So the kind of thing that really doesn’t scale well, and haven’t done that in years, but in the early days it was a good way to just get anyone to care.  

Rob Walling:
You scrapped to 1K MRR in about nine or 10 months. Then you continued working full-time at Zapier until October, 2022 because you applied to TinySeed. You were doing 10K, or a little more than that when you applied?  

Grant McConnaughey:
Yeah, it was north of 10K MRR at the time I quit. Funny enough, I’d actually put my notice in at Zapier, this is October, 2022, before getting accepted in the TinySeed, and then a week later got the email from you all that I had been accepted. So I really wanted to do this either way, but then when I got that email, it was like, “All right, this is the right thing to do for sure.”  

Rob Walling:
That is cool. Folks who listen to the show know that I don’t make the podcast an advertisement for TinySeed. So I have a couple of questions for you about your experience, not to say, “Well look how great TinySeed is.” But I’m curious, there was a thought process there of like, “Should I do TinySeed?” Why do it, is my question?  

Grant McConnaughey:
I talk to a lot of… I try to have as many mentors around me as I can. I really value other people’s input, especially folks who’ve done what I’m hoping to do. So I talk to a lot of people about, is this the right decision or not? Ultimately I just thought getting in this community of other people who are doing the exact same thing, especially as a solo founder who doesn’t have another founder to bounce ideas off of. I just thought there’s going to be so much value in the mentorship, the comradery of other folks who are also going through the TinySeed process at the same time as me, and have companies that are around the same size as mine. So it just ultimately felt like the right thing to do.  

Rob Walling:
Over the last year, you’ve grown by several X, right?  

Grant McConnaughey:
Yeah, so since joining TinySeed in November of last year, it’s been about 13 months, but we’ve grown 3.4x annual recurring revenue in that time.  

Rob Walling:
That’s got to feel good. What’s been working? Someone listening to this is like, “Well, if I was at 10 or 12 KMRR, and I wanted to grow substantially,” why do you think you’re where you are today?  

Grant McConnaughey:
I think a big part of it’s hard to give an app a ton of, or a company a ton of focus as a side hustle. I really was giving Zapier my full 40 hours, and then working Saturday, Sunday mornings, evenings. But it’s just hard to really focus on big initiatives at a company when you’re doing something like that. So I think having the full time working on Postpone to really dive into like, what are the big things customers are asking for, not something I can just knock out on a Saturday morning. But a big multi-week initiative, a feature, or a new way to position the product that is going to have a really big impact. That kind of stuff has been night and day. You could see the line just trend differently as soon as I could start getting these really big, impactful, valuable features out much more quickly.  

Rob Walling:
Are you telling me that focus helped you grow faster?  

Grant McConnaughey:
Focus.  

Rob Walling:
Focus.  

Grant McConnaughey:
Just focusing on it, yeah, not splitting my attention.  

Rob Walling:
Well, why didn’t you launch four or five more apps to see what sticks? Because isn’t that, sorry, a little starter for the rest of a drinking game joke there. Yeah, you actually, I believe you published a graph on Twitter. It was with the MRR removed, but it was a graph of your MRR with no y-axis. There were two inflection points where you bootstrap or hockey stick. One, you pointed arrow, it said, “join TinySeed,” which I was like, “Oh, it warms my heart.” The second one was increased prices. So tell us about that. Was it little bit, was a lot bit of A&R and I busting your chops, TinySeed playbook raise prices, or did you already have it in the back of your head?  

Grant McConnaughey:
It was almost exclusively you all busting my chops. I think A&R and you both, we had a meetup at one point, I think you both said, “If we do nothing else but you get you all to raise your prices, by the end of this, we will have succeeded.”  

Rob Walling:
We will have succeeded, yeah. That’s pretty much the mantra.  

Grant McConnaughey:
I thought, “Well, I should probably do it right then.”  

Rob Walling:
So you did raise prices. Well, it was June of this year, so it was about six months ago, right?  

Grant McConnaughey:
Yes.  

Rob Walling:
That was when you locked, because you were Reddit only until then, I believe. And now you have Twitter, Instagram, and TikTok. So you launched the Twitter support, and you increased your prices. About how much to give people an idea?  

Grant McConnaughey:
So about 20%. So we had a $19 a month plan that went up to 25. We had a $39 a month plan that went up to 49, and so on. So about 20, 25% or so increase. And yeah, tried to coincide with the launch of that of Twitter support so it didn’t just feel like increasing prices. It’s also, “Hey, I’m getting twice the value as I was before. I can now connect more accounts, manage them all from one platform, and paying a little bit extra. I don’t mind doing that.”  

Rob Walling:
Did you grandfather existing customers, or raise the prices on existing customers as well?  

Grant McConnaughey:
So I didn’t end up raising prices for everyone, despite the advice I got from several folks was to go ahead and just rip that bandaid off. But ultimately I decided to go with an approach where I introduce brand new plans but only include Twitter support on those new plans. So folks are grandfathered in on their old plans if they want to keep that they can. But these newer plans are where we’re going to start adding new platforms like Twitter, Instagram and TikTok. So for access to those, you do have to upgrade. So it was a good way to entice folks to upgrade if they want to, but also not feel like they’re being forced to. What we found is a huge percentage of our customers use one of those other platforms, and gladly upgraded to the newer plans in order to bring on more accounts plus expanded it onto higher tiers in order to connect more accounts because we do limit some of our plan tiers by number of accounts connected. So it’s been great for both bringing in new customers, and expansion revenue as well.  

Rob Walling:
Got it. And your average revenue per account has gone up pretty substantially as well.  

Grant McConnaughey:
Yeah, that was not just increasing prices, that was also adding higher tiers, which is where we started first. Just don’t have your highest tier be $99 a month because then no one can pay you more than $99 a month. So adding on those higher tiers I think went a long way as well.  

Rob Walling:
Because you have a more for agency’s plan, basically that’s above your 99. So when they come in, and people can go to Postpone app/plans if they want to see what you’ve added in there. So you didn’t have the agency plan at this point?  

Grant McConnaughey:
Not really, no. We had plans that would support multiple accounts, but we called it Ultimate or something like that. We weren’t really speaking the language of agencies themselves because we were mostly marketing toward creators. But it was a really missed opportunity for a long time to bring in these agencies who are willing to pay more, and churn less often as well. So it’s been really big for postpones a ARR.  

Rob Walling:
I often say that raising prices is technically easy to do. It’s like, “I’m going to change the stripe call. I’m going to change the number on my pricing page.” You do some stuff. Technically it’s usually not terrible. The big block is usually emotional. It’s a mental thing of like, “I might break my business. I’m going to make people mad. Is it even the right thing?” There’s a lot of, it’s a big change. It could break the business. Did you experience that before raising prices?  

Grant McConnaughey:
I did. It was scary to do. I had to have friends and just people I know come in, and talk me up a little bit to, “Hey, it’s going to be okay. You can always roll it back if it goes horribly.” So I finally did do it, but it was something I was pretty hesitant about, and was really afraid that new signups are just going to fall off a cliff if we do this. Shockingly, I’ve shown you the ARR graph. I can also show you the subscriptions graph. And it also went up. We raised prices, and number of subscriptions went up as well, which seemed completely countered to me, but that’s what had happened over the next few months as well.  

Rob Walling:
That’s incredible. It’s a good story. In most cases, that’s what happens. I’m invested 171 companies across TinySeed, and my own personal portfolio. Almost all those have raised prices at one point. If they haven’t, and they’re listening to this, they should raise the prices right now. But no, but seriously, the usual result is that everything goes up into the right, and obviously the counterintuitive part is you can raise prices too far. If you doubled all your prices today, it might work or it might not. At a certain point if you’re just priced too high, the alternatives are cheaper, they’re easier, they’re whatever, if you’re easy to switch away from, and there are alternatives, you just can’t. There’s only so much elasticity. But even with that in mind, I can’t remember the last time a TinySeed company raised their prices, and then had to roll it back. 

With every batch of companies every six months, we fund 20, 25, 27 companies, more than half of them, probably significantly more than half, raise their prices during the batch year. So that’s a lot. I don’t know the exact number, but obviously it’s dozens and dozens. It may approach a hundred, but it’s a lot. I cannot remember. I’ve had people raise prices, and need to change, “Oh, we got the value metric wrong.” Or, “We need to tweak the plan, we need to do some stuff.” But to raise prices, and then truly roll back. I don’t know that I remember a time when that’s happened. So it’s interesting, it’s anecdata. But nonetheless, it is usually the right call specifically if you haven’t done it in a while, or never done it, I think in your case, right?  

Grant McConnaughey:
Yeah, well, I’ve done it a few times. Like I said, we launched with an $8 plan.  

Rob Walling:
That’s right.  

Grant McConnaughey:
I think our highest tier was $25 at launch.  

Rob Walling:
Got it.  

Grant McConnaughey:
But as at the time, I truly didn’t understand customers, and what they’d be willing to pay, what their price sensitivity was. But we hadn’t raised prices in over two years. I sent everyone an email, and really included this laundry list of like, this is all the amazing things we’ve added in the last two years, as well as this new Twitter support that we’re launching. I think that that really helped to show folks, the app has grown so much in that time, and there’s been so much extra value that you’ve been getting. It makes the price increases maybe just go down a little bit better. But frankly, I wish I would’ve done it six months earlier, or soon after joining TinySeed based on how well it went.  

Rob Walling:
That’s the thing, if you’re in a very slow moving space, you can evaluate prices every year or two. If you’re in a faster moving space, like marketing technology, MarTech, you’re in every six to 12 months to me, is an evaluation. Doesn’t mean you raise every time. But I used to have a notebook because I’m old school of all the major drip competitors. I would write down all the prices that were published, and about every six months, nine months, I would go and I’d redo that. 

I just had pages and pages in notebook. I would compare them and be like, “What are these other people doing?” That was a mental evaluation for me. I would also, and it wasn’t just, look, it’s not just competitors. What are your customers saying? What features have we added? Do we need to rework our value metric deal? Is it working, is it not? So there’s more to evaluation that’s looking at competitors. But that’s where fast moving space like yours, I do think that if you’re not pretty seriously considering changing your prices, raising them, or tweaking value metric about every year, think you’re going to fall behind a little bit.  

Grant McConnaughey:
Part of what makes it scary is, once you realize you’re raising your prices, and becoming maybe the most, your prices are now a little bit higher than some of your competition. There are other post schedulers out there certainly. But the Reddit space is pretty niche still. And of the ones that do exist, their prices are a little bit lower. So just coming to accept that we’re going to be the higher priced one, but that’s going to be because we offer so much extra value that you simply can’t get from competitors in a much better package, and just being okay with not being the least expensive one.  

Rob Walling:
We’re not cheap because we’re not cheap. There’s an ad, I think I mentioned it in the episode that went live last week about you don’t have to be the cheapest and own that actually. No, we’re not cheap because we’re the best. You can’t get anywhere near this from other tools. Speaking of Reddit, I remember a Reddit API debacle that happened, say in the last four or five months. There’s folks listening, if they didn’t pay attention, you want to catch them up on what happened, and I want to drive home. You are a scheduling app for Reddit, Twitter, Instagram, and TikTok, but you are solely Reddit for what, two years? And that is still the bulk of your business. 

So to hear that the Reddit API had this platform risk, that’s what we’re going to talk about here. But to hear that, that had some difficulties, I remember stressed you out a lot. You and I talked, we did some Zoom calls, we did some slacks, and it was a little bit tenuous. So why don’t you tell the full story because this is great. I think for people to hear, to understand platform risk sometimes doesn’t work out, and sometimes you can get around it.  

Grant McConnaughey:
It was definitely a scary time. It was in April, 2023, I think when Reddit-  

Rob Walling:
It’s nine months ago.  

Grant McConnaughey:
Yeah, they announced some new API pricing, but they weren’t specific about what the pricing would be. They just said that API pricing is coming, and will be required. It’ll be required to pay for the API essentially. So that just inherently, you get a little hesitant because you don’t know what that means, and is this an existential risk or not?  

Rob Walling:
I think hadn’t Twitter just done their API thing where they were like, suddenly we’re charging $12,000 a month or some insane number.  

Grant McConnaughey:
Yeah, it started at 42,000,  

Rob Walling:
Forty-two thousand a month, it’s bananas. So I remember you and I got on a call, and you’re like, “I’m concerned Reddit’s going to charge 42,000 a month because then we can’t.”  

Grant McConnaughey:
Well, exactly. That was a big part of it. If the pricing is fine, no big deal. Happy to pay it. If it’s $42,000 a month, then there’s the existential risk. You just got to close up shop. And to be clear to folks, the Twitter pricing has changed as well. They now have a hundred dollar tier, $5,000 tier, and $42,000 tier. So they have added multiple tiers since then. But Reddit did come forward with their API pricing about six weeks later in May. And fortunately for Postpone, it was something that just based on the nature of our business, the average revenue per user, and the number of API calls we make, totally doable, ended up working out just fine. 

For third party Reddit clients who have a huge amount of free users, who are using tons of API calls all day every day, it was an existential risk, unfortunately for many of them, and much lower average revenue per user for those as well because they’re very B2C mobile apps. But fortunately for Postpone, it was something that we could handle, and ended up not being a big issue. But for a while there it was like, “What do we do? This could be it right here,” because we had all the eggs in the Reddit basket at the time.  

Rob Walling:
It was touch and go. I remember you were pretty stressed because it was truly potentially existential that it would destroy the company, and there was no, you hadn’t launched. Now I’m remembering you said it was April, so you hadn’t launched Twitter, Instagram, or TikTok, right? Those came in June, I think.  

Grant McConnaughey:
Yeah. Honestly, that’s where the benefit of being a TinySeed really came up because we added Twitter, Instagram, and TikTok because of a conversation I had with you where you said, “I think it’s just time to expand.” It was a great way for Postpone to diversify a bit. I think it was definitely the right call.  

Rob Walling:
And also a way to get a little more MRR, little more average revenue per [inaudible 00:25:26]  

Grant McConnaughey:
More MRR, make it a little more sticky. Lots of benefits that came with diversifying.  

Rob Walling:
Well, I’m glad the platform risk didn’t wipe you off the face of the earth this time.  

Grant McConnaughey:
Me too. But it is. It’s scary. There are folks who built Twitter apps who, their app didn’t exist after the $42,000 a month pricing came out, and they just had to close up shop. So it’s something that I think about quite a bit. Platform risk is real. So I have to keep that in mind and really ask whether it’s something you can work around, or if it’s truly existential.  

Rob Walling:
I think I want to wrap up with this question of, you’re a successful bootstrap, mostly bootstrap entrepreneur. You’re in an enviable position that I think a lot of listeners of this podcast would love to be in. With that in mind, what do you wish that you were doing better right now as the founder, operator, and CEO of Postpone?  

Grant McConnaughey:
Great question. I started working on Postpone as a software engineer at Zapier. Really wonderful company that I enjoyed working with them, but I just wanted to build these other skill sets as well. But I’ve found that in building Postpone, building up this product, and a small company, I still spend a lot of my time building, working on product stuff. I still feel like an engineer at heart. You simply have to focus on marketing as well. If I could go back, I would tell myself to spend three times as much as I’m spending on marketing over the last couple of years, whether that’s working on SEO building landing pages, especially signing up for affiliate programs that your users can join, and things like that. Don’t get into a rut of just building, and building, and thinking, “If I build this feature, then they will come,” because they might not. So definitely sticking with marketing would be a big thing for me to focus on. Huge recommendation to the book. I think it is called, Traction?  

Rob Walling:
By Gabriel Weinberg.  

Grant McConnaughey:
Yeah. Finding customer acquisition channels, trying out new ways of that. A Huge shout-out to that book, which really kind of opened my eyes to how to start getting a little bit of leverage on these different marketing avenues, and really doubling down on the ones that work.  

Rob Walling:
Grant McConnaughey, it’s been great having you on the show. You are, G McConnaughey on Twitter. We will link that up in the show notes because your last name is not the easiest to spell.  

Grant McConnaughey:
It is not, no.  

Rob Walling:
We will also try to find your tweet with the graph of your MRR because I thought that was really cool. We’ll link that in the show notes as well. Thanks again for coming on the show, man.  

Grant McConnaughey:
Sounds good. Thank you so much, Rob. I appreciate it.  

Rob Walling:
Thanks again to Grant for coming on the show. It’s great to be back in the saddle doing some interviews. I’m done with a ton of travel this fall. So I’m trying to schedule a few guests to come on the show. I look forward to seeing you back again next week. This is Rob Walling, signing off from episode 693.

Rob Walling:
Right now I’m just giving examples of perhaps anti-patterns of getting in your own head and staying in your own head and thinking that just because you prefer it, that your customers do as well and that your market does as well. And look, if you’re selling to other developers, maybe that’s true, but the moment that you step outside of that and you start selling to anyone who is not writing code 40 hours a week, you need to seriously rethink your approach and to think, not of how you buy, but how do they buy. 

Welcome back to The Startups For the Rest of Us. Today is a Rob’s Solo Adventure where I’m going to talk about making sure that your product works. Talk about how little you’ve proven until someone gives you money, why not being the cheapest option can be good for your positioning. And maybe one or two more topics depending on how the time shakes out. 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. So the first topic I want to cover today was actually sent to me by content producer, Ron. He helps make sure the podcast gets out on time and is really in charge of getting the YouTube videos all through our editing and production process and out every week, 52 YouTube videos a year, 52 episodes of Startups For the Rest of Us per year. In that role, producer Ron gets a lot of cold email outreach. 

In this case, I actually got the cold email and it was AI for podcasters. And so that sounds intriguing, could this be something we could use that could help us get the podcast out faster? So I forwarded that to producer Ron. He signed up with a credit card. He tried the app, didn’t work. I think it crashed or 404’d or something that obviously just didn’t produce a result. So he left. He came back later that day or the next day, tried it again, still didn’t work. 

So he says, “All right, my credit card’s on file.” So he goes to unsubscribe in the app, can’t do it. So he has to get on chat or email with the support person and he says, “I need to unsubscribe.” And the support person didn’t ask anything, didn’t ask why, didn’t ask if it worked, just said, “Okay.” And so think about the level of effort, the amount of time and money that was just wasted and the opportunity that was just wasted by not having their signup flow and their application working as it should be. 

It’s you have one job and the job is to make sure someone gets through your flow and then that they just get that first very simple use case. This is not a complicated app. It’s not as if you’re logging into marketing automation where there’s 50 different features and one of them broke. It is basically a one, maybe a two feature app. It’s kind of just a feature wrapped in a web page. And the challenge is we are actually a really easy customer to sell to. 

We pay money, we self-sign up. If it works and it’s great, we don’t need to talk to anybody. We self-onboard. We have budget. It’s crazy. So I think the big takeaway here for me is when was the last time you or someone on your team went through your own onboarding and actually tried what you think the first feature people should try is or that first step of the onboarding flow? 

This is one of those things that can easily get lost and forgotten because you deploy it once and you polish it up and then a year later your app, your positioning, your entire funnel, even maybe even your ideal customer profile has changed. But we just forget to revisit those first few steps, those first few moments that are so critical for new customers. 

So hopefully this can serve as a public service announcement for you to either assign it to someone on your team or to just step through your onboarding and try to travel your minimum path to awesome, that first spark where you think, “Man, this is a really cool piece of software.” And make sure that that is not only frictionless, but that it works. My second topic is from a cold pitch. 

Someone cold emailed me saying they had a B2B SaaS app. The idea was interesting. I’ve never invested in an app where the founders have cold emailed me. It’s always through, it has traditionally been through MicroConfs, and of course now it’s through TinySeed. But I believe someone emailed me and I was trying to size them up to figure out are they a fit for TinySeed, either the accelerator or our investment syndicate. And they had a good story and they had a solid founding team. 

I like the app idea. I think I went back and forth once or twice and I was like, “Great, what’s your revenue?” And this sentence, I’ve heard this in the past, I’ve heard it multiple times, which is why I’m bringing it up now. This sentence always kills me. Sentence was, “We are pre-revenue still as we have been focusing on early user acquisition with a free offering.” 

And that makes me cringe. Because unless you’re a pretty experienced entrepreneur or free really well, don’t do this. This is the early entrepreneur’s trap. Yeah, that’s what it is. I talk about several big mistakes, common mistakes that founders make in the SaaS playbook, and one of them is translating your app to other languages to or early or it’s white labeling or adding other verticals too early, underpricing your product, right? 

These common mistakes that folks make. Another one is thinking that free users offer any value. Now, if you’re a second, third, fourth time entrepreneur, if you really know free, if you have listened to Ruben Gamez, speak about it. If you’ve listened to me take Ruben Gamez’s four criteria for when free plans work and you’ve heard me say them on this podcast, then maybe you try it out. 

But what I find is it’s an excuse for doing something hard, which is charging people. It’s an excuse for at a minimum telling people, “I’m going to charge you when you get value from this product.” The first several months of Drip, as I was hand onboarding new customers, first 10 or 20, I would say, “Look, I’m not even going to take a credit card from you. Get in. Let me help you get onboarded. Let me know how much help you need. When you start seeing value from it, let’s get a credit card on file. It’s going to be 49 bucks a month.” 

And some people got onboarded in a week and some people got onboarded in six weeks. And in fact, it helped me understand how long I thought that our trial should be once we were automating this. But had I just told them, “Oh yeah, it’s just free. I’m just getting free users.” Unless there is a network effect where getting free users actually increases the value of your business, in almost every case, almost every case, I see of an early stage or a new entrepreneur trying this, it’s a mistake. 

Because it’s noisy as it is when you have 10 or a hundred or 500 users of an application. There’s so much noise. You don’t know who to listen to, you don’t know what to build. You’re getting conflicting, distracting reports of, “Build this feature. Pivot this way. Have you thought of just replicating all of Mailchimp’s functionality inside your app and adding a mobile Android and iOS apps?” It’s too much already. 

And if you’re doing it free, what you’re doing is not segmenting your customers to find out who really needs this. Who is this truly a pain point for? Because if it’s painful, someone should be willing to pay for that. And if they’re not, it’s probably time to move on. Right? On this podcast I talk about B2B SaaS that solves a problem, a pain point that people are willing to pay for, people in businesses are willing to pay for. 

And so if you are not able to charge someone something and you’re getting free beta users, “Free beta users,” I’m doing air quotes for those of you listening to the audio, you have proven so very little until someone gives you money. Specifically with B2B SaaS, you’ve proven almost nothing until someone gives you their credit card. 

I want to talk about my third topic of the day, and it’s around positioning about not being the cheapest option. So every once in a while on Instagram, I come across an ad that I really like, and I think several companies have copied this ad. I don’t know which one was the original, but I’ve seen it for pens, I’ve seen it for shoes. And the one I have in front of me is for socks. But I like the tone of it, the confidence of it. The headline is, this ad is for socks. 

And the headline is, “They’re not cheap because they’re not cheap. It’s not cheap to make a sock that lasts four times longer than cotton. It’s not cheap to create a merino wool that won’t lose its shape. It’s not cheap to reduce waste by 80%. It’s not cheap, but it makes a big difference. Introducing Aerowool, four times the life of Cotton. Twice the performance, one fourth of the waste.” That was an ad read for Aerowool, but you get the idea, the confidence. 

They’re not making excuses, they’re not trying to be Walmart. And this is how I’ve often felt about the businesses I built, specifically TinySeed. I was at a dinner with a friend, kind of in the broader MicroConf ecosystem within the last six months, and they are not a founder and they don’t raise money and they don’t know much about fundraising, but they said, “Yeah, someone told me that TinySeed money is expensive.” And I said, “Yeah, that’s true.” 

We are not the cheapest money. By design, we are not the cheapest money. If you want cheap money, go to a doctor down the street, a dentist, maybe a local angel group, go try to raise on Sand Hill Road, go to one of kind of the copycat like the tier B, tier C funds, whether they’re indie funds or whether they are major venture funds. Those have cheap money because they have no differentiator. Right? They don’t have world-class mentors like TinySeed. 

They don’t have the Hiten Shah, the Claire Suellentrop, the April Dunford, Asia Orangio, Chris Savage, Rand Fishkin, Jordan Gal, Steli Efti, DHH, Jason Fried. They don’t have that mentor list, right? It is a who’s who of B2B SaaS. You can go to tinyseed.com/people if you want to see the full mentor list. They don’t have myself and Einar Vollset giving you advice. They don’t have a year-long program. They don’t have the best B2B SaaS alumni network with 151 companies, 250, 275 founders. 

And look, this piece here, I want to be super clear, not an ad for TinySeed, but what I’m telling you is the reason that we are able to not be the cheapest money is because of the value we provide. We’re not a commodity, right? When you’re a commodity, then it’s a race to the bottom and it’s who can get it here the fastest and the cheapest at a quality that’s good enough that it doesn’t break. And in thinking about your own positioning, I’m not saying everyone needs to be the premium play. 

In fact, if you can find a hated competitor that has artificially kept prices up because of their brand or because of the space or because of their sales model, you can slip in underneath them and actually be less expensive and have an amazing product, there’s a real opportunity there. But for me, by the time I’m building a brand, by the time I’m at a million ARR, 2 million ARR, and people list me as one of the top two or three options in a space. I say, list me, they list my product, my company, as one of the top two or three options in a space. 

That’s when I’m starting to think about pricing power. Because now people are coming to me, to my product by name. They’re not just looking for a generic replacement and looking for the cheapest option. So in this conversation, I actually posted this in the team TinySeed Slack. Because I said, “I like the thinking about this, and this is how I think of TinySeed. We’re not the cheapest money and there’s all these reasons.” 

And Alex, who’s our program director in Europe for our EMEA program, he rewrote the ad just in our Slack and posted it. And I want to read that here because I like it. He said, “Our funding isn’t cheap because we’re not cheap. It’s not cheap to build a program that’s four times longer than the average accelerator. It’s not cheap to create a world-class group of industry-leading mentors. It’s not cheap to connect a network of hundreds of SaaS founders through events worldwide. 

It’s not cheap, but when it comes to your business’s growth, it makes a big difference.” Thanks, Alex. I use that without permission. I’m sure he won’t mind. But I liked that thinking of if you are going to be the premium brand, don’t apologize for it. In fact, do the opposite. Point out that you are more expensive and why. Get ahead of the objections by saying, “We are not the cheapest option.” 

And in fact, go to Instagram and type in, “We’re not cheap.” And maybe see if one of these ads comes up. Because every time I see it, I get a little smile on my face and I think, “This is not lazy marketing. That’s pretty cool, creative marketing.” Finding the perfect software engineer for your team can feel like looking for a needle in a haystack, and the process can quickly become overwhelming. But what if you had a partner who could provide you with over 1000 on-demand vetted senior results-oriented developers who are passionate about helping you succeed and all that at competitive rates? 

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My next topic is on mirror research versus market research. This is a quote that I heard from the Comic Lab podcast. I’ve referenced them several times on the show, actually pulled, it’s one of those, it’s two comic artists. They’re comic creators, they’re entrepreneurs, and they do Kickstarters and Patreon and they have books and they have stuff online. And it’s neat to see the overlap between startup founders and comic, these two comic artists as well as the things that are different. 

And that’s why I listen to the show. I love going into other disciplines that are tangentially related to see what I can learn. And so in a recent show, one of the hosts said, “Are you doing mirror research or market research?” Mirror research is when I look in the mirror and I say, “Well, this is what I would prefer. Therefore, that’s what everyone would prefer.” Market research is when you listen to prospects, customers and your broader market. Developers are famous for this. For saying, “Well, I would never pay for that because I could build it in a weekend. 

I would never pay for that because I could cobble it together in no code, low code or some other form. I don’t like to talk to salespeople, so I’m not going to do sales.” No one likes talking to salespeople. “I’m not going to do demos because they don’t work. They’re annoying. I’m not going to have high prices or have prices that increase with the value someone gets because I don’t like that kind of pricing. I don’t like that with MailChimp that as I get more subscribers, I pay more money. 

So I’m going to start a competitor where it’s just flat pricing for infinity subscribers.” And that last one is actually kind of what BeHive is doing right now and they’re having success with it. So I could talk about that as a case study on another episode. Right now, I’m just giving examples of perhaps anti-patterns of getting in your own head and staying in your own head and thinking that just because you prefer it, that your customers do as well and that your market does as well. 

And look, if you’re selling to other developers, maybe that’s true, but the moment that you step outside of that and you start selling to anyone who is not writing code 40 hours a week, you need to seriously rethink your approach and to think, not of how you buy, but how do they buy. To think not how you approach a purchase process, onboarding and retention, but how do your customers and your market think about this. 

And the way to get educated on that is to have conversations with them, to observe them as they use your application and to ask a lot of questions and figure out who’s succeeding and who is not, and what can we do differently to help more of them succeed rather than stand in front of a mirror and ask, “How would I like to buy and assume that my insurance agents,” if that’s who I’m serving, “Are going to in any way think anything like I do,” because they’re probably not. 

So that was mirror research versus market research. My last topic of the day is about ventriloquism and how it doesn’t work in comics, but realistically, it pulls from the Pablo Picasso quote that says, “Learn the rules like a pro so you can break them like an artist.” And I have a couple examples of this actually. I think this really drives home with SaaS in the sense that if you want to do something creative, like have a free plan in a B2C two-sided marketplace, first learn the rules of the common pitfalls that people run into. 

Right? So if you’re thinking about doing a free plan, maybe launch an app without a free plan and learn how that works first or maybe have a lot of conversations with folks who have actually made free plans work. Don’t just gut your way into it. Learn the rules of what makes them work and not before doing it. 

I think of this with all the rules of thumb I have around should you ask for credit card upfront or not? Should you do demo only or should you offer demo plus start a trial as an option? What are the rules of thumb around B2B SaaS pricing? There’s a lot of them around enterprise pricing. There’s all these rules, and they’re not rules, they’re rules of thumb, they’re guidelines. 

And now that I have them kind of locked in my head and all lodged as this whole framework, again, that I kind of bled onto the page, so to speak, for the SaaS playbook. That’s my most recent book, saasplaybook.com, if you haven’t read it. But now that I have them in my head, I kind of have a gut feel of when they should be broken because I know the rules, rules of thumb that is, because there are no rules. 

Right? There’s no hundred percents, but there’s a lot of eighties and 90 percents. 80, 90 percent of the time you should do this unless you have a really good reason not to. So in SaaS, it’s pretty obvious to me that this idea of coming in not knowing any of the rules, you’re likely going to make some really basic missteps. The common mistakes, I referenced some of them earlier, but there are dozens of them. Things SaaS founders should never do. I talked about this, what? Five, 10 episodes ago. 

Those are the rules of thumb that you should learn and then learn when to break them. And the example I referenced earlier is about ventriloquism not working in comics. I would never even think about ventriloquism in comics. But referencing Comic lab, again, they were talking about this rule between the two of them of how trying to have ventriloquism in a written art form, a visual written art form, like a comic. Imagine Garfield or Calvin and Hobbes and them trying to do ventriloquism. 

You could pull it off, but you really need to know how to do it. It doesn’t really work in comics unless you are an expert, unless you’ve learned the rules so you can learn how to break them. And I loved that analogy of it because again, this is something I just would never think about because I’m not a visual artist, can’t draw to save my life, but I love that thought of, it’s just kind of a rule of thumb. 

And they talk to a lot of beginners, right? That write into their show and they’re like, “Yeah, it just doesn’t work in comics.” Basically, don’t try it. And then the other example that I thought of as I was talking to someone about Rob Walling Drinking Game, the Beatles, and they were asking, why were the Beatles early songs so kind of generic and poppy? You go back to 62, 63, 64 and you have She Loves You and Please Please Me and I Want to Hold Your Hand. 

I still enjoy these songs, but they aren’t very deep compared to Sgt. Pepper’s and A Day in The Life and Strawberry Fields Forever, even Yesterday, Let It Be, Hey Jude, these amazing songs that are timeless and some of the certainly, inarguably some of the best songs of all time. But you compare it to their early work and they do covers and they write just a lot of kind of catchy poppy four chord songs. 

And I was trying to explain why that was. And I was like, “Hey, it was a sign of the times.” That’s how everyone else sounded. And then the Beatles, once they were number one, they just started innovating. And so they drove really the shape and the direction of music in the mid to late 60s. But realistically, I think a big piece of this is that Picasso quote, “They were learning the rules so they could learn how to break them.” 

The early songs sounds so old because they had to conform to the norms of the day to get on the radio. Right? They had great songwriting at the time, but it was very much this template of this three minute song with a verse, a chorus, a verse, of chorus, a middle eight with a solo and then a verse, a chorus and an ending. And then they got popular. And once they got popular and their name was recognized and their name was a brand, then they could start getting creative. 

If they’d been creative before getting on the radio and being really popular and selling a lot of albums, they probably would’ve never gotten popular. So then they could start setting the trends, right? No other songwriters, popular songwriters of the day were doing introspection about themselves, like the song In My Life. And Yesterday. They were doing deep topics, psychedelic topics like on Revolver or even Sgt. Pepper’s and Magical Mystery Tour. 

And after that, pretty much whatever they did was considered ahead of its time and cutting-edge. And in fact, that stuff that they recorded on a lot of four tracks and a few eight tracks, which is mind-blowing, they recorded it 60 years ago, still holds up today. But the Beatles had to learn the rules first, and they had to conform to the standards of that day just to get on the radio before they could break so many of the norms of music and songwriting of the day. 

Speaking of the day, I’m about to call it a day. I really appreciate you joining me for this episode and every episode of Startups For the Rest of Us. If you haven’t left a five-star review in your podcatcher of choice, that would help me a lot. And if you haven’t read the SaaS Playbook, you should head to saasplaybook.com or Amazon.com and pick it up. It’s only $10 on Kindle. I also sell it for $10 on PDF on my website. And if you have read it and you like it, it’d be amazing if you could leave me a review on Amazon. Thanks again for listening. This is Rob Walling signing off from episode 692.

Rob Walling:
If I’m competing against big, entrenched incumbents, I usually don’t care because I know I can outmaneuver them, but there are some exceptions to that. If there’s a network effect, like a two-sided marketplace or where everyone being there means everyone stays there. Think about eBay and Craigslist. These sites that so many people have tried to copy, including Amazon, tried to copy eBay, they had their own auctions. So, I mean, there’s been all these things that have tried to unseat eBay and Craigslist and they couldn’t because even though the sites didn’t change, it didn’t improve. They have tremendous network effects. And so, if the legacy trade organizations and associations you’re talking about have network effects as a bootstrapper, I personally would be very wary of trying to unseat those. 

Welcome back to Startups for the Rest of Us. I’m Rob Walling. And if you want to see one of the worst hair days I’ve had in years, go to twitter.com/startupspod and check out the clip from today’s episode. In today’s episode, I am going to be answering a handful of listener questions ranging from having a free version with an honor system to pay for it, how to gain traction against entrenched competition, doing sales as an introverted founder, and how to proceed if you don’t have time for the stair step method of entrepreneurship. Before we dive into today’s questions, if you haven’t checked out my YouTube channel, it’s at microconf.com/youtube. I’m putting out 52 YouTube videos a year with topics ranging from new SaaS ideas that you should build. Looking at acquisition funnels, high touch, low touch, talking about sales, talking about the SaaS sheet codes, pulling some things out of my book and expanding on them. It’s free and it’s easy to subscribe. microconf.com/youtube if you’re interested. And with that, let’s dive in to our first listener question, which is a voicemail because voicemails go to the top of the stack.  

Speaker 2:
Hi Rob, and thanks for the show and books. I recently launched my first product, a vulnerability scanner, available at opalopc.com. It is a desktop application. It is free for non-commercial use and for commercial use only for small organizations. The rest need to buy license to use it. I currently trust users to buy licenses if they are not eligible for free use. The program does not do any license checking itself. My reasoning behind this is that those interested can freely test the product, and the target market consists of very large organizations, and I doubt they will take the risk of breaching the end user license agreement. What do you think of this? Should I remove the free plan? How would you continue? Keep up the good work. Thanks.  

Rob Walling:
So, I’ll be honest, I struggle with this ’cause it feels like just one step above a tip jar of saying, “Hey, if you like us, support us.” I know that you will have a license such that big companies won’t want to break that license, but I’ll be honest, there are a bunch of people, individual contributors at big companies that will download it and just never say anything. You’re going to lose out on revenue, and I’ve never loved the model where I get a small bit of money from a very small percentage of my audience. I feel like if people get value out of my software, I want them to pay for it. 

Now, the exception of course is freemium having a free plan, and in that case, we look at our four, I don’t know, rules or rules of thumb around freemium, which of course were swiped as most of my good ideas are from Ruben Gomez of SignWell. And one of them is there a tiny bit of virality such that another user using it can potentially refer a separate user. Is it low support? Is it low onboarding? And is there almost no cost to you for them to use the software? 

And my guess is the last three are accurate, probably no virality for you. So, I guess the question is does it need to truly be free forever? Or could it be a 14 day, a 30 day, a 60-day free trial that then stops working at a certain point? That’s probably a default way I think about it or having your version so limited to where if it’s a vulnerability scanner, maybe there’s 500 types of vulnerabilities and it only scans for 50 or 100. And so, to actually get value out of it ’cause if I’m an individual user, a consumer, and I want the full value, shouldn’t I upgrade? And enter a license key such that it unlocks those. I don’t know. 

It feels to me like having a true free consumer version. I know that’s how WinZip made their money back in the days. “Oh man, that’s a throwback. Remember WinZip?” And there was that old Winamp player thing from Microsoft, I believe. I mean, but it is Microsoft. They have infinity money and can do whatever free they want. If I was bootstrapping this and actually trying to make money on it, freemium pushes out your revenue, right? It pushes out that revenue line, and if you have a bunch of funding, that’s okay. And you can play the long game like Dropbox did. And the other freemium players that we could mention off the top of our head, Figma, that was one, right? But if you’re bootstrapping, you’re trying to get to the point where you’re quitting your job. While I may have a free version, I personally would kind of want there to be more impetus than just honor system for someone to pay me money because my gut is even of the people who should pay you money, it’s going to be one in 10, one in 50, just some tiny, tiny number. 

And unless I get a cajillion installs of this thing, you need hundreds of thousands of installs of this in order to make any type of real money. And that’s tough ’cause you’re getting tens of thousands or hundreds of thousands of anything is hard if you’ve built it. So that’s my take. I mean, I’m more of the SaaS mindset rather than the old school. You’re almost talking Shareware is what you’re talking, and that model is not one that I personally would return to. So, thanks for your question. I hope that was helpful. Our next question is from Zach.  

Zach:
Hi Rob. My name is Zach and I’m a new listener to the Startups for the Rest of Us podcast. I’ve already listened to a few episodes and bought The SaaS Playbook and read it in two or three days, and it was a fantastic read and would recommend it for anyone looking to start a software company. My question is in regards to competition and maybe some use cases that I just haven’t heard before, I’ve tried to search online, but my niche is in the local government space and the competition would be dominated by legacy trade organizations or associations. Curious if there’s been a product or a company that has gone up against these behemoth legacy companies who, in my opinion, aren’t innovating and aren’t providing a valuable product, but it’s well known throughout the industry. So, curious if you’ve had that before or if you have any suggestions, I would love to hear it. Thanks so much.  

Rob Walling:
Okay. So, this depends on a couple of things. Realistically, I don’t quite understand what your businesses or exactly how you’re competing, but when I think about it, if I’m competing against incumbents, big, entrenched incumbents, I usually don’t care because I know I can outmaneuver them, but there are some exceptions to that. If there’s a network effect, like a two-sided marketplace or where everyone being there means everyone stays there. Think about eBay and Craigslist, these sites that so many people have tried to copy, including Amazon, tried to copy eBay, they had their own auctions. Did Amazon try to copy Craigslist too? I mean, there’s been all these things that have tried to unseat eBay and Craigslist and they couldn’t because even though the sites didn’t change, it didn’t improve. They have tremendous network effects. And so, if the legacy trade organizations and associations you’re talking about have network effects as a bootstrapper, I personally would be very wary of trying to unseat those. 

The second thing is switching costs and switching frequency maybe ’cause if folks, let’s say big construction firms and often governments will sign two, three, four-year contracts for their software, and if you’re trying to get people to switch, they literally cannot without eating a bunch of money for years. So, a, if there’s a lock-in there in terms of duration of contract, but beyond that, switching costs are brutal, right? Imagine if you are like Planify, which is a TinySeed company that builds software for construction firms to run their business on their entire business system. The switching costs to or from them is huge. You have to train all of your employees, everybody out in the field, everyone in the office, and you have to get everybody up to speed and on one day just flip it over and you just hope it works. 

And these are not… It’s not tech-savvy people, right? You’re not dealing with the people who work at TinySeed, right? Or the people who work at MicroConf where we all know how to use Trello. And so, moving to Notion wasn’t that big of a deal and building something in Airtable, we just kind of figured it out. You’re dealing with folks who I’ll say like my dad who worked 42 years in construction, he kind of knows how to use a computer. I mean, that’s about it, right? He’ll call me and say, “I can’t find where Firefox is.” ‘Cause the shortcut from the homepage got deleted and he doesn’t know where to find it, right? So that’s can be the level you’re dealing with. And so, switch and costs are a big deal because the retraining and getting people up to speed is tough. So, I’m not saying don’t do it if they’re a big switching costs, but if they’re big switching costs, like I would want to enter a space where new people are coming in all the time, right? 

Let’s say I build trip email service provider competed with Mailchimp. Switching costs are not that high, but in mentally people think they are, but there are new people coming in all the time just getting started and new people with kind of email lists that want to move it to an official ESP or whatever. So, while there were switching costs, there was also a lot of opportunity each month for new people who were looking for a solution. If you don’t have that and you have high switching costs and you’re literally trying to pull them from entrenched competitors, it’s going to be tough. I’m not saying don’t do it, but those are the two headwinds I’d think about. The third one is brand, right? Do they have a strong brand and does everyone love them? Then there’s no reason to switch unless people are complaining or there’s an actual problem like, “Oh, they’re so expensive. They don’t actually do anything for the money. Oh yeah, we all hate them, but we’re just with them because they’re the only option.” 

Well, now I start thinking, “Okay. How hard is it to switch?” And if one person at a time or one company at a time switches to my software, do they get the same value or do I need a hundred or a thousand to switch out once because there’s a network effect, right? Again, coming back to if it was a network effect thing, I probably wouldn’t do it or I would seriously consider not doing it. Now, if you weren’t talking about trade organizations and associations and city governments, local governments, I guess you said it’s a whole different story, right? Because if we’re going into MarTech marketing technology where the switching costs are low and there are no network effects, and there are some big brands in the space, but people don’t like, I mean, there is huge opportunity in my opinion, but that’s not the question you asked, so I answered it with the information given. 

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Next question is from Bavesh, and I’m answering this one even though it’s a written question because it is almost 11 months old, and that sometimes happens with these. So Bavesh asks, “What makes a SaaS product a low-touch strategy? If all the competitors are undertaking a high-touch sales strategy, can a low-touch sales strategy be possible?” So, the answer to the latter question is yes, it can. The answer to the first question of what makes a SaaS product a low-touch strategy, there’s a couple of things, right? So, if you aren’t charging very much, it kind of has to be low touch, but you really have to do the touch strategy to support the way that your customers buy. If they all want demos and they all want high touch sales and onboarding, then that’s what you do to get the most customers. That’s just what you do. You adapt to what the customers want. 

Here’s the kicker. If they all want high touch, but they’re super cash strapped, let’s say they’re a school or a library or a nonprofit and they need the high touch, but they’re only willing to pay $30 a month, that’s a tough business. I don’t say bad business, but I would never start that business because you’re going to need a lot of person hours that aren’t justified based on the average revenue per account per month or the lifetime value or the annual contract value. Whatever you want to say, you’re just not making enough money to justify it. So, usually I look at how do the customers want to buy, and in some spaces like construction firms buying their business system, I was just talking about with Planify, they’re not going to self-serve, always going to go through a really long sales process. 

I think most lawyers like if you’re serving legal, they want to do usually there’s at least a demo or a conversation. If you’re selling to developers or marketing technology or to entrepreneurs, there’s a split. Usually with developers, there’s more low touch, no touch. With entrepreneurs there’s a subset who are not as technical, but I think of the startup founders, I shouldn’t say entrepreneurs broadly, but more kind of technical, semi-technical startup founders. The more technical they are, oftentimes they want that lower touch, but that’s a generalization. And so, once you enter a space, it’s like getting to know your customer, right? Getting to know your prospects, how they want to buy, and then realizing, can I charge enough to make it worth that level of effort? And to go back to your second question, which is if all the competitors have a high touch strategy, can a low touch strategy be possible? 

The answer is yes. If your customers are willing to buy on the low touch, and in fact, if you can then charge a lot less and have a great product and make it simpler because there’s a certain subset that don’t want high touch. I’ll give you an example, Infusionsoft, which is now known as Keap, I think it’s spelled K-E-A-P. They did high touch only and their marketing automation, by the way. They did high touch only and they were like three or $400 a month and up, so they were priced high, and they did this sales strategy. When I launched Drip, we had a decent subset of their functionality once we got automations and we had, you could say 80% of their marketing automation functionality. Now they have other stuff built in a shopping cart. We weren’t going to build affiliate management, blah, blah, blah. But just in terms of email marketing and marketing automation, we had enough of their functionality that a good chunk of their users could use us. 

And I went with a low touch strategy, frankly, a lower no touch, and I think we did have a book, a demo, and it was only if you were over $100 a month or whatever, we would do a demo, but otherwise you could self-serve, and our pricing was way cheaper because the sales model supported it. And so, we got a ton of Infusionsoft refugees that didn’t like the sales strategy, they didn’t want to buy that way, but they were being forced into it. And so, there was opportunity. The hard part is figuring out how do people want to buy if I’m not in the space? How do you figure that out? And that really is the question. It’s by talking to people, by being in forums, by being in the Facebook groups, by being in the Slack groups, hearing people complain, “Oh my gosh.” At the time Infusionsoft requires a one-year annual commit and a $2,000 onboarding fee, and their support is crap. 

They don’t let you see the product before you buy, and it’s a heavy sales process, and dot, dot, dot, dot, dot. So, I looked at that and said, “Our product is a lot easier to use, therefore, we don’t need all the onboarding and all this other stuff. And I know that we can make money charging starting at 50 a month and that there will be expansion revenue.” Which there was. And that frankly, we could have net negative churn if there’s enough expansion revenue which there was. And therefore, I knew that we could undercut them on price and change the sales model and really take a lot of their disgruntled customers away, which is what we did. So, thanks for that question Bavesh. Hope it was helpful. My next question is about doing sales as an introverted founder.  

Jordan:
Hey, Rob. I’m Jordan from the Netherlands. I’ve been listening to the show for about six months, and I absolutely love the show. So, thanks a lot. I’m a developer myself and have a question about introverted versus extroverted founders. So, on the show, you mentioned founders doing the sales up to a certain point of the business, and to me, that makes total sense. But as a more introverted person, I’ve always found sales to be difficult, perhaps more difficult than for more extroverted people, or yeah, at least that’s my assumption. So, I’m kind of curious where you see yourself on the extroverted versus introverted scale and what advice you have for founders that are more introverted when it comes to sales. Thanks a lot, Rob. Bye-bye.  

Rob Walling:
I like this question. So, to answer, I think it was your last one first. Where do I fit on the scale? So, I’m introverted. And there’s a reason that I talk to a microphone and a video camera instead of hanging out with a bunch of people. While I do this, I enjoy thinking and talking one-on-one or alone, frankly, as you all have heard me do for however many hundreds of solo adventures that I’ve recorded. I’m an introvert. And so, I definitely get drained when I go to big events, even though I run them, I get drained, and I get drained when I have to do sales calls ’cause it’s just outside of my wheelhouse. It’s something I can do. It’s not something that gives me life. 

So, here are my thoughts for you. I would read a couple of books that are focused on this topic. That’s exactly what I would go for because there are a lot of introverts, and I don’t know what the numbers are, but is it 50% of the world? I mean, it’s certainly some percentage that experience this kind of stuff. And so, there is information out there on it. So, one audiobook that I actually have in our audible library that I believe Sherry bought, I’ve not listened to, but it’s called Quiet: The Power of Introverts in a World That Can’t Stop Talking. And I think as a general book, just to learn more about how you can make introversion a superpower, I think that would be interesting. 

And the other book that I have not read, but I have had recommended to me, and it’s by Matthew Pollard, it’s called The Introvert’s Edge: How the Quiet and Shy Can Outsell Anyone. And that’s $11 on paperback on Amazon, and it looks like there’s an audio version or whatever. I mean, frankly, go to Amazon and type in sales as an introvert or go to Google and type in sales as an introvert book and just pick one with high reviews. And I think the one that I’ve heard recommended the most is The Introvert’s Edge, but someone is going to have a book’s worth of info about this and a thought process and a framework, and a here’s how you take sales and turn it on its head. If you’re introverted, that’s actually an advantage. 

So, here’s one thing I do ’cause I’m introverted and so I’m a little anxious about sales. So, I would get on a sales call when I was doing it for Drip, and I would say, “Hey, I’m Rob. I’m the founder. I’m really not a salesperson, but I know that you wanted a demo and I’m here to show you what we can do and try to figure out if we’re a fit for your use case, if we can help you and maybe save you some money ’cause I know you’re on Infusionsoft. Talk to me about your setup today.” Right? And I would kind of get them walking into it, and then I would be evaluating my head, “Are they actually a fit? I only want to sign them up if they’re a fit.” I didn’t want bad customers that are going to churn or are going to be a bad use of our time. 

And so, I would just be pretty honest with them and be a human upfront about this is who I am and this is the goal, the call rather than trying to talk them into it or trying to act like someone that I wasn’t, right? I didn’t try to channel some fake extrovert in order to do sales, but that’s just my experience. I hope you can find more help in one of the books that I called out. 

And my last question of the day is from Jake. Jake asks, “Thank you for the amazing content and insights you share on the podcast and the blog. My question, what if your idea is time sensitive and you don’t believe you have the time to do the stair-step approach to learn? I’m working on a site to test the idea and see if it has traction.” Thanks, Jake. I would probably just go validated then. You know what I mean? The stair set method is I don’t have any ideas, and I’m going to go try to do it in a repeatable, predictable fashion that I have a decent confidence that I’m going to build it up over time, and I’m going to have some moderate successes over time that build and build and build. If you have an idea that you really want to build, you’re just very passionate about, then go validate that, right? You can do the 5:00 PM idea validation framework to kind of do a first pass at it, and then do some type of validation. 

I’ve talked about this. There’s the high-touch validation where you’re actually having conversations whether via email or Zoom or Looms. And then there’s the low touch validation where you build a landing page and you can send traffic to it, either just by talking about it to your audience or running ads or SEO or whatever. There’s a bunch of different ways to do that. So, there’s kind of two, there’s more validation modes than that, but those are the two that I think about. I would certainly not go build this because I didn’t have time to stair-step, but to skip to validation on something that you think there’s a real need for and you believe that you’re excited to build it. There’s no rules in this, right? It’s just recommendations, it’s frameworks, it’s best practices to try to help get you to success faster and more often and more predictably. But none of this is set in stone. It’s all just the insane ramblings of some guy who has been starting companies for 20 years, has a few million-dollar companies under his belt, and has been talking on a microphone for 13 years. 

Thanks so much for joining me today and for sending in your questions. If you have a question for the pod, go to startupsfortherestofus.com. Click ask a question at the top of the top nav and audio and video questions will go to the top of the stack. This is Rob Walling signing off from episode 691.

Rob Walling:
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Welcome to Startups for the Rest of Us. I’m your host, Rob Walling. In this episode, I’m going to answer listener questions. I have several voicemails and video calls that, as always, go to the top of the stack, and digging into topics like, if someone signs up for my SaaS and I now have their email address, can I make that part of my marketing list? Also, a question about which customer type they should sell to, and what’s the best way to collect customer feedback. 

Before we dive into that, if you haven’t picked up my book, The SaaS Playbook, after the very successful Kickstarter a few months ago, momentum has continued with the book. And if you haven’t picked it up, you can go to saasplaybook.com, or search for SaaS Playbook in Amazon or Apple iBooks. Is that even what they call it anymore? Audible, all the places. And if you have read it and you like it, I’d really appreciate a five-star rating on Amazon or Audible. That helps me get discovered by new readers. 

I’ve been very pleased with the reception of the book, so much so that my wife, Dr. Sherry, and I have sat down and written a table of contents for a new book. Glutton for punishment, I believe, is the expression you’re looking for, but we are looking to start writing that here in the next few months, so that would be, at the earliest, an end of ’24 release, most likely maybe spring of ’25. That’s going to continue to be around topics about being a startup founder, diving into the psychology and mental struggles of a certain aspect of being a founder, a certain point in time that many of us aspire to achieve. So more on that later. 

I want to dive into our first listener question. If you want to send a question to the show, go to startupsfortherestofus.com. Look for Ask a Question in the top nav, and submit your question. Obviously, as I always say, audio and video go to the top of the stack. I will try to get to a couple of text questions in this episode. So let’s hear our first one of the day.  

Luke:
Good day, Rob and team. I’ve got a small SaaS that is performing humbly, with a few thousand users having created an account and used the product. My question is regarding the email addresses of those people who have created an account. Can I consider that part of my “email list”? So if I were to start working on something new, can I email those people and let them know about it? 

For the longest time, I thought that I could absolutely do that, but then I saw some chatter about spam, and that my approach could actually be considered spam. If emailing those users isn’t technically allowed, how is an email list actually built, if it’s not from collecting them through various online ventures? Do we need to have a clear checkbox alongside the email input field that states, “I allow you to keep me informed about all the things you’re working on, not just this specific product.”? Look forward to hearing your thoughts.  

Rob Walling:
Thanks for that question, Luke. There’s the letter of the law, and that of course is literally going to depend on which country you live in, because the laws are different. And then there’s, I’ll say the kind of moral or ethical implications of it. Because letter of the law, if you acquire an email address and someone opts in and checks the box that they can hear from you or that they want to hear from you, I don’t know of anything in CAN-SPAM, which is a US law, and that’s what I’ll refer to the most during this conversation. I don’t know anything in CAN-SPAM that says I can’t email them about anything I’m working on, until they opt out. They need to be able to click on subscribe and opt out, but realistically, could I email them for years and years about different projects that I’m working on? I believe so, not legal advice, but that is my understanding. 

However, I am of the mind and the belief that I only want to send people things that they have opted in to hear about. And if I’m stretching that definition, for example, let’s say someone opts in at robwalling.com, which they get one of my books for free. It’s called Start Marketing the Day You Start Coding. And in that email, I welcome them and I say, you will hear from me again about stuff that I’m working on. And I hit them up a few weeks later with more info about things I work on on MicroConf and TinySeed. 

Now, if I go to email those users about a TinySeed batch application opening, I always put, at the top, first paragraph, first several sentences is, usually it’s something like, “You’re receiving this email because you opted in at robwalling.com. And as you know, I work on many things, one of which is TinySeed. It’s my accelerator, blah, blah, blah. If you don’t want to hear from me anymore, click this link right here and you unsubscribe.” Then I go into the email about TinySeed. 

Similarly, folks opted in at saasplaybook.com, which is my book website. And some folks give their email in order to receive the sample chapter. And that goes into my robwalling.com email list. It’s all one big list in Drip. And so legally, I believe I could just start sending them email about whatever I want because they’ve opted in. But I don’t. If you go to saasplaybook.com, in your email, what you’ll receive from me is the sample chapter. And then a few days later, I believe I send an email, it may be in the first email, I’d have to go and look at exactly what it is, but I basically say, “I work on a lot of things all related to SaaS. If you opted in to hear about this, you’re probably going to be interested in some other stuff I’m doing like Masterminds, like this podcast, this YouTube channel, maybe the accelerator.” And I give people plenty of notice and plenty of options and the ability to unsubscribe. 

And what I’ve found, I’ve done opt-in and opt-out over the years, where I will not put them on the main list. I’ll only have the list for this single product. And I found that most people were confused by that and said, “Well, I opted in. I wanted to hear about…” We used to do this with MicroConf. This is a great example. We would have a different email list every year for MicroConf. So like the MicroConf 2011 list, we didn’t roll it in to the 2012 event. And we started a new launch list from scratch. We did that for a few years. And then people would tell us, “I’m so confused. I thought I opted in to hear about MicroConf.” So that’s one example of, obviously, we should have just been smarter, but we eventually just started, all right, there is a MicroConf list, and once you opt in, you are going to hear about MicroConf stuff. And we don’t get complaints about that. 

And in fact, even the way I’m talking about with my book, how I ease people in, if you sign up for a sample chapter, then I merge you into the Rob Walling list. But I call that out, either at the top of an email or in an individual email, saying, “Hey, here’s other stuff that I work on.” For example, “You opted in for a sample chapter of The SaaS Playbook, but here is an entire book called Start Marketing the Day You Start Coding that is free and here’s the link to the PDF.” So to me, the laws are less strict than I think that we should act. We should be looking to be transparent and honest with people who opt into our lists. 

And so I’ve been in your shoes. You have an example of, I’ve had 2,000 people sign up for this product to get an account in this product over the last several years. So I’ve been in that situation, where I have emailed all those people who had signed up and canceled, and some were still customers, when we launched a big new feature as part of that product. And I couched it with, “You signed up and you canceled, and I’m not going to keep emailing you about this, and unsubscribe here if you want to. But, I felt like you would be interested in this.” And I did this with Drip 2.0. “Drip 2.0 is this whole new thing with automation and blah, blah, blah, and you signed up a year ago. And I think you might be interested in hearing about this.” So that feels like an easy sell to me. I don’t think you’re going to get many complaints. 

However, if they opted in to try out a product, and while technically, I have the legal right to email them about a new book I’m working on that’s completely unrelated to that product, I don’t think that’s cool. I wouldn’t do that myself. I would want to think, is there enough connection between these two things that I can bridge that with a paragraph or an email? And if I can’t, if it’s really far flung, there is an app for social media posting, that’s the app that they opted into, and then I’m going to go write a book about something completely different, building SaaS companies. In that case, personally, I would ask them if they wanted to opt in, rather than opting in by default and just letting them know, as I’ve said in my previous example. 

So there’s a little bit of judgment call here and I will say, you said that you felt like you’d be able to email them and then there’s talk online that your approach is spam. I’ll be honest. Look, I ran an ESP for years. There are privacy purists on the internet who say, any bulk email is spam and they’re just (beep) about it. And we would get this complaint all the time and we’d have these people who were either, they were so far off in their perception of how the real world works, that they were just kind of obnoxious (beep). 

And so if you get online and you’re in Hacker News or you’re on Reddit or you’re on Stack Exchange, especially with developers, and especially with open source developers for some reason, I’m sorry to throw shade, this is the pattern that I kept seeing was, the whole internet should cater to their whim and exactly their opinion. And even though the law says something different, and even though I kind of have my own moral and ethical code around sending email, boy, if it didn’t line up with them, then you’re a (beep) communist or whatever they want to throw at it. It’s like, there is no room for conversation. 

And so what I’m saying is, be careful with taking people’s perspectives on the internet, especially on public forums, especially on anonymous public forums, about what they consider as spam and what you should and shouldn’t do. In my experience and what I do is I ask myself, if I was on this list, and I opted in for this thing three years ago, and they emailed me, what would I need to read in that email to not feel like I’m pissed off they’re spamming me? What would I need to read? And if I can’t write anything that would make me not think that, then, at best, I’m going to email them and say, “Hey, you signed up for this. I’m working on a new book. I’m not going to email you about it again. Click here to opt in if you’re curious.” That’s the most I’m going to do if these two things are completely unrelated. But if they are related enough that I feel like I can bridge that, then usually, for me, that’s what I do. 

So thanks for that question, Luke. I’m sure it’s something that other people have encountered as well. And this actually brings up an interesting point of the advantage of building things that are related. Because if you opt in to robwalling.com, and then later on, I email you that I have a new book out, that makes total sense, you would expect to hear that. If I email you about Mastermind Matching with MicroConf, probably still in your wheelhouse. If I email you that Startups for the Rest of Us had a great guest or three great episodes or we’re hitting our 700th episode soon, I’m the host of the podcast, it kind of makes sense. 

I have this luxury. It’s an intention. It’s not like I lucked into it, but I have a luxury of, most of our lists, if you look at robwalling.com, Startups for the Rest of Us, MicroConf and TinySeed, they’re all closely related enough, that any one of them emailing another list with their announcement can be couched with just a few sentences of why you’re hearing about this. And while we are careful with the volume of email we send, it’s a nice to have if your projects are related enough that you can contact an existing audience that you have, rather than doing what I used to do, where I had nine or 10 products completely unrelated so none of the customer bases could be co-promoted to another of my products. 

And that was just the way things played out in my early career. But if you’ll notice, as I’ve gotten further along, my software products and my companies have become more and more aligned, because this concept of building kind of a single audience and being able to share audiences between them is pretty powerful. So thanks for that question. Hope it was helpful. 

And with that, let’s roll our next question about whether to build a service or sell it as an affiliate.  

Inad:
Hi, Rob. My name is Inad. Thanks a lot for all the content you have been providing over the years. I’ve been trying to follow the advice of, find a solution to an existing problem, focusing on B2B. My challenge though is that I found several ideas based on problems certain people in certain roles are having, but I also found that there are solutions out there they are not using. They are either using a crappy service that has better alternatives out there, or they are not using a service at all and they are just struggling manually. 

I see this as an opportunity, but I’m not sure how I can take advantage of it. For example, should I build another service, even though that there are alternative services out there, just because they are not using any of these? Should I check for an affiliate program for these existing services and I connect these people to these services? What do you suggest how I can tackle this? Thanks a lot.  

Rob Walling:
I like this question. It’s pretty creative actually. So I think it depends on your goals. I think that being an affiliate for a SaaS product that offers recurring commissions could be an interesting step one business. Y’all know, drinking game, stair-step method of bootstrapping, step one business, it has platform risk. Usually it’s not going to get you to $10, $20, $30K a month, and that’s how I would view selling someone else’s software as an affiliate. 

So do I think it could be an interesting step one? I do. Do I think, if you don’t have an audience in this space and you are just doing maybe cold outreach or maybe if you’re creating content around it and actually treating it? Yeah. Think of it like the skeezy review sites where they’re like, we’re going to review the best podcast host, but really, the ones that pay us the highest commission are ranked number one, two, and three. So I personally wouldn’t go down that road. But if you’re going to actually go out and actively try to market other solutions. 

But I guess if you’re doing cold outreach, it’s going to be kind of a grind. You need to make a lot of money for that to be worth your time, versus if you create more of an inbound funnel where people can click and you can get the commissions, it’s two separate skill sets. But you’re also going to learn a different amount. If you do the cold outreach and you actually are doing demos or consulting, and maybe even charging an onboarding fee to help people get set up to where you really become a freelancer contractor agency that is helping people get onboarded with solutions. And we have these back in the day with Drip where people just came out of the woodwork and said, I offer this service. It’s like the Drip onboarding and setup service. And they would get an affiliate commission and then they would get paid X thousand dollars to get people set up. 

There were some folks charging like 10 grand to migrate and get your stuff set up on Drip. Is that interesting? I mean, if you’re interested in learning about the space. And what you might learn is that building another tool is a great idea. And what you might learn is that building another tool is a terrible idea. But I think doing that handholding and assuming that the money is there, and at least giving it a shot, I don’t know what you have to lose other than some time. 

And I think for me, I’d be optimizing for learning, rather than money. Because I think if you’re in it to try to get recurring revenue from an affiliate commission, and for that to be enough to move your needle, I think it’s going to take a long time and a lot of effort if you’re starting from scratch right now, because there are going to already be companies that are ranking for these terms. Unless you see a real through line and a straight line for you to go from zero to an audience, or zero to recurring traffic channels in this space, it’s going to be a ton of work. Again, if you’re optimizing for learning, that’s okay. A ton of work without making a lot of money, at least let’s have learning going on, learning meaning I’m learning about this space, I’m learning maybe we don’t need another tool, or maybe I’m learning that, oh my gosh, if we just had another tool that did X, Y, Z, it would be so much better. These are the things I’d be trying to learn. 

So I’m not a hard no on this, but I definitely don’t see it as this has such platform risk. You’re not in control of the product. Do I see you wanting to do this for five years? No. But do I see in the short term doing it to make some money to learn about the space, to evaluate whether or not you want to launch a competitor? It’s an interesting idea. It depends on how much work you want to put in and the approach. Like I said, do you want to do a high touch approach and charge a lot of money, almost as a consultant? Or do you want to try to do this low touch approach and just learn the marketing, learn the funnel and see if you can get people to click through and convert? Certainly an interesting question. I appreciate you sending it in. 

Third question of the day, I’m actually going to bounce over to a text question, because this one has been in the coffers for eight months, it looks like. Apologies, y’all, but I can only do so many of the listener question episodes. But this one, the asker asked to remain anonymous. The subject line is SaaS sale and valuation. And he says, “I’m parting ways with my business partner due to a fallout. In short, I’m looking to get full control of the SaaS, but I’m struggling with evaluating the valuation. Do you happen to help with valuations or investing in SaaS companies? We have a turnover of around $18,000 a month. Please let me know your thoughts.” 

Given that this was eight months ago, I’m guessed that the asker has sorted it out since then. I wanted to read this on the show and answer it because I have known, I don’t know, a couple of dozen founders who have had to deal with this, who have had a fallout with a co-founder and they’re trying to value the business. And so what I would do is, I would talk to a broker and I would probably pay them for a valuation. So you contact quietlightbrokerage@quietlight.com or FE International, explain the situation and ask for what they think the business would be valued at. Maybe they charge a few hundred dollars or whatever, some number in order to get a third party valuation. 

You could also ask privately. I have weighed in privately on some valuations based on my experience. You have to take all this with a grain of salt. It’s not like buying and selling stocks. It’s an inefficient market and there’s a lot of it depends, and that’s what you’ll hear. It depends on the growth rate. Like having a static $18K per month. Well, if it’s growing a hundred percent year over year, the valuation’s different than if it’s 30% or less. What’s your churn like? What’s the space like? There’s all this stuff where it’s kind of like, well, it changes the multiple. The generic multiples that we throw out really depend on a lot of this stuff. 

But I have been involved in multiple companies, some of which I was invested in, where one co-founder leaves and the other one buys them out. And usually, the buyout is a little less. It’s usually less than market rate for that app, if you’re buying them out in cash. Because it just should be. Because you are left with the business and you now have to slash get to run it. 

But realistically, I think the easiest, the cleanest way is you’re going to be brokers in our space. So it’s Quiet Light Nefi for this type of business. I think as you get larger, let’s say you get north of a million ARR, you could still talk to Quiet Light Nefi, but Discretion Capital, run by my friend and co-founder, Einar Vollset, would be great to reach out to for them to weigh in. 

And if you’re big enough, what’s interesting is, let’s say you’re doing two or $3 million a year and you’re growing pretty quick. And you decide the valuation is $12 million bucks or something. And you want to buy your co-founder out and they own 50%. Well, that’s a lot of cash to come up with. There are outside parties, and Einar has experience with this through TinySeed and Discretion, with these private equity firms that are growth-oriented and they’re willing to write a bigger check to buy out founders. And they can buy out the founders if they’re staying. They can buy out a founder if they are moving on. And they’re willing to come in and some of them even have a playbook of how to take a SaaS from that $2 million to $10 million ARR mark. So this is something that I’d never heard of and really just didn’t exist 10 years ago. And so it is another option for liquidity for a situation like you are talking about in this email. 

But as I said, that would only be available if you were further along. It is not going to be at $18K per month there. I don’t know of anyone that’s willing to do partial buyouts at that early a stage. If there are any, there’s probably one or two and they’re probably extreme value buyers, meaning they’re going to give you very low multiples. 

And then of course, your other option is to sell the whole company. It’s to go to any of the brokers I just mentioned. And add acquire.com to that and just try to cash out the business. You each walk away and then you get to start your next one. So thanks for that question. Hope it was helpful. 

The next question is about the best way to collect customer feedback.  

Speaker 4:
Hey, Rob. How are you doing? I want to say that I’ve been fan of the show, had been listening these whole year, in the beginning of the year when I discover it. And a bit about me and I aspiring founder. I still on the process of validating a few ideas that I have. But this question is a bit related to customer feedback. You had mentioned extensively in a lot of your podcasts, in your book, which I have by the way, The Saas Playbook, and many other people also have mentioned that customer feedback, acquiring customer feedback, is super important. So my question is, what will you recommend for acquiring this customer feedback? Which mechanisms, forms, emails, phone calls or video calls? Anyway, I appreciate all you are doing and keep it on. Bye.  

Rob Walling:
It’s a great question. It’s a common question. So to me, in the early days, if you’re doing one Z two Z, then the higher the fidelity, the better. If you can get a customer on a Zoom call or a phone call, that is going to be greater than anything else. Because again, it’s just high fidelity. You can read body language. You can have, even if it’s a 20 or 30 minute conversation, there’s so much information that is communicated in that that won’t be communicated if you have a form or an email. So that’s optimum if you can get people on calls. 

Sometimes, people don’t want to go on calls. I will be asked for feedback about a tool I’m using and I don’t have time to do that. So I might write three sentences in an email. Or I might record a Loom. So Loom is interesting because it’s kind of halfway between maybe a text email and a video call. You don’t have the back and forth interaction that I would like, but you do get the high fidelity of voice intonation and body language and hearing someone’s real interactions or seeing their real interactions with your product. 

To give you an example, with MicroConf, we just added paid tiers to MicroConf Connect and that is our online community, 5,700 bootstrap founders. You should check it out, microconfconnect.com. But producer Xander did dozens and dozens of one-on-one calls to learn more about what people are looking for from Connect. And once they get in to learn what they’re liking, and perhaps where their expectations didn’t align with what we’ve delivered. So he did a ton of calls. At one point, so in the early days of Drip, before we launched, I had 3,400 people on an email list. And so I think I did a couple of phone calls, but most of my early, early stuff with about the first 20 people was via email and that’s what they preferred, and frankly what I preferred too. 

But I was also trying to get data from the broader list and 3,400 people’s a lot. And so I did use a survey. I actually covered it… What episode was it? Boy, it’s got to be in the 200s, maybe the 300s. I realize it’s not a bunch of guidance. If you go back and look for an episode, it would’ve been in 2013. And it’s going to be me talking about kind of a customer development survey. It’s a really good episode. It’s one of my favorite episodes from around that time, where I walked deep into exactly the survey I sent out to the entire list. And then I will walk through some of the results. And I still have those results actually in a Google Sheet. I was looking through them the other day and I was like, man, it was very helpful for me to learn that. 

But if you don’t have 3,400 people on the list, don’t send people to a form. No one wants to fill out a survey. They’re not going to type a bunch. They think no one reads it. Like having the one-on-one connection, that’s the highest fidelity learning that you will get. So I would lean much more towards phone calls or video calls, and at worst, one-on-one emails, assuming that people will respond to you. Because oftentimes, the hard part is not the mechanism of feedback, it’s that people just won’t respond. And they don’t want to spend the time out of their day to help you out. And getting on a Zoom call is cumbersome for a lot of people who are busy. And so that’s the thing is, I lean towards higher fidelity if it’s possible, and that’s the caveat. So thanks for that question. Hope it was helpful. 

My last question of the day comes from longtime listener, David.  

David:
Hey, Rob. This is David, longtime listener and appreciate all you do for the startup community. My first startup was acquired a couple of years back, completely bootstrapped. My co-founder worked a full-time job up until the day we were acquired. It was great. And now, after about two years, I guess, I’m looking for my next startup, and I’m focusing on the HOA space. 

Homeowners associations are a big market. I’m on my board right now and there are tons of challenges. One of the challenges is figuring out whether we sell to the property management companies, which seems a little bit more of a saturated market than the HOA boards themselves, which could be really hard to contact. So we have an MVP, at least a concept, we haven’t built it yet, and I’m thinking about just trying to start selling to boards and property managers, just to see if it resonates, before creating a landing page. But just asking for any advice you have on how do we figure out whether we can actually distribute and sell to HOA boards or whether we’ll have to go the property management route. Thanks.  

Rob Walling:
So to truly answer this question in detail and tell you exactly what you should do, I would personally need some experience or have funded companies who have tried to sell to HOA versus property managers. And I do not have that experience, and I have not funded companies that are selling to those. So all I can do is weigh in on how I would think about it if I were in your shoes, knowing what I know. 

And the two things that come to mind are, number one, I would try to figure out, is it harder for HOA boards to make a decision to buy than it is property managers? My gut is that it is, because it’s a board of people. And anytime there’s a group of people, they’re going to kick decisions down the line. There’s going to be 4, 5, 6 chefs in the kitchen, so to speak. My gut tells me they’re going to be a pain in the to sell to. So I would lean towards property managers where I’m guessing that I could find one decision maker and close more deals. That may or may not be true. I don’t know enough about the space, but that’s probably the hypothesis that I would look to validate or invalidate if I were in your shoes. 

The second thing that I would think about is running a test and actually marketing and trying to sell to both. I know that it would require a bit more work because I’m doing, let’s say, cold outreach. Well, now I need two campaigns because I’m reaching out to the HOA boards and the property managers. Or if I’m doing inbound marketing, I obviously need probably different content marketing or SEO posts or whatever it is I’m doing to attract that inbound. I know that it means more work. But until I know for sure, I want to keep asking questions and trying to validate this. That’s really the way that I’m thinking about this. And the way I think about everything is everything’s a hypothesis until I’ve mostly proven or disproven it. 

Now, am I ever going to get to a hundred percent certainty that it’s only HOA boards or property managers? You’re not going to get there. You’re not going to get to a hundred percent. And I’m sure you know this, having listened to this podcast. But some founders come to me and say, “I’ve just done all this conversation. I still don’t know what to do.” And it’s like, you’re never going to know what to do. You just have to take your gut and add it to the information you have and make the best choice. And even if you get to 50, 60, 70% validation that your hypothesis is correct or is incorrect, that’s better than you had a month ago or two months ago. 

And so that’s what I would try to think about is, what’s the next step that I could take to figure out, are HOA boards hard to sell to versus property managers? Does this involve going to an in-person event for property managers? Because we know those exist, right? Are there in-person events for HOA boards? I think HOA boards, aren’t they mostly volunteers? Question mark? You can tell, my familiarity with the space isn’t there, but my familiarity with making decisions like this is there. And the first thing I would do is, how do I collect more data? 

And so maybe it is cold outreach to HOA boards to see if anyone will respond. If they’re not looking for it, and you reach out with a question around, “Hey, you have this problem, does it need to be solved? I’m a local entrepreneur trying to solve this problem. Is this even a big problem? Just starting. I’m not here to sell you anything. I’m just curious if this problem is enough of a pain point that…?” And if you reach out to HOA boards and property managers, and one of those groups just completely doesn’t get back to you, then how are you going to find customers when you actually have a product? I’ve said that on the show before. It’s like, response to outreach and response to marketing, before you have a product, can be a pretty good signal of how hard the space is going to be to sell into. 

And realistically, let’s say you get in touch with a bunch of HOA boards and property managers and no one responds, so where are you then? Well, then I’m thinking, okay, so cold outbound at least isn’t working. So then, do I need to do inbound? And which of these is most likely to be looking for this solution? And if there’s no inbound opportunity, how are you going to market it once you’ve spent the six months to build a product? That’d be at the top of my mind is, are there any Google AdWords? You can run Google AdWords and just lose money right now, because what you’re trying to do is learn. 

And if HOA boards versus property managers search for this software, and if they search for it the same or different, I don’t care. Even if I’m paying 10 bucks a click, if I have the budget just to get into conversations by buying ads, this may be AdWords, maybe it’s Facebook, maybe it’s Instagram, where do property managers and HOA boards hang out? I don’t actually know. Facebook groups? If you’re in my hobbies, I know where the people hang out. But I don’t know it for this specific industry. And so in your shoes, that’s what I’d be trying to do is find out where they hang out online. Find out where they look for solutions. 

My guess is, there is some in-person component to this, and it’s a lot of word of mouth. And whether there’s an industry… Again, is it industry event or trade pub? Or is there a Slack group or an industry Facebook group where they hang out? That’s usually something that forms around these organizations. I would personally want to familiarize myself enough with this that I can make a decent gut instinct to call on. I think these are going to be easier to sell to rather than the others. 

And with all that said, there’s a chance that going after both is the right call, that literally going after two verticals at the start, it’s not a hard pass for me. Just because we talk about niching down or focusing our product doesn’t mean that we can’t have a couple of highly related verticals, especially if both of them onboard and use the product in the same way, even if the sales process is slightly different. I don’t know. It’s something I would consider in your shoes. So thanks for that question. Hope it was helpful. 

Thanks for joining me again this week. As a reminder, if you haven’t checked out The SaaS playbook, you can head to saasplaybook.com. Search for it on Amazon. And if you’ve already read it and you liked it, it’d be amazing if you could click that five star rating. This is Rob Walling signing off from Episode 690. 

Ooh, only 10 episodes away from 700. What should I do for that episode? If you have an idea of something I should do special for 700, questions at startupsfortherestofus.com and let me know. I may or may not do anything special. If you look back at 600, it was me talking about some Beatles songs, Strawberry Fields Forever, and I didn’t even mention it was 600 until the last 30 seconds of the episode. So we’ve done something special for most of the 100 anniversaries. I think 1, 2, 3, 4, and 500 we’re always special episodes. 600 was less so. At a certain point, I think you kind of run out of ideas of new and creative things to do at the 00 episode mark. But certainly, if you have an idea, shoot it over to me. And with that, I’m really signing off from episode 690.

Rob Walling:
Welcome to Startups For the Rest of Us. I’m Rob Walling, and today I sit down with Robert Cserti and we’d talk about how to keep your remote team motivated and engaged. This topic is based on a request that I received at MicroConf Europe, and Robert as the founder of SessionLab and a team of 13 has quite a bit of experience on this topic. He’s a founder, not a business coach or a consultant on how to keep your remote team motivated and engaged, but they have experimented a lot over the years with strategies and approaches for doing so. And I think it turned out to be a great conversation. 

If you’ve ever thought about selling your SaaS company or your WordPress plugin or even a content website, head to microconf.com/sell. We have some great resources for you there, such as The Psychology of Exiting Your Company which was a talk by our very own Dr. Sherry Walling, as well as a way to opt to hear about our Exit Event, which is an exclusive MicroConf retreat we’re thinking about running next year, plus links to episodes of Startups For the Rest of Us. 

And all of this is brought to you by our brokerage partner for 2023. It’s Quiet Light Brokerage. They’re an entrepreneur-led organization that assists people with growing, buying, and selling online businesses. I have a very high opinion of Quiet Light and how they operate their business. Their reputation is stellar in our space. Thank you to Quiet Light for supporting MicroConf and this podcast. And I hope you’ll check out microconf.com/sell as well as quietlight.com if you’re interested in learning more about buying, selling, and growing your online business. 

And with that, let’s dive into my conversation about keeping your remote team motivated and engaged. 

Robert, thanks so much for joining me.  

Robert Cserti:
Thank you. Excited to be here.  

Rob Walling:
Indeed, sir. So you are the co-founder of SessionLab. You are a TinySeed EMEA company, and the H1 of SessionLab is an easier way to design workshops, drag, drop, and reuse content, calculate time automatically, collaborate in real time. Create a workshop in minutes, not hours, with SessionLab. Can you give folks an idea, first of all, of the stage that SessionLab is at, whether it’s revenue or employee headcount?  

Robert Cserti:
We are 13 people growing profitably. And about SessionLab itself, we help facilitators, consultants, team leaders to design and deliver effective workshops. Typical use case, you would use our workshop agenda planner tool if you have a full-day strategy workshop or a two-day leadership retreat. Somebody plans these processes, what people do at what time of the day, and that’s the facilitator. And these are typically facilitators, agile coaches, org dev professionals, learning and development people. So we help them design better workshops. And next to that is also we have the biggest online library of workshop activities. So if you look for icebreakers, energizers, brainstorming techniques at the sessionlab.com/library and you can get inspiration for your next meeting or workshop.  

Rob Walling:
And in case folks are curious, where are you located in Europe?  

Robert Cserti:
We are a fully remote team. Our company’s officially Estonian. I live in Hungary. My co-founder’s in Sweden. We are Estonian e-residents and our company’s 10 different countries. That’s for our team members. Practically, we are remote since day zero. We happen to be in different countries and that’s how we started to grow the company.  

Rob Walling:
Well, that’s bootstrapped and mostly bootstrapped playbook almost, right?  

Robert Cserti:
Oh, yeah.  

Rob Walling:
That’s what we do. We don’t have the money to hire in these major cities and so we look around for the best people we can find. 

I want to set the stage for this episode. I actually was approached at MicroConf Europe in Lisbon just a month or two ago. And I didn’t get his permission to use his name so I won’t use his name. I’ll keep him anonymous, but he said, “You know what? I’d love to hear an episode about team engagement, specifically remote team engagement. How do you keep your employees, contractors, whoever you consider to be on your team, motivated, engaged?” Even just knowing one another, the more you know the other people on your team, the less likely there are to be, I don’t know, maybe conflicts. Or it’s easier to work together. 

I actually posted in the TinySeed Slack and I said, “I’m going to record an episode around this. Who has some thoughts on this?” And I got a bunch of really good responses, probably a dozen responses, from very knowledgeable founders, all running teams remotely. I think the first thing I was struck by was how many founders, including you, said, “I’m not an expert but here’s what we do.” So that’s the thing, you run this team. And how long has SessionLab been around?  

Robert Cserti:
Practically, we started the company 10 years ago. First five years was a hobby or side project. Then we realized, “Oh, we have customers. This is a business. Let’s build it.” Then we went full-time. A year later, we started hiring people as our revenue grew. So essentially, there’s two big distinct stages. And the interesting thing with remote engagement is it was definitely a process for us to realize that, well, building a team is a job itself and getting people engaged. Because initially as founders, we are into product and figuring out marketing and sales, and then realize, “Oh, we have now people on the team. It’s not only myself or two of us.” So we need to figure out what is our culture and how to keep people engaged. And that’s a very organic thing and it’s not the first thing that came to my mind. We also had our stage like, “Oh, we actually need to put more attention to how we engage people and what’s our culture.”  

Rob Walling:
Right. I think a lot of us who worked at other companies… I worked at a startup that was probably 40 people when it started or when I started there, and then it was several hundred by the time I left. And the company culture stuff always felt like just bull (beep) to me. It was like, “Let’s just come here and do the work.” But what I realized later as I started running teams as well, if you don’t introduce a culture, then the culture will happen on its own and you won’t be in control of it. And so that’s where mission, vision, values, I always thumbed my nose at them, these 50% companies. But a lot of that was because I didn’t feel like they were accurate or true versus my mission now. And I think MicroConf’s and TinySeed mission is to multiply the number of independent self-sustaining startups in the world. That’s a real mission and you see it, we’re actually doing that, most missions and values.  

Robert Cserti:
And you’re walking the talk, and that’s a big difference between a small and large company that you as the founder in a small team, you have an integral part in setting the culture.  

Rob Walling:
Right. We’re going to dive into your response along with some other points that were brought up by other folks. As I said, there were 12 different responses, but yours was good. It was long. It was detailed. It was thorough. And then your co-founder Filip even weighed in, and we’ll look at one of the points he raised. But in addition, there are some other TinySeed folks who weighed in, and certainly want to thank everybody who offered some points. 

Again, couching it with you’re not a company culture, neither am I, a company culture expert nor a consultant, but this is what’s working for you. And I’ve run remote teams. I would have to even count. It’s got to be four or five range. TinySeed is six people and MicroConf is five or six depending on how you count. And Drip was 10, half remote when we were running it. Anyway, I’ve just had a bunch of experience as well and I’ve seen what has worked and what has not. 

So let’s start with daily check-ins, and this is something that you mentioned that you do. You async daily check-ins specifically. A lot of people I know do not. We don’t do daily check-ins at TinySeed or MicroConf. We do have a weekly meeting where we get together and talk about stuff and then everyone, the introverted in our midst go separate ways and get work done. But specifically you said there are a bunch of tools for async daily check-ins. You are using Geekbot and usually when you start your day, if you’re working, it’s at SessionLab, you answer four questions, a combination of social and work-related. “How do you feel today? What did you do since yesterday? What will you do today? And what obstacles are impeding your process?” 

Talk me through this. Is this working? Did you try other things and weekly wasn’t enough? Why do a daily async check-in?  

Robert Cserti:
Yeah, absolutely. First of all, it’s a very iterative process to come up with what works for you and your team. We had different processes in place at a size of 3, 4, 5 people, and now at 13, and probably will have different as we grow. I think just to take a step back, one thing I would structure the thinking on various tools and processes, I see two big purpose. And we can break down to further subpurposes, but two big areas, both want to help with efficiency. So enable people to get their work done efficiently because everybody likes to do great work and be enabled to do that. And in the same time, also help people to feel valued, to feel appreciated, and to feel belonging. And most of the tools and structures are either for one or the other or a mix of both. 

For this part, the keeping aligned, we actually do weekly alignment calls as well. So every Monday, we have three bigger teams in the company, product, marketing, and customer success. We have a 30 to 45 minutes sync call where we align on the weekly priorities. And if there’s any questions, then we discuss those more in detail. And then these check-ins, then it’s a mix of keeping that alignment and also a social part, because essentially it feels good when we know that people are around. They are present. They’re available. And also it’s how we shape these things. I think important that, again, you’ve walked the talk, what you expect when you communicate with your colleagues. 

A fun thing that emerged over the years, we have people joining and they say, “When I was working in-person, I never knew that much about my colleagues.” And that’s because we share a lot of personal things in this first question, “How do we feel?” They don’t just say, “Yeah, I’m okay.” But what did I do yesterday, what I did the weekend with friends, with my kids, whatever. And it’s really up to the individual how much effort you put into it. But once you start opening up, you share more personal thing, you show some vulnerability, people get that and then they also join in that. So then it’s like a good, I think, water cooler. And just like when you enter a real office, people say hi to each other and they may have some short chat. Here as well. You can engage with it if you want a given day, or you can just not if you have other things to do on that day when you start. 

So that just evolved both with a social purpose of having this water cooler, and next to that, essentially helping each other know that what am I focusing on a given day. There was times when it just these slightly different question, it didn’t work as much. And then every once in a while, we reflect. Does this still work? Is this still giving value? If not, we tweak on it. If it’s good, then we keep doing it.  

Rob Walling:
And in addition to a daily check-in, it’s very common to have weekly, monthly. And there’s one-on-ones and there’s groups. And you specifically called out a few of these. You said these regular practices that some other folks mentioned were, I believe, do you have a week starting team alignment call?  

Robert Cserti:
Yep.  

Rob Walling:
45 to 60 minutes?  

Robert Cserti:
Yeah. Practically, with each Monday we have a team call with a subteam. So in our case, product, marketing, customer success where we align on the priorities, see where we are with our quarterly objectives projects, and that gives a focus for the team. And these daily check-ins are more like just what do I do on a given day, breaking it further down.  

Rob Walling:
The weekly get-on-the-same-page meetings, is that the entire company or is it team-based? So if there’s product and dev, that’s one. And then customer success and support maybe is another.  

Robert Cserti:
In our case, we now do it, team-based. But again as we evolved, I think when we were size of five, six, we had it together and then we broke it up. Then product was a bit bigger team and then customer success and marketing did together. It’s really like what type of projects and goals we have in a given quarter and just making sure that these alignments support achieving what you want to do in a given quarter.  

Rob Walling:
Got it. And then I believe, do you also have a biweekly all-hands that’s 45 minutes?  

Robert Cserti:
Yes. We just change it actually from weekly to biweekly because it’s a lot of meetings, and in product-  

Rob Walling:
Yeah, that’s the problem.  

Robert Cserti:
In a way, there is some meetings have a cost and so does working on a dead end path has cost. So there is a fine line between the two. And it really depends on your team as well, how much experienced people you have, what type of things you work on. We are trying to use for example the all-hands more for the purpose of some more inspiring presentations or things that everybody is useful to know about. Let’s say if you work on customer personas or have a big design project, that affects everybody. Those are good to be presented, while it’s less for aligning in terms of a practical operational way.  

Rob Walling:
Got it. And those are still work-focused, not a monthly hangout that I heard several folks talking about?  

Robert Cserti:
Yes, that’s right. So yeah, the all-hands are more for keeping us on the same page, what’s happening on a big picture or more on a strategy level. We also want to make sure that on the side of let’s have some more team bonding and team connection, we have every month, month and a half, some online team event, an hour of ideally something facilitated activity where we get to have some fun. I would say if we would work in-person in one city, we’ll probably go out in an evening or do some activity together. We don’t have that so we want to make space. 

On the grander picture, what really helps us is to have also team retreat. We try to have it twice a year. All of us get together for a week, and we use it both for a work purpose to workshop on a project that really benefit from that focused attention that you can have in live, and also have some leisure day when we have some organized activities and all the leisure time, all the unstructured time we have together. But in our case, there is half a year between them. So we want to make sure that next day, the everyday work, there is some activities where we both celebrate successes and also have some moments to build connections and build bonds, and again, just have opportunities where we can bring a bit more ourselves.  

Rob Walling:
Yeah. It’s a luxury that we have at MicroConf, TinySeed that we have so many in-person events that we don’t have to structure or we haven’t traditionally structured external team retreats where we just go to a place. Because we meet up at MicroConf, we meet up at TinySeed retreats.  

Robert Cserti:
Yeah, that’s an amazing opportunity.  

Rob Walling:
It’s really nice, and it’s an opportunity that SaaS companies don’t have because you’re located remotely and there’s just no reason for you all to be in a room. But the value of getting into a room, I know as companies get bigger, I believe Zapier went down to a once a year company retreat because it’s a quarter million dollars or something to throw their company retreat because it’s so many people. But it’s like I think three times a year would be ideal to get people together.  

Robert Cserti:
And it’s amazing how much those intense in-person meetings fuel collaboration. There’s a concept of a trust battery that you build with small human interaction and when you spend time together. And when that battery is high, then collaboration is happening at a higher quality during online work. So we definitely see after retreat, we communicate more, we shift things faster, we solve these agreements faster. It makes a difference. And then we need to also get by between two retreats to build up these trust batteries practically or maintain them to a high enough level that it doesn’t deeply do much before reach next one.  

Rob Walling:
Right, for sure. And so we were talking about an all-hands that you do every other week that is still focused on work stuff. Do you also, much like several of the folks who weighed in on the TinySeed thread, do you also do a monthly hangout where it’s still remote and it’s the team getting together just for happy hour-ish and more personal conversation?  

Robert Cserti:
Yeah. I would say that that’s more the team bonding focused events where we don’t have work agenda but it’s really to have an hour of time spent together ideally doing something which has some themes, some activity. One of our favorite activity that has been a big success whenever we played is an online board game called Cozy Juicy Real, which is again an activity which is somewhat facilitated and you open up about certain aspects of your life and you give appreciation to each other, you express gratitude to each other, and that just makes feel everybody happy. 

In the end, I think all these retreats and team activities definitely does have a cost in time and money, but people want to be part of a workplace where they are valued. If I reflect in my previous work experiences as well, whenever I feel that my bosses value me, I really put my best there because I don’t want to let people down who care about me. And that feels good to be at a place where you’re valued.  

Rob Walling:
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I want to read a couple of other responses around a monthly hangout that were in the Slack thread. These are from other folks who weighed in. One person said, “We have one monthly call with the entire team. We do a round of personal and work-related updates followed by a round of talking about a fun fact or playing a game on the call.” So it’s similar. It’s a good way to get to know everyone and learn a thing or two about them that usually doesn’t come up in normal work-related conversations. And then another founder weighed in. “We started doing a monthly happy hour for a social gathering of the entire team. We do social activities like trivia games, Guess the Desk,” I’m not sure what that is, “et cetera. People seem to love it.” So this does seem to be a relatively common theme with remote teams.  

Robert Cserti:
Absolutely. And I think it’s like you don’t have that intense human interaction as you would have in-person, so you need to make space for various ways for people to interact, both in a group setting, also if you can in a one-on-one setting. One of the useful things that we have seen that we are trying recently is people working in same teams, they interact often. But people who don’t work in the same teams don’t talk as much or don’t interact as often. And we introduce, for example, one activity where we have randomly assigned one-on-ones. So not for work purpose but just take half an hour from working time and just have a chat. And we use a Slack app called Donut for this, which essentially takes the scheduling or the randomization, which is also a nice small thing that it makes sure that between two retreats or between two such intense occasions, you actually get to speak with everybody on the team if you want. 

By the way, most of these things are also optional. The online team events, the extra one-on-one chats. So if people want, they can. They’re not forced to participate. But most people love it because it just builds human connections.  

Rob Walling:
I’ll be honest. You all do more than I typically do with my remote teams. And when I hear you describing the meetings, it feels to me like, “Wow, that’s a lot of meetings.” But maybe it isn’t that way. Maybe it doesn’t feel that way in your company. How do you think about that? At what point is it too many? And does the value decrease? Because each of these things you introduce can increase connection, but I think at a certain point, people will also glaze over at another Zoom meeting.  

Robert Cserti:
Yeah, that’s a good question. I think everybody need to evaluate it for themselves. What is the point where you feel it’s too much? In our case, that’s an average weekly two meetings for alignment and team purpose. Is that much or not> we feel when we have less, that we either have a gap in the team bonding side or we have a gap in the alignment side. And essentially, one of these is more for alignment, one of these is more for the team spirit. And very importantly if you have a team, I think one thing that we initially thought this all on us as founders to figure out, but people who are in our team, they have experiences themselves as well, what worked well in their previous jobs and not. So we try to reflect together what works well and what not. And there is a process. For example, we recently figured out that it’s not worth it to have every week in all-hands so we do it biweekly. And if it doesn’t give value biweekly, then we do it monthly.  

Rob Walling:
Right. So if you find you’re in too many meetings, you space it out further, as you said. You went from weekly to every other week to monthly. And I want to touch on two other points in this interview. Two things that you specifically called out that this first one I found interesting you put in the Slack thread. “Another interesting addition in the past half year in our workflow was part of our team using a sort of spatial video conferencing tool to hang out there during the day. The concept is it’s easy to move your avatar away. But if you want, then it’s very quick to start communication with other people just by moving next to them.” And you’re using spatial.chat for this.  

Robert Cserti:
Yeah, that was a fun experiment which is more in the work efficiency category, in that initial categorization that we realized that we had a couple of more context projects where it was important that we can align quickly when we have a problem. We had a major infrastructure change and we had series of bigger questions where it was just important that the key developers could interact quickly. And then it’s definitely not a tool we use company-wide, but there is opportunity for people who find it useful to do it. Essentially, you need to still have a chance to work focused and it gives that, but if you quickly need to regroup to discuss something, then you do that. 

And for our case, our dev team enjoys it so they going back there on a regular basis. And I think most days, one or two hours. It’s important to have the discipline though because you just don’t want to hang out because it’s definitely a need to have focused time to do deep work. But if you find what is the intersection then, and especially if you have a need for that, if you have a project where… Because sometimes work is simple and you have well-scoped projects to work on that everybody can take on individually and execute. Sometimes there is way more complexity and you need two people to be able to jam quickly on something. And when we recognize that case, then this is useful.  

Rob Walling:
One other tool you mentioned that I thought was pretty clever is you said, “It’s not so remote-specific, but one management tool I find really useful is sending a monthly reflection survey at the end of each month. It asks about accomplishments and challenges of the past month, asks how I can help, and asks for a rating on how happy, satisfied, they are and why.” And the results go directly to you the founder, not to the person’s manager. So talk us through the thought process of that and what information perhaps you’re learning that you wouldn’t if you didn’t have those.  

Robert Cserti:
This is a bit of a heat check on the team to get an impression of how everybody is doing individually. And first and foremost, which is even more important, that everybody has a mentor manager who takes care of one’s personal development and that one progresses. But this is more when we reached a stage that I was not anymore in a regular connection with each team member, then it was just a really practical way to… First the reflection part, that each month you actually have a moment when you look back, “This is what I achieved this month, and also what are my challenges?” And if everything is perfect, an ideal word, then this has no new information because the manager of the person already took care of that. 

But there’s always a couple of people who, for various reasons have various difficulties, more challenges, and they just essentially one outlet where you can voice that, “Well, I’m not that frustrated to proactively seek out support, but if I ask and I build the trust that whenever you say something that you need help, then I follow up.” Then people give that trust and they indicate, “Well, something is just not going the right direction,” and then they can help faster. So it helps to catch issues earlier on. And also it’s definitely have the element of not to go around once managerial line. It’s a complex word for a small company, but still give one more space to say if you feel that things are not in the right direction. 

And also what I found really useful is this essentially quantitative feedback of rate how you feel on a scale of 1 to 10 in the company, and it really is a quick feedback tool. If you give us lower than a certain rating, I know that I need to really follow up and pay attention. And not just me, but then we discussed with the manager there, “So what can we help? How can we support you? Whether you had a more difficult personal life in the past weeks or it’s work-related, what can we do to help?” So it just helps to catch these things.  

Rob Walling:
Well, thanks for talking us through all the tools that you’re using to grow SessionLab. I think before we wrap up, I wanted to offer one more comment that a TinySeed founder who I didn’t get their permission to mention him in the show so I’ll just keep them anonymous for now, but something they said that I think you and I probably both agree with but I’m curious to hear your take on it. They said, “I feel async remote requires different strategies versus purely remote where you can be synchronous.” 

This founder says, “We have very small overlaps of working day with the majority of our team, so we have to spend a lot of time on developing processes to ensure everyone is on the same page and working on the right goals. As much as we would love to do a big all-hands weekly catch-up to build team culture, it’s impossible for us to find a time that works for everyone. So we have to rely on Slack and ClickUp communication most of the time with varying levels of success.” 

So async remote different than remote, do you have experience with this? Do you have thoughts on it?  

Robert Cserti:
Well, only partially because we are in a lucky situation. We are roughly plus/minus one, two hours, same time zone. So we have the luxury to be able to meet each other. And I think it’s a sliding scale between almost having a full overlap versus having zero overlap. That’s a spectrum. 

In the end, I think the processes are very similar. It forces you to document effectively, to have the right processes. But also I think that’s a hard thing to start from. And I would definitely in this case make sure that it’s great to work with people remote if those people are experienced in remote and experienced in their specific job as well. So if I would not have overlapped with somebody who I worked together with, then I would be very cautious to handle somebody who just starts out. And one way is to just try to find people who are experienced both with remote work and with their specific field because that decreases the need of how close you need to communicate. 

And other than that, just take efficiency to a higher level. Yet you still, you need to build those async processes as well to have people feel valued and appreciated and part of that team if you want to build it for the long run. It’s easy to say and hard to do.  

Rob Walling:
I agree. I feel like in a perfect world, I would be in an office with my team maybe two days a week, two and a half days a week. That’s what we had when we were building Drip with most of the team, and it allowed us to collaborate, stand in front of our whiteboard, hang out, go to lunch. And then the other days we were at home and I was focused on getting work done. That was my ideal situation. That’s just not feasible really for the types of companies most of us are building. And the next hard, I’d say harder way to do it, it’s not hard mode per se but it is more difficult is to have a remote team and to have to try to get people together and get everyone to like each other and get people on the same page and build a culture. 

Then the next hard mode is async remote. It’s so hard when everything has to be a Slack response or a video recording or an audio recording or whatever it is. It really is a next-level challenge. And I would guess that most companies, whether bootstrapped or not, most companies around the world will have significant challenges doing async remote.  

Robert Cserti:
Yeah, that’s so true. It’s such a great opportunity if you can start at least with a team that is in roughly your time zones. That makes interaction easier. And also it just makes it easier to meet in live once a while because that’s a strong starting point. Also, to help defining your culture and align with those people.  

Rob Walling:
Right. And I know that’s what we’re talking about is just not feasible in every part of the world. You and I have this luxury of living in the US and in Europe and there’s a lot of talent within, as you said, plus or minus two, three hours of us. And some parts of the world, that’s just not the case. And so you certainly have your work cut out for you in that situation. 

Robert, thanks so much for joining me today. Folks want to keep up with what you’re building, sessionlab.com. And is there any social media that folks should follow?  

Robert Cserti:
Yeah on LinkedIn, Robert, C-S-E-R-T-I. Happy to connect there. And thanks so much, Rob. Pleasure to be here.  

Rob Walling:
Thanks for coming. Thanks again to Robert for joining me on the show, and thank you as always for listening to yet another episode of the show. This is Rob Walling signing off from episode 689.

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m Rob Walling, and this week I talk with Lane Wagner of Boot.dev about how he’s mostly bootstrapped his coding learning platform to the most recent month’s net revenue of 110,000. We cover a bit of his journey, getting it started, how he was able to bootstrap it, why he raised funding, whether or not that wound up being a good idea, as well as diving into what got his growth to dramatically accelerate, where he was growing, not very fast, and then suddenly things ticked up into the right. I asked him about that. 

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 Leanna 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. 

Do you want to reach tens of thousands of potential customers? Between our MicroConf events, Startups For the Rest of Us, our YouTube channel, our email newsletter, and all the other ways we interact with our large, and growing, and loyal audience of startup founders, we have a lot of options for you to reach B2B SaaS founders with your product or service. 

Drop us an email at sponsors@microconf.com. Before we dive into our conversation, if you haven’t downloaded the two top secret exclusive episodes of this podcast that have never been in the feed, they’re called Eight Things You Must Know When Launching Your SaaS and 10 Things You Should Know As You Scale Your SaaS, head to startupsfortherestofus.com, enter your email and you’ll get both of those episodes, and each one comes with a PDF guide. With that, let’s dive into my conversation with Lane. Lane Wagner, welcome to the show.  

Lane Wagner:
Hey. Thanks for having me on, Rob.  

Rob Walling:
I’m excited to dig in to Boot.dev today. Your H1 is learn backend development the smart way. Welcome to the most captivating, finger-flying, addictive way to learn to code. That’s good marketing copy. Did you write that?  

Lane Wagner:
Thanks. I wrote a very similar version and then I have a marketing consultant that also helps tweak it.  

Rob Walling:
Nice. That helps. So, to give folks an idea of where you’re at today in terms of the business, you have graciously published your revenue numbers on Indie Hackers. We can link that up in the show notes, but you had some pretty incredible growth recently. Even as of four months ago, five months ago, you were at 24K MRR. No, 24K net revenue, in gross revenue in the month. This previous month, which was October of ’23, you were at $110,000. 

That’s a heck of a growth rate. What has gone on over there? We’ll get into your whole origin story, but what has happened to 4X in four months?  

Lane Wagner:
It’s been absolutely crazy. I was on the Indie Hackers podcast. It was actually back-to-back with your episode, I think. This is before they stopped doing the podcast, or at least took a pause from it. Yeah, that was when we were about 26K, and the last three months have all been over 80 or 90. 

We’ve pulled a few growth levers that seem to have actually had some good returns on them, and we can get into that, but it’s primarily YouTube. YouTube has been good to us.  

Rob Walling:
I do want to dip into it a little bit because I’ve been doing so much on YouTube myself with MicroConf. We’ve tried, probably three different … I’ve tried so many approaches on YouTube, where it’s like, “Well, I already record this podcast and video. Can’t we just put it on YouTube?” It’s like, “You can, and no one will watch it. You’ll get tens of views per day.” It’s totally meaningless. 

Then we tried doing clips because we have, sometimes fun clips, or we do Q&A, listener questions where we can have a question and an answer, and that’s going to be the topic of the video, and we publish those. Crickets, for the most part. I mean, basically our audience would watch it, and it was not growing the audience. 

Then we tried another thing and eventually we figured something out, and I won’t go too deep into it, but we basically went from 10,000 subscribers to almost 70,000 subscribers in about 18 months. So, we figured out our system and what works. 

So, I’d love to hear from you. You don’t have to give up the golden goose and tell everybody what you did, but I’m curious what your strategy has been to get this type of growth out of YouTube.  

Lane Wagner:
Good question. So, this is actually, is probably a good thing. I don’t have the typical, “Well, we grew a lot on YouTube.” Actually, my YouTube channel and my podcast channel has had growth, but it hasn’t been this astronomical thing that’s driven all the revenue. 

It’s been partnerships, primarily. So, collaborations with other YouTubers. So, a ton of legwork, Twitter DMs, emails, getting to know folks. I have a podcast, and you were a guest on my podcast, right? Getting to know people, writing great stuff that, kind of is adjacent to our product and getting in front of their audiences has, honestly been a huge growth channel for us. 

A lot of those people come in direct. So, they’ll hear about us on someone else’s YouTube channel or on someone else’s podcast and then come direct to our site, which is kind of hard to track, annoyingly enough, but we know that it’s the only thing working, so it has to be that. Right?  

Rob Walling:
Yep. To give folks an idea, obviously if you’ve never done backend development. You teach Python and Go. If you’ve never done it, or you want a refresher, or you want to get better at it … I was actually just clicking right before we hit record, going through your first Python demo course, and I was like, “I’m actually learning something.” 

So, it’s a B2C play, usually. I’d imagine you’re not selling to businesses, you’re selling to end users, who either want to become developers or who want to up their chops in these languages. How is that … I mean, my opinion, or my answer when people write in with questions about, “Hey, B2C. I’m going to do it,” and my answer is, “Don’t.” It’s jokingly, and there’s reasons. 

I mean, it’s not truly, don’t, obviously because you’re an example of a very successful business. Did 100 grand in revenue this last month. So, it’s not don’t, but there are, usually churn is high, and on and on. I’ve talked about all that stuff before. 

As you were building this business, did you know it would have the B2C issues, or really does it have the B2C issues? Is it relatively high churn, and is it little higher support than you’d like, and is it the typical, kind of B2C situation?  

Lane Wagner:
So, it does have some of the B2C issues. When I was early getting into this space, I was speaking with another founder of a company in the same industry who was farther along than we are. We’ve, kind of started to catch up now, which has been great, but they were quite a bit farther along than we were, back when I was talking to him. 

He’s like, “Just so you know, this space, churn is high,” and he’s not wrong. This is not a tool that, if you like it, you’ll just use it for the rest of your life. At the end of the day, whether someone succeeds with the product, goes through the course, learns a ton, gets a job, or fails, they get through the part that initially got them to sign up. 

There’s obviously, exceptions to that. Some people just love taking every new course that comes out. They’re big fans. But as a model, it is fundamentally different than a SaaS company. Then on the consumer side, actually we have not had that second thing you mentioned, which was support issues. I think that’s partially been how our entire team of three are all engineers, and we’ve engineered our way out of some of those problems, but they could have been bigger problems than they’ve been.  

Rob Walling:
You made a comment that I want to dig into. You said, “This is not really SaaS,” but technically it is a subscription for a tool to learn. So, technically we could say, “Oh, it is Software-as-a-Service,” but I think of it, the job to be done of Boot.dev, it could not be software, it could be someone driving to your house. 

The job to be done is teaching you how to uplevel your skills, or frankly just to learn from scratch, Python and Go. But when you say, you thought it was SaaS, but it’s not, what’s your thinking behind that comment?  

Lane Wagner:
Yeah. This really, I think, set me back quite a bit especially in the early days, just being confused about the business. This is my first company. It’s so deceiving for several reasons. 

First of all, Boot.dev is not like some of the other platforms that are essentially, videos where it’s really just a content play. You could put it up on any CMS and have a product. It’s a very interactive, kind of gamified environment. 

In my head I’m telling myself, “This is a different thing. This is not just content creation. This is like we’re building a product.” So, that was mistake number one, because exactly as you pointed out, what matters is the job to be done for the customer. Because the job to be done is training, then you fall into that industry. 

Having a different product is fantastic from a branding, finding a niche perspective, but the business model is fundamentally locked into the industry, or whatever the customer’s trying to get out of it  

Rob Walling:
Training.  

Lane Wagner:
Yeah.  

Rob Walling:
Yeah. That’s a good, solid realization to have because then you realize the pros and cons of a training business versus trying to compare yourself to SaaS benchmarks, for example, which just aren’t going to make that much sense. 

I was impressed because right before we got on the call, it says, “Try your first course for free,” and I clicked and I expected it to be a video teaching me to do something, like Udemy, and it’s not. It’s fully interactive software that’s in the browser, and there’s a Python interpreter that, and the code appears, and you submit it, and you click on it. 

I was like, “Oh, this is pretty well-done.” This is not something that someone could replicate in a week because there’s code behind this. I say that because I know that there are a lot of courses out there to learn programming, backend, frontend whatever, but you’ve built something here that feels pretty unique, at least well, certainly for Python and Go, I think. Are you the only way to learn these on the internet in this fashion?  

Lane Wagner:
Most learning platforms, not only as we mentioned, are video-based, but another thing, is a lot of online learning in the programming space is based on the frontend. So, we’re going to get you started on the frontend, and if you want to learn backend, you can go watch a video, or maybe you can go get a CS degree. 

For whatever reason, it’s so undercatered to, and this really blew me away. It goes back to the origins of the company in the first place. I was a hiring manager. I managed a team of Go developers. Whenever I opened up a new job position, I’d get 10 applicants. My colleague who ran the frontend side of the stack for the same company, he’d open up a job application and get 150 bootcamp grads, or people who’d been through online learning platforms for the frontend side of the stack. 

I’m like, “What is going on? Only half of the backend developers on my team had CS degrees. It’s not like we required credentials.” I think there’s an argument to be made that learning the backend side of the stack takes a little bit longer, maybe 10 or 20% longer than the frontend side. It’s got a couple of more moving parts, but it’s not significant. Just no one was doing it, so we jumped on it. 

I’m glad we did when we did because I needed a full 18 months of absolute floundering in order to finally start to figure out how to get traction.  

Rob Walling:
Sometimes that’s how it goes. I mean, let’s talk a little bit about that, your origin story. You were writing technical blogs that developers were starting to read, and you were getting traffic. Then, what was the impetus to be like, “Well, devs are reading this. I want to teach them something”?  

Lane Wagner:
Yeah, so I’ve always been really into teaching. I was a tutor in college. Just really enjoy … My wife says I really like mansplaining things, and there’s definitely truth to that. There’s some founder fit in this company already. But no, early on it was blogs. Yeah, I was blogging on Medium, I was blogging on this other domain that we used to have, Qvault.io, and it had nothing to do with courses. It was whatever was interesting to me at the time, whatever I’m learning about in the programming space, which of course was all backend-oriented because I was a backend developer. 

Then it was really when I was this hiring manager, right? Hiring people, realizing how hard it was to find good backend developers. It was particularly tricky back in 2020 when the market was really good for developers. I was like, “We need to be training people on this stuff. I don’t know why we’re only training people on HTML, CSS, and JavaScript.”  

Rob Walling:
That drives me nuts. So, folks here know that I once wrote code, and I consider … Back in my day, you did all of it, right? HTML, and you did some CSS, and you did JavaScript with no … It was before jQuery. I eventually used jQuery, but there weren’t all the frameworks for the frontend, but the bulk of my code was always backend. So, I would consider myself, if anything, a backend developer. So, it’s shocking to me that, I guess this shows my narrow lens of it, that all the sites cater to frontend. 

I mean, I say this with full disclosure through TinySeed, I’m invested in Frontend Mentor, which is a frontend development education, you know? So, I’m not against them at all, or learning frontend dev or whatever, but it just seems so weird to me that there would be this bias towards it. 

Is it seen as a simpler, “Oh, it’s easier to learn,” or, “It’s just easier to get more jobs in it,” or is there just “No …” Because there’s more jobs on backend, right?  

Lane Wagner:
Yeah. According to the last Stack Overflow survey, there’s twice as many self-identified backend developers as frontend developers, which gives you a demand. I mean, there’s a supply and a demand aspect to that, but that’s just that number. 

I think there’s a few things that go into it. I think the online learning world is, it’s hard to build Boot.dev, let me put it that way. It is hard to teach backend development interactively in a browser. It’s not as hard to do with the frontend because JavaScript, CSS and HTML all render in a browser, natively. Right? 

So, to build this interactive experience in a browser for backend developers is, there’s a lot more engineering work that you have to put in upfront, but I’m a big fan of, I don’t know if you’ve read Seth Godin’s Purple Cow book. I think in the long run, that’s actually a really good thing for us, because to replicate it. It’s a moat. Right? It’s something that sets us apart.  

Rob Walling:
Right. Usually, the things that are hard to do, if you grind through them and you slept through them, you get to the other side, A, you’re glad you didn’t know how hard it was going to be when you started because you never would’ve done it. But then you get to the other side and you’re like, “No one’s following me through that shit pile.” 

It’s like, “I’m going to be alone over here for a while,” and that’s a good thing. So, about just over a year ago, it was about 14, 15 months, Boot.dev was doing 6,000 a month, and you quit your day job. Obviously, you’ve had really nice growth since then, but what gave you the confidence to leave? You were an engineering lead, so I’m going to assume you were making pretty good money, or an engineering manager, right? You were actually managing people. What gave you the confidence to leave when you only had 6K of MRR?  

Lane Wagner:
So, let me go back six months before I quit my job. The year before that, Boot.dev had essentially been around for a year. We were under a different domain name at the time, and we’d had no growth. I felt like I’d been grinding just as hard then as I am now, just really trying to get this thing off the ground. 

Getting to $1,000 in revenue for a given month felt impossible, so hard to get traction. That six months leading up to when I eventually, actually quit my job, there were a few things that I feel like, we actually, kind of figured out. One was rebranding, one was niching down. 

Originally, I was just like, “I’m just going to teach Go. I know Go development. I’m just going to teach Go.” That niche was not strong enough. It wasn’t unique enough or distinct enough. There’s Go programming books. So, we started to figure out some things and we started to get traction. 

So, that was really what gave me the confidence even at just $6,000 in revenue to be like, “All right, I’m out of here,” because yeah, I was making almost 200K, or right around 200K in total compensation at the time.  

Rob Walling:
You also raised some funding, which I was really intrigued to hear because when I think about starting a site like this or a tool like this, in my head I’m like, “Oh, this is totally bootstrappable.”  

Lane Wagner:
Yeah.  

Rob Walling:
You know what I mean? This is something that you really could. Now I know there’s a software component to it that, as you’ve said, it took a lot of time to build, and it takes time to continue to expand, but I was a little surprised by the fact that you raised … Is it public, $330,000?  

Lane Wagner:
Yeah.  

Rob Walling:
Is that a public number? Yeah. $330,000 in August of ’22, around the same time you left your job. Why did you decide to do that rather than bootstrap it?  

Lane Wagner:
Yeah. So, I would say I’m 50-50 on the scale of risk-adverse to risk-taker. I’m probably not quite as much of a risk-taker as most entrepreneurs, but I definitely have some of that in me. My wife is extremely conservative, very, very conservative. So, the idea of me quitting right as we’re about to have our second baby and not be able to take paternity leave, paid paternity leave made her quite nervous. 

So, raising some cash and being able to take a salary, even though of course it was a much smaller salary without all the medical benefits and everything, definitely just gave us so much peace of mind. So, hindsight being what it is, there really was no reason to raise money. We’ve been profitable this entire year. We have more money in the bank now than what we raised, but at the time just knowing the information I knew. 

I had projected, I was like, “It would be really great, if by,” what’s the date, “November of 2023, we have it a month where we make $30,000.” That was the goal, and here we are at 110, but that’s what I was planning for.  

Rob Walling:
You never could plan that you were going to grow like this. So, it’s that whole thing of, just because the decision didn’t pan out the way you thought it would, doesn’t mean it was the wrong decision at the time. Right? You made the best decision you could with the information.  

Lane Wagner:
Yeah.  

Rob Walling:
So, when you think about a long-term play here, you have investors. Investors, typically want to return at some point. Usually, that’s an exit. There are some exceptions, like the TinySeed terms and SparkToro, where you can pull out dividends because you’re structured in a way that, that makes sense, and you pay investors dividends over time. 

Again, I have one or two angel investments of my own out of 20 that do that too, as well, that actually pay dividends. Well, I guess at SparkToro, I’m an investor in and then there’s two others, but the usual one is to have an exit, right? I need to sell within five to 10 years or whatever it is. 

Also, founders get bored and decide they want to sell eventually, but you’re still early. I mean, you’re really … I know you’re three years into it, but really you’re full-time free just over a year. So, I don’t expect you to be thinking about what’s going to happen 10 years from now, but does that cross your mind of, “How do I pay investors back? What’s the future hold for me?”  

Lane Wagner:
Yeah, absolutely. When I raised with the investors, first of all, these investors are awesome. I actually knew them from before, which is why I only pitched one investor. I raised from that investor, and that’s all the raising we’ve done. I don’t think we’re going to raise any more. 

The conversation, originally was like, “Hey, I have this platform. We seem to have found the traction thing, and I have different ideas for some growth levers we can pull. I think they’ll work, but I want to quit and go full-time on this. I’ve been doing it 15 hours a week,” or whatever. “I don’t know if we’ll sell this company.” 

That was the conversation I had to have with the investors. “I don’t know if this is a thing that we sell. I don’t know if this is a sellable thing. It’s not a SaaS application. It’s not a recurring revenue tool. It’s an education platform.” It certainly could have an exit. There’s no reason we can’t, but I just had to be super upfront with them. “Maybe we just do distributions.” Right? 

So, we raised a million-dollar valuation, so they bought a third of the business. We could just do distributions at that point.  

Rob Walling:
Right, because at typical valuations you get half a percent, 1%, 2% of a company, and then it’s like, “Great, for every $100,000 you pull out, I get $1,500.” It doesn’t make sense, but if the investors have that much, that does make it a little more palatable.  

Lane Wagner:
It also changes how you compensate employees. So, rather than just doing the standard, “We’re going to give employees options, and then maybe they have this big windfall when we go public,” I’ve had to be a little more conscientious. Right? 

So, we basically have a split program, where we do the options thing just in case we sell, but also, kind of a profit sharing plan on top of that just because we don’t know if we’re going to sell.  

Rob Walling:
Yeah, it’s nice to have that, to provide both options. I’d love to hear if there has ever been a moment in the life of Boot.dev, where you were really not enjoying it, like the worst lows, where you were either up at night or you were, “I want to throw in the towel. This sucks. Why did I become an entrepreneur? I should go back and be a full-time employee.”  

Lane Wagner:
2021 was an awful year. So, I wrote the first course and launched a very, very small MVP of the platform in 2020. I can’t even remember, exactly the month. It was right after COVID, so it was summer, spring of 2020, but it was a new fun project, no customers. I did all the classic things, had zero distribution channels. 

So, I just published this thing no one used and I thought it was, kind of fun. 2021, I was trying to get customers that entire year and we had, effectively no growth. There was a time, I remember it was early in 2021. I was like, “Can I just get rid of this thing? It’s causing me more mental … It’s more taxing on me mentally than it’s worth, and I can’t just put it down. It’s making 500 bucks a month,” or whatever. So, I can’t just kill it, but it’s destroying me mentally. 

So anyways, I went on Reddit and I was like, “Someone want to buy this thing? Does anyone want this?” The result of that conversation was actually that I found someone that was interested in helping me market it, and great person. They were super nice, super smart. They were in a different industry. We tried for all of 2021 to market this thing and we absolutely failed. 

We had no growth in 2021. It was terrible. So, I actually bought my section of the business back from him. He put in a bunch of sweat equity over the course of the year, and at the end of the year I just bought it back from him and I’m like, “I don’t know what to do.” So, we tried a few more things and it started to work. 

Beginning of 2022, we started actually seeing some growth getting up into the two, the three, the 5K monthly revenue numbers.  

Rob Walling:
What were you doing differently, because there are a bunch of people listening to this right now, who have a business doing 500 or 1,000, and it has been. They’re like, “I don’t know what to do.” 

Not that your solution will work for everyone, but I’m just curious if you can touch on … If you even know, because sometimes you don’t, but what did you start doing differently that got you from the plateau to actually a pretty good business?  

Lane Wagner:
There were three things that we all did in fairly rapid succession, so I actually can’t be sure exactly which one was the most impactful, but I will list all three that I’ve had time to reflect on. 

The first is that this guy that I was doing marketing with in 2021 was not an engineer, was not a developer. It is really hard to write good copy, to come up with good messaging for an audience that you don’t know very much about. 

So, one thing I’ve definitely learned over the last couple of years is thinking about hiring a marketer or thinking about using a contractor. Marketing, almost is not a specialty in and of itself. It’s like, you need to be good at marketing to this audience, or you need to be extremely familiar with what they want, what they need, what the content they consume online. You need to hang out where they hang out. Right? 

So, I just found that, that wasn’t working. That actually, at least in that moment, I could do a much better job just because I knew how to talk to these people. That was a big turning point. 

Rebranding the site was a big one. I read this book. I’ll probably reference it a couple of times because I really do think this was probably the biggest turning point for the company, was just reading this book called The Purple Cow by Seth Godin. 

It’s all about finding a unique niche, because this is a crowded market. There’s a lot of people teaching courses online in lots of industries, but especially programming. Programmers love to share their knowledge. So, you really have to figure out how to stand out. 

We did a bunch of stuff, visually, with the name, with focusing on the backend side of the stack that really allowed us to start getting more word of mouth marketing, because nobody wants to talk about another learn to code platform. No matter how good you think your courses are, you need something else that’s remarkable. Something else that someone will talk about. That was another big one.  

Rob Walling:
What’s the purple cow for Boot.dev? What is it, the thing that people talk about?  

Lane Wagner:
We have two, which might be antithetical to the thesis of the book, but I still think it’s correct for us. The first is the focus on the backend. Just no one else is doing this, which is frankly, kind of lucky. We, kind of stumbled into that. I just happened to be a backend developer, and everyone else is teaching HTML, CSS and JavaScript. So, that’s the big one. 

You could even sub-niche it and say, “Go is not the most popular backend programming language, but it’s the one that we focus on, primarily.” So again, we get a lot of attention in Go communities for that reason. It’s much, much easier to get traction in a small community than in a large one. It’s not even close, which is another thing that I really made a mistake of in the beginning. 

Qvault.io, back in the day was a very generic. I was just branding it as this, “Come, learn to code. We happen to have this course on Go and this course on Python,” or whatever, but the messaging was all extremely generic, because you like to tell yourself that this thing could be big, right? Anyone could use this thing. I think that’s such a huge trap.  

Rob Walling:
Was that both purple cows? You named the one of niching.  

Lane Wagner:
Oh, yeah. The other one is the gamification. This one’s more recent. I’ve always enjoyed e-learning that leans heavily into the admission that we are human, and that we like hits of dopamine, and that we have all these things, these very human things. We’re not mechanical when we learn, and there’s not a lot of learn to code websites that lean into that. 

So, just every month it feels like we’re leaning harder and harder into that messaging. I don’t know if you saw on the site, it feels like this fantasy game. Our mascot is this wizard bear, and everything we do is around unlocking achievements, and earning XP, and getting on the leaderboard. 

That’s all really good and is based in pretty well-known psychological principles about getting yourself to keep coming back and keep learning, but it’s also just super unique. Nobody else is doing it.  

Rob Walling:
Very nice. Yeah, I do. Of course, I’m a fantasy nerd myself, and so I like the visuals on the site. It seems like you’re catering pretty well. 

Before we wrap up, you had commented earlier about how you originally thought of Boot.dev as SaaS. It’s not really SaaS, it’s training. Also, before we hit record, I was asking you for MRR and you mentioned your gross revenue of 110, and I said, “Oh, what’s MRR?” You said, “Well, MRR’s 50K, but that’s not the right metric to look at for this business.” What did you mean by that?  

Lane Wagner:
Yeah, so Stripe shows us our monthly recurring revenue. Out of the box, Stripe defaults to SaaS metrics. For a long time, I really worried about that one. There’s a couple of reasons I don’t think it’s important, or as important for us. 

Again, this threw us off. We’ve been a subscription revenue company, and that really, to a new founder that doesn’t understand all these different business models, really confused me. I was comparing myself and my metrics to other SaaS companies, and that’s not the right way to think about it. 

So for example, our net revenue in, what was it? October of 2023, $110,000. Our recurring revenue, about $50,000. Our revenue that came in that, was recurring was $30,000. There’s a distinction, right? The actual money that came in the door, that rolled over from yearlies last year, and monthlies of the month before. This is not a tool, where people stick around forever if they like it. People drop out for all sorts of reasons. 

So, our churn is much higher than the traditional, what is it? One to 4% of a SaaS company.  

Rob Walling:
A healthy SaaS company. Yeah.  

Lane Wagner:
Of a healthy SaaS company, exactly. Yeah, what we are actually optimizing for is just lifetime value of a customer. Is our lifetime value of a customer in a healthy spot, and can we acquire customers at a price that’s lower than that? Ideally, much lower than that, and then you get better margins. Right? 

But every year, this is another interesting thing because you actually do have some advantages. This all sounds worse. This is just worse. This is worse than SaaS, but there are some nice things. Word of mouth is much higher in this industry than in other industries. 

So, if people really like your thing, they’re much more likely to share it than, I think is the baseline in, maybe SaaS tooling, B2B SaaS tooling specifically.  

Rob Walling:
For someone listening who’s trying to get their head around why you have $110,000 in revenue, but MRR is 50K and actual recurring revenue is 30K. We won’t go through all the math because on a podcast it would be terrible, but the idea is that when you sell annual plans, you can’t recognize, you shouldn’t recognize all that revenue in that month. 

Usually, let’s say for easy math, your annual plan, you have an annual plan for $348 a year and then you have a monthly membership for $49 a month. So, you sell a lot of annual plans because it’s almost half the price to just pay annually. Right?  

Lane Wagner:
It’s about a 50-50 split of about half our customers do annuals, half do monthlies, but of course there’s more revenue, immediately from the yearlies. Yeah.  

Rob Walling:
Right. So, you get a bunch of that cash upfront, which is great. It means you have money to market. It means just getting cash upfront is always good, but for someone who’s never thought about how … I’m going to do a simple math example of, if I sell an annual plan for $1,200, what I should do if I’m doing my accounting right, is divide 1,200 by 12 and recognize $100 of MRR per month for the next 12 months. 

So, that’s what you’re doing with your 348. That’s why the numbers are all different. It can be deceptive in either direction. If you do all annual plans, you get a ton of cash upfront, but your MRR seems really low.  

Lane Wagner:
Yeah, we think about it as, essentially we’re selling a product that’s being financed over an amount of time. Right? Because these dollar amounts are so low, we don’t actually have a contract for you to sign, and we’re doing loan terms, and interest. 

It’s more just like, you want to get access to this thing for six months. You’re financing the total cost of the course over the six months that you’re accessing it, which makes us think about it, again in terms of lifetime value of the customer, which is somewhere between $100 and $300. There’s averages in there. 

That third point about the revenue that I made way back when that, I’m sure everyone’s forgot about, was we do care about this number that is the actual dollar amount coming in every month.  

Rob Walling:
The cash coming?  

Lane Wagner:
Yeah, and it’s even lower at present because of our really fast growth that we’ve had recently, than the actual MRR. So, our SaaS MRR is for 50K. The actual cash coming in from recurring revenue every month is down into the 30K range. But that’s an important metric to just keep in mind because it’s like, if we do no marketing, if we bring in no new people this month, how much cash is coming in the door? So, keeping a tab on that is actually really important.  

Rob Walling:
Lane Wagner, thanks so much for joining me today. Folks want to keep up with you on Twitter. You are wagslane, that’s W-A-G-S L-A-N-E. Of course, Boot.dev if they want to see what you’re working on. Thanks, again for joining me.  

Lane Wagner:
Thanks for having me, Rob.  

Rob Walling:
Thanks, again to Lane for joining me on Startups For the Rest of Us. Thank you for listening this week and every week. This is Rob Walling signing off from Episode 688.

Rob Walling:
It’s Startups For the Rest of Us. I’m your host, Rob Walling, and this week is kind of a Hot Take Tuesday but to be honest my two guests were unable to make it. One got sick and the other one had a pretty gnarly schedule, and I have no flexibility later this week because I’m traveling and we have MicroConf Remote and I’m giving a talk, etc, etc. So you’ll notice more episodes than usual over the past month or two have been solo episodes, and that has been because of my schedule. I have very limited time in front of my computer these days and trying to schedule folks to actually record an episode, whether it’s an interview or a Hot Take Tuesday it just hasn’t worked out. So even though I had this on the calendar with two guests planned, here we are with me and several topics to talk through today. But rest assured, as my schedule calms down over the next few weeks we will settle back in to our normal Startups For the Rest of Us schedule and one more thing. 

We’ve recently reopened the doors for our online community, MicroConf Connect. MicroConf Connect is our virtual hallway track, it’s a vibrant community of SaaS founders helping each other and discussing wins, challenges and frankly how to grow faster. A couple of months ago we paused new signups to improve the platform based on your requests. With MicroConf Connect 2.0, we’re rolling out three membership tiers packed with new perks, like weekly coworking, exclusive discounts, a searchable content library and more. Whether you’ve been a member of Connect or not, you really should check it out, microconfconnect.com. So I want to cover a few topics today, one of which is more of a, Rob, solo adventure topic and the others are things from the news that I had put together for this episode of Hot Take Tuesday. The first topic ties into an episode of the podcast that went live a couple of weeks ago about things startup founders should never do, and I listed seven things in that episode. In between the time I recorded that episode and a couple of days ago, I realized there’s another one. 

And of course I think this will be a fun Startups For the Rest of Us drinking game over the course of the next year or two. That every time we all collectively as a community think of the next thing that folks should never do we can all take a sip of an adult beverage. But this one popped up during a conversation I was having with friend of the show, Ruben Gomez, and we were texting back and forth about different things. And I realized that an eighth thing that startup founders should never do is to take funding and then start side projects. And the reason for this is that three of the things that lead to your success as a founder are focus, focus and focus. I say it jokingly a bit, right? Obviously there’s a lot of other attributes of founders that make them successful and unsuccessful. But I do see a lack of focus as a major red flag with founders and in fact, when we’re interviewing founders for TinySeed. 

If we get a lot of pushback about asking them to say go full-time on their startup, or someone who we notice is all over the place doing the indie hacker dream where they have five or six different products. I would never invest in that person because they don’t have commitment to one idea or one company or one product to be able to push it forward in the way that it’s going to need to be to become a successful product. And I think of success these days as it’s a seven or eight or a nine figure ARR company, usually seven or eight figure. And trying to have a bunch of things going on, starting side projects that you’re investing quite a bit of time in and taking seriously and actually launching and working on it is this interesting drain of your creative energy. And I know some of you out there are hearing this and saying, “That actually makes me better at what I do. You know what? Once I’ve had one or two drinks I’m actually a better driver.” Which was the whole cliche what in the ’80s and ’90s. 

But seriously I get it, we all have entrepreneurial ADHD and I would love nothing more than to work on five or six different things. Because you know what? It allows me to always be stimulated, it allows me to feel creative and it allows me to spread my efforts across a bunch of stuff. But that’s precisely the negative impact that it has is I’m spreading my creative thoughts, my creative energy and my time and my attention across side projects and my main company. So there’s no reason that you can’t work on two, three, five, 10 things at once you should go do that, but what you shouldn’t do is take investment for one of those. Because any investor, especially venture capitalists and especially professional angels and especially accelerators will require that you do not continue working nights and weekends or maybe it’s during the day. Right? No one’s watching you, but that you continue to work on these side projects, launching these things, promoting these things. It’s a terrible signal. Now, you may find friends and family or you may find inexperienced angel investors who are willing to give you money. 

If you are playing Dungeons and Dragons on the side and you have a Dungeons and Dragons podcast or you run an event for startup founders most people don’t care. But it’s when you are essentially launching other products that are also software. Right? That are also SaaS. You can’t grow three SaaS companies at once, no one does this. Right? It’s an anti-pattern. You can grow one and then have a couple that are flailing around and so if people see you tweeting about one, two, three, four, five, different projects at once. It’s pretty obvious that you’re not giving any one of those the attention they deserve and so the solution, if you do want to work on multiple things or you want to be able to start side projects don’t take investment. Investment only works in certain situations and although I have my 1990 rule, which is I think about 1% of tech startups should consider raising venture. I think about 9% should consider raising what I call indie funding, which is TinySeed, Indie.vc, Upeka, and the other alt VC funds that you might hear about, and then 90% should probably bootstrap. 

And I think that if you want to do a bunch of products, and this comes from someone like myself who at one point had somewhere between nine and a dozen depending on how you count products, all generating revenue. But I didn’t raise money for those, and when I went to focus on HitTail I didn’t raise money for that either because I wanted it to be a lifestyle business. The only one that I would’ve considered raising money for was Drip and then frankly TinySeed, because I’m focused on those and committed to those and you might say, “Well, Rob, you work on TinySeed and MicroConf, and you have this podcast.” And that’s true, but if you look at them they’re all in the same ecosystem and it’s this virtuous cycle of all three of these things feeding into one another in a good way. Everything I do for MicroConf helps the podcast and vice versa. Everything I do with MicroConf helps TinySeed and vice versa. Each of these things feeds on each other and they’re all growing and supporting one another and I also have teams of people running these companies. 

If you think I’m in the nitty-gritty of every decision that’s being made at all the companies I work on you would be incorrect. Now, there’s a vision and a direction and high level guidance and advising that I’m giving. But if any of these were a SaaS company that I was trying to grow I would need to focus on it almost full-time. Now, I ran MicroConf and this podcast on the side. Mike, and I did this essentially as a hobby and it was a side project and when I went to sell Drip I actually got in a conversation with our acquirer and the CEO asked me, he said, “Are you going to keep doing these things on the side, the MicroConf and the podcast?” And I said, “I am. That’s been part of my personal brand, I actually think it’s beneficial for Drip and it’s something I think I will do for decades.” And he was okay with that. 

But what he wouldn’t have been okay with or I don’t think he should have been okay with is if I said I’m going to sell this to you, I’m going to come work for you for a year or two, and while I do that I’m going to launch a side project or four side projects. Because I get bored with stuff and because this one isn’t working and so I’m going to hop to the next one. I didn’t do that and it’s anti-pattern, it’s a bad signal and so it’s tough because as much as anyone I like starting new stuff, as much as anyone I have entrepreneurial ADHD I know that. But the founders that I see succeeding are the ones that focus on something for enough time to get it off the ground and to get it to escape velocity and that takes focus. So to recap, the eighth thing that startup founders shouldn’t do is to take funding and then start a bunch of side projects. 

My second topic of the day is more of a Hot Take Tuesday topic I was going to discuss with my other two co-hosts, but I have some thoughts on this and I’m pretty intrigued by it to be honest. This is an article from Slashdot, I know you haven’t heard that website in ages, have you? I haven’t read Slashdot well over a decade. I was never super into it, but I found it to be a pretty decent source of nerdy news stories that kind of relate to this podcast and that can be discussed on a Hot Take Tuesday episode. So the headline is, “Facebook and Instagram to offer subscriptions for no ads in Europe.” To comply with evolving EU regulations Meta says they’re introducing a new subscription option in the EU, EEA and Switzerland. It’s going to cost $10.50 cents a month if you buy on the web or $13.75 cents a month if you buy on iOS and Android. My take, I would pay for this in a heartbeat. I actually like the idea of having freemium and paid versions of all these systems. 

Because it allows someone like me who doesn’t want to see ads and who has the means to eliminate the ads and on YouTube, I have been paying for whatever YouTube Premium I think it’s called. I’ve been paying for that for years. For so long in fact that if I wind up on YouTube in an incognito browser I’m shocked and appalled at the pure volume of ads that are coming my way. I forget, I forget that YouTube has ads as crazy as that sounds. But you know what? My 17-year-old, my 13-year-old, they’re not going to pay this much and so they can still use the product and be ad supported and that’s what I like about this kind of thing. I don’t use Facebook at all, I deleted it from my phone about eight months ago and I only use Instagram for it’s to keep up with a few people in a niche hobby that I’m in. But my hope is that Meta looks to roll this out worldwide. 

I don’t know that they will unless the US requires it because this is EU regulations that are essentially requiring them to do this and given that Meta is in the ads business. Right? That’s where they make their money. I don’t know that they want to cap their upside by having a subscription that they then have to increase the price of every year and take a bunch of flack like all the streaming providers do. So it remains to be seen if this will come to the US, but any of these systems that want to do this why not give us the option? And if you do this they won’t use your information for ads because they’re not serving you ads. And I like that even more to be able to pay for that privilege while again having the option for folks who can’t afford it to still be able to use the free version. So I’m envious of you, EU, EEA and Switzerland, I hope you take advantage of this once it’s available. 

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As a bonus for our podcast listeners get a 15% discount on your first four weeks of working with a developer. Stop burning money, hire devs smarter, visit lemon.io/startups. My next topic is a thread from Hacker News. Don’t read the comments, but we will link it up in the show notes. No, actually it’s so funny to look at Hacker News threads and to see the first comment or the comment that’s all the way to the left as you scroll down. Right? So it’s the ones that are the main comments responding to the original poster. Those comments for the most part are pretty intelligent, well-thought-out and helpful. Now, the further you scroll down they’re not. But what happens is you get someone post an intelligent comment and then it instantly devolves into this pissing contest and this argument between people who it’s pretty obvious like you have no idea what you’re talking about. Or wow, dude, you are way too opinionated about something that no one else cares about and/or pedantic trying to correct a word someone wrote. 

And they write a 500 word response and you disagree with a single word of their response because that’s totally worth talking about. So anyways, it never ceases to amaze me both the value you can get from Hacker News and also what a mistake it can be to actually read into the comments. But this thread is an Ask HN where the OP says in, Paul Graham’s, essay he talks about manually doing what you later plan to automate. So this is the essay do things that don’t scale, and in the essay PG gives the example of Stripe manually onboarding startups. Does anyone else have other examples? And I really like this thought process. What’s funny is manually onboarding startups like Stripe did was considered, it was like, whoa, you can do that? No one does that. And that was what, 2012, 13, 14? It was in that range. Nowadays, anyone who’s starting out I would say manually onboard your first 20 customers. 

Don’t write any code, figure out what the hiccups are, figure out how long it takes them to get onboarded and to get value and that will inform the duration of your trial and even run billing manually for a while. One of the first things that we did when we were getting Drip off the ground, was not write any billing code. There was no subscription code, I believe we could accept their credit card through a form… No, actually we didn’t even have that. We would manually create an account, and this is for maybe the first 20 or 30 trial users really most became customers. We’d manually create an account, Derek, would do this in the console, into the database directly. So then they would have a login, they could reset their password and they could log in and they could use it and there was no billing page. There was nowhere to enter a credit card and I was manually working with folks mostly via email. 

I think I did a little bit of a Skyping, because this was pre-Zoom, so we would literally jump on Skype to show you how long ago it was. And I would just tell them, “Look, don’t pay anything before we get value and if you never get value just don’t pay anything. But I’m going to check in with you every week or two and let’s figure out how to get this installed and how to get you using this and whether or not it’s more valuable to you than the current tool you are using.” And I learned a ton about this. I learned that from the time you installed the code, it was about 14 days until you maybe had enough subscribers that it kind of made sense that Drip was valuable for you and we had folks in the system that would eventually say, “All right, I feel like I’m getting value. I want to start paying you.” And I had told them it’s going to be $49 a month. 

And so what I was going to do was go directly into Stripe to log into stripe.com and I was going to take their credit card and type it in. But, Derek, said, “No, let’s get a page up and let’s get a page in the app so they can enter it. It’s all secure, you don’t have to get on a phone call with them and it’ll make sure everything’s synced between our database and Stripe.” And so in an hour or two he hacked something together that allowed them to enter their credit card, post it to Stripe to get the customer token and now we could bill them. The thing was we didn’t have any code written to bill people and that was okay, and we ran like this for months and I would set a calendar reminder in Google Calendar that after 30 days or a month I would go in and I remember billing, Brennan Dunn, manually. And I remember billing several other early customers going into Stripe and literally clicking a button that said charge this much and that doesn’t scale. 

And that sounds a little crazy, but it saved us hours of development that we were pushing towards other things, features that actually made a difference to our customers. And eventually of course, Derek, created a little billing engine and we put a rig task into the system. A Cron job for those who aren’t familiar with Ruby and Rails and set it to run every night, check if anybody needed to get billed. We did all that eventually. But I mean building that takes time, right? It takes how many to QA it and to write the unit tests and to make sure it runs because man, you don’t want to screw up billing. That took time and we pushed that off as far as we can. It was literally months and months and we had I would say 20 people using the app willing to pay for it before we cranked up the subscription engine. Another thing we did, this is less about things that don’t scale but this is top of mind for me. 

Because I did a call about a month or two ago, someone backed the SaaS Playbook Kickstarter and they backed it at the level where they could do a one-on-one conversation with me. I don’t do consulting, but I made just a handful of spots available where people could pay it was either 800 or $1000 and they could talk to me for 45 minutes and those all sold out. It was great. But someone had the question of what can I leave out of the app? When people talk about an MVP, what does it really need to do and what can I leave out? And one example I gave her was in Drip, which was an email service provider. Think of it like a competitor to MailChimp, it’s a little different but you get the idea. You can create emails, you can send them to people and you can send sequences and there’s some automations. We had no delete buttons anywhere, so you could create a broadcast email, a one time broadcast, you could send that or it would be a draft. 

But if you decided that you wanted to delete it, we had to literally go into the console and delete it out of the database directly. There was nothing in the user interface to delete anything. In fact, there was no searching anywhere. So if you’d had 100 or 200 broadcasts at the time that you wanted to search through, you couldn’t and it actually took us a year or two to get to adding search. But in the early days, no one had 200 of those. So they didn’t need a way to sort or search or really even delete. For the most part, people would just rename it and use it next week if they had mistyped something or if they’d created a broadcast they didn’t want to use. We got shockingly little pushback about this. As developers who have worked on complete systems that are mature five, 10, 15 years in this piece of code or this application does all this stuff. 

You can’t imagine not writing sort and search and delete buttons and reorder and all the basic functionality of what you might think of something in a table layout, but you don’t need much of that. You need almost none of it, you need to display it and you need to allow them to do what is the minimum viable action for that screen. It’s to create a new thing and it’s to edit that new thing and in this case it’s an email, so it’s to send that new thing. But that was it, everything else we pushed off as long as we could and sometimes we did get some pushback. I can’t believe… Put in quotes, “I cannot believe that you don’t have any delete buttons.” And I’d respond with, “Yeah, I appreciate that. And if you want us to delete something send us the name of it or whatever and we’ll delete it for you.” But honestly, we are so busy providing value to our customers at this point and there are more valuable things to be building than delete buttons. 

To wrap up this topic, as I read this in this Hacker News thread the number one response to doing things that don’t scale is actually super interesting. So the comment is from one of the co-founders of Lugg, which is lugg.com and Lugg’s H1 is move anything with the push of a button. So it’s about actually moving furniture and such and one of the co-founders posted and they said, “At Lugg we did a few things that would not scale. Number one, my co-founder and I did all the lugs ourselves in trucks we rented through Getaround for the first four months. My co-founder and I’s names, pictures and phone numbers were hard coded into the app as the crew to fulfill the lug before we had crews or proper dispatching.” And this is Rob cutting and see if you’re going to do a two-sided marketplace, this is it. They were one side of the marketplace and it must’ve been incredibly local. I don’t know where they lived, but then… Oh, they’re in the Bay Area, it looks like the next one they talk about being in Emeryville. 

So they lived in a city big enough where there was enough demand because if you lived in a tiny little town this wouldn’t work. But living in a big enough city and then being willing to grind it out like these guys did, it’s pretty impressive. The third bullet is, “We launched without payments and would charge customers with a square reader at the door.” That’s amazing. Fourth one, “Most mornings we would camp out in the IKEA parking lot in Emeryville, California.” That’s in the East Bay, “And approach customers that were struggling to get their purchases in their cars and we pitched them that we would deliver their items if they downloaded the app and made a request. In the early days, we didn’t have operating hours and anyone could request a lug at any time and my co-founder and I would hop in our rented truck and do it. A few months in we did a lug for someone that knew, Sam Altman, and made an intro for us. 

We met him for coffee shortly after had a YC interview and we were later accepted in the spring of 15 batch.” So that’s eight years ago. This is not something that I would personally do, it doesn’t sound fun. But talk about grinding and doing what it takes to get the job done, right? And if you’re going to do a two-sided marketplace, as I said this is how you do it. But also none of that scales, but all they were doing was just trying to prove things out and just trying to learn and if you think about that that’s what doing things that don’t scale is about. And there are a lot of companies that apply to TinySeed that we talk to and some that get in that are doing the human automation man or woman behind the curtain just pedaling like a duck under the water like crazy to get the service done just to prove that there’s a need. 

Because if you prove there’s a need and you prove that you can sell it and you prove that people are willing to pay for it, fulfilling the service and automating that, writing it in code is often not the hard part. It’s usually not the hard part. The hard part is just figuring out what is it that people want? How do I build something that people want? How do I offer something that people want and are willing to pay for? And however, you can validate that obviously assuming you’re doing it ethically and you’re doing it in a way that allows you to learn. I’m all for doing things that don’t scale in the early days and that’s going to wrap us up for this week’s episode. Thanks for joining me this week, I know it was kind of a mashup of multiple episode types and it’s one of these weeks where the show has to go on. I wanted to get an episode out to you. 

I hope it was valuable to you to hear the insights I had to share on these topics and as always, I’ll be back again next week with another episode. This is, Rob Walling, signing off from episode 687.