co-founder

Rob: Welcome to this week’s episode of Startups For The Rest of Us. This is Episode 515, and I’m your host, Rob Walling. Every week on this show, we cover topics related to building and growing startups using an ambitious but insane approach. We’re not willing to sacrifice our health or our relationships to grow our companies.

This week we answer listener questions, and I have founder of DNSimple, Anthony Eden, back on the show. We tackle a bunch of questions about stair stepping, about becoming better at sales, and about looking for and finding co-founders. With that, let’s dive right in.

Anthony Eden, sir, thanks so much for coming back on the show.

Anthony: Thanks for having me on again, Rob. Appreciate it.

Rob: As a reminder to folks, you were on episode 509 just about six weeks ago and you are the founder of DNSimple, a bootstrapped business for a decade, 15 employees, multiple millions in revenue, and you are a domain name registrar, and domain management. Is that a relatively accurate picture?

Anthony: Yeah, that’s a pretty good picture, that sums it up.

Rob: Awesome. Today we are going to dive into listener questions as I’ve been letting folks know and our first question is a voicemail from, I’m mispronouncing his name. I think it’s Ges, but it’s like hair. It’s one of those sounds that we don’t make in Western English. So I’ll let him say his name and we’ll roll into that voicemail right now.

Ger: Hi, Rob, this is Ger from Routine Factory again. A while ago, I sent you a question about going international with our SaaS for people with special needs. A few months ago, one of our U.S. customers left us a message that uses Routine Factory for his brother in law and loves the experience. We’ve had some great conversations online and ended up hiring him part time.

A few months later, he’s already helped us by making our international website sound more natural and our social media page is no longer dead in the water. This step does feel right. I’m just wondering if there might be some tax or liability issues that I’m not aware of right now. There’s no paperwork, only an NDA. He sends us weekly payment requests through PayPal.

I’m fully aware that you’re not a lawyer, but your insights are much appreciated. Okay Rob, thank you very much for considering my question and hope to see you in the future.

Rob: Thanks for the question and congrats on moving forward with that. This was just a couple of months ago. Ger had emailed in about expanding into the U.S. from, I believe it might have been the Netherlands or Sweden. It was somewhere where he was trying to figure out if he should go adjacent or try to come to the U.S. So it’s awesome that they were able to move forward.

I will obviously counter it again with this is not legal advice or tax advice and neither Anthony or I are attorneys or CPAs, but Anthony, did you hear the question as they now have one customer in the United States and he’s wondering if there’s tax or liability issues with having this single customer in the U.S.? Is that the question that you hear him asking?

Anthony: It sounds a little bit like that, although what’s interesting is that he was saying he was giving feedback and the person was asking if he’s making a payment request. It wasn’t clear to me whether this person on the other end is actually doing, they said they hired them part time, so in fact, it is somebody who’s working on the product with them a little bit, providing feedback, maybe actually doing some work for them.

I don’t think it’s necessarily just the customer. I think they actually have some sort of a business relationship with this person already.

Rob: Okay, let’s assume that’s the case and that this advisor or contractor, I guess we’ll call him, is a contractor that lives and resides in the US as an international company. What type of stuff should they be thinking about?

Anthony: The biggest thing that you have to start looking at, of course, is you have to consider your local laws and how those are impacted by the foreign laws from wherever this person lives.

For example, one of the big ones that my attorney generally talks a lot about is intellectual property. If you have a developer or a contributor who’s outside of your country or even inside of your country and they’re actually writing code for you, the thing you really need to do is make sure that you get an IP assignment.

That’s before they even start working, you have an agreement written up which states that the work that they’re doing for you is owned by your company, because if you don’t do that, you put yourself at risk in the future of somebody coming back to you and saying well, I did this work for you and I wasn’t compensated fairly so now I feel like you should compensate me and oh, look, you’re very successful, therefore, you should really compensate me heavily.

Essentially, you want to protect yourself by having clear agreements in advance for things like intellectual property. Clear agreements for the mechanism for payment, the number of hours they’re going to be working if it’s a contractor. Again, these are the kinds of things that are a staple of setting up an agreement with a contractor or an employee inside of your country or outside. These are the basics you should do for everyone.

I always recommend hiring a good attorney who’s in your area first, understand what the impacts are in your country, and then if you’re also hiring somebody outside of the country there are attorneys that specialize in this type of thing. Granted, they’re not cheap, but the value in the long run is that you protect yourself from much more significant risks down the line.

Rob: Yeah, I really like the way you’ve called that out. I think that a lot of early stage founders overlook having an IP agreement with every employee, every contractor, anyone who they work with. It’s something that I overlooked in the early days, too, because it’s kind of a pain in the butt.

You want to bring someone on for, let’s say it’s 10 hours a month of work. It’s like, I got to draft this thing up and I got to send it to him on Docsketch or DocuSign or whatever and get him to sign it.

Then what’s interesting is it doesn’t seem worth it in the early days. But here’s what happens if you ever want to sell your company, if you ever want to raise investment, when they get into due diligence, they’re going to ask you and they’re going to make you sign something that says every person who has touched this code or every person who has contributed to this IP I have an agreement with, and then you’re going to have to go back. I actually had to do this twice.

I had to go back to people who hadn’t worked for me in years and say hey, can we basically retroactively sign this? Lucky for me, I had maintained healthy relationships with these people. I have heard it go sideways where someone leaves disgruntled or you fire them. You don’t have the agreement and when you go back to them, they basically shake you down and they say I’ll do it for a price, and you wind up paying. I have multiple founder friends who have had to pay an ex employee to get them to sign an IP agreement so I think that’s a big one and to your point, this is not just for international. This is for local, and this is for contractors, and this is for full time employees.

To any place you’ve worked these days. If you’ve had a full time job in the last decade, you’ve signed an IP agreement because this has become such a big issue.

Anthony: When it comes to things like taxes, that’s a whole nother ball of wax and that’s, for example, if you hire somebody outside the country, you’re essentially going to have to pay them in a full amount and they’re going to be the ones that are going to have to ensure that they report their taxes properly, regardless of how they’re structured. Whether it’s an independent contractor or if they have a small company that they operate under, no matter what, essentially, the foreign entity has to basically do their own taxes.

Again, this should be spelled out clearly in any agreement that you have that essentially you’re paying them and they’re responsible to comply with all their local tax regulations, all of their local laws and things like that.

Rob: Yeah, and the general advice that I hear and see is if at all possible, don’t have international employees. Hire them as contractors.

Now, there are laws around that. That’s the ideal thing, but there are laws. So you have to adhere to those laws. But in general, the startups and the remote companies that I see working, if someone lives in another country, they hire them as a contractor or they hire their company, as you were saying, as a contractor and there’s that agreement that spells that out pretty clearly.

I will say that in the U.S, if I’m a U.S. entity and I have a contractor working in Europe, or Asia, or just any country outside, there is this form that the IRS  makes you, or encourages you, wants you to fill out called the W-8BEN. You’re basically reporting on your international contractors and you’re saying it’s this person, and this is their name, and this is where they live, and this is how much I paid them last year. I don’t remember if it’s this how much I paid them or I’m going to pay them or whatever. I don’t know if other countries do that. It seems like a typical kind of US IRS thing.

Anthony: Yeah, we’ve done that. We’ve had to do the same type of thing for each one of our contractors outside the US and I think it’s a very good idea to ensure that you have that documentation in place if you’re a US entity. And then in your local country, you have to figure out what the tax reporting requirements are for basically any entity outside of your country who you’re paying and who’s doing work for you.

Rob: Yeah, these are always hard questions. To be honest, most founders I talked to, either they’re doing it as best they can, some ignore it just altogether, and they just figure they’re small enough to fly under the radar.

Others do the best they can and then there’s others who are super, super Type A about it, and they hire all the lawyers and hire all the CPAs and they know that they’re dialed in. I do think it comes back to risk tolerance and how much you want to walk the line and how far you’re willing to push it, because I do think there’s a lot here.

It’s like with GDPR or one of these other big regulations. If you live in the US, how much do you invest in being exactly letter of the law with GDPR. In a perfect world, you would do everything, dot every i, cross every t. Most small bootstraps in the US are not actually doing that right. They’re kind of doing as much as they need to to feel like they can say hey, I’m compliant and really not much more than that.

Anthony: I can understand that and then you have to ask yourself at what point does not doing this present a greater risk and cost in the long run than doing so? Sure, when you’re a single person and you’re just starting and you maybe have a few customers, okay, maybe it doesn’t make sense, but then maybe you should consider okay, I’m not going to hire somebody who’s outside of my country because the risk is significant enough and I can find somebody in my country who can do a similar job.

But if you can’t, then take a look at the risk. Hire somebody who understands how this works. If they cost you a thousand dollars, if your goal is to make your product work or your business grow, ultimately you’re going to have to decide to invest in some of these legal matters at some point. It’s just a question for you to decide how long you will wait before you do so.

Rob: Thanks for the question, Ger. I hope that was helpful.

Next question is from David. He says, “Hey, Rob loved the podcast. Really appreciate the work you do. I believe I have a very interesting SaaS product that I’m really interested in pursuing. But this is the very first business I’d be building and I’m concerned that I’m biting off more than I can chew. I’m currently employed full time and have taught myself how to program. I don’t feel confident that I have the technical skills to build something of this size.

I have two kids and a mortgage, so I’m not looking to take really big risks financially. This is a project I’m interested in and wanted to put the time and effort into, but I’m not sure how best to tackle it. I would be willing to consider a partner. Any thoughts?”

The subject line is, “When stair stepping is not feasible?” Anthony, what are your thoughts on this?

Anthony: Well, I mean, the first thing that I get struck by is I haven’t heard anything yet that says tair stepping isn’t feasible. In fact,  just because you want to jump to a SaaS which is kind of one of the harder businesses to develop, doesn’t mean that the option isn’t there to stairstep your way to it.

For example, you might have things around your SaaS that are informational that you could start with by creating a product around that. In other words, you don’t have to have the full SaaS. You might be able to create something simple that says here’s these ideas around this SaaS that I built, and for $15, I’ll explain to you how it works with the tools that you have today.

A lot of ways the SaaS is taking some concept that is kind of manual today or maybe lots of different manual or semi automated processes and putting it together into something that works very smoothly for individuals and businesses who don’t want to take all this time to put everything together themselves. But it doesn’t mean there aren’t opportunities to stairstep.

Just taking the subject apart, my feeling is look closely and see, are there other ways to get there, especially if you’re risk averse? I understand that when I was first starting DNSimple, I had triplets. At the time, I think that they were maybe six or maybe seven, something like that, and I had a one year old. I was right there with you and the approach that I took being a technical founder, I was able to work on a lot of it myself. But I still avoided jumping into complete risk by working with a company that had hired me to do other work, and then I carved off the things that were DNSimple in our contract which allowed me to work on both things at the same time.

That was nice because it reduced the risk somewhat, but at the same time gave me the opportunity to focus on developing DNSimple. There are ways to do it where you don’t have to jump into it, feet first into it, and stop the work that you’re doing with your business and take all this financial risk. There are ways to do that, but really without more information on what the product is, without understanding what your background is, how the two are connected, it’s really tough for me to say that you cannot stair step to it.

Rob: Yeah, I’ve felt the same way when I read that. I think creating information around it, I think starting a product service around it, I think building some kind of audience around it, whether it’s through a podcast or a blog or whatever you want to do it, there are ways to do work that doesn’t carry a bunch of risk and kind of test the market a bit.

I think the big question, there’s a couple in my mind. Number one how can you validate this idea without writing any code? Again, without knowing the idea, it’s hard, but is this having to build a landing page, send some traffic to that type of thing? Is this I need to send 100 cold emails a week and start having conversations with HR managers, or construction firm managers, or whatever space that’s in to find out if this is even worth doing?

How can you get in conversations with people who would be potential buyers in order to validate or invalidate your hypothesis? Because all you have right now is an idea and a hypothesis and writing code doesn’t actually solve that or it won’t solve, disprove, or prove your hypothesis for 6, 12, 18 months. How can you prove or disprove it in the next 90 days? Is there a way to build so you can validate it with conversations?

Of course, that doesn’t get you 100%, but maybe that gets you to right now you’re at 10% or 20% based on gut feel. Can conversations get you to 50% or 60%  thinking wow, this is pretty good. Can you build an MVP? That is the next step with Excel spreadsheets or with human automation using VAs, or with no code movement, or with just a crappy code MVP or something that maybe gets you to 60%, 70%, 75%  that you think it’s going to be worthwhile.

The bottom line is all of this kind of removes risk one piece at a time. It gives you a little bit of confidence and it makes it easier for you to find a co-founder the more validation you have. Because if you go to a developer today and say I have an idea. Want to work for equity? Developers hear that all the time, why would they do that? But if you come and say I have an idea, I have built a no code prototype that I have ten people paying $50 a month for, and I have a waiting list. I’m in conversation with another 50 people.

Now you have something. That’s the way I would think about it, how can you get further down this process of launching this thing into the wild and validating it without spending hundreds of hours to actually code the thing up?

Anthony: Agree with you 100%, Rob. The key of any business is the processes that you’re going to end up building around it, technology or not. Those are the parts that are really interesting and if you can wire that up with something where you’re basically doing things manually in the beginning just to verify, are there customers out there? Do they see the value? How do they translate that value into actual dollars? That’s priceless and you don’t need to start developing a huge entire product in order to do so.

Rob: Yeah, and I do think if it’s SaaS, stair stepping, Anthony and I have named info-products and productized consulting and building an audience is different ways to kind of start the end. There’s also, is there a way to build a WordPress plugin version of this or Shopify plug in version that maybe isn’t SaaS that is dipping that toe in the water and could get you a little bit of exposure, a little bit of revenue, a little bit of experience?

Because, again, when I think of having two kids and a mortgage and trying to build and launch a SaaS on the side when I’m not a developer who I think I can build it, there’s just a lot of hurdles in your way. So I’d encourage you to think creatively about that. I hope that’s helpful for you, David.

Our next question is from Andy and his subject line is, “Becoming better at sales.” He says, “Hey, Rob, I love the show. As an early stage SaaS founder, I’m looking to learn outside of my given skills of product design and programming. I’ve got a newer B2B SaaS product that I’m looking to expand to a wider audience. To do that, I realize becoming better at sales is crucial. So my question is what can a solo founder do to increase their knowledge in the sales aspect of a business? It seems that the tactics of today are extremely different than any just a handful of years ago. Are there courses, books, mentors you would recommend? Is it more of a learning by doing type of skill? I imagine it’s a combination of all those seeking help from someone else. But I’m curious about your take. I should note that I’m also introverted and the art of sales sounds quite scary to me, but I know it’s necessary. So I’m ready to put up or shut up. Thanks for the advice, Andy.” Anthony, what do you think?

Anthony: Andy, I feel your pain. I’m not an introvert, but even I’m sort of afraid of the idea of trying to cold sell somebody, somebody I don’t know that has no knowledge of my product and trying to get out there and sell my product to them. It’s hard. It’s very hard, and frankly, I’m not sure, at least for me, it didn’t work. I’ve tried it before and the idea of pitching somebody who has no idea what I do or what the product does just never was really very useful for me.

On the other hand, building an audience, which is something you said, you want to bring to a wider audience, that’s less about getting out there and necessarily selling, cold selling. It’s more about how do you speak to that audience? How do you write for that audience? Where does that audience, where do they get together on the internet or in real life? And how can you become part of that community and give them the things that they need to get them into sort of into your lead pipe line so that then they get to learn about your product because there’s a genuine need there.

I think a lot of the key to sales is focusing on aligning somebody else’s needs. They need something now with the fact that you have a product that fulfills that need. The first thing I would suggest is there are books out there, there’s lots of courses you can read about sales, but I would say the real thing is to talk to people. You don’t have to go pitch them. You can just talk to them and say, hey, I built this thing and I know you’re in my space. I wonder if you’re interested in doing things like, just have conversations with them and that’s a good starting point from my point of view.

Then the other thing, like I said, is figure out how you can get into communities where multiple people that might be interested in your product congregate and ultimately, it is hard. It’s very hard. It takes a lot to sort of put yourself out there and sell your product, but if you really believe that what you have is going to help them, it’s a lot easier to sell them at that point.

Rob: Yeah, I think that’s a good point. I like to think of selling as the way like my co-founder with TinySeed, says if you’re selling B2B SaaS, especially to more higher priced customers, which if you’re having one-on-one conversations that you should be charging enough to make that worth your while, think of yourself as a high priced consultant who isn’t charging any money, but you’re actually giving people advice that is worth hundreds of dollars an hour because you are the expert in your space.

If you’re talking to a customer, you tend to know more about your competitors and about your own product than anyone else in the conversation as a rule. That mindset, because I’m also introverted. I don’t love selling like it’s just not my strong suit. But that shifted a lot for me and that these conversations are more about finding the right solution rather than forcing something on people.

Obviously there’s cold email where you could cold email someone and then you’re not that warm essentially when they come onto a call and you’re trying to convince them of things. That’s not really what I’m thinking about here. I am thinking more about like inbound lead gen and these are just sales conversations from people who are genuinely trying to educate themselves on your product, on the space and trying to find the best fit.

I remember having conversations with folks as we were growing Drip where I would literally recommend a different tool because they would tell me their use case would start digging in and I would get to the point where you know what? MailChimp is actually a better fit for you. It’s less expensive and you don’t need any automations. Drip is like a Ferrari, but you can totally go with the Nissan or a Toyota. MailChimp is a solid tool and it’s going to do what you want for less money.

That was where I remember feeling a little bit weird about that like, should I be doing that? Am I a bad salesperson? But it was like, no, as the high priced consultant, the high paid consultant who isn’t charging anything, that was the right recommendation.

I think that’s my mental model of it. I think if I were to look at mentors, I would look at two people coming off the top of my head. The first, of course, is Steli Efti. He’s a many time MicroConf speaker. He’s a TinySeed mentor. He’s been on this podcast for at least three times. If you just go to startupsfortherestofus.com and search for his name, and I think we’ll link a few of those up in the show notes and you can hear back.

He’s written a dozen books or ebooks on selling and it’s all focused on B2B SaaS. So that’s someone who I would start with. He also has a podcast called The Startup Chat, where he talks with Hiten Shah a couple of times a week about stuff.

Very good person to be mentored by and again mentored, you don’t ever even need to meet him in person because he has so much content out there, much like some folks who listen to this podcast and email me and be like you’re my favorite mentor. It’s like we’ve never met and I don’t know who you are, but you just talk on the mic enough and people have read the books and stuff. Steli Efti is one.

Then Damian Thompson who was on the show Episode 507, talking about cold email. He is a different style than Steli, but he’s been in B2B software sales for 20, 25 years, and he’s a coach now, a trainer in I think it’s vpsales.co. Again, his approach is a little different with Steli which is why I like it. You get kind of a variety of viewpoints, but he’s another guy that I would be following today. You have other thoughts on this, Anthony?

Anthony: Just the last thing was I want to double down on what you said about a lot of I think how you and I probably think about sales is more dealing with inbounds where people are already interested in what we’re doing and building up that inbound pipeline. The investment that you need to make is really writing good material that gets out there that you can publish and that potentially people will find on search engines or that other people from your customer base will link to in their blog posts or wherever they’re publishing, maybe doing videos and things.

Essentially, you need to think about giving them a hook that gets them inbound, because if they’re coming in, they’re already interested and it makes your job more about figuring out like Rob was saying are we the right tool for you?

And like Rob, I have told people from time to time, I really wish we were the company to help you, but we’re not. Go to this other company, and we have a very small number of companies in the domain space that I would recommend outside of our own company. But I’ve done it before and sometimes that’s the right thing to do because it’s not always a great fit.

I think at Basecamp, they talked about this as well about having sort of a sweet spot for their customers and sometimes customers are either too small or too big to hit that sweet spot, and they’re okay with that. Again, when you accept that, you know your space, that you know where you fit, that you know who your audience is, that you know what your product does, and you know when the fit is good, it makes the selling part a lot easier.

Rob: Thanks for the question, Andy. I hope our thoughts were helpful. Next couple questions are about finding a co-founder and it’s funny how these came in waves. But the first one is from Martin and he says, “Looking for a business co-founder.”

He says, “I discovered your podcast only recently. Indie startups really resonate with me. I’m a misfit and I don’t like playing by the rules set by authority. I’m driven by solving customer problems with code. I’m a technical founder building activitymessenger.com which is an SMS/email marketing platform for Sports and Leisure. Competing against Mailchimp’s constant contact in a niche with two advantages.

The first is I send SMS because millennials don’t read their email. Second is integrated to the registration system because that’s where all the contact information is. Six months in, I have around 10 customers giving me feedback to help me shape the product. It’s pretty sticky and seems to be generating anywhere from $50-$100 MRR per customer.” So he has a $25 monthly fee and then there’s variable bundles of SMS that you purchase. “I’m looking for a business co-founder, someone to take on sales and marketing. Where should I look?” What do you think sir?

Anthony: This one is interesting. I’ve tried to find people who I thought would be a good fit for the sales and marketing of my business and I tried to do this early on. It’s hard to take somebody, especially when you’re really passionate about your product and put them in that position, unless they, too, are very passionate about that product.

The first thing that if I was really going to try to go look for a co-founder, I would look for somebody who is interested in this space, but maybe who doesn’t have the technical depth that you have in it, but really is very interested and can see a future where this will be successful.

Now, since you’re in the center and the sports and leisure space, it may be somebody else who is involved with Sports and Leisure, but maybe who doesn’t have that deep technical knowledge that you do. But they really know sports and leisure. They know how to know that audience. They know how to market to the audience. They know the words that the audience understands, they know how to communicate with them, where they live and where they congregate and so that might be one way to do it.

My guess is there’s probably public bulletin boards for this type of community out there, maybe I’d start by looking through that. I’m going to also offer one other thought for you, which is I don’t know if you necessarily need somebody to be the business side of it. I think that if you’re early on in this, you probably have enough knowledge already of your product and of the space to be able to do a little bit of work to get out there and to make yourself known in those communities. It’s going to take some legwork and it’s going to probably make you uncomfortable, but the value of doing so in the long run, there’s a strong upside. You won’t be losing any value here, at least at the small scale.

Then if you continue to get traction, then you can start thinking okay, now I understand even more about my sales process because I’ve gone through it and now I know do I need somebody to do marketing first? In other words, getting those inbound leads because your product is going to be self-service or do I need somebody to get sales because my customer out there, the sales cycle requires a longer sales cycle. It requires more hands on work with potential customers, but ultimately results in a larger contract size. Well, then you can look for that type of person.

Rob: Yeah, I think that’s really good advice, that’s what I was going to say first off, is maybe check your assumptions on whether you need a co-founder right now and I would question that because the further along you get, the more traction you have, the better off you are to, as you said, figure out exactly what you do need.

The more traction you have, potentially the less of your company you have to to give up. Oftentimes, people will complain about investors investing and taking a portion of their equity. But really the most equity you’ll ever give up is to a co-founder or your other co-founders so I’m not saying not to do it because of that, but I do think that you should definitely ask yourself what exactly do I need from someone and what would that look like?

To answer the actual question, I’m looking for a kind of sales marketing cofounder. A, yes is going to be hard to find someone good who’s not already working on their own thing, but the way that I used to recommend it is to go to in-person events. Of course, that’s not that’s not working right now with COVId. But that will work again in the future so that would be MicroConf or your Indie Hackers meetup or whatever.

I think in your case, I’m curious if there are any of your customers that on the off chance, any of the 10 people already paying you, any of them potentially have time to work on something on the side with you or does their business would it be complementary to them and so strategically they might want to to team up? It’s a long shot, but I would certainly think about that.

Another thing I would look at is MicroConf Connect where we have like around 1500 founders and aspiring founders talking about this type of stuff. Some people I’ve seen post in there looking for co-founders on either side, the technical or the non technical side.

So microconfconnect.com, if you get in there, you can obviously ask around and start to feel out who’s there in the community.

I think participating in Indie Hackers, indiehackers.com, the amazing community run by Courtland Allen. You start to see patterns and figure out who’s doing what in these communities.

Finally, if you’re listening to this and you feel like you could potentially be the sales and marketing co-founder that Martin might be looking for, for data points, he’s in Montreal, Canada, and its activitymessenger.com. If you want to take a look at it, you’re just going to drop me a line at questions@startupsfortherestofus.com and I will forward along any interested parties to Martin.

Not a co-founder matchmaking service, but it would be kind of fun to have a success story. I actually think we’ve had a few of these work out where it’s either a co-founder or it’s like hey, I’m looking for a contractor to do this, and people email it and get them hooked up. So that’s cool.

Anthony: I’ll tell you what, finding the co-founders is, you said it before. I think I’ve heard it on your podcast numerous times which is like marriage, and it really is. It requires some dating in advance that requires getting to know the person, and it’s a very challenging thing. I have no doubt that anybody who’s trying to find especially like a 50/50 co-founder, that’s hard work. That’s hard work to find somebody you don’t know and to build up that level of trust that you can actually be willing to take on such a serious endeavor with them.

Rob: Yeah. I agree. Don’t jump into this lightly, make sure that there’s vesting in place and all of that stuff. I hope that was helpful. Our next question is also about finding a co-founder. This one is about finding a technical co-founder. Actually the subject line is finding the right CTO, Chief Technical Officer and validation.

I’m going to read it as he’s written it, but I would discourage you from thinking, I’m looking for a CTO and more think, hey, I’m looking for a developer, co-founder. There’s some nuance to that with the language but from Nicolas and he says, “Hey, Rob, I’m a huge fan of yours and really appreciate everything you’ve done to help out the startup community. I just graduated from college amid this pandemic, and I’ve been working on a mobile app startup idea with a friend.

We’ve talked to many potential customers to validate the idea, but we haven’t shown them the prototype yet. Do you think we should show each one of them our prototype and change it based on their feedback? How do we determine what we should change and what we shouldn’t?” There’s a whole lot of questions buried in here. I didn’t realize that. Do you have thoughts on that, Anthony?

Anthony: Yeah. Actually, I do have a lot of thoughts. It sounds like the two friends, when they say prototype, I’m assuming that it’s a mockup. They have this mockup that they put together or maybe a prototype with like a no-code tool, but really, there’s a huge difference between those two things.

A prototype is something that actually works to some extent, and that somebody could use it. Whereas a mockup is going to be a non-working just the images of what things are going to look like when that product is built. Given that, let’s just assume for a second when they say prototype, it’s actually something where you can click on things and it goes through and it’s usable.

Yeah, you should absolutely be showing this prototype and getting feedback on it, but at the same time, I don’t know how much you know about jobs to be done over there Rob, but the jobs to be done concept, I really love it. The truth is that every product is helping people do a job or multiple jobs.

You as the two friends who are working on this mobile app, you have to really say what is the job that needs to be done? Ultimately, if you can do that job with that app, and people go, Oh, yeah, I need that. I do this job and that will make my job easier. Even if that job is socializing with friends, taking photos, and whatever it is, there’s still a job to be done.

What I highly recommend is don’t get too wrapped up in showing that prototype, and then somebody says, oh, you should move this button here or this flow is a little wonky or whatever because it’s not really as productive as saying does this solve your problem? Does this help you accomplish the job that you want to be done? If that’s the question that you’re asking if you’re getting good feedback from that perspective, then by all means show it to people.

Rob: Jobs to be done, big fan. We’ve talked about it on the show before, and I make you dead on with that. Whenever I build an app, I always have a vision, and it’s the vision of what the app should do. It’s a job to be done on the app. Sometimes that vision has to wander a little bit like with Drip, where it was just an email capture widget, and then it did some autoresponders, and then suddenly, it’s an ESP, and then it’s marketing automation.

That vision had to change over time, and I think as founders, we have to do that, but I do think that in the early days, it’s really hard. It’s very fragile, that vision of yours. You have to, yes. I would be showing it to people, and if you show it to 10 people, you have to aggregate or average their feedback or figure out which of it is really in line with your ideal customer, or your ideal end-user.

There were times when I had conversations in the early days with very consumer-oriented folks, and they wanted me to launch a mobile app. They were like if you don’t have an iOS and an Android app, then I can’t use Drip and it was like, okay, so we weren’t going to go do that. It wasn’t just because it was a lot of work to do, but it was because they weren’t in our ideal customer wheelhouse.

I think that is one of the hard things as a first-time founder, trying to build something novel from scratch is a real challenge, because you just don’t know when to trust your gut, and when not to. Wish you the best of luck with that. The actual question about the co-founder, Nicholas says, “We’re also having trouble finding the right CTO.” Which again, I would just call the developer, co-founder, or technical co-founder to join us and build it out.

One concern I have is trusting a person without ever meeting them in person, which hey, I do all the time. We fund companies without ever meeting the founders in person and we hire employees and stuff without ever meeting in person. That’s something you’ll just have to get used to over time, but, “How should we approach finding the right CTO? How can we ensure that that person won’t simply build it and disappear with our idea? Thanks so much for everything.” What do you think?

Anthony: Yeah. There’s a lot to pull apart here. Like he said, I definitely think that they should be using the term first developer or whatever you want to say. The reason is CTOs do a very specific job, they run technical organizations, and the skills required to do that are very different than somebody that’s building out the first version of an app.

You want the person that’s going to be like I’m going to put together this first version of this app, I’m going to do it quickly, it’s going to be awesome, it’s just going to work, it’s going to be tested, and you guys are going to be so thrilled about it that you won’t think twice about giving me half of your company because we’re going to make so much together.

Finding that type of person comes down to looking for somebody that is interested in—in the case of developers—building something that aligns with your space. In the case of mobile, you probably want to find somebody who is really interested in building mobile apps, and maybe who has built a couple of them of their own and you maybe want to try to figure out a way you have an idea that you think is valuable.

You have a prototype that you’re working on to get there, coming to them with that, and showing them how that you’re going to be able to exchange this tool for money. That’s the incentive that you want to use to bring on a developer and then you’re going to have to pay them. You need to be ready in some way to say, okay, whether that payment is going to be with the actual exchange of cash, payment through that means if it’s going to be through equity, or whatever it might be.

You need to mentally put in your head what you are willing to pay this person. There are tons of developers out there that will work on contract. Consider also that maybe what you really need is you need to hire an independent, who can take your little prototype to a first real minimum viable product for you.

Again, if you do this like we talked about earlier, make sure you get an intellectual property assignment in place. Make sure that you are clear that you’re paying them for the work that they’re exchanged for and don’t necessarily go in and get that co-founder yet. It may be a little too early. Again, without knowing more, it’s hard for me to tell whether you’re at that stage yet, but there are plenty of options to build it out without necessarily doing it.

If you haven’t tried them yet, there are no code tools out there that you can try. That’s like all the rage now, and all that stands for is essentially, a way that you can put together an app or a website without having to actually write all the code behind it, and it may be good enough to get you to your first version.

Rob: I like it. It’s a big question. If you obviously read at a college, you probably don’t have a budget to pay somebody but that’s the ideal way to do it. It’s contract to hire is how I think about it, and maybe it’s a contract to hire a co-founder or founding engineer or contract to hire a founding engineer.

Where that’s the ideal path to take, because then you can take this really long term view of it, but if not, I mean, the people I know who found technical co-founders after they already have some type of validation or they have prototypes and stuff. They do take a long time, they take months and months to vet the person and they do try to meet them in person at least once, but if you can’t in this time of COVID spend a lot of time on Zoom talking.

They do happy hours in the evening, they get to know the person on a human basis because this isn’t just a work relationship really is, as we say, often it is as much like a marriage as most marriages are. It’s a very intertwined relationship, and once you own a company with someone, there’s a lot of complexity there.

In addition, I would definitely have a vesting of shares such that if you say, all right, come on as co-founder or founding engineer, you get 10%, 20% of this company. They don’t instantly get that so that they can walk away with ownership that is going to vest over several years. Of course, you sign IP agreements, and you sign all the things that the entity owns it.

That’s how you keep someone. You vet someone to try to ensure that they are an ethical human being but then also you sign paperwork that says that if they do take the code and go off, that legally wouldn’t be a good idea for them.

Anthony: Can I just add one more thing to the last question, how do we ensure that person will simply build it and disappear with our idea? If it’s that easy, so if there’s no moat, there’s nothing that you have that’s special about this. Then chances are somebody already has probably built that idea, and somebody probably is out there hustling to do this.

I caution you to think that you have something that is so unique and special, that it hasn’t already been done or isn’t being worked on. Because if you do, then there may be other paths that you want to take as well, and then I would definitely ensure that you have an attorney, that you get all the legal agreements in place, as Rob has said, and make sure that the company, the entity owns that.

That’s the key. If you really have something that is unique and special that has a business behind. Like you’re going to create a business for it then go ahead and take the steps to make that business and assign the IP to that business, including the IP of the things that you work on. That way, you have this entity that is all contained within and it becomes a lot easier to hire and whether that hire is contracting or bringing on a partner and doing equity. You have an entity around which you can do this, but I only suggest that you do that if you really vetted the idea, you have customers lined up, or already have customers that you’re to the point of where you have revenue coming in off of this thing.

Rob: Thanks for the question, Nicolas. I hope that was helpful. One more question for today also on finding a technical co-founder. This is from Alistair, and he says, “A few years ago, I put my own money and my parents’ money into getting my health and safety app developed. I’m not a developer, so to keep costs down, I designed the app myself and I got a developer to make it.

Since then, I’ve mothballed the app, but this year COVID-19 has put my job on thin ice, and it gave me a kick in the backside to get back on it. So I got feedback from some actual customers this time instead of just going out on his own, and he said, with a few tweaks and additions to the concept, I’ve secured 30 customers that want to transfer from the app they currently use to mine.

I vastly improved my UX designing skills and I’m more confident than ever in the idea. The developer built exactly what I told them the first time around, but I’m still not a developer. My question is where do I go from here? Am I being foolish without a technical co-founder with me on this? Making the same mistake twice would really hurt, but I have customers waiting at this time.

I don’t really know where to start with finding a co-founder and the time spent finding one might risk losing these customers. Thanks. I’m a huge fan and dream of the day when I’m in a position to apply for tiny seed funding. Much love, much appreciation for what you do, and thanks, again for your advice.”

I was summarizing his email, but in essence, he had a developer who did some work on it earlier, and it didn’t work out, and he basically feels like he wasted the money early on, so he doesn’t want to make that mistake twice. This feels similar to the prior two questions where someone has done some validation. I think his question is a little different. He’s saying, should I find a technical co-founder?

Anthony: Yeah. He definitely hasn’t jumped to the conclusion that he must find a co-founder, which I like, actually. Especially, since he’s already had enough business acumen and skills to get this developed and he has a product that he can bring customers into. He even said he’s already secured 30 customers that want to transfer from the app they currently use to mine.

Awesome, do that. If you have customers and your app is going to work for them, then help them do the transfer and get them starting to pay for it, and then you can start seeing, okay, now can I grow this? Are there more customers out there? The downside of course to doing this, the risk that you’re taking, is that you validated with these 30 customers, but that’s where it stops.

Now I have a feeling 30 people who are interested in something is a lot more than a lot of companies start with before going out to actually grow, so that’s pretty awesome. I really think that you ought to try to run with this a little bit, and if you had a developer or company that helped build the revised version of this app, and it’s working, then stick with them.

Get those 30 customers in and maybe try to add on 30 more, 60 more, 100 more, or whatever, and then use the money from that to fund further development with this company for a little while longer. It doesn’t seem like you need necessarily a technical co-founder yet, because you seem to have a pretty solid base of knowledge, and you’ve already made some mistakes on your own, so you start already understanding what mistakes not to make again, with regards to developing the product.

You’ll find new ones, don’t worry, but at least you have a starting point, and I think you have enough to go on for me at least. That’s my thought. What do you think, Rob?

Rob: Yeah. I don’t know that I have anything to add to that. Whether they’re the co-founder, and again, I shirk away a little bit from that title in this case, it’s like should they just be a founding engineer, or that you can give someone equity without them being a co-founder. That’s where you have to think about: is this app complicated and is going to need 24/7 support, and it has a lot of moving parts?

It’s going to be hard to scale, there’s going to be performance stuff, and there are a lot of things moving around. I think of like an analytics app or like Drip, which sucked in a bunch of analytics. It’s just a very complicated tool. I think not having a technical co-founder would have been a real challenge there. If it is just a CRUD app, where it’s just create, read, update, delete, and stuff going in and out of some database tables.

I’m not so sure that you necessarily need a co-founder, but having a developer who is reliable who maybe is getting paid a reduced rate and has 10% equity in the company that’s vesting or maybe they’re paid solely in equity, in which case, maybe they get a little more than that. I think you have options here, and again, based on what Anthony said, 30 people willing to switch is a lot.

That shows me that there’s some traction here, and there is an appetite for this. In true early-stage, bootstrap founder status, like I would beg, steal, borrow, scratch, and claw to get those people using your app, and then you take that revenue and you build on it. Use it to find the developer or pay the developer to get the next feature built.

Thanks for the question, Alistair. I hope that was helpful. Wrapping up our mostly co-founder episode, that was fun. If folks want to keep up with you, you are @aeden on Twitter and your anthonyeden.com, as well as obviously, dnsimple.com if folks want to see what you’re up to.

Anthony: Yeah, absolutely. They can reach out to me. I’m happy to answer any other questions if somebody has more. It’s true. This really was the I need a co-founder episode. Hopefully, we were able to help a little bit. I feel like for a lot of folks that if you have something that’s working and you have the confidence to go with it and keep it going, just because the media out there in the startup world says, oh, you need to have a technical founder with a non-technical founder. You don’t have to believe that. If you have enough knowledge to hire the right people to help you out as a contractor, you can get a lot done.

Rob: Indeed. Sir, with the DNSimple, you had mentioned that you guys are about to launch an API of some kind, is that right? You and I were chatting on MicroConf remote last week. Do you want to give people a 30-second rundown of what’s coming up?

Anthony: Okay. The idea is that we want people to be able to build integrations between the services they use in DNSimple and vice versa so that for example, connecting a domain to another service is literally a one-click thing. I don’t want to say too much about it, because it’s been a long time coming, and I have no idea when it’s going to come out, but we’re working really hard to make that one of the key things that we put out there within the next probably 6-12 months.

Honestly, what I want from this more than anything else is making it so that people connect a domain without having to think at all about DNS. That’s the vision that I keep pushing forward, and hopefully, this API will make the development of tools that allow that even easier.

Rob: You already have an API. You were an API first company. I’m looking at dnsimple.com/api, and you can use your API to manage domains and do all types of DNS stuff, but you’re taking it a step further.

Anthony: That’s they can do everything like all of this can essentially be done right now with the API that we have. What is missing from this is the experience where you actually get feedback from all this connectivity, not just when you first set it up, but all along with the life of having that thing connected, and to me, that’s the piece that’s missing.

It’s something I’ve been pushing the team to try to get us moving in that direction. The bottom line is we need to have feedback in the DNSimple application for these connections that we established with these different services, not just when they’re first connected, but throughout the life of it. I’ve been working with the team, and we’re pushing really hard to try to get that implemented, but we have the full API. You can do all kinds of stuff with it today. This just like you were saying takes it another step.

Rob: All right, sir. Well, thanks again for joining me.

Anthony: Thanks so much, Rob. Have a good one.

Rob: Thanks again to Anthony for weighing in and bringing his expertise to the show. I hope you got a lot of value out of that. If you enjoyed this show, feel free to reach out to me @robwalling on Twitter, and he is @aeden. If you have a question for the show for a future Q&A episode, I actually believe we’re running pretty low on questions at this point. Just email them the questions at startupsfortherestofus.com and of course voicemails always go to the top of the stack. Thanks for listening. I’ll see you next time.