Josh

Rob Walling (00:00): Welcome back to another episode of Startups for the Rest of Us. I’m Rob Walling and in this episode I have fan favorite Ruben Gamez back on the show and we answer some listener questions. In this episode, I actually earmarked five questions that we were going to run through and we only made it through two because we went so deep on these. First question was about optimizing a trial funnel, when to add friction, when that works, when it doesn’t, because Ruben runs two different SaaS companies, Bidsketch and SignWell, and different levels of friction work differently for those two companies. So he has a lot to say on the topic. And then we dive into a question about the core four SaaS skills: dev, sales, marketing, and product. And someone asked me, how do you learn product? So we spend, I don’t even remember, 10, 15 minutes talking through how we learned how to make product decisions. 

Rob Walling (00:54): I think it turned out to be a great episode. Before we dive in, I want to let you know about the SaaS Institute Cancun Retreat we’re having in early December. It’s going to be a two-and-a-half day high-level knowledge sharing event exclusively for seven and eight figure SaaS founders. I know how hard it is for founders at your level to find a group that is at or ahead of them, and this event will be that. You’re the average of the people you spend time with and the SaaS Institute Cancun Retreat is going to be filled with ambitious people who are executing. It’s a small group retreat focused on founders sharing real behind-the-scenes knowledge on what’s working, building relationships, and taking a step away from the day-to-day to figure out the next big-picture move. 

Rob Walling (01:41): It’s going to be at one of the top resorts in Cancun, close to the airport, December 5th through the 7th. And as I mentioned, while this event will be focused on SaaS Institute founders, there is a chance we might open a limited number of tickets to other qualified seven figure founders. You can email tracy@tinyseed.com if you want to get on that waitlist. It’s going to be a great event. I’m really looking forward to it. And finally, if your company serves SaaS founders, we have a few sponsorship opportunities open right now, including this podcast, at MicroConf Iceland, and in our MicroConf newsletter. It’s a great way to get your business in front of thousands of SaaS founders who are actively building and growing their companies. We’re definitely selective about who we work with. We actually turn quite a few sponsors away because we want it to be a strong fit for our audience. 

Rob Walling (02:28): And if you’re interested, reach out to producer Ron, who’s heading up all our partnerships, at sponsors@tinyseed.com. That’s sponsors@tinyseed.com and it’ll go directly to producer Ron. And with that, let’s dive into my conversation with Ruben. Ruben Gamez, back by popular demand. Thanks for coming on the show again, man. 

Ruben Gamez (02:59): Hey, thanks for the invite. 

Rob Walling (03:01): I always love recording with you. It’s fun and informative. So we are going to dive into some listener questions today. The first question, I love it when people do this. Ryan emails in and says specifically, “I have a question for the next time you have Ruben on the show.” And it’s like, anyone, if you’re listening to this, please do that for any guest. You know Derrick Reimer’s coming back. I can get Jordan Gal coming back. I can get Craig Hewitt. I can get Ruben. Anybody who’s been on, if you want questions for Laura Roeder, name someone by name and I will get them on. It’s a great excuse and a reminder because producer Ron told me you haven’t been on for, I think it’s been a year. I think it was June of last year and I was like, “Wait, that can’t be right.” And then I looked and it’s right. 

Rob Walling (03:45): It just goes quick, right? So it’s a good excuse to have you back on the show. And so Ryan wrote in, or actually he sent a voicemail and we’re going to play that right now. 

Ryan (04:00): Hi Rob. I was listening to the latest episode of the Offsite podcast with Jordan Gal and Ruben Gamez and towards the end of the podcast they were talking about friction during the trial flow. Ruben mentioned that friction works pretty well for Bidsketch’s proposal software, but SignWell, his e-signature software, needs to be frictionless. With my own project management SaaS, I have about a two-week trial, but users often need a lot more time than that. And I’ve thought about ways of trying to accommodate this, but maybe it is better for them to contact me than to do a month-long trial or a freemium product. It would be interesting to explore the idea of friction a bit further and even better if you could discuss it with Ruben next time he’s on the show. Thanks. 

Rob Walling (04:42): So Ryan mentioned Jordan Gal’s podcast, Offsite, and he did that for a while but he’s not doing it anymore. He’s now actually on a podcast called The Panel. But he did mention you’re on Offsite and asked about friction versus no friction. So do you want to give folks a little idea of what you were talking about and maybe the difference in funnel, the difference in customer type between Bidsketch and SignWell that dictates what works better? 

Ruben Gamez (05:14): I have two businesses. Bidsketch is proposal software and SignWell, where I focus now, is eSignature software. And I was comparing both of the businesses and some of the differences between them. One of the biggest differences is just this idea of friction: it tends to work better for Bidsketch and not so much for SignWell. They have some similarities and from a product perspective you would think, and even customer-wise a little bit, but they’re very different businesses. So for example, for Bidsketch, we educate upfront. We don’t draw people off into the trial immediately. We do more lead nurturing and all this. I think it helps that business because it’s not just any friction, it’s the right type of friction. If we just added a bunch of form fields to fill out that have nothing to do with anything, or can’t connect to the product, it wouldn’t work as well. 

Ruben Gamez (06:13): But there’s a lot of anxiety around selling and proposals. What do you put into a proposal? How do you price things? So that combined with the time to value being longer on that product, meaning they get into the product and they have to customize it. They have to really think about it. They have to put their offering in there, their services, the things that are specific to them. You can’t guess this, you can’t generate it with AI. And so just that combination of things, with the anxiety, with them not knowing what to do, just lends itself really well to more of an educational, slow approach where we get them a little bit more confident about what they’re doing, why they may want to write things a certain way or price a certain way. 

Ruben Gamez (07:10): And that just works. And anytime we’ve tried to do that with SignWell, even if it’s educational in that way, it’s not worked. We’ve had drop-off because you typically have drop-off when you add friction, but the idea would be that you get more conversions from the people that do come through. For SignWell it’s like consistently we get fewer paid upgrades because of the people that we drop off. I think it’s just a different business because when it comes to document signing and agreements, people are already past that stage generally. If you think about how you get an agreement, you go to a lawyer, draft it up, you kind of scan it and you’re trying to get through it. You’re not that invested, and you don’t have the same anxieties. 

Rob Walling (07:59): I read every word. 

Ruben Gamez (08:00): I’m sure you do. Like the South Park episode about terms of service. Totally. 

Rob Walling (08:08): But that’s what you’re saying. You’re kind of past that and a lot of people are in a hurry at that point, right? 

Ruben Gamez (08:13): Yeah. They’re just in a hurry. They’re trying to get through it. The time to value is very quick as well. They have their contracts a lot of times. So I think that’s what I was talking about. But there are other examples of this. I like Jordan Gal’s example where, you remember when he was getting a ton of interest and signups in CartHook? He added a crazy amount of friction upfront by having an application that people would have to submit. That helped reduce the amount of people that weren’t a good fit, but it also had the side effect of exclusivity, sort of like what they do in courses and things like that. And it worked really well for his product. There has to be a reason for it and sometimes you just don’t know. 

Ruben Gamez (08:59): You just have to try and test some things and learn about your business. It’s not always 100% one way, but most of the time for SignWell, if we just eliminate steps and reduce the friction, it’s going to be better. 

Rob Walling (09:14): I guess you’ve kind of hinted at this, but is it that the time to value is so quick between the two? 

Ruben Gamez (09:20): Yeah. I think that has a lot to do with it for SignWell, and just where they are mentally, what they’re thinking about, what they’re trying to do, how they’re trying to get through it. Those things make a difference. Though I’ll say you can’t randomly add things. There’s something I used in both businesses that worked and was a little random. I learned this from Noah Kagan way back in the day when he was doing contests. You opted in, entered your email address, and then he had a random question like, “Do you like tacos? Yes or no.” Made no sense, totally what you would not want to have on a form. You’d think why add the extra field? Not just that, but why make it a required dropdown that you have to select that’s not pre-selected? 

Ruben Gamez (10:11): And he said it just increased their conversions. So I tested this on Bidsketch first, for giving away templates, and it worked. I have no idea why. And I did the same thing on SignWell except I didn’t make it completely random. I did something like, “Would you like a trial or would you like to hear about something relevant?” And it was better. It wasn’t a huge lift, but there was something there. 

Rob Walling (10:44): And that goes to show you that testing, if you can, if you have the volume, if you make the time, it really is ideal. Because even with all of your knowledge and all of your experience, sometimes you test and it’s just some weird anomaly like, I don’t know why that works, but it does. Can you give us an example? When I think about adding or removing friction I think of SignWell’s signup flow. I could imagine you have a signup flow that’s like: enter your email, and enter it again to make sure it’s correct, now enter your password, now enter it a second time, now we’d like to know your state, and you click next and then enter a credit card, and then you get into the app and there’s some onboarding that shows you stuff. 

Rob Walling (11:38): I’ve just described a very high friction process. What is the quickest path? I think you’ve removed a lot of friction. If I was going to try to sign up for SignWell today, what does that look like? 

Ruben Gamez (11:52): The main thing we have is a Google login button and you can click a link underneath it to sign up with a password, but I want to say like 95% of our signups use the button. It’s crazy. And then that’s it. That’s a really easy signup. And then we do have some questions we added recently, and we were very careful about this because we didn’t have those before. We open you up to the upload automatically because we know that’s what most people want, but not everyone. So we ask some questions to qualify people and put them into two different buckets: like what are you trying to do, whether they’re trying to sign their own documents or collect signatures. And then to understand what they’re trying to do first, like are you trying to set up a template, to direct them to the right place. 

Ruben Gamez (12:44): So that has worked, along with some other changes. But yeah, it’s a pretty minimal process. And then there’s a higher-friction version we’re testing for people with a lot of people in their company, which goes into an onboarding call and a different experience. The bet is that that’s kind of their expectation and they’d actually prefer it. But we’ll see. 

Rob Walling (13:14): But you’re just testing that at this point. 

Ruben Gamez (13:16): Yep. 

Rob Walling (13:17): To summarize: the low-friction signup is I click sign in with Google, there’s an OAuth screen, you pick your email, and that’s it. You’re in. It is literally two clicks. You don’t enter a single piece of information. And then the questions you added come after? 

Ruben Gamez (13:37): Yeah, super fast. So this is another thing with friction. You’ll hear some people say, “Don’t let people with Gmail sign up to your product. Force them to enter their business name.” And a lot of people actually get good results from this. They’re adding friction and getting good results. You think, “Why would you get results? You’re just eliminating the people on Gmail.” But some of those people do have business emails and they enter those instead. So we tried that, making them type in and enter a business email, and we had about 30% drop-off in signups and about a 30% drop-off in paid conversions as well. It mapped super cleanly. There was no benefit whatsoever. But I think to your point, I wouldn’t overthink it with a lot of these things unless you have volume. And in some areas where we don’t have the volume, we can’t go quantitative, so you kind of have to eyeball it, feel it out, and make an assessment. 

Rob Walling (15:13): I think that’s important for people to hear because people try to split test with way too little volume. I did a talk, this must have been about 10 or 12 years ago, it was in Boston, and I was giving a talk about how we improved our onboarding with Drip and how the numbers went up. And one of the first questions was, “How did you test this along the way to confirm the results?” And I was like, “Guys, at the time we were getting 150, 200 trials a month, credit card upfront. How do I test that?” 

Rob Walling (15:56): There was enough gut feel. And then the numbers did go up and I was like, “Cool. I think what we did worked.” At a certain point, in some instances, unless you have volume like SignWell does, you have to go with some rules of thumb, some gut feel. And sometimes you make a little tweak and you do a poor person’s split test where you’re like, “Well, the numbers did go up and maybe I can’t directly attribute it, but my gut feel says that was the right move.” You can’t over-optimize this, right? 

Ruben Gamez (16:26): No, no. Especially the earlier you are. If you have lower numbers, you’re probably earlier, unless you’re enterprise. The earlier you are, the less that stuff matters. You’re not trying to optimize, you’re trying to get really big, obvious wins. And if it’s roughly the same, if you don’t notice a difference, who cares? Do you like it better? Does it align better with your product positioning? Great, go with that. 

Rob Walling (16:53): Go and move on. Yeah. 

Rob Walling (16:55): That’s great. And then do you have any thoughts on Ryan’s second point? He says, “I have my own project management SaaS and I have a two-week trial, but users often need a lot more time than that.” If someone needs two or more weeks to get onboarded, based on what you’ve said, it feels like having a little bit of friction, especially if it’s medium to high touch, is probably the way you would lean without additional information. 

Ruben Gamez (17:33): Yeah. It’s always tough to say. If you have the volume, I would try to look at the data and try to segment out who are these people, what makes them different? But either way, you really just want to find out why. It’s kind of like trying to address the symptom versus the core fundamental issue. You always want to work at the core issue, otherwise you’re just guessing and maybe not solving the right problem. It does feel long. For a project management system, if they’re taking longer than two weeks, the first thought would be, “What’s going on? Why are they taking so long? Is it a product thing? Is it the way that we’re onboarding them, or the expectations they have about transferring all of their projects and their whole team?” Something’s probably going on there. 

Rob Walling (18:29): Love it. Thanks for that question, Ryan. And as I mentioned, if you have questions for Ruben or any other person who comes on this podcast, feel free to send them in at startupsfortherestofus.com or click “ask a question” in the top nav. My next question, I’m not sure where it came from. I either got it on X or someone asked in person because I sent myself an email to my own Trello board. So I’m going to read the question anonymously. The question was: how does one go about learning the skill of product? Because I talk about the core four SaaS skills you likely want on your founding team: development, sales, marketing, and product. Development, sales, and marketing, if you want to learn them, there’s curriculum out there, there are people, you can dive in. 

Rob Walling (19:21): But I think there’s a lot more intuition and gut feel in product. I think it’s harder to learn. So the question was, does product sense just come from experience? If you want to learn more about this, go to startupsfortherestofus.com and type in Brendan Fortune in the search bar, because he and I talked about product, since he helped run product at Drip with us. And Derrick Reimer and I have talked about this multiple times too. Product is also a bunch of other stuff: if you’re at a big company, there’s the politicking, the managing up, the communication to everyone. And there’s also how to build it in terms of where do we put it in the app, what’s the most elegant way to do this. We have these five feature requests that feel vague, we’re not building any of them, but oh, if we just build this one thing, it actually does all five. So there’s some science, there’s some art to it. 

Rob Walling (20:44): When you and I talk about product, to me it’s a very intuitive thing. I hate to say it’s just a gut feel thing, but there’s judgment and taste that I’ve developed over years. And I have a hard time telling people how I learned. How did you learn? You’re good at it. You know what to build. Did you take a course? Did you watch a YouTube video? 

Ruben Gamez (20:57): Yeah. It was a $500 course. No, I guess part of it is also, what do you mean when you say “product”? Because product is so many things. I’ve never really thought about it from, you’re right, it’s kind of like I just know it, it’s intuitive, but that’s not how I got there. Way back in the day, I sucked at product when I first started, same for you. I learned it over time. For me, I learned a lot about product at work, at the jobs that I had. 

Rob Walling (21:37): You were a dev and a development manager. 

Ruben Gamez (21:39): Yeah, I was a developer, but then I also was a dev leader and then ran the web development department. And really anywhere I worked, no one knew anything about product. They didn’t know anything about product marketing or much about marketing. So it was up to me to learn on the way, and it was a slow process. Whenever something came up I would learn and study those things. Like, at some point I got really interested in UX and read several books and then hired UX people who I could learn from and see how they approach things. 

Ruben Gamez (22:35): It was a daily thing: people requesting stuff, us having to weigh what do we have the time for and how do we prioritize this? All these different skills over the years were things I picked up. But then I also was at one point doing some design work, so I learned about design. Coding, design, also had to learn about marketing, like SEO, because nobody else was doing it. So I had to hire and then understand how it worked. That’s slowly over time how I gained those skills. I don’t think I’ve heard how you picked it up. 

Rob Walling (23:21): No, and I don’t know that I’ve talked much about it. When I think of the skills that a mostly bootstrapped founder actually needs, I kind of think these are the only two product skills I have. And so I did okay. I compare this to, if you’re at a big org as a product owner or product manager, you need probably 10 or 15 skills including how to manage up, how to justify your decisions to the rest of the org, how to communicate with the other departments. I don’t care about any of that for a bootstrapped company. The two skills, and they’re different, I’ve known people who are really good at one and not the other. 

Rob Walling (23:59): The first is figuring out, of all the feature requests, everything coming in from support and sales and from your own head, everything that you could build next, how do you figure out what to build? Picking that and having a decent gut feel, prioritizing, building that roadmap of what to build next. That is hard. The other skill is the UX, the design of features. And sometimes that includes, like I said, five feature requests coming in that are all a bit vague and you’re not building any of them, but then you realize: if we just added tags and workflows, it would do everything all five of those people asked for. 

Ruben Gamez (24:44): Yeah. How did that sort of filter down, like from a high level you say “these features make sense because of where we’re going,” but then within that you’re still ending up with a whole bunch of features you could build? I think it’s an underrated thing to manage that and understand how to end up with a good product because you can go into any category and there are products that have all the features and they suck, they’re hard to use. 

Rob Walling (27:43): Yeah. And that’s when it came to a real lean toward more streamlined UX and elegance and saying no to a lot of things, knowing our customers. That was the big thing. I would frequently ask, we’d get a feature request, I’d sit there with Derrick and Ian, one of our devs, and Anna, the customer success person who was bringing it to us. I’d say, “We know we can build this in a couple days, couple weeks, whatever. What percentage of our customer base, or our ICP, do we think will use this?” And we’d talk it through and it was usually a guess. “Is it 5% or is it 50%?” Gut feel. This is the hard part about teaching this. I really had a strong sense of that and I’m not sure why. 

Ruben Gamez (28:41): Yeah. No, we still do that and it is gut feel. You just have to know your customers, know their use cases, really talk to them and understand the different types of customers that you have and what they’re trying to do, how they use the product. But then outside of that, sometimes we build stuff that very few people are going to use because we want more customers of a certain type. We’re like, “We like this customer and we want more of them and we think we can get them.” And that generally has worked for us. It’s risky because it doesn’t mean you can automatically get more of those, but it’s something to factor in. 

Ruben Gamez (29:42): It’s like the two disciplines are UX and product management. Product management is about figuring out what to build. And I’d say you can look into product management communities, talks, videos, and books. But I would completely skip all of the managing up, getting buy-in, and stakeholder stuff. That’s a big part of traditional product management, but what founders are probably more interested in is about what to build, why, positioning in the market, all that. Then on the UX side, there’s very specialized UX, but then there’s also well-rounded UX where “what to build” is actually part of it as well. It’s a little less common, but good UX should entail that. I took a course about six months ago by Shreyas Doshi, I think is his name. I don’t know if you’ve heard of him. Really great product person who worked at Stripe and Google and a bunch of other places. He has great content aimed at product management but relevant for founders doing any type of product work. It’s called Product Sense and it’s a lot of hours, a couple thousand dollars, so it was more expensive. 

Ruben Gamez (30:50): I got it for our product management team and I thought maybe I’ll check it out as well. And I really, really liked it. I think founders would gain a lot from even just watching his YouTube videos. He’s got a lot of free content on YouTube and Substack I think. I like how he described it: you have to decompose it. It’s hard to just take something as broad as “product” and say, “How do I learn that?” You have to break it down. And even things like simulating product experiences, the ability to put yourself in the shoes of your customer, the person using it. You get so much out of that. You can know the concepts of good UX, but if you can’t do that simulation, you’re going to end up with something that’s not that good. 

Rob Walling (31:46): I appreciate that. That’s a really good recommendation. And you know what’s funny is if you were to bring me into a SignWell product meeting and you had a big list of feature requests and you turned to me and said, “What should we build?” I wouldn’t know. My gut feel hasn’t been trained on your customers and your use cases. You know those use cases in a way that I just wouldn’t. It would take me six months or more to get there. I think of it in a way, I’m going to do an analogy. Do you play an instrument? Guitar, piano, anything? 

Ruben Gamez (32:23): No, I’ve played a little bit, but not too heavily. 

Rob Walling (32:27): So I’ve played guitar since I was in college. When you first start out, you’re basically trying to read a chord. It’s like the G chord. You put this finger here and these fingers here and it’s just so hard to do. And then you play it and it doesn’t sound good. Then it’s like, all right, now switch to a C and you’re like, “How do I do this?” It takes you two minutes just to move your fingers. And then you go to a D and it’s just this agonizing thing. Well, you do that a thousand times and I can now literally pull up a guitar tab of any pop song and sight read it because G no longer means I have to think about it. G just means this. It’s muscle memory because I’ve played the G chord probably 10,000 times. 

Rob Walling (33:07): So the ability to sight read, I feel like if we were in a SignWell product meeting, you would sight read. There would be all the input going in and you’d just know. And I’d be like, okay, let’s think about this use case, I’m trying to figure out how to play this chord, I’m trying to understand your customer. So there’s a certain amount of repetition and understanding and practice. It can translate from app to app, but just because Derrick and I were good at product at Drip, I wouldn’t automatically be good at product at SignWell. It would take a huge learning curve, and I want people to understand that too. 

Ruben Gamez (34:07): Yeah. It can take some time, but it can actually go much faster than I thought before. I experienced this with a product person who had been a fractional chief product officer for many years, and had done his own startup and helped at some well-known startups. He came in to help us and it was really amazing to see how quickly he built his product sense for our product and our customers. There were no shortcuts. He went through so many feature requests one by one, reading the actual words, asking us questions. Very grindy work. But after going through all of that, it was a crazy amount of information to process, and I could just see, yeah, he started to give suggestions and ideas and I was like, “Actually, he’s pretty good already. He gets it.” So it can be done, but you need to have that repository of customer information. Otherwise you’re learning it as it’s happening. 

Rob Walling (35:31): I like this because I’ve never had to jump into a product cold and make product decisions. With HitTail I acquired it but there was an existing user base emailing me, and with Drip we built it from scratch from day one so every feature request kind of went through our heads and all added to the filter and the gut feel. Well, sir, thanks so much for joining me on the show. That’s all we have time for today. I have a couple listener questions earmarked for you, so I’d like to have you back in the next few months. If folks want to keep up with you, you are @earthlingworks on X/Twitter, and of course the best electronic signature app on the internet is signwell.com. 

Rob Walling (36:19): Thanks again for joining me. 

Ruben Gamez (36:20): Thank you. 

Rob Walling (36:22): Thanks again to Ruben for coming on the show and thanks to you for listening this week and every week. This is Rob Walling signing off from episode 837. 

Rob Walling (00:00): You’re listening to Startups for the Rest of Us. I’m your host, Rob Walling. In this episode, I talk with Einar Vollset about the five AI moats that SaaS acquirers are looking for in 2026. Einar effectively gives us a market report of what’s happening in SaaS M&A right now in the middle of 2026, how things have changed given the fear, uncertainty, and doubt being sown by the SaaS apocalypse narrative. And then we talk about moats that you can build into your SaaS to help protect the value of your company in this age of AI. Before we dive into the conversation, I want to tell you about MicroConf Connect. That’s our online gathering spot for SaaS founders. In Connect, we have focused discussions with other founders and SaaS experts. You have access to our MicroConf content vault, which is more than 400 talks from the last eight years of MicroConf events. 

Rob Walling (01:00): And we have monthly Connect Live sessions and AMAs with yours truly. My AMAs are once a quarter and our next Connect Live session is Jim Zardakis talking about how to build a user-friendly onboarding workflow. If you join before June 17th, you can attend that live. microconfconnect.com if you’re interested. And if you haven’t already, you should subscribe to the MicroConf YouTube channel. We’ve been releasing the talks from MicroConf Portland, including Jason Cohen’s keynote about breaking through growth ceilings. That was one of the top-rated talks at the event. That’s YouTube.com/@microconf. And remember, that channel is separate from the Rob Walling channel, which we renamed a few months ago. So YouTube.com@/microconf. And with that, let’s dive into my conversation with Einar Vollset. Einar Vollset, welcome back to the program. 

Einar Vollset (02:04): Thanks for having me. 

Rob Walling (02:05): We are here to talk about moats and really about the state of SaaS exits between two and 20 million ARR and the shifts that you’re seeing. And let’s date this. This is May 15th, we’re recording, 2026. And if we had recorded in 2021, you’d have been like, “Oh my God, money’s coming. Everybody’s buying everything. Mark it up.” And then if we recorded in mid-2022, sentiment shifted way, way down. 

Einar Vollset (02:35): Terrible. Yeah. Russian invasion of Ukraine, et cetera. It was rough. 

Rob Walling (02:39): Yep. And so in your role as the founder and principal at Discretion Capital, which is sell-side M&A advisory for SaaS founders doing between two and 20 million, you see a lot of deals, you have your pulse on the sentiment of acquisitions. You’ve in fact written a book on the topic. Remind me of the title. 

Einar Vollset (02:59): The title is, hang on. Let me just grab the book so that I can actually remember exactly what it’s called. 

Rob Walling (03:03): Can’t remember his own book title. It’s so long. Get ready. 

Einar Vollset (03:05): That’s how it goes. I’m not a professional author like you. 

Rob Walling (03:08): Buckle up, listeners. Here it goes. 

Einar Vollset (03:10): Are you ready? The Definitive Guide to M&A for B2B SaaS Between Two and 20 Million of ARR. 

Rob Walling (03:16): Wow. Is that a— 

Einar Vollset (03:17): And there’s actually a physical copy. If you’d like a physical copy, you can email me and I’ll send you a physical copy. 

Rob Walling (03:21): That’s the title for three different books, right? Because it’s very long. That’s the first chapter is what you’ve just said. 

Einar Vollset (03:27): If I stretch it out, you know, with my fancy three books, I don’t know. I just put everything in one. 

Rob Walling (03:34): And folks can get physical copies. You also have discretioncapital.com/guide if they want to read the whole thing. That’s your bona fides. That’s why folks should listen to you in this episode. And I wanted to kick off by having you share what you were telling me offline right before we started about how this acquisition market has felt since, let’s say, 2021. So talk us through it. 

Einar Vollset (03:57): Yeah. I think people understand pretty well that in the public markets there’s sort of a risk on, risk off sentiment. And that is also true in the B2B SaaS acquisition world. Particularly when I’m talking about this, it applies at pretty much every revenue range, but it definitely applies sub-20 million, because in that universe of potential exits there’s a lot of private equity. And so the public market sentiment is quite well expressed in terms of the way private equity works and how they’re feeling about the market. We’ve gone through a number of cycles since I’ve been doing this, because unbelievably I’ve been doing this now for nearly 10 years. I think back to even before 2021, like 2020, during COVID. Just that spring of 2020 seems kind of like ancient history now, although it doesn’t feel that long ago. 

Einar Vollset (05:01): It was complete risk off. The public markets were crashing. There were stories about population declining 30% globally, horrible time, not good. I remember in particular we had one deal going in diligence for Discretion. It was selling to a US Fortune 500 company. All of a sudden they went quiet and it was right around quarter end and we were like, “What happened?” And then we saw their quarterly report and they stated that they were suspending their M&A program, which is not great if you’re about a month away from closing. So terrible risk-off sentiment. Then, turns out, nevermind, it’s 2021 and money is everywhere. 

Einar Vollset (05:49): This is the time you should have sold: 2021. Really, if you had a one million ARR-plus SaaS business doing more than, say, 100% NRR, and I’m going to define what NRR is, then you could sell for a good multiple in 2021. Things were great. Thresholds were low. SaaS was the future, everything was great. The thresholds that private equity were using to filter were quite low. So like I said, 100% NRR. NRR is net revenue retention, or net dollar retention sometimes. It basically means: start of the year, what ARR do you have? Then look at that cohort at the end of the year. How much of that revenue do you still have, and you get to count upsells and expansion? 

Einar Vollset (06:44): So that’s why— 

Rob Walling (06:45): Yeah, expansion revenue contributes to NRR. I talk about net negative churn and expansion revenue on the podcast, but NRR is kind of the flip side of that. 

Einar Vollset (06:56): And actually there are two things to know. Private equity tends to worry a lot about retention. There are two defining metrics of how recurring your recurring revenue actually is. One is gross revenue retention, which is literally: January 1st, what ARR do you have? And then December 31st, what percentage of that revenue, not counting any upsells, do you still have? The maximum is 100%. NRR is that, but you get credit for upsells and expansion revenue. 

Rob Walling (07:29): And so in 2021, you used to come on the podcast and say, “Hey, if you’re north of a million you could sell.” And these days it’s two million. 

Einar Vollset (07:38): Yeah. There’s a reason my book and Discretion Capital focus on two to 20. It’s because right now it’s probably more like two million than one million. And then 2022 rolled around and it was a very different climate completely. Russia invaded Ukraine and all of a sudden private equity was not buying anything. They were unsure again about the market. And so all of a sudden it was like, okay, now not only do you need to be probably two million of ARR before we’ll start looking, and your NRR needs to be over 100%, but we also started to hear more about gross revenue retention being important. That’s usually how we can tell that sentiment has shifted: we hear more and more things being thrown up as filters. “We won’t look unless X.” That’s usually the signal. 

Einar Vollset (08:33): But then it recovered again, which sentiment tends to do quite quickly, and things have been good through 2023, 2024, 2025. The market came back in a pretty major way. Some of that has to do with the fact that these private equity companies have an awful lot of dry powder to deploy. But in general it was good times. And then probably last summer is when people started this whole narrative about the SaaS apocalypse: is AI going to kill all of SaaS? That sentiment intensified in the fall and particularly in the new year. It partly had to do with Claude Code, I feel like. People really started down this agentic coding, agentic doing-everything path. 

Einar Vollset (09:25): And I think a lot of the more influencer-type people, probably pretty far disconnected from SaaS in general, started talking about how all SaaS is dead and everyone’s just going to vibe code everything. You could see that in the public market ETFs that track public SaaS companies: way down. And that’s still true. It’s way, way down to the point where someone told me that despite growing significantly faster and being significantly more profitable, the price-to-revenue multiples of SaaS companies is actually less than industrials now, which is a little peculiar. But yeah, because of this, buyers have lately started asking: okay, there’s GRR and NRR, but how do we know this business isn’t going to zero because of AI? 

Einar Vollset (10:22): We really started seeing those conversations earlier this year. 

Rob Walling (10:27): Once the FUD, the fear, uncertainty, and doubt, and as you said, influencers who’ve never run a SaaS company are saying SaaS is dying. And it’s like, geez. 

Einar Vollset (10:34): I always thought it was weird. Look, and this is just my personal view. I think AI is amazing. I think AI is super impactful. But one of the funny things for me is: this is still software. I think people lose track of that sometimes because they talk to it, so they anthropomorphize it and think of it as somehow different to software. But look, it’s software. And if you’re very bearish on SaaS companies, then you’re sort of saying that the companies that are the best in the world at deploying software are going to be bad at deploying this particular kind of software. 

Rob Walling (11:12): That’s the thing. Whether SaaS goes by another name or not, it’s not like ChatGPT and Claude are going to do everything and no one’s ever going to pay for software ever again. As bootstrappers, we’re actually in a really good position as the market shifts. We don’t have these incumbent positions so to speak. 

Einar Vollset (11:31): It’s great. I actually think it’s a great time to be an early-stage software entrepreneur, just because there is so much uncertainty and the cost of developing software has gone way down. That’s definitely true. And honestly, I think we see that inside the TinySeed portfolio. We’ve invested in 200-plus companies and I’ve never seen the sentiment be so different between what we’re seeing internally in the Slack channels among founders, who are like, “Things are going super well, growth is accelerating, we’re adding features in three weeks that normally took us six months,” and what the public markets are saying. 

Rob Walling (12:11): And growing. 

Einar Vollset (12:12): Yeah. And same with most of the public SaaS companies reporting. They’re saying, “We’re not seeing any disruption whatsoever from AI, no additional churn.” But in the public markets, the sky is falling. It’s strange to me. 

Rob Walling (12:26): Sentiment versus reality is a thing. 

Rob Walling (12:28): And I want to cut in here. I want to get into the moats, these AI moats that you talked about. But before we do that, I just want to mention: if you’re a bootstrapper or mostly bootstrapped and you’re thinking, “Well, I’m never going to sell. Why should I care about any of this?” There are a couple things. Number one, everyone sells eventually, or you shut the business down. That’s basically it. And I’ve seen 100% of the people who told me they would never sell hit a point where they either get tired of it or realize they can sell for 10, 15, 20 million dollars, and something comes up and they’re just like, “I don’t want to do this anymore.” They have a family shift, they get a divorce, or they get married and have kids. It’s like saying you’re never going to do something. You can’t say never, right? 

Rob Walling (13:12): But the other thing is: if you’re a bootstrapper, you have an asset that’s worth a lot of money. Just knowing that, whether you plan to sell or not, paying attention to these markets means you can say, “Oh, today if I’m doing two million and I’m doubling this year, six months ago maybe I could have sold for 10 to 15 million dollars.” Today maybe that’s not the case. It’s just good to know. It’s like knowing the value of your house. You don’t need to know it all the time, but you should pay a little attention because there might be an opportunity or there might be a storm coming. 

Rob Walling (13:42): So what we’re going to dive into today are things that you called AI moats. You posted these in the TinySeed Slack for our founders and you said, “I’ve increasingly been seeing that buyers of B2B SaaS are requiring or favoring businesses with these AI moats.” I want to talk through all five. Before we do that, I talked in The SaaS Playbook about four types of SaaS moats, and I think there’s some overlap. I had integrations, especially custom integrations that are hard to get and that make you a core part of a company’s workflow. If your software is deeply integrated into their HubSpot CRM and HubSpot won’t do that integration anymore, that’s an interesting moat. Having a strong brand, where people buy Salesforce, people buy Zapier. High switching costs in general, which I think is one of yours. And then owned traffic channels. SignWell has really good SEO, for example. That’s a weaker moat, I’ll say, because you can lose an owned traffic channel. 

Einar Vollset (15:00): It’s interesting. I still think brand is a strong moat. I actually think owned traffic channels are also kind of a strong moat still. Is there disruption because of AEO vs. SEO? Yeah, but it’s correlated. Integrations, I actually think with an asterisk. I think integrations in and of themselves are no longer a moat just because it’s so much easier to build them. But to your point, if they’re harder to get because everyone is protecting themselves from AI, then it could definitely be a moat. 

Rob Walling (15:39): And then I had a false moat, even at that point, which was unique features. As developers, we think, “Oh, I came up with this new innovation and I built this thing that no one else has.” And I was like, “Nope, false moat.” 

Einar Vollset (15:51): That’s not a thing anymore. 

Rob Walling (15:52): That still especially doesn’t hold today. So getting back to your AI moats: in your Slack message, you said these moats vary a fair bit between buyers as in which ones they hold most important, but it might behoove all of you to think about how your product relates to these, and it might be a factor as you think about growing further and prioritizing product direction. And so the first one of five is hardware-software coupling. The product delivers superior performance, reliability, or economics through tight integration with a hardware layer. Replacement is not an API swap. It has physical downstream effects. Tell us more about that. 

Einar Vollset (16:31): This is the one I know the least about, to be perfectly honest, but that makes sense, right? If you have a hardware component that is tightly integrated into your product and it’s a key part of what you deliver, and it’s not just like an off-the-shelf hardware component with an open API that anyone can just vibe code into in an afternoon, then yes, I can definitely see that being a moat. 

Rob Walling (17:03): We have TinySeed companies that have hardware scales and digital scales at grocery stores. 

Einar Vollset (17:10): And EV charging. 

Rob Walling (17:11): Yep. Software that runs in the charger. We have a physical printer located at certain warehouse locations. Those are all moats, right? That’s what we’re talking about here. 

Einar Vollset (17:25): Those are all moats. And it’s funny because when we invested in those, it was kind of a minus. It was like— 

Rob Walling (17:32): Because it’s hardware. 

Einar Vollset (17:33): Yeah, it’s a hardware component. It’s going to be hard to scale. And now we’re like, yeah, actually— 

Rob Walling (17:37): That’s fine. 

Rob Walling (17:38): Number two is marketplace scale and two-sided network effects. The platform becomes more valuable as participants join each side of the market. More supply attracts more demand and more demand attracts more supply. Does this completely overturn my “don’t bootstrap a two-sided marketplace” advice? Talk us through it. 

Einar Vollset (18:01): I sure think it’s hard as hell to do. It’s hard to do, but hard to undo if you succeed at it. I think that’s true. 

Rob Walling (18:11): If you tried to bootstrap eBay or Uber or any two-sided marketplace we can think of today, you’re going to fail. But if you could do it, there’s a reason eBay has been around. They treat their sellers awfully. They’re hard to work with. But sellers don’t change because that’s where all the buyers are. It’s so sticky. 

Einar Vollset (18:32): No, I agree. And it’s not that unusual for folks to have a component of marketplace stuff alongside their core product. Before I was always like, “Yeah, this is great.” But now I’m like, “Actually this might be the moat, because the marketplace as it scales makes the software stickier.” 

Rob Walling (18:55): But we’re in agreement that it’s extremely hard. I say it’s approximately 0% chance you’ll pull this off if you don’t already have one side of the market and you’re bootstrapping. If you’re going to raise a big chunk of money, you can take a run at this. But I’ve known maybe two people who’ve bootstrapped successful two-sided marketplaces, and it’s hard. 

Einar Vollset (19:14): I don’t think I know anyone personally. 

Rob Walling (19:16): I’ve seen people chime in on Twitter threads saying, “Oh, I did this.” And I asked, “Was it great? Should people do it?” And the answer was, “It was like eating glass.” And I was like, “Okay, so we’re in agreement then.” 

Einar Vollset (19:31): Eating glass. But if you succeed at eating glass— 

Rob Walling (19:35): Somehow it’s worth a lot of money. 

Einar Vollset (19:36): The moat is that anyone else has to ask, “Do I really want to eat all this glass?” 

Rob Walling (19:41): Right. And when I say don’t bootstrap a two-sided marketplace, I always mean unless you already have access to one or both sides. Me bootstrapping a marketplace of founders and investors is different. Dan Andrews and Ian starting Dynamite Jobs, where you need people hiring and you need remote job seekers, they had access to one or both sides. Those are the exceptions. But let’s dive into AI moat number three: communication graph and relationship embed. The product becomes the system where people and organizations coordinate work, messages, approvals, shared context, and recurring interactions accumulate inside the platform. Talk us through that one. 

Einar Vollset (20:25): That’s one of those things where it’s a little bit similar to whenever we talk about pricing. One of the things you always say is: there’s got to be something else going on when you log in. You’re not going to sell 10 seats to a company if every single one of those 10 logins is the same. It’s related to that. SaaS buyers really want to deal with what we’d call system-of-record type systems, where this is where you run your business. This is where you’re sending messages back and forth, this is where the context is, this is where the coordination between people is happening. 

Einar Vollset (21:05): The various states of the conversation, all that kind of thing is on the platform, and that just makes it a lot harder to move off. I think that’s definitely, definitely true. 

Rob Walling (21:15): Slack is a perfect example of this. 

Einar Vollset (21:17): Yeah. We try to leave Slack, feels like every year, and then we come back and we’re like, “Please give me some more of that sweet, sweet Slack.” 

Rob Walling (21:24): Everyone’s still using it. Number four: proprietary data with closed feedback loops. The company captures exclusive, continuously refreshed data, and uses it to improve automation, decision making, and product performance over time. The moat depends on containment. Data flows in but does not leak out via APIs. 

Einar Vollset (21:48): Yeah. This is another one where the incentives are now for companies to not give you access to even your own data through an API. That’s the key difference, right? The data has to flow in but not flow out. Because if I can take the entirety of the data that’s in there and quickly export it including all the timestamps so that I can replicate the whole thing, then yeah, the moat is gone. 

Rob Walling (22:24): So examples of this. You think Crunchbase has this? 

Einar Vollset (22:29): No, I don’t think Crunchbase has it. Not really. That’s more like I’m in there by myself looking at data, and that’s a little more replaceable. I’m trying to think of— 

Rob Walling (22:42): BuiltWith.com? 

Einar Vollset (22:43): Again— 

Rob Walling (22:44): They’re scraping the internet constantly. It’s constantly refreshed. You can’t get all of it out. 

Einar Vollset (22:48): You can’t get all of it out. That’s true. Yeah. Those kinds of things are actually reasonably good examples. I’m trying to think of better ones. 

Rob Walling (22:55): Fiscal.ai. 

Einar Vollset (22:57): Fiscal AI is a good one. 

Rob Walling (22:59): TinySeed company. 

Einar Vollset (23:00): Yeah, TinySeed company. And DealForma is a good one, where data goes in and doesn’t necessarily just flow out immediately. And even if you took a snapshot, what good is that tomorrow? You still need the data next month, and the month after, and every single month. So yeah, those are good examples. 

Rob Walling (23:20): Let’s move on to our fifth and final, which is operational embed and switching costs. Switching costs are the time, risk, and expense of replacing a system. The product is embedded in daily workflows, integrations, reporting, and team routines, which makes replacement disruptive and costly. 

Einar Vollset (23:40): Yeah. That’s your classic system of record. You’re the finance team and everybody uses QuickBooks or some ERP to coordinate absolutely everything. Or you’re a warehouse and all your stuff coming in and going out, approvals, shipping, is all in one system. You could build something that does the same, but the risk to your actual business of that collapsing is high enough that it just isn’t worth it. And this ties a little bit with your moat around brand, because I think particularly technical people tend to overestimate how much time folks are willing to spend optimizing their software costs. For a lot of businesses, the cost of software just isn’t that significant and they don’t care. 

Einar Vollset (24:33): It’s much more important to people to be able to say, “I trust this brand, this company to do this job well, and I’m willing to pay for that.” And partly what you’re paying for is the brand and the brand trust. And honestly, being able to call someone up or email them and know that getting you back up and running is their number one priority. You’re never getting that with something you vibe coded at home. I think that’s a key, key part of it. 

Rob Walling (25:00): Yeah. That’s the thing. If you’re a business paying 10 grand a year for your system of record and someone comes along and says, “We have most of the same features and we’ll be eight grand a year,” you’re like, “No.” “We’ll be five grand a year.” Probably still no. Because it’s the switching costs and the pain and the retraining and what if stuff goes wrong and how do I trust that your software is actually good? Does it actually do what you say? Is it buggy? Are you going to be in business tomorrow? It’s not just about price. 

Rob Walling (25:39): It would maybe matter if someone came along and said, “Ours is a thousand dollars a year.” But now I think you’re not going to stick around. It’s this interesting conundrum. If you’re paying a hundred grand a year, obviously there’s more leeway, but cost becomes much, much less relevant because switching cost is risk. 

Einar Vollset (26:05): And I think cost is not that important for most businesses. And I also think a lot of technical founders hugely overestimate how much time people want to spend fiddling with their software systems. I sort of want to put all the influencer types who say AI is going to eat everything in a room and ask: how many of you are still running the open-source AI agent setup you were evangelical about two months ago? Because there’s a surprising number of deeply technical people who were super excited about it and then two weeks later I see them on Twitter saying, “I just can’t.” 

Einar Vollset (26:59): “It breaks all the time. I spend more time fixing it than getting productivity out of it.” And that’s just you, a technical person. Now apply that to a business doing millions in revenue with employees to pay. Why would I want a vibe-coded thing to save an inconsequential amount? The downside risk is just way, way too high. 

Rob Walling (27:28): And in the ensuing thread under these five AI moats, TinySeed founders were asking questions. And one of the things you said was: some of the buyers you’re talking to through Discretion, mostly private equity and perhaps some strategics, are telling you that if a company has none of these five moats, they won’t even show it to their investment committee. So some of them are saying it’s a pass without at least one of these. 

Einar Vollset (27:54): Yeah. And that circles back to what we started talking about: how do you tell that sentiment is risk off in private markets? In the public markets it’s easy, the stock prices crash. But in private markets, you can tell when you see repeat buyers putting higher and higher hurdles up before even looking. And just so you know, the investment committee is the group that signs off on sending an LOI and actually doing a deal. If that committee at a private equity firm is saying, “Don’t even show us things unless these criteria are met,” that means that company is not buying your company no matter what. 

Rob Walling (28:32): And to be clear, we’re saying some PE firms are saying this, not all. But even when some do, if it’s 30% or 50%, that will soften multiples. Any multiple range we give is always an auction. When someone says, “I’m doing three million a year, what can I sell for?” and you say, “Maybe 4x or maybe 15x, we’ve seen in the past two years,” they ask why the range is so big. And the answer is: it’s an auction. Someone had really great net revenue retention and someone really wanted to buy them. So you have to keep these moats in mind. One last thing I want to bring up before we wrap: a TinySeed founder asked, do these same AI moats apply to AI-native SaaS where AI is a core part of the product? 

Rob Walling (29:23): And you said, “If anything, AI-native SaaS, where AI is the heart of it, has higher hurdles. Usually newer and faster growing, buyers will ask harder questions about the risks of disruption.” Talk me through that. 

Einar Vollset (29:37): So we’re seeing stories about folks going from zero to four million of ARR in like three months because it’s an AI SaaS thing. It’s certainly true that a lot of these businesses are getting very fast adoption, but we’ve also seen, and I know of at least one private equity firm that invested in one of these fast-growing things and it went to zero within a year. And that’s what they’re worried about. The key thing to understand here is that founders are sometimes a little frustrated with private equity because they think of them more like venture capitalists. Venture capitalists will take extremely high risks because they’re expecting a vast majority of their investments to go to zero. 

Einar Vollset (30:25): That is not what private equity does. Private equity, if anything, is slower to adopt new sentiment because their whole business model depends upon being able to underwrite the downside risk. And so that is the challenge when it comes to AI. They don’t have a good mental model, or even an Excel model, of how to think about the risks to these businesses. So in that case, they’ll tend to step back. An example from Discretion Capital: we had a business we were selling called Zyra Talk. It was basically an AI voice agent, like a receptionist for HVAC companies. This business had great metrics on every measure: growth, retention, integrations. They had everything. We showed them to the market and had tons of interest, lots of strategic interest, lots of private equity interest. 

Einar Vollset (31:16): They actually ended up selling to a Fortune 500 public company called Evercommerce. So they sold to a pure strategic. But with the private equity firms, we had tons of interest, and the way it normally works in an auction is you go to market, show all the marketing materials, and the people who are really interested will do a management meeting before making a bid. I think we had something like 22 or 23 management meetings, which is quite high. I was expecting an avalanche of LOIs because the metrics were great. But not a single one of the private equity firms even put in an LOI. It became a fight between strategics in that auction. So the mental model to have here is that private equity tends to be much more risk averse than people think, and also a little slower to react. 

Einar Vollset (32:08): So when things are going bad, they very quickly shut down, but when things are loosening up again, it takes a while for them to unwind. I remember being so frustrated in 2022, saying, “You guys have been telling me for years that prices are too high and there’s too much competition. Now is the opportunity. Go against the stream.” They could have made a killing if they’d actually started bidding in 2022 and picked things up for 50% of earlier prices. 

Rob Walling (32:50): Well, thanks, man, for coming on the show and giving basically the boots-on-the-ground report to the podcast audience, because this is info you can’t find elsewhere. You’re not going to see this on TechCrunch. This is not in some blog or book. It’s stuff you’re seeing on the front lines. So really appreciate you spending the time with me today. If folks want to read your most recent book, discretioncapital.com/guide. And of course you are Einar Vollset on X/Twitter. And if there’s a founder listening who’s like, “I think I’m going to be hitting two million ARR in the next 12-ish months—” 

Einar Vollset (33:25): Or 10. 10 is fine too. 

Rob Walling (33:26): At least two. 

Rob Walling (33:28): If they’re between two and 20, or think they’re going to get there, they can reach out directly to you, Einar, E-I-N-A-R at discretioncapital.com. Thanks again, man. 

Einar Vollset (33:37): Thank you. 

Rob Walling (33:38): Thanks again to Einar for coming on the show and lending his wisdom from the front lines, and thanks to you for listening this week and every week. This is Rob Walling signing off from episode 836. 

Rob Walling (00:00): You’re listening to Startups for the Rest of Us. I’m Rob Walling. In this episode, I talk with Taylor Hendricksen. He’s been doing performance marketing online for well over a decade, including e-commerce, B2C, B2B, and has bought tens of millions of dollars in ads over the years. He said it was both Meta and Google when I asked him in the interview, but I’ve known Taylor for about a decade and he’s just extremely knowledgeable when it comes to copywriting and making incredible offers, general marketing, getting people interested in something and actually paying for it. Taylor is one of our coaches at SaaS Institute, saasinstitute.com. If you’re doing at least one million in ARR and you’re a SaaS company looking for a coach like Taylor. Before we dive into our conversation, I’ve been writing emails again, essays that I’m sending out to my email list. I haven’t blogged regularly since 2010, 2011. 

Rob Walling (01:07): I started a few months ago writing my thoughts. These are new thoughts. Some overlap lightly with the podcast, but a lot of them are new thoughts, frameworks, et cetera, that I’m mulling over. You can head to robwalling.com/emails if you’re interested. And with that, you’ll get a free sample chapter of The SaaS Playbook. But realistically, the list on my site says, “Hey, you want some proven cheat codes for growing your SaaS in 2026? Marketing channels that actually work, building a sustainable moat, refining your pricing.” That’s the kind of stuff that I’m talking about when I send these emails. It’s one email a week and it’s an essay of my original thinking, robwalling.com/emails if you’re interested. And with that, let’s dive into my conversation with Taylor Hendricksen where we cover several topics, but one of the ones that we focused on a lot was where founders of all types should be using AI in your marketing and where you shouldn’t be using AI. 

Rob Walling (02:03): And I really appreciated the back and forth that it was kind of impromptu. I had some questions and an outline of what we were going to cover, but it was so interesting to me the way Taylor was thinking about it. And then he and I piggybacked off each other a bit thinking through using AI in marketing operations, content generation, all that kind of stuff. So that’s a highlight of this conversation. Let’s dive in. 

Rob Walling (02:34): Taylor Hendricksen, welcome to Startups for the Rest of Us. 

Taylor Hendricksen (02:37): Thanks for having me. 

Rob Walling (02:38): Yeah, it’s great to finally have you on, man. So you and I have known each other for at least 10 years, maybe 11 or 12. You and I have hung out at Rhodium. Chris Yates had a mastermind going and we hung out for a weekend at one point. You spoke at MicroConf several years ago, talked about, was it funnels and ad stuff? 

Taylor Hendricksen (03:01): Everything that was working at that time. Yeah. 

Rob Walling (03:03): So Facebook ads, funnels, quizzes, all the hot stuff at that time. That goes back to 2018, something like that, 2019. 

Taylor Hendricksen (03:10): I would guess around there. Yeah, 17, 18. Some of that works still. That’s how it always is, right? Half the stuff I talked about at my MicroConf talk back then still works and the other half doesn’t. 

Taylor Hendricksen (03:19): Oh yeah, for sure. 

Rob Walling (03:20): I mean, when I think of your career, what I know of it, you’ve run a lot of Facebook ads. I don’t know if you ran Instagram and other stuff, Google AdWords, but a lot of ads, sold a lot of, correct me as I get done with this if I’m missing anything, but I think a lot of stuff for e-comm and then info products and had some of your own, also did affiliate deals or for-hire stuff. Is that a summary? 

Taylor Hendricksen (03:46): Yeah, it’s pretty good. I would describe myself as a full-stack marketer. So everything from ideation, product design through the copywriting, some of the actual putting the product together, less operations, but then how do you take it, do all the landing page design, connect the funnels, and do the paid media on the side. So you can kind of go soup to nuts with taking a product that’s already there and taking it to market. We’ve done it for online education, some of the digital info stuff, a lot of lead generation, specifically in the financial services industry, and just tried to figure out how to convert cold traffic. We’ve spent a tremendous amount on Facebook as well as Google. So across YouTube, display, Facebook, Instagram, those are the kind of the main levers I pulled in the time. 

Rob Walling (04:22): That makes sense. And you of course had involvement in SaaS as well, otherwise we wouldn’t have you speak at MicroConf and you wouldn’t be a coach at the SaaS Institute, which folks have heard me mention many times on this show. So I guess given that you are now coaching and giving people advice on how to grow, how much do you think you’ve spent on ads across all of this stuff you’ve managed? 

Taylor Hendricksen (04:55): We’ve done easily tens of millions, up to multiple six figures a day in spend we personally controlled and overseen, and affiliates doing almost up to a million a day. 

Rob Walling (05:04): I just want to give people an idea that you’re on here for a reason because you’ve been walking the walk and talking the talk for a very long time and you know what works and what doesn’t. So as I think about you coaching SaaS Institute, B2B and B2C SaaS founders at one million and up in ARR, what’s the number one thing that you hear keeping these folks up at night? 

Taylor Hendricksen (05:24): I think the biggest thing right now is probably AI. Like the boogeyman that gets thrown around. It supposedly has the worst approval rating out of anything out there, but it is the constant thing. With SaaS, with software, we’ve seen these big public companies absolutely taking nosedives in terms of their valuations because AI is going to come and take everybody’s jobs and ruin everything. And the biggest thing now is there’s still this kind of break between AI being a cool whiz-bang toy and actually being effective. So you have this gap that these founders are going through, and a lot of it now is like, “How do I prove my relevance? How do I keep my pricing in the time of AI?” Especially now when customers are coming and saying, “Hey, you use AI to do this.” 

Taylor Hendricksen (06:02): “Shouldn’t it cost a tenth as much, or be doing 10 times more than you normally do?” And I think this is an interesting question of how do you prove your value in a time where people just say AI is a buzzword or a fix for something, even though it’s not there yet. We have one founder in particular who does high-end UI/UX design services for startups and SaaS companies. And the bigger question is, yeah, by all means, go have Claude vibe-code your whole product, and it’s going to be the generic AI output that people are used to. But what comes with the curation and taste and actually having an expert drive it? It’s like basically giving somebody a Lamborghini. If somebody is brand new, you put a toddler in there, they’re going to crash it in a second. 

Taylor Hendricksen (06:42): But somebody who knows how to drive, that thing is a perfectly tuned machine. So a lot of us are trying to figure out how to integrate AI that’s not just a cheap ChatGPT wrapper, but really utilize it as a human-first tool rather than a full replacement agentic thing. 

Rob Walling (06:59): I heard you noodling on something where it was like, use AI for ops and scale, but keep your content and maybe your front-facing stuff authentically human. Do you want to double-click into that? 

Taylor Hendricksen (07:13): For sure. Yeah. I think we’re in the very early days of seeing what AI can do for video, for text, for everything else. And it’s taken basically what was a human-level labor arbitrage and made it ubiquitous. Now anybody can generate as much text as they want instantly. So I think the flood that will come from this, both in video as well as text, the whole world of SEO and all these things is going to be flooded with mediocre content. So I think the big delta in the next couple of years is going to be: what human-first things can you use that are still uniquely human? Something like cold email, where before it was more labor-intensive to supposedly customize each cold email to reach the desired person and have some kind of relatability. 

Taylor Hendricksen (07:56): Now that’s all agentic. And so the amount of cold email that’s going to come through is going to flood inboxes and make it basically a useless channel in a lot of ways. I’ll probably get a lot of hate from people who still use cold email and it still is absolutely effective, just like SEO is absolutely effective and same with most of these marketing channels. But the human-first premium on top of it is going to be a bigger and bigger deal the farther we go. So I think we’re pretty close to passing the Turing test from video. You can still tell AI video for the most part, but a couple of times I’ve been like, “Wait, that definitely fooled me,” which is interesting. 

Rob Walling (08:26): Yeah. And so what happens when that happens? When we get to the point where even video generation, like this video right now, you and I both know we’re humans. If we took the Voight-Kampff test, we would know we’re humans. But what if we could generate video just like this, at this level of quality? How do you think that changes the game? Should founders use it or should they stay away? Is keeping it authentically human meaning a human does it, or what are your thoughts? 

Taylor Hendricksen (08:57): I think the humans need to do it. People have a really good sense of whether something’s legit or not. Our BS detector is high. Whether it’s an offer or something like that, people can generally tell. So when everybody else takes the lazy route and hides behind not going in front of camera, or just has the AI do it, spinning up a sexy avatar to be the pitch person instead of actually doing it themselves, I think it’s just going to be another cheap thing. What’s going to separate you from every other person who could spin up the same avatar? So the human-first premium is real. It’s like when computers first beat humans at chess, back in the 80s or 90s, and chess isn’t dead. 

Taylor Hendricksen (09:33): It’s just now kind of a different game with how it’s played, but it still has that human-first level to it. 

Rob Walling (09:38): It’s interesting because a lot of times we’re asking the question, can we tell the difference between if AI did it versus if it’s authentically human? I don’t think that’s the right question. I think the right question is: is the content any good? Because if you show me two essays or blog posts or marketing landing pages or two podcast episodes, one is human and the other is AI, but they’re both mediocre, does it even matter at that point? And that’s the thing I think we’re forgetting. I have yet to see flat AI just generate something great. If I say “write a blog post on this topic,” it’s a solid five out of 10. It’s mediocre. Now if I say, “I’m Rob Walling and I’m going to dictate a new framework that I thought of,” and I talk for 10 minutes into ChatGPT and say “turn that into a blog post,” that post will at least have my phrasing. 

Rob Walling (10:37): It’ll have my concept that isn’t on the internet yet. And that’s the human aspect of it. I’m going to let you talk, but I’m fired up about this because I don’t think it’s a detection issue anymore. I think it’s just a quality thing. And I have not seen AI YouTube videos that are just AI voiceover on stills impress me. Even if the voice is good, I’m like, “This is just boring. This is flat.” It’s like a mayonnaise sandwich. It’s just a very bland thing, which I think comes back to what you’re saying about humans having to do that. 

Taylor Hendricksen (11:11): Oh, absolutely. You see the videos on YouTube that are clearly bulk-generated, throwing them out there to try to get views. You skip them the second you feel it. You can feel the AI voice, whatever it is. So in general, that’s what’s going to be the biggest differentiator: doing things a little bit more thoughtfully to stay on top of this mass of AI-generated content that’s going to flood the space. You can’t just give something to AI and say, “Hey, write me a blog post or write me sales copy or do this whole thing for me.” I’ve seen a couple of AI tools recently that just say, “Put your website in and it’ll automatically do the go-to-market for you.” 

Taylor Hendricksen (11:46): And that’s a cute idea, but in practice it all falls flat. Every time I have it go through and do it, it’s a really good enabler on the backend. Operationally, being able to do the research and compile the stuff to get it to a point where you can see the nuance and the details, market research or persona research, it could be incredibly effective. But by the time you then take that and have it try to spit out the actual headlines or the actual human-first things, it’s not able to grasp the nuance. It’s very good at “next best thing” or grouping things together and bulk-approaching it. 

Taylor Hendricksen (12:24): But this whole thing of how do you take something over here and connect it here, or really have a nuanced understanding of what a human is actually experiencing to then be able to relate to them? AI will be able to do a bulk offense at it, like a DDoS attack, overwhelming the systems. And that’s the whole thing: people are going to use AI to spin up a hundred ads each with micro-differences between the avatar or the hook or the phrase, and hopefully one of them is good. That’s the only way I can see AI potentially beating the human-first stuff in the short term, meaning one to five years. 

Taylor Hendricksen (12:59): But after that, you’ve got to have the human level into it because it’s about nuance and the things you don’t fully grasp. 

Rob Walling (13:05): I had Eric Ries on the show because he has a new book out, Incorruptible, and one of the things he said I thought was a very succinct description of what we’re talking about. The moment he said it, I knew it in my bones. He basically said AI is the average of the internet. It’s the average of everything. And so if you’re not a good copywriter, if you’re a two out of 10, and you have AI write copy, it’s going to write a five out of 10. And you’re going to be like, “Man, AI is so great.” But if you’re a six, seven, eight, nine out of 10, if you’re actually good at something, you look at AI and you’re like, “This is solidly mediocre. This is like what an intern would write.” 

Rob Walling (13:45): Same thing. And it’s the Dunning-Kruger effect: the less you know about something, the more you think you know. That’s why, if you’re an expert, if you’re a really good designer, you know AI is not a good designer. If you’re a really good copywriter, you know AI is not a good copywriter. If you’re a great musician and you listen to AI music, you know it’s not actually that good. But this is why you see these sentiments on the internet of folks saying, “AI can do this and tomorrow it’s going to be even better.” And it’s like, yeah, a little bit, but it’s not 10% better every month. So that’s what we’re getting at: it produces average work unless you give it above-average inputs and above-average refinement and revision, and you actually train it not to be average. 

Taylor Hendricksen (14:33): Which is going to be a million times more valuable, because the average is going to go from having a hundred people putting out posts to now a million people. So if you do a little bit more to sit on top of that, it’s just going to skyrocket your ability to do things. But if you’re a two out of 10 copywriter and you’re just a straight dev, yeah, you could use it to have a baseline, do persona research, write headlines that work, and get an average passable thing. Sometimes that’s fine. You don’t need to be a pro in everything. But having that expert-level task in whatever it is, especially selling for founders, you have to have that empathy and really believe in whatever it is, otherwise it’s just sales material, just a headline, and it won’t actually resonate with people. 

Rob Walling (15:13): AI is helping founders ship faster than ever, but at some point you’ve probably wondered, is my codebase actually ready to scale? Today’s sponsor Designli can help you answer that. Here’s their CEO, Keith Shields. 

Keith Shields (15:26): Thanks, Rob. We’re hearing from a lot of founders right now who are avoiding parts of their codebase because something might break. And honestly, that’s a sign that your product isn’t ready to scale yet. AI development leaves behind hidden security issues, fragile architecture, and features way more tangled than you’d expect. That’s not a knock on AI, it’s just reality. So we built the engineering intensive. In just two weeks, our senior engineers do a deep audit of your code, stress test your infrastructure, uncover vulnerabilities, and hand you a prioritized roadmap to get scale-ready. We give you full clarity on your product’s health, backed with a money-back guarantee. So if you want to keep your AI tooling, but add professional oversight from senior software experts, book your engineering intensive at designli.co/fortherestofus. That’s D-E-S-I-G-N-L-I.co/fortherestofus. 

Rob Walling (16:18): So I talked to a couple of the founders that you coach and asked, “What is Taylor exceptionally good at? What has he helped you specifically with?” And one of the founders told me that you’ve really pushed him to rethink sales and prospecting in the age of AI. You obviously come from performance marketing where the numbers can get pretty crazy. What do you see bootstrapped founders getting wrong about how fast they could actually grow? 

Taylor Hendricksen (16:42): I think it’s just this artificially placed ceiling that they put on themselves. “I could never imagine doubling my business in a week.” Once you get past that idea and limitation, you realize the only limitation is your own comfort. You don’t necessarily think this will work, or they’ve tried something like that and it failed in the past, so therefore they don’t try again. The biggest thing founders, especially SaaS founders, could take from the performance marketing world is: when something’s working, how can I 10X this in a very short amount of time? What would it take? And once you start to do that, you start reverse engineering: okay, what would it actually take? 

Taylor Hendricksen (17:21): We had a project doing this for lead generation, and it was, “What would it take to get to 100,000 leads?” About 10 times bigger than what we were thinking. And then my business partner and I started going back and forth and realized, “Oh, all it really is, is we just need to crank the dial up to 11 on ad spend and have the backend operations that can handle it.” It was a very scalable deal. The only thing holding us back before was our own limitation. For the founders we’re talking to, SaaS can scale pretty quickly operationally. And especially the service-enabled ones, there’s a lot more headroom there to increase than they ever realized, but they always just get stuck at something comfortable, especially when their needs are met. 

Rob Walling (18:00): We’ve seen a lot of people in the TinySeed community: once they hit 20, 30, 40K MRR, life’s good. They don’t have that broke fire burning under them as much. So they kind of limit themselves naturally, or they’ll naturally get to the temperature of the room around them. If you’re in a group and everybody’s doing $50K and you start to do $100K, you kind of coast. Your goal is not to get to 500K, but just to sit there. So I think getting around people who are doing higher numbers and thinking bigger is key. Not just that ephemeral “think bigger” motivation, but actually, “Well, what would it take to do 10 times what we’re doing?” 

Taylor Hendricksen (18:36): And then what would it take to get up there? But at the same time, not just scaling for scaling’s sake either. I remember having this conversation: “What’s your goal for the business?” “Well, we really want to get to five million ARR.” “Why?” “Well, that just seems like a good number to hit.” But you were there before, you were doing two or three million a year, and now you’re back down to one or two. Before, you had twice the people, twice the headaches, and you were making the same amount of profit. So scaling for scaling’s sake is still not necessarily the best answer. 

Taylor Hendricksen (19:07): And obviously the TinySeed and MicroConf community is not about scaling just to get the Lambo and sit in front of a private jet. But I think it is important to think: why am I doing what I’m doing, and would it be better to scale more? It’s going to have different problems when you get there, but thinking bigger is probably the biggest thing you could bring. 

Rob Walling (19:25): Another founder that you coached told me that you’re really good at go-to-market and marketing and getting content out there. So if a founder buys into what you’ve said, “Maybe I do want to 2X or 5X this year,” and they’re ready to push hard, how do they actually get in front of people these days? What’s working? 

Taylor Hendricksen (19:46): I think the biggest thing is: scaling operations is about 10 times harder than scaling marketing. Marketing’s my hammer, so it’s obviously the thing I want to swing. But making sure you can fill the backend first. Assume SaaS is scalable. Getting out there in front of people is now going to be about really figuring out who your target demographic is. What are the core problems they’re actually trying to solve? And how can you get to the places where they’re actually talking about it? You’ve got to have a really deep understanding of who that market is, and the market may be very different than you actually think. You have to have an offer for getting in front of them that they really feel stupid saying no to, or isn’t a huge burden to get over, and then you have to solve their problem in a different way. 

Taylor Hendricksen (20:26): Starting with the avatar: who are you going after? A lot of people want to go after the most common ones because they don’t have creativity. They go after dentists and chiropractors. But they often don’t realize some of the non-sexy niches are the best places to be. Everyone wants to go after the startup or the FinTech, but the companies who are making money hand over fist and still have a very backwards view of technology, some of those are the best ones to go after. They’re the least critical on product delivery, timing, and speed. So really figuring out who you’re going after is an important starting point. 

Taylor Hendricksen (21:07): The other thing is really trying to figure out what problem you’re trying to solve. You’ve been talking about solving problems with software for decades. And I think a bigger thing now is not necessarily solving the problem they have right in front of them, because a lot of people aren’t waking up and saying, “I need a new procurement software because it’s inefficient.” But really trying to figure out how you’re solving one of their primary problems with a secondary solution. For the UI/UX design agency, they’re not necessarily waking up shopping for a new agency to redesign their SaaS website. They’re really trying to figure out how to look more modern, like they’re not about to go out of business. If somebody comes to your site and thinks, “I don’t even know if those people are still working,” or “The product is going to be bad because it looks so dated,” that’s the actual problem you’re solving. 

Taylor Hendricksen (21:59): Or for one thing we’re working on, a business for digital disbursement cards for corporate payouts. They’re not actually solving “how do I get someone a debit card instead of writing a check.” They’re figuring out how to retain the best workers in areas where churn is one of their biggest problems by making sure people get paid right away. So that’s where some of the positioning is really about: how do you solve the problem that actually keeps them up at night? Most of the time, founder products don’t actually solve that problem, but they definitely can. 

Taylor Hendricksen (22:40): It’s kind of like Nike’s “Just Do It.” They’re selling generic T-shirts and clothing, but what they’re really selling is their ability to encourage you to do that thing you’re scared to do, through clothing and shoes. 

Rob Walling (22:52): Talk to me about some unusual marketing approaches. I’ve heard you mention direct mail and founder-led ugly talking-head videos. Is that working? Have you seen that helping people out these days? 

Taylor Hendricksen (23:06): Yeah, totally. In general, I’m very agnostic about what marketing channels are best for a business. “Best” is very relative based on who you’re going after and what you’re trying to accomplish. In the TinySeed community, in the B2B space in general, you have a target demographic you know you’re going after. Let’s say it’s chiropractors or a specific type of business. Going after that using paid media channels like Facebook and Google, it’s really hard to get that granular on targeting just chiropractors or just the office admin assistants for chiropractors. Cold email has obviously been a great channel for these founders. But most people now ignore most emails in their inbox, and I basically ignore all cold email and cold LinkedIn spam. 

Taylor Hendricksen (23:49): It’s just so egregious that they don’t really get on the platform anymore. So when founders need to get in front of the demographic they need, approaching the old crowded channels that used to work a couple years ago but now don’t, you just have to find a new channel and get in front of them in an uncrowded way. We’ve found that with direct mail, being able to mail something, not a cheap postcard that gets chucked as soon as it comes over the bin, but there are handwritten letter services, there’s stuff in a plastic garbage can that you stuff the letter into and stick in a package. We even got video mailers shipped over from China that you can upload a custom pitch video into, slip into something, and send it out to get in front of the demographic you really want at surprisingly low cost. 

Rob Walling (24:30): Even the video mailers with shipping, with labor and everything, are about $25 or so to get in front of somebody. So when they start thinking about that, they can actually approach their target market in marketing channels that are not crowded now. But you still have to marry that on the other side with the trust built, because as soon as they get that thing or see your ad, the consumer isn’t necessarily just clicking on the ad and going directly to your landing page. They’re immediately opening up a new tab, searching for your company, trying to figure out who you are, checking the reviews, and trying to figure out, “Should I be able to trust these people?” So one of the SaaS Institute founders started making videos on YouTube to build that trust and started posting her expertise across a number of platforms: YouTube, Facebook, LinkedIn. 

Taylor Hendricksen (25:12): And she’s basically now got a really good trust built up over that. She’s a known entity in the space. “Thought leadership” is such a phrase, but she’s basically known as a trusted entity in that space. But that itself isn’t necessarily going to drive a lot of the results. People think, “Okay, well I’ll have a YouTube channel and leads will just flow in.” Kind of. That’s usually part of it, but it’s the trust layer on top. If you’re really trying to go after specific people, those people aren’t necessarily searching for what you’re talking about. So going after them very specifically with direct mail or direct outreach of some kind, send the brownies in the mail, do something different that’ll get through the noise. Then once they go see you, the trust will be built, and they’re much more likely to convert. 

Rob Walling (25:54): We’re talking a little bit about distribution here, and as you drive traffic and generate interest, that attention has to land somewhere. So talk to me about the offer itself. When you think through an offer that you’re going to make, what makes someone actually say yes? 

Taylor Hendricksen (26:10): Yeah, totally. So if you put yourself in their shoes, they’re getting bombarded with different offers, pitches to hire services, spend money with them, or try something for free. That has gotten so saturated because their inbox is full of them. You have to figure out what is the thing that’s going to cut through, and most of the time that’s going to be the baby steps going into it. It’s really hard to come in and pitch somebody cold on a big $100,000 project. But if you can come to somebody and say, “Hey, we have this very specific thing that solves a very specific issue for you. You don’t have to replace what you’re doing already.” 

Taylor Hendricksen (26:44): “It’s going to take a very short amount of time to implement and see the results, and you’re not going to have to spend a bunch or take a big risk on whether it will work.” So for any company out there: what is the thing that’s going to make them feel stupid for saying no to? Alex Hormozi talks about offers all the time. It’s a really good place to start on figuring out how do you stack something that people feel stupid saying no to. And feeling stupid for saying no to isn’t necessarily just a free trial, because a lot of people are offering free trials now. It is: how do you solve the very specific issue that they have, or their primary issue with a secondary solution like we talked about earlier. 

Taylor Hendricksen (27:17): Putting something in front of them that gives them a low-risk way to start testing this relationship with you. That could be something where they start the relationship, watch your founder talking-head videos for three months, six months, a year or two before they’re ever actually ready to interact with you as a business. But once they do, having that thing that makes it easy to say, “Okay, yeah, I’ll give it a try” versus committing to something big, I think should be in every founder’s playbook. The biggest problem with some of the software stuff is the replacement offer: “Come in, I’ll replace your existing internal systems.” That’s a really big ask. It’s a really big one-way door. 

Taylor Hendricksen (27:54): “If I try you and you don’t work, I’ve got to go back and revert to the old system. There’s got to be a lot of breakage. It’s going to be huge pain. It’s going to take months of migration.” All those things. 

Rob Walling (28:05): As we wrap up, I want to circle back to what we started with, which was talking about AI. Lest people think that we are anti-AI or don’t use AI or don’t think founders should use AI, we think none of those things are true. Throughout TinySeed and MicroConf, all of our team members have Claude and ChatGPT accounts and we are using a lot of it internally to automate a ton of stuff, and I know you are as well, and I know you’re seeing the founders that you coach use it too. So I wanted to say, we covered a lot of stuff today: positioning, scaling, distribution, offers. It’s a lot of plates to keep spinning. How are you using AI to make things faster? Or more specifically, how are you seeing the founders you coach use AI? 

Rob Walling (28:53): If it’s not what we said at the top, it’s not to generate the video, it’s not to generate the blog post. So how should we use AI? Because we all should be. It makes us faster. 

Taylor Hendricksen (29:03): Absolutely. I think there are two core pieces of it. One is the agentic stuff: how do I have this repeatable task that I’m already doing be an automated thing? It shouldn’t take four hours a week to do this thing. That’s one level of AI where especially the production and operational people should be absolutely leaning in heavily to whatever agentic framework it is. Whether you’ve got open source tools, Hermes, Claude, whatever it is, that’s an important thing: where am I wasting time on stuff that could free me up to do higher-value tasks? Then the other side is the non-repeatable things. The things you can’t necessarily just hook up an agent to go do research on. 

Taylor Hendricksen (29:41): And then I think it’s more this iterative process with AI as a thought partner. AI is really good at taking long rambling stuff from me, making sense of it, and going back and forth ping-pong style to really develop something out. So for me, it’s a lot of market research, a lot of demographic research, figuring out who we’re selling to. One of the companies we invested in is specifically going after truckers. So getting up to speed on the space, going out and pulling: “Go to Reddit and pull 50 comments based on this, get their actual verbatim language that you can use across the sales stuff. Go do deep demographic research.” Then build all that stuff up to fine-tune the AI for starting to get some initial rough drafts on copy. 

Taylor Hendricksen (30:21): So this kind of back-and-forth thought partnership thing. And making sure you have good guardrails on it too, because obviously the “Oh, you’re totally right” thing gets thrown in a lot. So having custom instructions like: don’t just placate me, really challenge the thoughts, don’t make stuff up, point out where I’m doing something wrong. I’ve developed some custom frameworks around this to hopefully give it some better rails. What I use it most for is how do you speed up the learning curve and compress that time down? For the trucking company we invested in, it’s a FinTech platform for truckers. Making jokes about Swift, the trucking company, is one of the best things to poke fun at. All these different things I would never have known, but AI basically goes out and does the market research to pull actual quotes from different places. 

Rob Walling (31:02): Taylor Hendricksen, as always, a fount of wisdom. I’m really appreciative of you coming on the show. You are a SaaS Institute coach, as I mentioned, and folks can hit saasinstitute.com if they’re curious about that program. It’s our premium paid coaching program for SaaS founders doing a million or more in ARR. So thanks for all that you’ve given back to the MicroConf and Startups for the Rest of Us community over the years, man. It’s great to have you on the show. 

Taylor Hendricksen (31:29): Thank you for putting everything together and thank you for having me on, Rob. Really appreciate it. 

Rob Walling (31:32): Thanks again to Taylor for taking the time out of his busy schedule to join me on the show, and thanks to you for listening this week and every week. This is Rob Walling signing off from episode 835. 

Rob Walling (00:00): Welcome back to Startups for the Rest of Us. I am your host, Rob Walling, and in this episode I talk with Eric Ries, the founder of the Lean Startup. We revisit some concepts from his seminal work and we also discuss his new book about how to become incorruptible. Before we dive into our conversation, SaaS Institute is my premium coaching program for founders doing a million or more in ARR. We provide a private members-only community designed for candid conversations and trusted connections, invite-only founder events built to spark breakthroughs and accelerate growth. We surround you with a curated circle of peers. These are other ambitious founders at a similar stage to you and they’re tackling the same challenges, as well as one-on-one coaching with experienced SaaS operators and subject matter experts, as well as direct access to mentors across growth, sales, product, finance, and more. 

(00:59): You can find out the full story at SaaSInstitute.com. This is a premium paid coaching program, again, only for founders doing seven or eight figures in ARR and only for SaaS founders at SaaSInstitute.com. And with that, let’s dive into my conversation with Eric Ries. Eric Ries, welcome to the show. 

Eric Ries (01:28): Thank you so much. It’s good to see you. Always good to hang out. 

Rob Walling (01:30): Yeah, it’s been a long time, man, since we saw each other and this was your first time on the show, surprisingly enough. I think I want to have you back on before your next book. 

Eric Ries (01:40): Sure. Yeah. Always a pleasure. 

Rob Walling (01:42): Your new book is Incorruptible and it is out today. Incorruptible.co if folks want to jump straight to Amazon or a local bookstore and grab it. I want to talk today a little bit about Lean Startup, which is what most folks are going to know your name from. But you’ve written now three or four books and this new book is fascinating. It’s based on a lot of hard-won knowledge from working on the Long-Term Stock Exchange as well as a lot of observations that probably only you have, working with these large companies in the capacity that you’ve been doing over the past few years. I think first question before we dive into Lean Startup is: what motivated you to write this book? 

Eric Ries (02:25): The new book? Oh gosh. Yeah, I’ve been busy the last 15 years and as they say, I’ve seen some things. So building Long-Term Stock Exchange, building the other companies that I’ve built, helping hundreds, thousands of people start companies. I’m very proud of all the positive work that’s come out of this movement. The global startup movement together has pioneered everything from incredible bootstrappers to massive venture-backed companies and new institutions of every kind. We’ve really had a lot of positive impact, very proud of all that. But there’s a dark underbelly to this whole thing. There’s a toll, a cost. And we treat it like it’s just inevitable that as companies get bigger, they get betrayed. They cease to be what they stood for. We think that founder burnout, mental health issues, all this, we are accepting a certain amount of carnage that it’s just a necessary cost to get all the good stuff we like out of this system. 

(03:17): But the more I’ve studied, the more I’ve learned, and the more I’ve built, I don’t think that’s true. I actually think we’ve been misled by a whole package of what are today called best practices about how companies are to be built, structured, and governed that are frankly value-destroying. And so we as builders, we get the final say here. We get to decide what the best practices are and I’d like us to have an understanding of how we got into the mess we’re in now and start to work together to develop some new practices for the next generation. 

Rob Walling (03:48): Awesome. And that’s a great tease for the middle of the show when we start diving into your story around the Long-Term Stock Exchange and you have a new definition, or a more complete definition, of profit that I think folks want to stick around and hear. But before we dive into that, I want to ask you about Lean Startup. It’s been around for, is it 15 years now, since 2010-ish? 

Eric Ries (04:10): 2011, yeah. 

Rob Walling (04:11): Yeah, 2011. All right. 15 years. And I would guess almost everyone who is listening here has heard of Lean Startup, but to encapsulate it, I’ve always thought of it as you pulling together some concepts: product-market fit that Andreessen came up with, MVP, I think Frank Robinson maybe. I know you and Steve Blank popularized it. Customer development was a Steve Blank thing. You invented the pivot, the concept of the pivot. You pulled these ingredients together in this recipe. And it’s, as you said, been used by bootstrappers and massive Fortune 500 companies. Some of the 

Eric Ries (04:45): World’s largest. 

Rob Walling (04:46): Oh yeah. It’s incredible. But you’re 15 years in now and do you feel like the ideas within it have held up? How have they shifted? Any recent observations on your part? 

Eric Ries (05:00): Oh, sure. Happy to talk. What a ride. I mean, who could have imagined it would get so big? The book has sold millions of copies and people write to me still basically every day telling me they found it helpful. That to me is always the acid test: are practitioners finding it useful in real life, not just finding it entertaining and enjoyable. That’s great. As an artist, I appreciate that part of it. But I write these books for a reason because I’ve personally witnessed and endured the pain and I personally want to help people get out of that mess. I never ask anybody to try anything I haven’t been willing to try myself. I very much eat the dog food before I ever try to serve it to anyone else. It’s interesting being on this tour talking about the new book. A surprising number of hosts have asked me, do I feel vindicated by what’s happened since I wrote Lean Startup? 

(05:51): Meaning that the AI stuff that’s going on now, the kind of changes the technology platform, they feel like I called it 15 years ago. And I was like, “Really? I don’t really…” Yes, I guess that’s right. And people have been quoting my own work back to me: “Remember when you said this? Remember?” I’m like, “Oh yeah, I guess we did say that.” Fundamentally, Lean Startup I’ve always thought was about the confluence of two mega trends. One is the democratization of access to the tools of building. We take it for granted now that a kid in a garage can compete head to head with a Fortune 500 company in the global marketplace. That’s just normal, but that’s a very new accomplishment as a society. So more and more people could do more and more things because the cycle time is going down. 

(06:34): Things are getting faster. And the second mega trend is that, partly as a result of number one but partly for other reasons too, things are becoming more and more uncertain. So our ability to use the 20th century general management toolkit of planning and forecasting is getting harder. Not that it can’t be used for anything, but entrepreneurship is that special domain of business, of organization building, of building, of making, where we really don’t know what’s going to happen. And that’s exciting, but also it’s a little bit scary. Many of the tools that we have as managers, for holding people accountable, for raising and deploying capital, for figuring out what to do, they require the ability to forecast to work. So as uncertainty increases, our managerial tools break down. And so to me, I feel like that was a pretty good call 15 years ago, that we would see more and more of those two dimensions. 

(07:26): And so we would need to develop tools that are equipped and evolved to handle that environment. And boy, is this a crazy environment. 

Rob Walling (07:35): For folks who don’t remember what it was like before Lean Startup and customer development and MVPs became a concept: in probably 2003 to 2006, I was a software developer by day, engineering manager, and I was just trying to build bootstrap products at night. I would go into the basement and I would code. I wouldn’t talk to anyone. I would come up with an idea and I’d code for 400 hours, 500 hours, put it on the internet, try to market it, and it was just frustration after frustration, wasted swaths of time. And so when I heard about customer development, I was like, “A, that’s really scary,” and an MVP, that concept of launching something that’s minimally viable. 

(08:22): That felt scary and it was not the way we used to do it. We all think that’s just the way everyone does it now, but there was a time when, no, it was just years and years of wasted effort. 

Eric Ries (08:33): Oh, it was really controversial. I can still remember. I tell the story in The Lean Startup of a company called IMVU, one of the first Silicon Valley companies that I was a founder of, and we did all this stuff then. We didn’t have language for it, we just did it. And after that company, I was being asked to advise other companies. I didn’t really understand the way Silicon Valley worked back then, but VCs were all of a sudden my new best friends. I didn’t know why all these VCs wanted to talk to me and invite me into their offices. I would go to these meetings and the VC would set it up and they’d be like, “Hey, we have this company that’s going too slow. Can you sprinkle some of your magic pixie dust on them?” I’d be like, “No, no, no. I’m not smarter than anybody. I don’t have magic pixie dust. I just have a better system, a thinking system.” And they’d be like, “Sure, sure, whatever kid, just go make it happen.” 

(09:13): And I’d have these meetings and people would yell at me. They’d be like, “That’s not true. What you’re describing could never work.” And I’m like, “I’m sorry, I’m just telling you a story of something that I personally witnessed. I’m not even asking you to do anything. You asked me.” At a certain point, some of these meetings ended so badly I would have to say, “Listen, with all respect, you called me. You asked me as a favor to have this meeting and now you’re yelling at me.” That’s really how countercultural it was at the time. I can remember being a student in Steve Blank’s class. 

(09:53): He was one of my investors at IMVU and the deal was we had to audit his class. He had just started teaching customer development at Berkeley Haas School of Business and we would make the trip, my co-founder and I, from Palo Alto all the way through traffic to Berkeley to sit in on Steve’s class. I remember the MBAs just being so skeptical. And yeah, now it’s so gratifying to see that these ideas have taken over. But as a result, a lot of people don’t realize that they ever had to be invented in the first place. So they kind of take for granted: well, of course everybody knows about pivots. Of course everyone knows about MVPs. But no, it’s actually a relatively recent achievement that we have the vocabulary to talk about it. 

(10:36): And one of the things I’ve learned from that experience is that conceptual vocabulary is very valuable. Even people who want to criticize Lean Startup have to carry the meme forward to do so. So by creating an intellectual framework for talking about these issues, we have advanced entrepreneurship itself, even if some of the ideas are wrong, because it helps us get to the right ideas. Now we can reason about and talk about things that before we didn’t have language for. 

Rob Walling (11:02): Talk to me about AI. What parts of Lean Startup do you feel like AI makes easier? 

Eric Ries (11:09): I get this question a lot, but I think the question reflects a misunderstanding. Entrepreneurship is not a solo game. It’s not a single-player game. Imagine you’re playing a single-player video game and someone gives you an auto-clicker that does all the tedious clicking for you. Now you go faster, you’re doing better. Did the tool make you better at this video game? Oh yeah, totally. But what if it was a multiplayer competitive game? Well, if you get the auto-clicker and everybody else gets the auto-clicker too, how did it make you better? Not necessarily. In fact, now the question is whether you can use the tool better than your competitors. 

(11:51): It changes the basis of competition in such a way that it makes some things a lot easier, some things a lot harder. So I think the jury’s still out on what the net effect will be of these tools. Now, many of the specific tactical things that we recommend, if you read The Lean Startup now through modern eyes, you’re like, why didn’t they just use Claude Code for that? 

Rob Walling (12:09): It didn’t exist. 

Eric Ries (12:10): It didn’t exist. None of that stuff existed back then. So of course the stories are outdated in the sense that the timelines and the costs of things are all off because now those timelines and costs are totally different. But that’s why I tried really hard in the book to emphasize principles, not tactics, because principles can endure, but tactics are always tied to the specific economic environment in which they’re invented. 

Rob Walling (12:30): Yeah, like that. Folks who listen to this podcast know I’ve written five books. The first one was very, very tactical. That’s actually when you and I met. I wrote Start Small, Stay Small, published it in 2010, and then I was on the speaking circuit. You and I met and were speaking at several of the same events, lean startup events. 

Eric Ries (12:47): Yeah, sure. I remember those days well. 

Rob Walling (12:48): My first book was so tactical and people loved it and it became outdated in 18 months. And so my later books are much more about principles and concepts. 

Eric Ries (12:59): It’s the only way to write something that’s going to endure. And you see with AI, the durability of these so-called best practices is so short. The prompting tools and guidelines and context management, stuff that we were writing about six months ago, 12 months ago, 18 months ago, is now completely wrong. And what’s interesting to me is how quickly people fixate on the new thing, how quickly things become ossified as just so stories. “Oh, everyone knows now you have to do this to get the most out of an LLM.” And it’s like, no, that was just a quirk of how we were building them in February, but now it’s March and we’re doing it totally differently. The breakthroughs are coming fast and furious. 

Rob Walling (13:36): With customer development, obviously there’s build-measure-learn, and you’re talking to customers and then you go build and then you measure and learn. It feels like AI is shrinking these windows. It just takes less time to build. Does it take less time to measure and learn as well? What’s your experience? 

Eric Ries (13:57): This is the biggest problem with the way we are currently using AI. I tried to make this clear 15 years ago: learning is the unit of progress. Well, who does the learning? 

Rob Walling (14:09): The humans. 

Eric Ries (14:10): It’s still being done by old-fashioned wetware between the ears of the founders. At the end of the day, the rate-limiting step, the fundamental constraint, is how fast can you learn? Now AI can be an incredible learning tool. So I do think the next generation of founders, once we get past the bubble and all the nonsense happening right now, will use these tools not to make artifacts for themselves, but rather to improve their own capabilities. That is the big divide I see in the world of AI today. Yes, if you’re trying to just build and measure, these tools are incredible. You can say, “Go make me a thing. Now make me a new thing.” I have a Claude Code agent running on my laptop right now doing book promo, constantly trying to brainstorm ways to get on social media and make a post that might go viral. 

(14:56): It’s constantly looking at my posts and other people’s posts to see what’s gone viral and using that data. So it’s doing what it thinks is the build-measure-learn step on its own. The problem is it doesn’t do any learning. What they call in-context learning is not learning. It’s just token prediction, next-token guessing. So what happens is it inevitably convinces itself to do average work because that’s what’s in the training data. Unless you really give it a lot of your own learning capability, it just can’t break out of that paradigm. The build and measure can be accelerated, but the learning, if you just send it off to do the artifacts for you, if you have it make a product you don’t understand, if you don’t talk to the customers but have the machine talk to customers for you, it will not actually accelerate what you’re trying to do. 

(15:41): It will actually slow you down. 

Rob Walling (15:43): You and I are in agreement here. I talked just a couple weeks ago on this show about the four core SaaS skills: product development, marketing, and sales. Everything else you can figure out. But I conjecture you need these core skills on a founding team or senior folks if you can hire them. And I was talking about how AI impacts each of these. AI speeds along development. AI can help you with sales and marketing, it can create some stuff, but founders still have to do it. Product, making decisions about what to build next, especially in an early stage, I think AI is not good at that and will not be good at it for a very long time. Which is in line with what you’re saying, because it’s seeking the average. 

(16:25): I hadn’t put it in those terms, but it is seeking average work and an average product isn’t going to do anything for anyone. 

Eric Ries (16:33): Yeah. It’s funny. If you look at the studies on how AI works and how people are using it and how it performs, it makes everyone’s work more average, which for below-average performers is an increase. So a lot of people saying AI is so much smarter are kind of telling on themselves. 

Rob Walling (16:47): Oh, fascinating. 

Eric Ries (16:49): Everyone thinks they use AI writing and it’s so brilliant. But then when they receive AI-written slop, they’re like, “This is terrible.” You can’t tell the difference. The number one finding I think from use of LLMs is that LLMs cause the Dunning-Kruger effect to be magnified. They convince you that you’re more capable than you are while they degrade your actual capabilities. If you use them the way the normal tools are designed, obviously there are some tools designed differently, I help build some of them, but if you use them the normal way, I’m convinced that when we put these vibe coders into an MRI machine while using Claude Code, they’re going to look like slot machine junkies because you’re just saying next, next, next. You’re building stuff that you don’t understand. 

(17:29): And of course it’s only a matter of time before someone vibe codes their way into a massive, mission-critical disaster. When they deploy code, they think they understand it, but they don’t. It’s the psychological effect that’s really damaging. 

Rob Walling (17:39): I want to change it up and get back to Incorruptible, what you’re here to talk about today. You introduced it earlier, why you decided to write it, but one story that I was really compelled by, early in the book, is about the Long-Term Stock Exchange. This is a story I’ve been following since you announced it because I love the concept of it. So for someone who’s never heard of it, can you describe what the idea behind it was and then what happened? I believe you had to shut it down. 

Eric Ries (18:07): No, no, no. On the contrary, LTSE is still going strong and we actually made money last year. Yeah, I know. 

Rob Walling (18:14): Oh my gosh. Okay. This is amazing. 

Eric Ries (18:16): In fact, if you’ve noticed, the SEC is considering eliminating quarterly reporting for the first time in 40 years, and that’s our petition. Now I say our petition, but I have to get out of that habit because of course I don’t run the company anymore. I’ve long since turned it over to a really capable management team who are much better at running a financial services company than I am. But yeah, LTSE is live. It’s interesting that you have that reaction. A lot of people do. It’s very difficult to get attention for it because it’s so different, and press doesn’t like to write about it. So many companies come to me and say, “I’m so glad you’re working on this problem. It would be so great if everybody would adopt your principles.” And I’m like, “Great, would you like to adopt these principles?” “I would love to, but I can’t.” 

(19:01): Would you like to lift a finger in defense of the world you want to see? “No, I can’t do it.” So yeah, I have tremendous respect for the companies that are listing on LTSE. It’s such a leap of faith. And our job is to make it easier and feel less scary. One of my goals with the book is to lay out the long-form argument for why we need new civic infrastructure like LTSE and why companies should vote with their wallets to have the world they want to see happen. For people who don’t know, Long-Term Stock Exchange is the first new listings venue for public equities with its own listing standards, its own ideas about what corporate governance should look like, since the creation of NASDAQ more than 50 years ago. We’re in the same regulatory category as NYSE and NASDAQ. 

(19:45): We compete with them head to head. We list stocks. We trade all the same stocks that they trade. Most people don’t realize that modern stock exchanges are all interconnected through what’s called the national market system. All exchanges trade all the other exchanges’ stocks. It’s not like the old days where traders are in a physical building. In fact, that beautiful marble building in New York that people associate with the New York Stock Exchange is more of a museum than a trading floor. The servers are in New Jersey where the actual trading happens. We have servers in New Jersey too. We do the things the other exchanges do. And I used to wonder, I tell the story in the book, why the major exchanges are all the same. If you look at the rules, the listing standards of all the existing exchanges, they’re almost identical. 

(20:25): And when you ask people why something in the economy is the way it is, they always answer the same way. They say, “Oh, well, that must be the result of Darwinian natural selection because the market selects for value creation. So whatever you see must be the best.” This is maybe the most untrue thing that is commonly believed about markets in the whole world. And I got to learn this the hard way because we were very stubborn when we were trying to get LTSE off the ground. This was many years ago now. We raised money. I had an incredible team who had quit way more lucrative jobs to come on this crazy quest with me. We tried to get this new thing approved and we had partners that we had to work with. We got them to agree to adopt our standards. 

(21:03): We had this petition before the SEC and then we got ambushed. I’ll make a long story short. A group of hedge funds, governance experts, policymakers, and people who were opposed to what we were doing did not want to see us succeed. And they made it really clear. They called me and were very bold about it. They didn’t seem to think there was anything wrong with this or even unusual, which made me think, “Do they do this all the time?” They said, “Look, we are going to see to your destruction. We don’t want to see this happen.” And the first time they said this, I was like, “Look, I’m sorry they don’t like it, but this is America. We’re going to run this experiment and we’re going to compete.” They said, “Your thing is doomed.” That’s okay. 

(21:40): If it’s doomed, why don’t you just sit back and watch it fail? Why are you bothering me? They’re like, “No, you don’t understand. We will lean on every one of your partners and make them cancel their contracts with you because every one of your partners needs stuff from us that they care about more than this.” And I was like, “Again, why are you going to such efforts? Do you think there’s something wrong?” They were like, “No, it’s not that we think your ideas won’t work. It’s actually that we think they’re too good.” I know this sounds ridiculous, but they were like, “We’re worried that if you succeed, you will take attention away from the reforms we want to see happen. We want the markets to go in a certain direction and we can’t have an unauthorized person like you messing up our plans.” And I was so naive. 

(22:23): They leaned on one partner after another and the partners would call me and say, “Listen, can you just give these people what they want?” And finally I was like, “I don’t even know what they want. They want me to die. How can I do that?” I tell the story in the book: they timed it perfectly. I was away from my team, thousands of miles away, in the wrong time zone. It was the middle of the night. They finally called me and said, “Listen, all these problems can be made to go away.” Oh, really? Just a small thing. We just want you to change your listing standards to be the same as everybody else’s. And if you do that, why don’t you live to fight another day? And I was like, “Oh, now I understand why everything is the way it is.” 

(22:59): So I gathered my team. It was the middle of the night. I said, “Everybody, look, here’s the deal. I think if we say no, we’re going to go bankrupt. I really don’t see how we can survive. It’s a very small compromise they’re asking for. I wouldn’t blame any of you if you want to do it.” From the career perspective of all the people on my team, just getting any exchange approved would be a really big deal, a feather in their cap they could trade on for the rest of their careers. On the other hand, we had built this company to stand for something. We built it so that we would help other companies stand for something. We didn’t realize those tools would save us first. So anyway, I asked everyone on that team that night, yes or no, and every single person said no. No deal. 

(23:40): And I say in the book, I wish I could say it was my visionary leadership that got us through that night, but of course I was the one curled up on the bathroom floor. That line about being on the bathroom floor, when test readers who were not founders read the book, they were like, “What’s the big deal? I don’t understand why you were on the bathroom floor.” And everyone who’s a founder understands immediately. They were like, “Why is it so…” I was like, “My body thought I was going to die. That’s what was so bad about it.” 

(24:14): When you become ego-identified with the thing you make, what happens to it happens to you. And so I thought we had died to save a principle. Now it turns out, as these things often are in retrospect, this was the best thing that ever happened to the company. Because of these principles, we were able eventually to recover, to get something approved. And like I said, we make money, we list companies, it’s a going concern right now. Yet it left me with this feeling that there was a lot more going on in the economy than I previously understood. And I think that was a big important part of what led me to want to understand: how do these systems work, and what is the role that we as founders play in this ecosystem? 

(24:54): And I think actually we are the ones propping this whole thing up. It works the way it works because we permit it. 

Rob Walling (25:00): Right. And in the book you talk about a more complete definition of profit. Can you share what that definition is and why it’s so important? 

Eric Ries (25:13): So if you ask any founder what it means to be a for-profit company, they look at you like, really, everyone knows what that is. You’re like, but indulge me, what does it mean to make a profit? Easy. Take a $50 piece of wood, turn it into a $200 table, I have $150 in profit. Revenue minus expenses, come on. But if you’ve taken an economics class, you will know that there are some bugs in this definition. For example, ask people: is a Ponzi scheme profitable? And they really don’t want to say yes. What I’ve found is we have an intuitive understanding, what I call the builder’s intuition, about the right way to make money, but we carry around a mental definition of profit that is not aligned, and the divergence creates real cognitive dissonance. 

(26:02): Builders are like, “I don’t want to say that a Ponzi scheme is profitable.” Okay, well, what’s the problem with it? Well, if they think for a second, they’re like, “Well, it creates massive deferred liabilities that have to be paid out eventually.” So yeah, it’s revenue minus cost, but you have to take all costs into account. Not just the current period, but costs out into the future. But does that mean a company that creates a toxic waste dump and gets away with it is profitable? I’m like, of course it’s profitable, but is it? If they’re going to have to pay for the cleanup, isn’t that just a deferred liability? They’ll be like, “Oh yeah, I guess you’re right.” But now what if instead of putting a toxic waste dump in my backyard, I dump my pollution in the river and the town downstream gets sick and people die. 

(26:45): Imagine I get away with it. Is it profitable? They’re like, “Yeah, of course it’s profitable. You’re not responsible for their healthcare.” But did that really create value? You said before that if I moved the expenses in time, they still count. Here I’ve moved the expenses in space. I’ve moved them from my books to the books of the town downstream. Does that make them any less real? Most people are like, “Oh yeah, I guess not.” In economics, this is called negative externalities. If you’ve taken an economics class, these bugs are well known. The conventional definition of profit ignores negative externalities. But if you’re willing to accept that negative externalities have to be counted as part of the profit definition, now we have big problems. Because what if my product is addictive? What if it is damaging to the health of my customers? What if their communities are fragmented or destroyed? 

(27:26): It’s starting to get complicated. And it actually gets even worse. I said before I take a $50 piece of wood and turn it into a $200 table. But what about this: what if I steal a $200 piece of wood and make a $100 table? Is that profitable? Again, imagine I get away with it. No one ever finds out. Most people will be like, “No, because you didn’t account properly for the input factors of production.” Oh, what are those? Well, you have to account for the value, not just the cost, the value of everything that was consumed in the creation of the thing. The second you admit that you have to make this accounting move, now you have a new problem. 

(28:13): What if a human life is one of the input factors of production? People say, “That’s absurd. Nobody does that.” I’m like, “Okay, imagine I make a hitman-for-hire dark web business. Give me Bitcoin, I’ll kill anybody you want. Is it profitable?” People hate this one. They’ll be like, “It’s profitable, but unethical.” Then they’ll be like, “Oh, it’s illegal.” I’m like, “Okay, but what if I made so much money on the dark web that I could lobby the government to have it made legal?” Now is it profitable? It’s not ethical, but is it profitable? And eventually people will pretty much always admit that it’s not profitable, because of course a human life is precious. If it’s destroyed to make $6,000, how is that a good trade? But then you’re like, 

(29:00): “So you’re saying that Philip Morris International is not profitable? Are you sure? Data says that tobacco companies make about $6,000 per death, so that’s how they value a human life.” And as soon as you say, wait, if Philip Morris isn’t profitable, you’re saying that hardly any companies on this planet are profitable. Yeah. So we have to have a better definition of profit, one that we can use as an operating goal, a North Star as builders. What I think is the better one: to make a profit is simply to maximize human flourishing. If we leave human beings better off than we found them, we have created profit. Otherwise, we have destroyed it. That solves every one of the problems we just talked about. And although that sounds abstract, it’s super concrete. If you enact this as a company’s mission or purpose, it helps with so many situations that most companies run into today. 

(29:49): It makes it much easier to build a company that people can trust. Most company charters, if you’re a Delaware C Corp, say: “The Acme Corporation is hereby incorporated to pursue any lawful act or activity.” Any lawful act or activity is pretty open-ended. So I say, go tell your lawyer that you want to narrow it. You want to write down, “I want to maximize human flourishing by making a thing.” Your lawyer will be like, “Listen, keep your options open. Maximum valuation is to be had by maximum optionality.” And if they say that, I want you to ask them: “Does that include the option to turn my customers into Soylent Green and eat them?” Most normal people will be like, “Of course we should write that out of the charter.” But most lawyers will say, “You never know what you might need to do.” 

(30:44): And we’re like, “Why don’t people trust me?” So instead we want to write into the corporate charter that the company exists to do a thing, to make a thing. Tim O’Reilly calls this “create more value than you capture.” And when we do that, we’re by definition making the world a better place through our own profit. I call that the builder’s intuition: the intuitive understanding that the best way to make money is to create a bunch of new value in the world and capture some of it for yourself. But this isn’t a surprisingly radical statement. Because once you admit this, if you tell me that your goal is to do something as humble as to make a great product or bring a little efficiency or beauty into customers’ lives or improve health, you are already a business revolutionary, whether you admit it or not. You are building this company in a business culture that treats all forms of making money as equally good, and therefore extraction and exploitation are its watchwords. 

(31:43): So yeah, proceed carefully. 

Rob Walling (31:45): Someone listening to this, I think it’s an amazing definition. As you spelled it out, it starts off pretty subtle and then by the end it’s like, “Oh no, this is very different from the way corporate America runs these days.” Someone listening might think this is very idealistic and no company runs this way today. But you talk in the book about some examples of companies that do. You mention Patagonia, Costco, Anthropic, you have several examples. As we wrap up, can you give someone an example of a company that you think is already living this way? 

Eric Ries (32:18): Oh, Patagonia. 

Rob Walling (32:19): Patagonia. Yes. But also like Costco. Anthropic. You have several examples. As we wrap up, can you give someone an example? 

Eric Ries (32:31): Can I illustrate with a story? 

Rob Walling (32:33): Please. 

Eric Ries (32:33): Maybe it’s more valuable than an abstract concept. I want to tell you the legend of Saul Price, who many people today don’t remember, but he is actually the father of modern retail. He’s so influential that when Sam Walton was thinking of getting into the retail business and trying to figure out what he should name his company, the reason he chose Walmart was as a tribute to the company Saul Price had created: FedMart. Let me tell you about FedMart. Saul was a lawyer before he became an entrepreneur, and when he was a lawyer, he was trained that he had what’s called a fiduciary duty to his client, meaning you have to put the client’s interest before your own. That’s what we all want from our lawyer. So when he became a retailer, he asked himself a simple question: “Who’s my client?” And he said, “Oh, the customer is my client.” So he had what’s called a fiduciary hierarchy in his philosophy: customers first, employees second, shareholders last. 

(33:24): You will find this pattern in a lot of the greatest companies in history, shareholders last. Unfortunately, we live in the era of shareholder primacy where we’re taught to put shareholders first. So what did it mean to be a fiduciary to the customer? Saul believed that his job was to look out for the interests of his customers no matter what. So for example, when his competitors would try the loss leader strategy on him where they would dump products below their own costs to drive people out of FedMart, Saul would post signs all over FedMart saying, “Hey, don’t buy this product from me. You can get it cheaper down the street.” Can you imagine anyone doing that today? It’s extremely rare. That was FedMart. So customers loved FedMart. They would drive way out of their way to shop there. Company grew, it was a huge success. 

(34:08): So successful that he took it public. But when he was a public company, he felt this financial gravity always pulling on him trying to make him more mediocre, force FedMart to act on best practices. Investors constantly were on him for higher prices and lower wages, but he believed in low prices and high wages. He’s like, “This is the engine that makes this work. Why are you trying to ruin it?” So as a lot of entrepreneurs have tried over the years, Saul took the company private again, buying out all the investors and bringing in new investors. They owned 51%, he owned 49%, and this solved exactly zero of his problems because his new board was still in the hypnotic spell of these best practices. They wanted higher prices, lower wages, faster growth, retail best practices. 

(34:57): So Saul was a completely uncompromising SOB and would not give them what they wanted. So one day in 1975, Saul comes into work and he can’t get into his own office because they’ve changed the locks on his door. He doesn’t work there anymore. What happened next is like one of those natural A/B test experiments you see in business history sometimes. In the A corner, we have the FedMart investors. They got what they wanted. Saul was gone. FedMart was converted to conventional best practices and within seven years, they had driven it into bankruptcy. It took Saul 20 years to create what they were able to destroy in seven. In the B corner, we have Saul. Now, did he retire? Did he complain about how unfair life as an entrepreneur was? No. Saul took two weeks off and then he was back at work. 

(35:44): He leased the office upstairs from FedMart headquarters and started a new company, which he called the Price Company. Their product was called Price Club. And when I was a kid, Price Club was like the dominant retailer I would shop at with my family. Costco and Price Club were the two. 

(36:01): But most people don’t remember Price Club anymore because, as you’ve foreshadowed, one of the people who left FedMart to go to Price Club with Saul was a guy named Jim Sinegal. He had worked his way up from stockboy to executive at FedMart. Saul was a big believer in promoting from within, which is why his companies had such coherence to them. Saul and Jim both understood that there was an engine that made FedMart work, and once you break the engine, destruction follows. But the positive side of that is because they knew it was an engine, they knew they could do it again. So they created Price Club. Price Club was a big success, and with Saul’s blessing, Jim left to start his own new company. And eventually the two companies were merged to create a company they called Price Costco. 

Rob Walling (36:44): I remember that. Clunky name, but I totally remember. 

Eric Ries (36:47): We remember. 

(36:48): Now it’s just called Costco. Today, Costco is a $400 billion public company. To get a sense of how big Costco is: Costco is so big that its house brand, Kirkland Signature, if that was a standalone company, would be bigger than United Airlines, Procter and Gamble, or Coca-Cola. And that’s just their house brand. Costco is massive. But why was FedMart destroyed while Costco hasn’t been? Costco’s been going for 40 years now. Jim Sinegal has long since retired, yet the ethos endures. Why? This is the double mystery of this book. First, why does this happen? Why would investors kill the golden goose? People say, “Well, it’s inevitable.” But if it’s inevitable, why are there exceptions? Why is Costco the exception? So to build an incorruptible company, one that can be one of these exceptions, we need two things. 

(37:36): We need the ethos of Saul Price, the fiduciary commitment to customers and employees, not just shareholders. We need the trustworthiness that that way of working creates. But we also need the integrity of Jim Sinegal. When Jim took Costco public, he encoded the company inside a governance fortress that protects it from outside meddling. That’s why when I say Costco is a high-integrity company, I don’t just mean they’re ethical. I mean they’re able to make and keep promises, an ability that most modern companies cannot. So that’s incorruptible in a nutshell: ethos plus integrity. 

Rob Walling (38:12): Amazing. Eric, thanks so much for joining me on the show today. As I mentioned at the top of the show, incorruptible.co if folks want to buy the book, it is out today. And if folks want to keep up with you on the internet, they can scroll down to the bottom and put their email address in to subscribe to your list. 

Eric Ries (38:29): Please do, please join the mailing list. We have so many cool bonuses for those that order today or this week: a secret chapter, implementation guides for those that want that, reader’s guides for those that want that. So we tried really hard to make it as worthwhile as possible to act now, not wait. Thank you very much. And if you feel like it, on the website you can also see lists of many, many independent booksellers all around the country that are carrying the book. So you can buy the book in hardcover, eBook, or audiobook, wherever books are sold, but if you want to support your own local community at the same time, maybe buy at an independent bookstore. 

Rob Walling (38:59): And you’re doing a book tour. If folks want to see where you’re at and read news stories and see if you’re in their city, how is incorruptiblegoing.com? 

Eric Ries (39:10): Yeah. All the latest and greatest will always be there. 

Rob Walling (39:14): Thanks again for joining me, Eric. 

Eric Ries (39:15): My pleasure. Thanks a lot. 

Rob Walling (39:17): Thanks again to Eric for coming on the show. And as a reminder, if you want to order the book, you can search for it on Amazon or head to incorruptible.co and it will be for sale wherever great books are sold. Thanks so much for listening this week and every week. This is Rob Walling signing off from episode 834. 

Rob Walling (00:00): Imagine this: you’re about to close a massive deal. You’ve been grinding for it, you’re pumped. And then your customer’s legal team decides to make things interesting. What happens if you get hacked? How do you protect our data? And your brain just goes blank. That’s the nightmare founders deal with all the time. That’s exactly what Ysecurity solves. They are 40 security engineers who’ve actually done security at Apple, Uber, Microsoft, Robinhood, Brex, and more. And get this: you don’t hire them, you rent them by the hour. No massive salary, no expensive consultants, just real experts embedded in your company helping you get SOC 2, ISO, whatever you need. Set a monthly cap, know exactly what you’re spending, and close the deal. Head to ysecurity.io/startups and book your free strategy call. Your first eight hours are free. 40 engineers, one full working day, totally free. Go take it. 

(00:57): ysecurity.io/startups. That’s the letter Y: ysecurity.io/startups. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode I’m going to talk through some solo topics. The first one is about how a TinySeed founder who found they didn’t have product-market fit just started generating $10,000-$15,000 a month in quasi-consulting revenue. It’s really customer development mixed with project-based work, and I was impressed with how quickly they pulled this off. I’m going to talk about what separates Nobel Prize winners from forgotten researchers, and one or two other topics as time allows. Before I dive into those topics, tickets for MicroConf Europe are going fast. We will sell this event out. We’ve sold out all our events for the past several years. MicroConf Europe is in Reykjavik, Iceland from September 21st through the 23rd of this year. We have incredible speakers coming to this event, our world-class hallway track. 

(02:05): And of course, producer Sonya is lining up some amazing excursions to hot springs, thermal spas, and a distillery. microconf.com/europe if you want to check that out and grab your ticket. Tickets will never be cheaper than they are today. And if you or your company are interested in supporting the event and getting in front of a couple hundred founders, mostly focused on B2B SaaS, you should consider sponsoring. Shoot us a note at sponsors@microconf.com and my trusty team will get back to you ASAP. 

(02:46): My first topic of the day is about a TinySeed company called BlinkMetrics at blinkmetrics.com. I did get permission from the founders to tell this story. I was going to anonymize it and then I was talking to Nathan Tyler, one of the co-founders, and mentioned I was going to talk about this on the podcast and he said, “Oh, just use the name. Tell them what we’re up to.” And I really appreciated that because the story is an interesting one. So we accepted BlinkMetrics into TinySeed earlier than a lot of other TinySeed companies. Nathan has had a nice exit under his belt, so he’s a serial entrepreneur and someone we put faith in to execute alongside his co-founder. And so they were building BlinkMetrics, purely as a B2B SaaS, and had some early traction. They came into a batch, I don’t even know if it’s 18 months ago. 

(03:41): I lose track of it these days. And what they found is that what they were selling wasn’t resonating. Their product-market fit was very weak or non-existent, and they were struggling to make sales and struggling to retain people, tweaking with the pricing. But in true entrepreneur startup founder form, they have iterated so quickly, tried a lot of things, and been right on enough of them that they’re starting to see some traction. So Nathan in particular and I have gone back and forth with Loom videos and Slack voice messages, having these async conversations about approaches that he and his co-founder are trying. And one of the things he eventually decided to try, he was asking me what I thought about it, was the approach of: look, I want to do some consulting and project-based work to serve both as revenue for the company, because the company wasn’t really making any money, but also as customer development to find out what people really need. 

(04:42): And before I continue, BlinkMetrics, the H1 today is “Take your business reporting out of spreadsheets for good.” You know the data is somewhere in your CRM, finance, and operations tools. BlinkMetrics pulls it all together into live dashboards that finally answer the questions your individual tools can’t. And as I’ve talked about on this show, building analytics dashboards is a tough space because they’re often vitamins, not aspirins. And that’s what BlinkMetrics was running into. And so they decided to take a pretty bold move. If you go to their custom dashboards page today, you can see they have just three pricing plans and they are effectively one-time. They have a $5,000 custom reporting dashboard done in 30 days, done for you, with a lot of custom code and custom integrations with apps. There’s a $10,000 one if you need a few more things, and then there’s a custom one starting at $25,000 and going up from there. 

(05:39): And I’ve seen founders both inside TinySeed and out try to do the consulting-to-product path, and it is challenging. There are a lot of challenges that go along with it. If you can’t see commonalities between all of the projects, then you’re basically just a dev shop. And if you can’t charge enough to make really strong margins, you find yourself on a hamster wheel of never-ending code writing and you can’t productize it. It’s a trap that a lot of consulting firms and agencies fall into and they’re never able to get away from that instant infusion of cash when you can charge $5,000, $10,000, or $25,000 for a few weeks of work. It makes it hard to then go try to build a business on $50 a month. 

(06:24): And so Nathan and I had a lot of conversations about this. The interesting thing is he came back, a month or two after one of our conversations, and said, “Well, I’ve been generating between $10,000 and $20,000 a month in this project work and we are learning a ton.” And I thought to myself, and I realized both he and I had been talking down about it, being like, “Yeah, it’s kind of not working and you have this consulting stuff you’re doing.” But then he said, “Well, some of it is turning into recurring revenue.” So some folks are paying $500 or $1,000 a month. It’s a pretty substantial amount of MRR with most projects. So the MRR is actually starting to build. Talk about customer development. Most people don’t do customer development to this level, where you are truly building mostly custom software and then able to find the commonalities. 

(07:23): But the really interesting thing was just how I was like, “Yeah, it’s not SaaS, so the revenue isn’t worth much.” That was kind of the way I was talking about it. And then I realized it’s pretty incredible. Think about what they’ve done: within a month or two of deciding to do this, they’re bringing in between $10,000 and $20,000 a month in project revenue. But it’s cash. It’s cash that allows them to pay the bills and to keep the company going. And I just had the realization at a certain point that as entrepreneurs, we often just make things out of nothing. From nowhere, suddenly this business is a six-figure ARR company that will support both founders until they can figure out how to turn this into recurring revenue. And it’s such an incredible luxury that we are able to do that. I asked Nathan, “Ten years ago when you were working a day job, did you ever think you could just spin up a business doing $10,000-$20,000 a month effectively overnight?” I mean, they had a website, that was it. 

(08:31): They didn’t have a bunch of incoming leads or anything, and all of a sudden this business is doing this. And he said, “No, I kind of take it for granted these days.” And that’s the thing when you talk about entrepreneurs who execute and just get it done: they kind of take it for granted. And I was doing that in our conversations as well. I actually asked him, “I don’t think you have a ton of traffic, but how are you finding these new clients?” And he said in a Slack message, “Nothing secret. LinkedIn, networking groups, coffee chats. I did 104 coffee chat type calls in Q1, which yielded 24 sales calls, which landed enough deals.” So it’s just putting in the work that has led to this. And I’ll say it’s not about never giving up. I don’t mean you should never pivot. This is in fact a pivot. But the fact that they’re keeping this business alive, learning things, and seeing commonalities between these dashboards, they discovered a whole new customer type. 

(09:20): There are partners, agencies, and fractional CFOs, EOS integrators who want this type of thing, and they don’t just want a $100 or $200 a month dashboard. They want something that’s pretty complicated to set up. But Nathan is technical, he’s a developer, and so he’s able to get this going. The other thing he pointed out to me is that back in the day this would be a lot of manual, grindy work, but AI makes it way faster. He said, “The fundamental economics have changed.” The API connectors to do new integrations, AI is actually really good at building those and writing all the unit tests and smoke tests. He was telling me, “I think this could go from 30 days down to delivering in seven days. 

(10:25): And there are some I think we could get to the point where we could deliver in a day or two, in essence.” And so that’s obvious once he said it, but it hadn’t occurred to me just how valuable this model might actually be. And so you might say, “Well, can’t anyone just spin up AI and do this?” And it’s like, yeah, but these fractional CFOs and EOS integrators don’t want to do that and they don’t want to host this software. And if you just use AI without a bunch of controls, it will hallucinate, data can be wrong, code can be buggy and insecure. And effectively BlinkMetrics is taking care of that. So not only are they generating revenue and discovering new customer channels and picking up on commonalities, but they are also turning a significant number of these projects into more SaaS-based subscriptions. 

(11:11): And if someone paid $5,000 or $10,000 upfront to have custom software written, think of how sticky that is. They’re not going to cancel in three months or six months. The LTV on this is going to be high. The churn is going to be very, very small, if not net negative. And so I wanted to call out the BlinkMetrics case study for a couple reasons. Number one, being a founder and being able to just make something out of nothing is so impressive. And I think a lot of us take that for granted. If someone came to me and said, “Yeah, I’m doing $20,000 a month in consulting work,” my initial thought would be, “Oh, I’m sorry,” because I am so immersed in the SaaS space where everything’s recurring and that’s where the value is. And that’s true, but also let’s just take a moment and be grateful. 

(11:56): If we can support ourselves with our own products or whatever we’re doing, just how impressive that actually is. And how the version of us from 10 years or 20 years ago would be so impressed and so happy with what we’re building. And then secondarily, I wanted to maybe give a bit of inspiration. If you’re out there doing consulting work and trying to get into a more SaaS-based model, I think BlinkMetrics is going to make this work. They really are on that trajectory, and that wasn’t the case even three or four months ago. It changed very quickly with a lot of focused effort: 104 coffee chats, 24 sales calls, executing with AI, and just grinding through a lot of stuff that’s probably not fun at this stage. 

(12:47): But my hope is that BlinkMetrics is going to build an incredible business. My next topic is what separates Nobel Prize winners from forgotten researchers. This is a tweet that I will link up in the show notes, and this tweet effectively tells a story of Bell Labs and a man named Claude Shannon who gave a lecture in 1986 that explains why some people win Nobel Prizes and other equally smart people spend their whole lives doing forgettable work. He had spent 30 years at Bell Labs observing those who succeeded and those who didn’t. And he talked about several habits that the Nobel Prize winners had. The first one was that most scientists deliberately avoided the most important problems in their field because the odds of failure are too high. So they would pick a safe, adjacent problem, solve it cleanly, publish it and move on. But because they never took swings at hard problems, they never knocked it out of the park. 

(13:48): That’s what it takes to win a Nobel Prize. The second habit was about doors, like the doors to their offices. He noticed that the scientists at Bell Labs who kept their office doors closed got more done in the short term because they had no interruptions. But the scientists who kept their doors open got more done over their careers. The open-door scientists were interrupted constantly, but they also absorbed every new idea passing through the hallway. Ten years in, they were working on problems that the closed-door scientists did not even know existed. The third habit was inversion. One example is a scientist who Bell Labs refused to give a team of programmers. So he flipped the question and asked why machines could not write the programs themselves, and that single inversion pushed him into the frontier of computer science. 

(14:40): So it’s thinking about the same problem in a different way. The fourth habit was that knowledge and productivity compound like interest. Someone who works 10% harder than you do does not produce 10% more over a career. They produce twice as much. The gap doesn’t add. It multiplies, and it compounds silently for years before anyone notices. This last one hits me the hardest, because over my career I’ve seen founders who show up wanting that instant quick hit of success, and sometimes they get it. Sometimes you get lucky. But I don’t want to base my approaches or my advice on getting lucky. The founders I see who show up day after day, year after year, shipping and thinking in terms of years, not months, as I often say on this show, are many of the folks who have outsized outcomes. You can look at my product career in the early days, just plodding along, making nothing for several years, then making a few thousand dollars a month, then maybe $10,000 or $20,000 a month. 

(15:43): And then suddenly, after 11 years of grinding, having this massive, successful multimillion-dollar company in Drip and having that exit to where I didn’t have to work again after 2016. It seemed to come out of nowhere, but it didn’t. It was shipping software for years. It was learning marketing for years. It was shipping this podcast 52 weeks a year, running MicroConf. It was a lot of things that compounded to contribute to that success. And then even beyond that, if you look at MicroConf and TinySeed these days and the success of this podcast and the YouTube channel, all of that has taken years and years to build. So this idea that 10% harder produces 10% more: it doesn’t add, it multiplies. And obviously if you get lucky and knock one out of the park early, good for you, but that shouldn’t be your expectation going in. 

(16:45): Going back to the second habit, keeping doors open, I think of that these days as being in community with other founders. And I hesitate to say social media because social media is such fake community. I think more along the lines of actually meeting folks in person at in-person events. And not just because I run in-person events. I also think of private Slack channels where it truly is community. I’m in a few private Slack channels with other founder groups, and I think consuming content like this podcast, where there is a community of folks sending in questions and guesting on the show to give back, whether they’re being interviewed about their experience or answering listener questions, to me that is keeping your door open. 

(17:38): It allows you to absorb new ideas as they pass through the hallway, so to speak. And it’s not just this podcast. There are other podcasts that I think are good for bootstrappers and SaaS founders. And then the first habit was about not picking a safe, adjacent problem and solving it cleanly, but taking bigger swings. I think this could be looked at two ways. We could say if you’re not building a billion-dollar company, you’re being too safe, but I don’t think that applies in our space. That’s not how I think about it. I think of this as just generally staying in your comfort zone versus being willing to fail and get uncomfortable. And sometimes that means having a nice, safe business doing $10K a month and pivoting that into something that is much bigger, or at least has bigger potential, but is going to be hard and scary. 

(18:28): And that is exactly what we did with Drip: the story of the early days of plateauing at $8,000 or $10,000 a month and then pivoting into a multimillion-dollar business. That was tough. It was a lot of work and it was not glamorous, but that was the big swing that we took. I also think about it as, in your business day to day, are you working on the safe stuff? Are you staying in your comfort zone, writing the code or whatever it is that’s predictable and certain? Or are you doing the scary, risky, uncertain things: trying the new marketing approach that may never come to fruition, making cold calls and cold emails, doing the grindy thing that, if it works, has asymmetric upside and will change the course of your business and potentially your life. 

(19:16): But doing that makes you uncomfortable. It’s unlikely that the biggest risk in your business is something you can safely fix while staying in your comfort zone. And that’s what I like about this first habit. So I hope you enjoyed that walkthrough of Nobel Prize winner habits. My next topic is also a tweet. It’s from barretto@tiiny.com, but it’s T-I-I-N-Y.com. I’ll link that tweet up in the show notes. Someone had asked them, “It’s been years since you started. Most builders are launching apps like there’s no tomorrow, within 48 hours and the like. But you, years in the making. What’s your take on working on a project until it’s really successful versus launching several apps quickly?” Barretto has built Tiiny Host, which is tiiny.host, the simplest way to host and share your work online. I believe it’s bootstrapped and he’s the solo founder, and it’s doing more than a million a year. 

(20:19): And I enjoyed his response. He said, “This is one of the reasons indie hackers are not succeeding. I picked one idea, but in reality one problem space, and I dived deep into it for five-plus years. The idea didn’t instantly work out, but I learned a lot, navigated, and found product-market fit.” And then you see folks below, of course, chiming in, a thousand percent. Posted about this recently: vibe coders, focus on one problem or sector over a long time so it can compound. So obviously this depends on your goals. If you want to get a lot of things into production and potentially get lucky, then you probably want to build a bunch of things and see what sticks. But I continue to see evidence from folks who have built great things without a lot of luck and without a huge social media audience, but got in, solved a problem, and had to focus on it for a long time. It doesn’t need to be five years for you, but this continues to support that thesis. 

(21:06): And my last topic for today is around an Instagram post featuring several pro basketball players warming up on a court. Steph Curry takes two shots and misses both of them and he says, “The rim is off.” The measurements of the rim, it’s supposed to be exactly 10 feet. It’s not right. He has such confidence in his own ability and feel that he’s questioning the height of the rim. In the video they measure it and it’s off by, I don’t know, like an inch, maybe an inch and a half. 

(22:00): It’s kind of hard to tell. A very, very small amount that no one else could tell, but he is such a professional with such incredible feel that he was able to detect that with almost pure intuition. And then there are a couple other clips of folks dribbling on a court, the ball bouncing slightly different than they expect, and they say, “There’s an issue here, like under this board, it’s like a dead spot.” You see them just being really puzzled by it, and then people come out and they realize there’s a dead spot on the floor. Watching these clips on Instagram actually reminded me of when I used to run track. I ran track for nine years in high school and college and we used to run a lot of 200s in practice. In a given week, depending on the workout, you might do 10 or 15 200s, or maybe 20 or 30 in a given week, to build up speed and endurance. 

(22:49): And I could tell within about a half second how fast the 200 I just ran was. We would run as a group and I remember running a bunch of 200s with my dad timing and my brother there. We’d run one and I’d say, “28.5.” And he said, “Yeah, 28.7.” I said, “Cool.” Then we’d run another one and I’d say, “28 flat.” And he was like, “Yeah, it was 27.9.” And he said, “You really have a good feel for this.” And I remember it was just something I did so much. I wasn’t even thinking about it. It just felt that way. 

(23:31): And the idea here is that when you do something so much, you gain an expertise and an intuition, in quotes, an intuition that looks like magic to an observer. Part of it is pattern recognition, a bit of repetition, and you learn how that vibe is. How many shots do you think Steph Curry has made from the three-point line? He knows when it leaves his hand if it’s going to go in or not. He knows way before it hits the rim whether it’s going in. And so when he feels it and he’s like, “Yeah, that’s going to go in,” and it doesn’t, he’s like, “Oh, that’s weird.” He does it one more time, he’s like, “No, something’s off here.” It’s the same with any expertise. As a chef, you get the feel and taste for things. As a startup founder, you start to get the feel of where you should be focusing in your business. You start to get this feel of, “Ooh, this part’s making me uncomfortable. This is probably where I need to be focused right now.” 

(24:13): People ask, “What do the best founders you know do differently than those that fail?” And a lot of it is figuring out where they should be focusing their time and how to execute on that. And so if the biggest bottleneck in your business is marketing and sales, but that makes you uncomfortable, or you just want to post on Twitter, or you get into marketing and sales but you kind of half-ass it and you don’t really focus on anything, you don’t really do the parts you don’t want to do, you’re going to find that you’re never going to get better at those. 

(24:58): You’re never going to get this expertise that looks like magic. When you ask Derrick Reimer, “How did you decide to build that feature or not build that next feature?” it might look like magic. How do you make such good product decisions? Well, it kind of looks like magic, but Derrick’s been building products for at least 17 years, maybe more. You ask Ruben Gamez how he knows what to focus on next when he’s working on SignWell: he has a process. He looks at the business and gets a gut feel of where the bottleneck is, and then either focuses on that himself or hires someone to do it. He doesn’t half-ass it. He goes all in on it to figure it out, and he knows that if he puts effort into it, he’s just going to make it work. He has that confidence. 

(25:48): And if it doesn’t work, it’s okay, because he’ll do the next thing, and you don’t have to be right all the time. You can be right 60% of the time and be pretty well off. When you look at some of the founders who’ve come on this show who have bootstrapped to $50 million exits, $80 million, $100 million exits, literally bootstrapped with one or two co-founders, and you listen back to what they did, they generally worked on the right things. They got a lot done and they generally worked on the areas of uncertainty, and they up-leveled their skills. They didn’t say, “Well, I don’t really know how to participate in a Reddit forum or a Facebook group. I don’t really know marketing. I don’t know how to do sales. Maybe I need to read a bunch of books about it.” Maybe you do, but you also probably need to dive in and just figure it out while learning from those who have done it before you. Just having that confidence and building that repetitive muscle of doing these things often. 

(26:50): Doing new things that scare you often, and that ability and willingness to learn new things and get outside your comfort zone will build expertise in you that looks like magic. When I started Drip, I had a lot of confidence that it would succeed, and a lot of confidence it would succeed very quickly. The latter part was not true. It took us a lot longer than I thought. But I did have this confidence that I could figure it out because I’d figured out a bunch of smaller things along the way as I’d stair-stepped up. Then after Drip, I had even more confidence that whatever I did next, even if it was bigger, scarier, more stressful, with more on the line, I would be able to make it work because I had built that muscle and a bit of expertise that to an outsider might feel like magic. 

(27:42): But in addition to the 21, 22 years that I’ve been thinking about this stuff and writing about it and launching really poor ideas in the early days, I’ve been recording 833 episodes of this podcast and three or four hundred YouTube videos over the past five years, writing five books. I actually just completed the manuscript of my sixth book. And I haven’t always been right, far from it. But if you show up every day and you think in terms of years, not months, and you put in the work and work on the things, some things that scare you, doesn’t always have to be, but the areas of uncertainty in your business, I have a hard time imagining you’re not going to build some incredible expertise that looks like magic. Thanks so much for joining me for this episode. It’s great to be able to talk into a microphone and know that tens of thousands of people will listen to it, and some will be impacted and some will be inspired, and for some it will change your life. 

(28:44): This is why I keep doing this: shipping podcasts, YouTube videos and books, starting TinySeed, running MicroConf. It really is the best job I’ve ever had. So thanks for being part of that. Thanks for listening this week and every week. This is Rob Walling signing off from episode 833. 

Rob Walling (00:00): Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode, I’m going to do a lightning round of listener questions. In fact, I’m going to take as many of the written listener questions, the text questions that we receive and crank through them with probably shorter than usual answers. The challenge is we get a lot of questions here at the show and it’s great. It makes for great content. It allows you as a listener to hear other voices and to hear what folks are working on. And frankly, they may ask questions that you’ve never thought of. And that can help make us all just a little bit smarter and get there a little bit faster. But I tend to put audio and video questions to the top of the stack. Every now and again, I fudge that rule. 

(00:48): But as a result, our text questions pile up. And I have some questions here from 2024, from two years ago. So I apologize to those folks, but I kind of wanted to crank through a bunch of the backlog. There’s an awesome range of questions from reducing risk with my startup to go full-time, when to register as a business, design audits, how to calculate TAM for a step one business, how to know when to pivot, all kinds of things we’re going to get into. But before I dive into that, I’m doing a live Q&A and AMA on May 20th, and it’s only available for MicroConf Connect members. MicroConf Connect is our online community for founders just like you. Folks who are bootstrapping or mostly bootstrapping and building incredible SaaS companies. MicroConf Connect is highly curated and it is one of the higher signal-to-noise forums or online communities that you can be part of in the space. microconfconnect.com. 

(01:51): If you want to check it out. And again, I’m doing a live Q&A/AMA where you get to ask questions and hear me answer them, only for members of Connect on May 20th. Sign up before then to get access. 

(02:15): Let me dive into my first question. This one’s about reducing risk with my startup to go full-time. It’s actually a Reddit thread, and we’ll of course link that up in the show notes. A user was sharing their salary information as they went from an intern making $15 an hour in 2017 to a tech company product strategist in 2025 at 28 years old, making $440,000 a year. Now, caveat this: they probably have to live in the Bay Area or in a very expensive place in order to make that. So I’m guessing they do not live in a low cost-of-living city. And one response to this thread said, “Congrats, man. I have a question for you. I earn $400,000 via my base salary. I work at a Fortune 50 company. I have a side hustle that is the one-man army of me and freelancers, of course. 

(03:08): The salary I pull for the business is good. My thing is, how do I get over that hurdle to go all in on the business? It’s not that the salary I draw from it is bad. It’s the unknown future factor. W2 is safe. I’m well known within my space, so jumping to another company isn’t hard for me, but that fear of the company fizzling out in a few years gets me. I’ve had successful businesses that ran into scaling issues before and those fizzled out. This one I think has longevity, but no way I can scale it to where it needs to be without cutting the W2. So what do I need to just do it?” Now, I actually think this person thought that the original poster was a founder and they’re not. And so there’s a bunch of people in the thread that are like, you mistakenly asked this question and there’s no good answer to it, which is one of the reasons I wanted to address it on the show. 

(03:53): Building a business when you have a really high salary and taking the jump is very hard. This is why it’s easier to basically take this leap when you’re younger, because when you’re in your teens, 20s, even early 30s sometimes, I guess this 28-year-old is making almost half a million dollars, but you get the idea. The younger you are, usually your earning potential is lower. And the further on you get in your career, the harder it gets. So one thing to note is if you’re listening to this and you’re still early in your career, now is probably the best time to start a business if you want to do this eventually. The other thing is that these high salaries are like golden handcuffs. And the only piece of advice I can imagine for someone making $400,000 a year as a W2 employee who wants to take the leap is to save a bunch of that money. 

(04:41): If you are spending 390,000 of that and only saving 10K a year, then yeah, it’s a huge risk. But if you’re making 400K and you can stock away 200 grand a year, then in a couple years you have two full years of living expenses. You already have a business that’s doing something. You said the salary you pull for the business is good. So you should actually be able to save more than 200K. The biggest problem I’ve seen with folks making this much money is lifestyle inflation. They or they and their spouse just live it up and that’s great, unless you want to leave to start your business. That’s when it’s a problem. So having the discipline and the optionality of stocking a bunch of money away in the bank is a big way to maintain your optionality. 

(05:26): You have a business. If you get to the point where it’s not scaling and it fizzles out, you go back and get that W2 job again. You said you’re well known in the industry and it would be easy for you to switch companies. Obviously that goes down a little bit over the years. If you get 10 years into the business and you try to go back, yeah, there’s probably going to be a little bit of a challenge in getting the old job back at that rate. But it feels to me like you have to make that decision of when is it worth it. I remember I was making between $250,000 and $300,000 a year as a consultant. I was a micro-agency where I was doing a lot of the work, but I was outsourcing to freelancers and making a big cut on those folks. 

(06:08): This is the 2007-2008 timeframe. And I quit all of it when I had about just under $100,000 in product income. I was able to do that for a couple reasons. Number one, we did not let our lifestyle inflate to consume all of the business revenue that I was generating. Number two, I saved a lot of that business revenue. And as I was growing the products on the side and had the consulting business running too, I was stocking away as much of my product income as well. And so we had enough of a cushion because I am risk averse. I never bet anything that would have meant we lost the house, never did credit card debt. I was always pretty disciplined. I say I’m risk averse, but I’ve obviously taken risks in my life starting companies and angel investing and buying crypto in 2016. 

(07:01): I’ve talked about this a little bit on the show in the past, but what I did do was be pretty disciplined about it. And if you don’t want to be disciplined, then you will reduce your optionality. If you want to live it up and spend that 400K, that sounds like a lot, but you’re in the Bay Area and you kind of do have to spend it if you buy a house. This is one reason I don’t live in the Bay Area. I was born in the Bay Area and I will likely never live there again because of this. Making adjustments to your lifestyle and not consuming everything that you make is a big way to maintain your optionality. I said lightning round and then I gave a long answer to this one. I’m going to try to be a little faster when I answer these other ones. 

(07:43): Next question from February of 2024. James L. says, “Hey Rob, I can’t promote your YouTube and books anymore than I do. Love your content. Myself and my co-founders are bootstrapping a property app and wanted to know when is it a good idea to officially start the process of being identified as a business? As we are looking to first validate our idea using a landing page, I want to know what the next steps would be after we get our first five to 10 customers.” The answer is it depends. It’s kind of about risk tolerance, because if you set up an LLC it reduces your liability. But as loose guidance, you don’t need one when you have a landing page. You don’t really even need one when you have some revenue. In a perfect world you would. Personally, I would use Stripe Atlas and set up, what do they have, LLCs or C Corps. 

(08:33): If you really want an S Corp, you can talk to a lawyer, but Stripe Atlas gives you clean docs and it’s pretty inexpensive. I would consider doing that once I was convinced it had some legs. Is it making $500 or $1,000 a month? That’s a decent business. I will admit, I bet I was doing $100,000 a year before I switched away from a sole proprietorship. And a sole proprietorship, for those who don’t know in the US, just goes on something called a Schedule C on your taxes. So you don’t have a business entity. Now it meant all the liability was on me. It wasn’t an external entity that could be sued if something went sideways, but I didn’t want to deal with all the accounting and potentially payroll depending on the way you set it up. So I would say if you really want to do it clean, you do it when the first dollar comes in. 

(09:22): Very few people do that. Most people just leave it on somebody’s Schedule C and put it into maybe a separate bank account and track it. But I think you can do this a little later than you think. If you’re doing $5,000 a month, yeah, I would definitely have an entity set up by then because the business starts to convince you that it has traction. One thing to be careful of is once you set up an LLC or a Corp, you do then have some bookkeeping and accounting and additional tax filing. So there is some additional ongoing cost once you set that up, as well as annual fees to your state. It’s just a little more admin paperwork and headaches. So that’s one reason why I would prefer not to set one up until I felt like the business has legs, or you can include it under an umbrella corp. 

(10:14): I had a consulting LLC and I would throw my products under there until they were making enough revenue that I spun them out on their own. Next question is from Matt. And Matt says, “First off, I absolutely love your book, The SaaS Playbook. I’m in the early stages of founding a SaaS product to give financial advisors access to pre-built charts with the ability to build decks, create reports, and record videos over slide decks they make.” Generally it’s to help them better communicate crucial investing ideas with their clients, visually. Every chart tells a story and answers a common client question. “My question is on pricing. At first, I thought seat-based pricing made the most sense with an enterprise tier, but after reading your chapter on pricing in your book, I’m now conflicted. Users will sort of see the same thing when logging in, except the colors, logos, and disclaimers on each chart will be different. 

(11:06): But if five advisors who are all associated with the same firm log in and have the same branding on their charts, they will see the same thing. I’m trying to effectively price this service and would love your advice. For context, I’m 24 and have limited experience in the startup world. I quit my traditional Wall Street job earlier this year and now I’m working on this.” Sorry for the delay, Matt, but I do have thoughts on this. Number one, with AI, seat-based pricing is getting kind of a bad rap because people are saying agents are going to take all that over. So we’ll put that to the side for now. If you can do seat-based pricing, if people see something different, generally I would use seat-based pricing. 

(11:45): In this instance, I would think about whether there’s any type of feature I could build, such as messaging or putting the advisor’s name on the decks. Maybe have a conversation with ChatGPT or Claude and explain this exact issue and say, “What are 10 ideas for features that are commonly used to justify seat-based pricing?” And then you want to build one that is actually useful. You don’t want to just build a feature that no one’s going to use, but that is probably the number one thing I would think about. The other option is to not use seat-based pricing and instead base it on the number of decks created or reports created. Pick a different value metric. I don’t know enough about this business to help you with that exactly, but you would want to pick something where when they get more value from your product, they pay more. 

(12:37): Thanks for that question, Matt. I hope it was helpful. Next set of questions. These three come from Neil Magnuson. And I think Derrick and I answered this one before, but I’m going to weigh in again just in case we haven’t. At how much MRR should you have a design audited from a professional designer? I don’t think it’s about MRR. I think it’s if your design is causing issues or confusion, or people are telling you it’s crappy and you think it’s dragging the brand down, then I would consider having, I don’t know that I’d do an audit, just having a designer redesign the thing. I mean, maybe if it’s close they can make tweaks, but usually you just redesign it. And if you’re doing $20 a month and people are complaining, would I have a designer redesign it? These days, would I have Claude maybe redesign it or something? 

(13:27): That’s probably more of what I would do. But I don’t think there’s any MRR mark. It’s more about whether it’s causing you headaches and losing you business. Because you can do it at $10K MRR, $50K MRR, $100K MRR and get that audit or redesign done. I will caution you: I see a lot of makers and designers who build a product and then just redesign it over and over. “I’m going to redesign the landing page again. I’m going to redesign the homepage again.” Instead of actually doing marketing and doing the hard thing, they just want to keep redesigning. So be careful of that. 

Keith Shields (14:12): Thanks, Rob. We’re hearing from a lot of founders right now who are avoiding parts of their codebase because something might break. And honestly, that’s the sign that your product isn’t ready to scale yet. AI development leaves behind hidden security issues, fragile architecture, and features way more tangled than you’d expect. That’s not a knock on AI, it’s just reality. So we built the engineering intensive. In just two weeks, our senior engineers do a deep audit of your code, stress test your infrastructure, uncover vulnerabilities, and hand you a prioritized roadmap to get scale-ready. We get full clarity on your product’s health back with a money-back guarantee. So if you want to keep your AI tooling but add professional oversight from senior software experts, book your engineering intensive at designli.co/for-the-rest-of-us. That’s D-E-S-I-G-N-L-I.co/for-the-rest-of-us. 

Rob Walling (15:04): Second question from Neil. What’s the best way to calculate the total addressable market for a step one business in the Shopify app store? I don’t know of a tool that allows you to do this. It would be a guess. Frankly, I would try to look at non-step one businesses. So are there any businesses doing this thing for non-Shopify apps? If it’s a shipping or label printing service, can you look at how big they are and just take a guess? I think all of this is going to be a guess. And to be honest, do you care what the TAM is for a step one business? A step one business in the stair-step approach, what do you want it to be? $5K a month? That’s a pretty good step one business. $10K a month is awesome. I don’t know that I care about the TAM. 

(15:46): Obviously if the TAM is $1,000, that’s too small, but it feels like anything you’re going to build is going to have plenty. TAM is not going to be the limiting factor. It’s going to be total reachable market, the market you can actually get in front of. And more than that, it’s just going to be: can you rank for this term in the Shopify app store? Can you try to get to number one for the search terms? That’s a much bigger question than the total addressable market. Trying to figure out how much the existing apps that are doing it are making, or trying to guess how much it will make if you launch into a gap in the market, for that second question I would just build the thing. Use AI, crank it out, build it, see what you can rank for, see what the traffic’s like. 

(16:29): Back in the old days of SEO, maybe 2009 to 2012, I would buy exact match domain names. I’d put up a single landing page with a bunch of content that I would either create or hire someone to create, just to see where it could rank. I would frequently rank on the first page. These were for longer-tail keywords, obviously not amazing head terms, but I would just try to get an idea of what the volume actually was. For a step one business, I might consider doing the same thing today because the code doesn’t take that long with AI, and I think it’s a good learning experience. Now, please don’t quote me and say, “Rob said you no longer have to validate anything.” 

(17:15): That’s not what I’m saying. I talk about the 20/200 framework. The 20 is the very quick keyword research. I would still do that here. To try to estimate how many people in the Shopify app store are searching for something, couldn’t you look at any keyword tool? The Google Ads keyword tool, any search tool you can get anywhere, and just kind of guess: Shopify has how much of the market? That’s a question to ask Claude or ChatGPT, and then get a ballpark number of how many searches you think are there, and are there other competitors? I would do a couple hours of research before I built a step one business. I don’t know that I would do the full 20 hours of landing pages and customer conversations, though customer conversations I could actually see doing, to validate whether this solves a real pain point. 

(17:59): Going on to Reddit or other online forums and having conversations so that you do in fact get five to 10 people that are interested in this before you build it, because just because the building is simple and easy doesn’t mean you should skip validation. Now, 200 hours for a step one business, 200 hours with AI actually sounds like a bit too long. I feel like you could potentially build a step one Shopify app in less time than that. That doesn’t mean I would jump straight to building. The third and final question from Neil is, how can you know if your step one business could break free of its marketplace and be standalone? I’m not sure you can. Ways I would think about it are a couple things. If you’re going to build a Shopify app, I would look around at what other platforms are out there. 

(18:47): There’s WooCommerce, there’s Magento, there’s BigCommerce. It’s interesting. I’ve heard from a lot of people that Shopify is a dominant player and has the vast majority of the dollars being spent, and that’s probably true. But the idea I would be asking myself about is twofold. Number one, if I build an app for Shopify, can I build it for the other three or four major platforms and how far do I think that could extend my growth or my top-line cap? The other question is: if I build a Shopify app that does something, are there other custom-made shopping carts on the internet that would really want this functionality that I could somehow integrate with? 

(19:43): The problem there is integrating with truly custom-built carts is going to be custom work for each one. So unless you’re charging a lot, or there is some type of standardized way to hook into all of them, such as it hits an email inbox or sends an SMS, that part is much harder. Beyond that, I don’t think you can really know from the start. Until you get something live and get people using it and see how fast it grows and see where it plateaus, it’s going to be really hard to answer all these questions. There’s just not publicly available data on this topic. Next question is from X/Twitter from June of 2024. 

(20:28): I did a call for questions on the podcast. Igor Beneck asks, “How do you know if it’s time to pivot? If it is, how do you know how to pivot? Are there general strategies that can be applied to such situations?” Kind of. How do you know if it’s time to pivot? When what you’re doing is not working for long enough that it’s just not working, and that’s it. It’s when you’re out of ideas or out of motivation on the current product. Now, knowing what or how to pivot: you go with your founder gut, there’s market pull, there’s guesswork. I don’t think there are generalizable strategies. It’s always going to be muddy. If you have 50 customers that are not really paying or are churning and you ask them what you should do differently, they’ll tell you 47 different things. 

(21:16): And as the founder, you have to make the hard decision with incomplete information to figure out what and how to pivot. I did a talk about the big Drip pivot we did. We’ll link it up in the show notes, but you can search Google for it. The title is “I Grew This SaaS by 13% Every Month for 13 Months.” It’s the inside story of the early stages of building Drip and how we plateaued. We did not have product-market fit, churn was super high. I talked about all the feedback and input we were getting and how messy it was, and there were two or three steps I used to make that decision at the time. One was my founder gut, and another was getting advice from people I trusted and then sitting with it and just trying to decide whether we should pivot into marketing automation. 

(22:08): I have a really tough time generalizing any of that. The early stages of any product you’re building are the fuzziest by far. It’s really hard to know when and what and how to fix things unless you’re getting some type of input and you’re taking some type of leap of faith. Next question is from Michael. His question is about episode 720. That episode was titled How to Prioritize Your Focus in Both Your Startup and Personal Life. In it, Craig Hewitt and I talked about having kids and trying to build a startup when you have young kids. Michael says, “I lit up at the quote. If you have four kids under eight, that’s me.” One, three, five, and seven. And then Craig said, “You’re screwed.” It is very challenging. I’ve definitely had to learn to prioritize ruthlessly and delegate things I could do better myself. That’s the key. 

(23:03): Somehow I’m making significant progress despite all the craziness. You said it gets better as the kids get older. Does this mean I’m going to be unstoppable in a few years? The answer is: I think so. If you are able to make progress, I’m assuming you’re working nights and weekends. Whatever you’re doing with four kids, yeah, I would say you are going to have a superpower of being able to prioritize and delegate ruthlessly. And most people don’t have to learn that. Look, if I was single and 24 years old with infinity time, let’s say I do have a day job but I work 40 hours a week and then I have another 40 hours, you can stay up late and do all the things you can do when you’re young. You don’t learn how to prioritize and delegate. You have been forced to. So I would actually take that as a good sign. 

(23:57): Back to Michael’s email. Any tips for making it through this time of life and for best leveraging the additional bandwidth as it becomes available? I would say you’re pretty good at leveraging your bandwidth and you will probably know exactly what that next priority is. If you have 20 things you should be doing and you’re working on the top two, it’s the third one that gets the attention once you have the additional bandwidth. It sounds like you’re doing a really good job on this so far. Tips for making it through this time of life: enjoy it as much as you can. That’s the tip. There’s no silver bullet. You don’t have as much time as you need to grow as fast as you want. But for me, it’s about getting to the point of having enough revenue that I can quit the day job as soon as possible, because that is the biggest recapture of your time. 

(24:43): A caveat to that: if you can make a couple grand a month, two, three, or $4,000 a month, and you can step your full-time work down to 32 hours or 24 hours, you’re only working three or four days a week. This is what I did at my development job. My boss really liked me and I said, “Hey, I only want to work four days a week because I have this other thing that’s doing enough revenue that I don’t need the money anymore.” You buy out your time. That’s the whole point of the stair-step method. So my tip is: don’t bite off something huge that you have to work for years to get out there. You want to get something to revenue that can help you buy out even if it’s one or two days a week of your time. 

(25:21): And if you can buy it all out, great. That is the point where you have the maximum hours to dedicate to what you’re working on. Thanks for that question, Michael. I hope it’s helpful. And my last question of the day in this lightning round is from Nim. This one’s from 2025. Nim says, “Hi Rob, longtime listener and fan. Thanks so much for your work and your wisdom. I use Start Small, Stay Small as a reference.” For those who don’t know, that is my first book. startsmall.com if you want to pick up a copy. Nim has two questions. The first is: the common advice when starting out is to talk to 10 people who match your ICP. However, I found that unless you have a deep network in a vertical, it’s extremely difficult to talk to that many ICPs outside of conferences. 

(26:03): Number one, this is why I say build your network, not your audience. If you have an audience, you’ll probably get people to talk to you too, so either a network or an audience would work, but I think it’s easier and quicker to build a network and it’s a lot less work than building an audience. Back to Nim’s email. “While as a software developer I have the advantage that I can build whatever I want, I don’t have the experience or network from another vertical that I would have had if I’d worked in a different field, for example home inspection or senior care. For entrepreneurs entering a market cold, do you recommend flipping the book a bit and starting by building something small?” Maybe. Senior care is a great example. I interviewed the co-founder of Senior Place on this podcast. 

(26:44): They didn’t have a network in senior care and they made cold calls, and that was it. And people talked to them. So there are spaces where you can cold call. Cold email is a little harder, but you don’t necessarily need a network. You’re doing it the way a lot of people start out. When you first start out, you don’t have any network, audience, or customers. As you build products and assets, you get to be known a little bit. I don’t think most people should build an audience, but you do build a reputation and can become known, at least on the internet. Maybe it’s not in a particular vertical, but just by launching stuff you can make a name for yourself. I don’t know if that will do what you want here, because for senior care or home inspection, doing stuff on the internet is less relevant unless you’re doing it in a Facebook group. That could be interesting. 

(27:31): A Facebook group or a Reddit group, where you start without a product yet and you’re just hanging out. If you think you want to go after this vertical, you start posting and kind of become a helpful name in the group. That is one way to build a network. But the other thing I’ll say is when Jason Cohen did this to validate WP Engine, he contacted a bunch of WordPress agencies and consultants and freelancers and said, “I will pay you for an hour of your time. I want to talk to you about hosting. I have an idea.” My memory is that he got 40 yeses before he built it. I’m trying to remember if at one point he said that no one actually asked for the consulting fee, maybe, maybe not. 

(28:13): It doesn’t really matter. He was willing to pay them their typical consulting rate for that hour. And when we were building Drip and I wanted to talk to some ex-salespeople and marketing people from some competitors of ours, I similarly contacted them via LinkedIn and said, “I’d love to talk to you, I’ll pay you whatever your consulting rate is.” In that one, I only talked to about five people, but none of them charged me anything. They wanted to meet me and hear about the company we were building and potentially expand their network. So there are different ways to do this, and sometimes throwing money at it is what works, or at least being willing to throw money at it can work. And Nim’s second question is: your advice is to not throw everything at the wall and see what sticks. 

(29:03): That is, not to build 52 startups in 52 weeks like a Twitter SaaSpreneur, but instead to actually follow a method. My question: what counts as working on something? Seems to me that if you’re at the early stage where you’ve just identified a market and a pain point, it makes sense to validate three to five ideas at once if you can do so cheaply, and pick one to actually invest 100% in if you manage to get some paying users for it. Is that wrong? I don’t think that’s a bad idea. Coming back to the 20/200 framework again: for the 20, I used to have 10 ideas that I would sketch out, research, and try to get a general idea of how much demand there is. How competitive is it? 

(29:43): There are not going to be any amazing high-demand niches with no competition. That doesn’t exist anymore, but just to get a top-line idea of demand and think, “Can I play the angles?” I would do that for 10 ideas at once over a weekend. Then to build out landing pages or have conversations with potential customers, I could see doing that with multiple ideas. Sure. That’s the 20 hours, roughly. The third part where you’re doing 200, this is where you’re building these products. That’s where it gets a little tougher. Do you want to build and launch three to five products? I think I would probably be whittling down at that point. Even if you have five landing pages and you’ve tried to have conversations in five niches or with five ICPs, it feels like you’re going to have more traction on one or two of them. 

(30:37): And these days with AI, if you’re building a step one business or a pretty simple MVP, maybe it makes sense to build two of them. I could be convinced. What I don’t want to do is give you permission as a builder or maker to spend a ton of time on this step without being more certain. But I definitely understand the desire to get more validation by actually building something and getting it in people’s hands. I would almost say: let’s say you started with five landing pages and talked to a bunch of ICPs and that gets down to maybe two or three you’re kind of iffy about. What if you then tried to pre-sell them or tried to get pre-commitments on those two or three? 

(31:21): And whether they write you a check you don’t cash, or you do cash it, or there’s a Stripe link and they pay for the first three or six months, I think that’s what Jason, the co-founder of Senior Place, did when he made those cold calls. He got checks that they cashed and said, “Pay for the first three to six months and we’ll cash it. Once you have it, you’re prepaid.” Pre-payments are still not 100% validation. Nothing is 100% until customers are paying you and not churning and you have a full product. But I do find it an interesting thought experiment to whittle it down using each of these steps. Each of them is a hurdle and it’s a marketing/sales funnel. 

(32:05): And you’re trying to get signal in a super muddy, messy, cloudy time with this product. This is when you have the least confidence that you’re doing anything right. You don’t know if your ICP is right. You don’t know if your copy is correct. You don’t know if you’re selling it well. You probably aren’t. You don’t know if your pricing’s right. It probably isn’t. You don’t know if you built anything anybody wants. This is the hardest, or at least the cloudiest, part for sure. It is the least certain part where you have the most variables that aren’t working. And that’s all validation is trying to do: take a few of those and get you just a little more certainty before you go off and build a full product. So thanks to everyone who sent a question in. 

(32:51): As always, we can use more video and text questions. I think I only have five audio or video questions right now. If you send one of those in, the odds of you getting answered in the next couple episodes are pretty high. With text questions, there are still a couple dozen, but I’m going to continue to work through those. If you want to ask a question, you can email questions@startupsfortherestofus.com or even easier, go to startupsfortherestofus.com and click Ask a Question in the top nav. I recently recorded a brand new video of me asking for your listener questions, so you can go there and see that instead of the old one where I think I had a Beatles baseball hat on, no facial hair, and I think no glasses. It barely looks like me, but that was from several years ago. 

(33:33): You click Ask a Question, you can record video or audio on your phone or laptop, or you can enter a text question. As always, I love getting questions from listeners. I would never have thought to cover the range of topics we covered in today’s episode, and I really appreciate everyone who sends in their question. I’ll continue to answer them and try to answer them as quickly as possible. So thank you for listening this week and every week. This is Rob Walling signing off from episode 832. 

Rob Walling (00:00): Their feedback while valuable, it’s not anywhere close to how valuable your software can and will be for them if you solve a desperate pain point. And what you really want is you want customers, even if they’re customer zero, to be desperate to pay you for what you’re building. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I answer questions from listeners just like you. I have a great range of questions today, including whether to have my customer zero pay me or whether I should comp them, kind of in exchange for all of the work that they’re going to put in helping me figure out what to build. Whether writing ad copy to be spoken, like on a podcast, is different than writing written copy, metrics for a transaction fee-based SaaS that has no subscriptions, and more listener questions. 

(01:02): Before we dive into that, I built a course. It’s called the SaaS Launchpad, and it is by far the best course I have ever built. I spent months architecting and creating the content that was the basis of this course, and then producer Ron and I spent almost six months diving deep and flushing out all of the modules. It has almost 10 hours of video content, and it is the best course I know for early, early stage SaaS founders. It’s called Launchpad because the idea is that if you have no idea for a product you should build, it helps you look at ways to generate ideas. It helps you look at ways to validate ideas, to pre-validate them so that you don’t go into a basement and build for six months and regret your life choices. Even with AI these days, can’t I build it in six minutes? 

(01:53): Maybe, but should you build it in six minutes? Or should you spend 20 minutes doing some type of Googling to see what the competition is like? So it’s called SaaS Launchpad. It’s at saaslaunchpad.co. And if you haven’t checked it out, I highly recommend it. As I said, it’s kind of all of the wisdom and knowledge that I’ve learned over the years, both launching products and watching founders launch products. And so it has the biggest mistakes. It has a list of, I think it’s like 18 factors of what I would see in a perfect SaaS business that effectively almost no SaaS businesses actually have, but it gives you an idea of things to watch out for and a path to take if you want to bootstrap a SaaS. saaslaunchpad.co. And with that, I want to dive into my first listener question. 

(02:42): This one is actually not a question. It is a thank you email from a longtime listener who asked to remain anonymous. And they said, “I just went full-time on my business. I just wanted to write a quick thank you for your guidance, both direct and indirect, that has helped me build my SaaS to the point where I can quit my day job. Four years ago, I tweeted you asking about one-time payments versus subscription payments, where you obviously, in parens, directed me to charging an annual subscription versus charging one time. Ironically, I emailed DHH around that time and he told me the exact opposite. I’m glad I listened to you.” That’s the point the business really started to grow and compound. While I did get rejected from TinySeed when our revenue was smaller, we also chatted last year about going full-time and how best to get there beyond just raising cash. 

(03:34): The reason I’m reaching out to say thanks now is two weeks ago, I quit my job and started working full-time on my product. Six years to overnight success. $35K MRR and growing four to 6% a month. Wouldn’t be here without your recommendations, both in person and via books and the podcast. So thank you. Keep up the good work. I love emails like this. I read them on here because they bring me so much joy and they’re honestly the reason that I keep doing this. I could sail off into the sunset and sit on a beach in the Caribbean, but it’s so fun to have an impact on people’s lives. It really juices me up. What I like about this email too is there’s a PS at the end. Open source freemium funnel numbers are brutal. Low annual contract values and low conversion rates. 

(04:24): Probably should have taken your advice and started a different business, LOL, but thankfully I’m making it work. So it just goes to show you can make it work, but this is the whole, I’m going to go against the advice, and then once I get there, I’m going to be like, “Oh yeah, I should have listened to the advice.” But either way, this longtime listener and their six years to overnight success is something that we can all celebrate. And with that, let’s dive into my first listener question. 

Luke (04:55): Hey, Rob. My name’s Luke. I’m a super big fan of the podcast and listening to it has really helped me begin my journey in entrepreneurship. I am starting a SaaS company that is an ed tech product aimed at secondary schools. And the nature of such a product is that I think it really needs a trial on a secondary school before I start delving into sales, marketing, et cetera. Should I have the trial school pay for this product or should I give it to them as a service for free as they’re participating in a trial? I know from what you’ve said on the podcast, I’m likely to get better and more real feedback if they’re paying, but I do feel as though there’s a chance that issues arise in terms of what the product is providing when tested on a live school environment. Thank you. 

Rob Walling (05:46): Yeah, so Luke, you mentioned that I have commented on this in the past, and my default is always to charge something. Even if you give them a significant discount, you want them to have some skin in the game and you want to know that this is something that they are willing to pay for. I knew an entrepreneur who built a launch list in a small niche of like 10 or 20 emails and he was in touch with them. And when it came time to kind of launch into what he called beta, I said, “You should call it early access.” But when it came time for him to do that, he comped all of them, I think for life. And I was like, “No, those are your…” Let’s just say of those 20, you could have gotten 10 to become customers. I don’t remember what he was charging, but even if you were charging $250 a month, so $3,000 a year, if you could have gotten half that, that’s still $15,000 a year. That would have been a great little kickstart. 

(06:40): $1,000, a little more than that of MRR for an early stage bootstrap SaaS is a big deal. So I would have a really, really tough time not charging something for this. Now, if you have an idea of what your pricing is going to be ultimately, whether you see competition out there that you are not competing with per se but basing your pricing on, or if you have some idea and you’re like, “It’s going to be $5,000 a year or $20,000 a year,” whatever it is, even if you give them 50% off, 60% off, getting someone to pull out a credit card is really quite a bit of validation that they actually want that. I think it’s a trap to comp them. How much buy-in are they going to have when they’re not paying? How much confidence do you have that anyone will pay for this? But also, their feedback while valuable, it’s not anywhere close to how valuable your software can and will be for them if you solve a desperate pain point. 

(07:39): And what you really want is you want customers, even if they’re customer zero, to be desperate to pay you for what you’re building. Now with that in mind, of course, there’s going to be issues during development. And it’s kind of like, well, if they’re not paying anything, then I can say, “Oh, sorry about that bug. Remember, it’s free.” Or, “It’s taking a while, but remember you’re not paying for it.” Don’t do that. I think you own up and be very clear early on that, hey, this software is early access. There might be bugs. We’re doing the best we can, but there might be issues. It might take us a week to build a feature. We can’t necessarily build every feature you want, et cetera, and couch it upfront instead of hiding behind this shield of free. 

(08:21): Therefore, they can have low expectations. I’d say set their expectations realistically, but then ask them to pay. So thanks for that question, Luke. I hope it was helpful. My next question is about written marketing content versus spoken marketing content. 

Dave (08:42): Hey, Rob. I’ve got a marketing question for you. I’m considering sponsoring a season of a podcast that is listened to by my exact ICP. The way the math works out, if I only get a single sale at the price of sponsoring the season, it’ll end up being a 15% ROI on my investment, and I feel very confident I can get at least one sale out of it, but of course I want to have multiple sales. My question is, do you have any advice about writing copy or marketing materials for something that’s going to be read out loud as opposed to read on a website? Also, knowing that I have a very specific audience for this, is there anything I should be doing or advertising that takes advantage of the fact that it’s not a generalist audience that’s listening, but rather people who I really believe could be champions for purchasing my product? 

(09:45): Any help would be really appreciated. Thanks for entertaining my question. 

Rob Walling (09:50): So this is a great question. The answer is yes, it’s different. It’s very different. I mean, the one thing I learned early on, I remember the first time I read something that I wrote, is that the word “probably” is hard to say. Probably, probably. You just stumble over it and now I almost always write “likely” because they’re basically synonyms and I’ve just gotten in the habit of writing “likely” instead of “probably.” That’s just one tiny thing I’ve learned writing copy that is going to be read aloud and not written. On this podcast and the YouTube channel, I believe we have 40 or 50 different sponsor ads, maybe more than that, that we have coordinated with sponsors on and either written the copy or certainly worked with them to refine and hone it. And so the expert on that topic is actually our very own producer, Ron. 

(10:41): The Startups for the Rest of Us written ad copy remote correspondent. Over to you, Ron. 

Ron (10:46): Thanks, Rob. So first off, I think it’s worth calling out that podcast ads are voice, right? They’re not going to be read silently. They’re being spoken out loud. So whatever you write needs to flow off the tongue naturally. So after you’ve written your script, read it out loud to another human, or at least record it on your phone and play it back. You’ll find where there’s natural stumbles and words that don’t flow nicely. If you’re using Claude or some other AI to help write the script, then actually even in the prompt, say, “This is going to be spoken out loud by a host.” And that generally helps with the outputs. With written ads, we get to rely on things like headings and bullet points and visual formatting, and you don’t actually get that in a podcast ad. So I think it’s important that things flow and that it makes sense as you’re listening through. 

(11:34): You’re kind of building towards that CTA at the end of the script. I think leaning on a scenario or a story works better than just listing features. For example, something like, “You know that moment when you’re struggling to juggle three clients and you realize you forgot to send an invoice,” you’re trying to put the listener in those shoes so they think, “Yeah, that’s me.” You want them to raise their hand and recognize themselves in the ad. Just like written content, if there’s a testimonial you can wrap into the ad, that can work really well too. Imagine something like, “Derrick at SavvyCal said conversions went up 18% when they started using our plugin.” I think this is extra powerful when the testimonial is coming from somebody that the audience would recognize within their industry. I like to keep it to just one simple, easy-to-remember call to action. 

(12:18): A lot of people are walking or driving or doing something else while they’re listening to a podcast, so help them out. Use a vanity URL. Same goes for promo codes. Keep them short and simple. Depending on your web address, it might actually make sense to have your host read out the URL, especially if you’re not using standard spelling. So if your product is called Sendly but your domain is SNDLY.com, you probably want to spell that out for people, otherwise they’re just going to type in whatever they heard and end up somewhere else. I think it’s worth offering something special to folks who are coming from a podcast ad. So don’t just send them to your website and say, “Go to CRM.com and learn more.” Give them some reason to act. So maybe that’s an extra month free or $1,000 off their first contract, or whatever makes sense for your business. 

(13:07): And it doesn’t always have to be a discount either. You could do a bonus offer like a free onboarding call or access to a special resource that you put together for the audience. That incentive gives the listener a reason to actually use your link and it also helps you track whether the ad is actually working. Since you mentioned that you’re sponsoring a whole season of the podcast, you have some extra options. You might consider mixing up your message from episode to episode. So if you have a six or eight episode series, maybe you have two or three different messages that you can test out over the course of the season. Since you’re committing to a full season, I’d recommend building out a dedicated landing page just for that podcast audience. On that landing page, you can give a little hat tip to the show, something like, “For Startups for the Rest of Us listeners, we’re offering an extended free trial plus priority onboarding,” or whatever it is. 

(13:57): It makes the audience feel like they’re getting something special and it reinforces the connection between your brand and the podcast that they already trust. I’d also ask the podcast producer or host if they’ve seen any good results from anything in particular. They know their audience better than you do and they’ve probably seen what’s worked for other advertisers. Maybe it’s a certain type of offer that converts better, or maybe their audience responds well to a particular style of ad read. At the very least, you can ask them if they would recommend tweaking the script at all. There might be something that the host would never say, but they’re willing to do it if you put it in the script, but they would tweak it slightly and then it’ll just sound more natural as they’re reading it. I think the last thing is that it’s worth matching the energy and tone of your ad to the podcast itself. 

(14:43): Some shows are going to be more buttoned up for a professional audience and while you might get away being a bit more casual with other industries. All right. I hope that helps. Best of luck with the sponsorship, and now back to Rob. 

Rob Walling (14:57): Thanks for that, Ron. I really appreciate you weighing in, and thanks for sending that question in, Dave. I hope it was helpful. My next question is about metrics for a transaction fee-based software company. 

Sean (15:14): Hey, Rob. I’m Sean, the co-founder of a B2B SaaS platform for outdoor rental and experience operators, things like bikes, skis, kayaks, and tours. We charge a percentage-based booking fee instead of a monthly subscription. The upside is our average account generates roughly five to 10 times what operators in the space would be willing to pay for a flat subscription. We have zero churn and steady account growth, but the trade-off is the seasonality. Comparing month to month and calling it MRR doesn’t really work because it’s not recurring on a monthly basis. It’s recurring annually. So our main pulse check has been month-to-date revenue versus the same period last year normalized to our active accounts. Net negative churn has been built in: as our shops grow, our revenue grows. What other metrics should we be watching for a transaction fee model? And as a follow-on, do you think MicroConf would still be valuable for someone not running a traditional subscription SaaS? 

(16:07): Thanks. 

Rob Walling (16:08): Yeah, it’s a good question, Sean. Thanks for sending it in. I guess first of all, I don’t consider you SaaS because SaaS to me is subscription software. If you refer back to, gosh, what was it, four episodes ago where someone asked, are they SaaS? And I said, SaaS is subscription software where the majority of the value comes from the software itself. And since this isn’t a subscription and it’s just usage-based, I wouldn’t call it SaaS. That’s kind of a nitpick and I don’t know how much it matters, but I did want to clarify that upfront. Not only do you have this monthly revenue that isn’t recurring, right? It’s not an agreement where it happens every month, it’s usage-based, but you also have seasonality, which makes it even harder. Before the seasonality, I had a whole diatribe I was going to give on this. 

(16:54): And then when you said, “Oh, it’s seasonal,” it’s like, yeah, you kind of have to look at the prior year. So of course, month-to-date revenue numbers versus the same period last year, I think is a great way to go. Is it truly seasonal, or is each individual month different? Meaning, is June, July, August all approximately equivalent, or does June map to June, July to July, August to August? That’s one thing that gets me thinking about this: are there shoulder seasons, like spring and fall, where revenue is half or a quarter of the peak summer season, but June, July, August should effectively be almost approximately the same. I would give some thinking on that, but if truly it is really individual months, then yeah, you just have to look at the growth from the last year. 

(17:51): I don’t know what else you would look at. The other thing I’d be thinking about is the customers that you have who are paying you. You can look at churn. It’s not churn in a traditional sense, but it’s churn as in: which customers paid us last June that are not paying us this June? That shows they churned because they’re not using you anymore. I would be thinking about how to set up customer success to reach out to them and nurture them if in fact they have not returned. I would also be looking at your top five, 10, or 50 customers in terms of the revenue they generate for you, such that the aggregate is great, but then knowing your individual customers is important too. 

(18:40): The other thing I’d be thinking about is that a lot of businesses started as transaction fee only, and they do eventually move to subscription plus transaction fee. And when you pay that subscription, the transaction fee goes down. So if you pay a couple hundred dollars a month, then instead of paying 8% of GMV, you only pay 6% or 5%. We saw Shopify do this in the early days. We’ve seen Gumroad do it. I’ve seen many companies think they’re going to make it with GMV only and they eventually do move to subscription. Of course, you’ve heard me talk on this show about how when you go to exit, subscription revenue will be valued at a higher multiple than just transactional GMV processing. I’ll add two other things. I do hear you on the fact that you can charge more on a percentage basis than you could as a flat subscription. 

(19:36): And so there’s a challenge there, but I feel like if you were charging an annual subscription, not a monthly one, and it gave them a discount or other perks, they get some special stuff plus the processing fee goes down, is that worth pitching? And lastly, you asked about MicroConf and whether that would be worth it. And I think absolutely. I mean, we have one-time download software folks, especially in Europe, who attend MicroConf. We have WordPress plugins, Shopify plugins, all types of businesses. And so while MicroConf, of course, is focused on bootstrapped and mostly bootstrapped SaaS, I’m guessing the challenges that you face are 80%, 90% the same as someone with a recurring revenue model. So I think you’d get a lot out of it and meet some great people to boot. My next question is about selling into low-awareness markets. 

Mark (20:38): Hi, Rob. It’s Mark here from Australia. My co-founder who is technical and I, as a domain expert, launched our B2B SaaS about 18 months ago. It’s a lightweight risk management platform that replaces spreadsheets and manual reporting and uses AI to guide non-experts through risk identification, treatment, and reporting. We’ve been deliberately learning the sales and marketing fundamentals. So thank you so much for The SaaS Playbook. We’ve read Traction as well, and we’ve been running through a mix of content and SEO, LinkedIn outbound, some paid ads. We’re looking at some conferences and sponsorships later this year. We’re seeing some engagement, but we’re struggling to turn that into consistent meetings. Specifically, what I’m noticing is that the market is generally low in awareness of risk. They have limited internal capability and the people who are responsible for risk are typically wearing multiple hats, and risk might not be their core capability. 

(21:41): That was really a key part of why we built the product in the first place, but now it seems to be turning into a sales hurdle. So I guess my question is, if you’ve seen this kind of situation before, do we just stay focused and continue executing consistently in terms of those traction methods I mentioned, or are there other things that could work and help us get more traction at this early stage? Thank you so much. I really appreciate the show and everything you do for the community. Cheers. 

Rob Walling (22:11): Thanks for the question, Mark. Yeah, I mean, this is a tough one. This is where you are fighting an uphill battle. I talked a lot in Start Small, Stay Small, my first book, which I wrote in 2010, and I talked a lot about how as a bootstrapper, you really want to find demand. I wasn’t familiar at the time with the five stages of customer awareness, but in my experience at that time, having some successes and a bunch of failures, the successes had online demand. They had some type of search volume. Even if I wasn’t going to win the search volume challenge, it showed that there was demand somewhere. And if there’s demand somewhere, you can usually get in front of it by being on Reddit, by placing ads, by gasp, maybe building an audience, probably don’t want to do that, but maybe you do, by SEO, of course, cold outbound, all the 20 B2B SaaS marketing approaches. 

(23:09): I don’t need to go through them all here, but when there is that actual demand and the awareness that they have a problem and that there’s a solution, that’s the best place to be in. And of course, not all markets have that. And there are founders, mostly bootstrapped, who are making it work where folks don’t have the awareness that there is a solution, but usually they know they have a problem. And it sounds like in your case they’re not even problem aware, because they’re like, “I don’t really know what risk management is.” I can’t tell you to shut a business down or to pivot, but aside from becoming a media company, starting a podcast or YouTube channel to educate people, writing a lot of articles, or publishing a book, you’re essentially educating them that they have a problem. Because even a cold email is, “Hey, do you know you have a problem?” That’s going to be a brutal uphill battle. I have a tough time imagining enjoying building mostly bootstrapped SaaS if that were the case. 

(23:53): So while I can’t tell you to pivot or bail on the idea, I know of very, very few examples of bootstrappers who have been successful when folks don’t even know they have the problem that needs to be solved. At least if they’re aware of the problem, it’s still an uphill battle, but you mention it and then they’re like, “Oh yeah, I do have that problem. Oh, I didn’t know there was a solution.” And then you can kind of present that to them. But in the case you’re in, it really does sound like a tough situation. 

(24:46): And I’d be thinking about, are there any adjacent markets that are aware they have the problem, so that you don’t have to completely bail on everything that you’ve built? I mean, with AI these days, we can all build every app in what, 20 minutes? Obviously I’m being facetious, but realistically, if you have subject matter expertise in this space, I find that it can be a bit of a trap to say, “Well, there’s a bunch of products in this space for the advanced users, but there’s a lot of less advanced users who don’t use those because they’re too expensive or they need a simpler version of it.” I’ve heard this before. The challenge is that those folks usually don’t have a budget, or they aren’t actually that interested in solving this problem, or they don’t really know how to solve the problem, or the tool has to completely solve their problem in a way that is almost impossible for software to do. 

(25:46): So I say that to let everyone know who’s listening: just be careful with that assumption. There is likely a reason that the simpler version doesn’t exist today. You could totally give it a try. I’d love it if you’d prove me wrong, but I think it can be an easy trap to think of building for folks who don’t have the budget or the real interest. And this is kind of a side project for them, right? I don’t mean a hobby, I don’t mean on nights and weekends, but if their main focus of their job is X and then 5 or 10% of their job is Y and you’re like, “I’m going to build for the people where 5% of their job is Y and I’m going to solve that Y problem,” you’ve got to be really sure that they’re going to be motivated to care enough to invest any time or money into that solution. 

(26:46): So thanks for the question, Mark. Hope that was helpful. And our last question for today has two topics: one is about freelancers, about finding them and general thoughts on them, as well as the music for this podcast. Let’s roll into this question. 

Bernard (27:09): Hey, Rob, this is Bernard. I love the show, and as a small off-topic start, one thing that I also really like about your show that I don’t think many people mention is your intro music. You have multiple songs and I noted down that my favorite song is in episode 810, for instance. So please bring that song back more often. It’s a really good song, and maybe also talk about where you got the song from, who made it, give them a shout out. So my question is about freelancers. I would just generally like to hear your thoughts about freelancers, how you think about the topic when it comes to bootstrap founders. Some things I’m specifically interested in: first of all, pricing. How do you know what is a good price for something that you have maybe never ordered before? 

(27:55): Should it be hourly, result-based, or maybe a retainer, and just what is a good amount? Then also discovery: where do you find freelancers? Obviously Fiverr and Upwork are some options, but what else do you use? And then more generally, I would just like to hear your thoughts on the topic. Maybe you have some strong opinions that come up when you think about the topic. Yeah, that’s all. Thanks. 

Rob Walling (28:17): So I’m going to start with the music. And that particular song in episode 810, I’m going to drop just a little sample of that here to remind you. So thanks for noticing that. Folks have actually commented that the podcast kind of had a soft reboot in 2018 when I went from having a co-host to going solo. And at that point, I wanted to introduce some higher production elements. And I talked to my editor, Josh, who we’ve worked together for, it’s got to be more than 10 years, probably like 12 years now. And Josh has edited five or 600 episodes of this podcast. You think, dear listener, you think you’ve heard my voice for hours and hours. Imagine having to edit this podcast at 1X and hearing all my foibles and cutting all of the times that I misspeak. But all that said, I tasked Josh with just finding some royalty-free tracks. 

(29:32): And one of the tracks Josh brought, he actually wrote. And this track, Zellewave, he wrote back in 2013. And so I asked him to give me a little background on it. Josh himself is a musician and an engineer and a music producer. So he told me that in the early 2000s, many indie developers were creating their own mobile games. Me being just a few years graduated from college, I’d be checking job boards to see if there was any audio-related work out there. I found that many of these developers were looking for sound effects and music for their games, often looking for 8-bit or chiptune-style tracks. That’s an electronic style inspired by the sound chips of vintage computers and game consoles. When people say “vintage,” it makes me feel old, Josh, because that was me growing up. 

(30:24): I eventually got my hands on a chiptune synth plugin and Zellewave was the first track I created with it, really as an attempt to just get familiar with the plugin. From there, I went on to compose music and sound effects for several mobile games during that time. However, Zellewave itself was never used, as most projects required simpler, loopable, game-level music that fit nicely in the background. Fast forward to when we were overhauling the production level of the podcast and adding more music. In addition to the royalty-free music service you had, you asked me if I had any instrumentals and I threw Zellewave in the batch of tracks for you to review, and it made the cut. And it now lives on in the podcast as part of our music rotation. Not sure if your listener is interested in listening to the full version or not, but it did manage to find my old portfolio work SoundCloud account I created back then to host these compositions. 

(31:15): And of course, we will link that up in the show notes. In addition, at the end of this episode, after I sign off, I’m going to ask Josh to put the entire track because it’s less than two minutes long. Just append it to this episode. I had never heard the entire track. I’ve just heard the intro part, and it’s a cool groove. Yeah, it’s a jam. So thanks for asking that question, and thanks Josh for giving us all the background and for composing some awesome music for the show. Now on to the second question. This is about freelancers. So there were many questions in the voicemail: what is a good price, should it be hourly or results-based, should it be a retainer, what is a good amount, how do you find them? There’s a lot of questions here and we could probably spend a whole episode on it. 

(32:00): It just would be kind of boring, I think. So let me give you the 80/10 of what I’d be thinking about. Upwork is really where we go to hire freelancers. That’s where I’ve gone for a long time. I don’t know of some magical other place. I know that a lot of people go to Fiverr. I’ve used Fiverr a little bit, but really Upwork just tends to have a really good selection. You could also check out dynamitejobs.com. Dan and I have a good crew of contractors over there as well. For me, freelancers are to fill either a temporary gap or what I call a black box role. And what I mean by that is if I could put a black box on the desk and you could feed it some kind of input and you know the output you want, it’s a great role for a freelancer, especially if you don’t have that on an ongoing basis or don’t have a full-time amount of that. 

(32:55): So give you an example: Josh. Josh is a freelancer. He’s a contractor. Now we’ve worked together for ages. I mean, Josh may in fact be the person I’ve worked with the longest out of everyone. He basically takes in an audio input, my maniacal ravings, and he tightens it up. He cuts out all the misspeaks. He queues it and the end result, that output, is a black box result that we know we want. And just to give you an example, Josh and I have never met. Josh and I have never even done a phone call before. We always communicate in writing. It’s kind of a trip to think about that, right? Video editing is a great example for this. Copywriting can be this too. 

(33:43): I happen to know Leanna Patch, who writes a ton of copy for TinySeed and MicroConf and has done the copy for my Kickstarters. I happen to know her in person, but I have worked with copywriters in the past that I just find. And the end result I want is good copy. If I can feed in the information about our brand and, “Hey, this is the book or the whatever that I want you to promote,” and they write good copy, I don’t need 40 hours a week of copy, 52 weeks a year. I really just need an output, a result that we can take and move on. Design is another amazing use of freelancers. Whether it’s visual design for a slide deck or for a PDF or for your website or for your app or for your logo, most companies of our size don’t need a full-time designer. 

(34:29): And the good news about design is when you see the result, if you like it, that’s it. It’s done. There’s no legacy. There’s no technical debt with it. And the reason I bring up technical debt is the moment I start thinking about software developers building my core product, I start getting a little uneasy with freelancers. Now, if you don’t have the money, you don’t have the budget, you have the constraints, you might need to use freelancers. But if I were building a SaaS today, I would try to avoid it. I would want a full-time person dedicated to it, whether that’s me or whether that is someone I hire. There’s a certain amount of ownership of the codebase, and technical debt will screw you. I mean, you hear me talk about this on the podcast all the time. Getting three or four freelancers to come in and build three or four designs for me, or write the copy, or edit a bunch of audio, or design a T-shirt. 

(35:24): You can think of all these examples. If the results are good, it’s done. There’s no huge negative. But if I get three or four different developers, especially freelancers, to just pop in and build a little feature here and there and build this part of the app, and then we’re just going to tie it all together, that is a recipe for disaster. It’d be like hiring three or four different companies to pour the foundation of your building and then trying to, all right, you build this floor and you build the second floor with a different contractor, and you build the third and fourth floor, and expecting that building to have any type of structural integrity or to look halfway decent. So those are kind of the two buckets that I think about, right? These things that are easier to outsource where the results come back, but there can be some technical debt tied to it. 

(36:09): In addition, the big question is: what is your core competency as a company? What really are you selling? What do you want to do better than the competition and what are you selling to your customers? If you’re a SaaS app, your product is such a core part of what you’re offering. And so anyone building that product, I don’t particularly want a freelancer who’s flitting in and out of my life to come and build that. Now, there are elements to this, right? What if I want an operations manager who’s just going to do a bunch of admin work, or an executive assistant, whatever term you use? Could they be a freelancer? Could I do 10 hours a week with someone and either pay them hourly or just pay them a monthly retainer? 

(36:52): I think you could. In fact, I have done this. We have worked with folks where we have a 10-hour-a-week retainer and ongoing work, and as long as the results on a week-to-week basis take a lot of work off my plate and there’s no kind of legacy sitting around, I don’t think this is the worst idea. The question of hourly versus results-based versus retainer: it really depends. Retainer is if you need ongoing work, that’s it. If you need someone to write copy every month, if you need design work every month, we’re in a position where we actually do need a lot of web design work. Not a 40-hour-a-week web design work, but five to 10 hours a week. We’re launching enough stuff and tweaking it. And so we have had a web designer on retainer for a while. 

(37:39): We have a copywriter on retainer. And of course, the downside of not having someone on a retainer is you don’t have their availability and you may have to find new freelancers to do work that you need. So there’s a lot of questions. Pricing is so hard to say because if they’re in the Philippines versus the US, the pricing can be five to 10 times different. And of course, pricing is all over the place: what is a copywriter versus a designer versus an executive assistant versus an editor versus a producer? The pricing is just all over the place. The way that I know pricing is typically by looking at Upwork or Fiverr or asking ChatGPT or asking in my network. I would go into the TinySeed Slack and say, “I’m looking for this role. I’m thinking $40 an hour, $50 an hour. 

(38:24): Does this sound reasonable? What are people paying for this?” So it’s a market system, and sometimes you can be clever and pay under market with someone early who is more junior. Usually that means they’re not going to be as experienced and it’s going to be a lot more work on your part. And so you can be clever and be cheap. I used to do that when I didn’t have much money, but you want to break that habit at a certain point. I really these days do believe in getting what you pay for. And when we go in to post a job, I will not take the low-end bids on Upwork at all because I don’t think the quality’s going to be there. So if we post a job and we get bids in the $30s and $40s and also a bunch in the $10 to $15 range, I won’t even look at the $10 to $15. 

(39:11): And it’s not that we have infinite money or that I’m immune to cost. I’m really quite frugal, actually, but I just don’t want the headache of the $15-an-hour freelancer. But I like this question. Overall, I think freelancers are a boon for bootstrappers. I mean, I remember when I was first starting out, we were talking 2003 to 2005 and 2006, and there was no Upwork. It was really hard to find freelancers. I remember going to Craigslist and posting job ads and trying to get people. Remote work wasn’t a thing. It was a hassle and it was expensive. Anyone you hired usually was in your local city, and going overseas, even trying to pay someone in Canada or the Philippines, was really hard. 

(40:01): Therefore, it was really expensive to do all this stuff. So I see a lot of value in freelancers, especially as bootstrappers where we don’t have the budget to hire people 40 hours a week and we don’t have the work to give someone 40 hours a week of a given task. Oh, and that reminds me. The big trap I see some other people falling into is: cool, I’m going to be all freelancers because I don’t want any employees, or I’m going to have five or 10 different freelancers all doing different things. And it’s like, now you’re a project manager and you’re a traffic cop and your entire job is keeping people on task, reviewing work, herding cats, managing all these people who don’t really have loyalty or ownership. They don’t have loyalty to you and they don’t have ownership of what they’re building because they are just going to move on to their next thing. 

(40:41): That is a nightmare. So don’t overdo it. You do want core team members. This idea of not having any core team members is a mistake I’ve made and it’s a mistake I see some other entrepreneurs make. And once you make it a few times, you realize, oh no, I’m going to hire core for the things that I want to be really exceptional at and that we want to own, and then I’m going to have these ancillary resources for the other stuff. And they have the freedom to build an awesome life for themselves and they can provide great results, much like our editor Josh has been doing for the past 12 or 13 years. So I hope you’ll join me in celebrating all of Josh’s contributions to this podcast, because it would not be what it is today without him showing up consistently week after week. 

(41:26): I talk about shipping 52 episodes a year since 2010. That doesn’t happen on its own and it doesn’t happen without an extremely reliable editor like Josh. So thanks for all the amazing listener questions today. If you have a question for the show that you’d like to hear me or me and a guest answer, head to startupsfortherestofus.com and click “ask a question” in the top nav. I actually recorded a new video for VideoAsk because the old one was recorded with a backwards baseball hat on. I was unshowered. I didn’t really think we were going to keep VideoAsk around, and that was seven years ago. So we recorded a new one just a few days ago. You can check that out at startupsfortherestofus.com. And as a reminder, we are going to put the full Zellewave track after I sign off here in just a minute. 

(42:14): Thanks for listening to me this week and every week. This is Rob Walling signing off from episode 831. 

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Rob Walling (00:57): ysecurity.io/startups. That’s the letter Y, security.io/startups. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode, Derrick Reimer and I talk about breaking through plateaus, Zero-Click marketing, attribution, being an AI doomer, and more takeaways from MicroConf 2026 that happened just a week and a half ago in Portland, Oregon. If you listen to this episode and you’re feeling FOMO because you missed it, you’re going to want to join us here in just a few months in September of 2026 at MicroConf Europe in Iceland. Going to have, I don’t know, 175 of your favorite bootstrapped and mostly bootstrapped founder friends, along with Derrick and I. microconfeurope.com. Check out the dates, September 21st through the 23rd and to buy your ticket. And with that, let’s dive into our conversation. Derrick Reimer, back for another MicroConf recap episode. 

Rob Walling (02:11): Thanks for joining me today. 

Derrick Reimer (02:13): Yeah, glad to be here. 

Rob Walling (02:14): It’s exciting. So we just got back, as you can tell from my voice, we just got back from MicroConf US in sunny and only partially rainy Portland, Oregon here in 2026. We had about 235 attendees from 12 countries and a really good turnout once again of folks with real businesses. I said from stage when I opened up, this room is different than any other startup room you’ve been in for a few reasons. One is that I think we do value freedom and purpose and relationships more than a lot of other startup conferences, but we also have a lot of folks who are really getting it done. And there was almost 25% of attendees doing seven figures, had at least $100K of MRR and that still blows me away. Look, pre-COVID, that wasn’t the case. And somehow after COVID, I think people that are really serious show up. 

Rob Walling (03:11): Now on the same token, I think it was 15%-ish had no revenue, 15 to 20. So it’s like still a chunk. So you get this wide swath of conversations from folks, again, with no revenue up to, I mean, there were several eight-figure founders that I spoke with. So as someone who’s come to 14 of these or whatever it is, you can’t even keep track anymore. What was your take this year coming into the event and meeting the attendees? 

Derrick Reimer (03:37): Yeah, I think it’s sort of been this compounding thing over the years where it feels like the caliber just keeps increasing. A lot of people having kind of deep conversations about gnarly problems in their business that happen at a later stage. I remember the earlier days of MicroConf, it was a lot of us just getting started. We were talking about how do you get from just writing code to actually marketing? And it was more early stage type conversations. And it always impresses me how now I can walk into the room and feel a little bit intimidated, even though I’ve been doing this stuff for a long time, in a good way. I’m saying it kind of pulls you up as opposed to the opposite direction, I guess. So I was impressed by all the conversations that I got to participate in. 

Rob Walling (04:22): It’s a mix each year in terms of first time and returning attendees, is probably the better way to say it. There were, I think it was around fifty-fifty, if I were to guess. We have that number. I didn’t look, but it is a nice mix. Getting new blood in there is interesting. There’s a lot of old timers. There were different waves of MicroConf. The first three or four years had a very similar attendee base. And then there was a shift to a second generation almost because in entrepreneurship, it seems, at least in SaaS, every three or four years there’s kind of a new generation coming up. And it definitely feels like that has been the case over the past few years, especially, I know I keep bringing up COVID, but it was such a watershed moment for events. 

Rob Walling (05:07): So many events went out of business. We didn’t do the US event for two years. And coming back, it was half the size. I mean, we had like 140 people the year after COVID. So it really has kind of built itself back. I won’t say from nothing, but from almost nothing. And so it’s got its own unique feel each year. And I will say this year, I came in the room and I just felt a lot of positivity. A lot of founders trying to help other founders was the thing that kept coming to me. And that’s been the gestalt of MicroConf forever, but I just really did feel it. I mean, when I got up on stage for the very first time, there’s always a little bit of nerves of like, “Well, here we are in a room. How’s the room going to feel?” And I was like, “This just feels good.” The welcome reception, a lot of positivity. 

Rob Walling (05:50): And that was something I kept hearing from first timers was like, “I can’t believe how helpful everyone is. I can’t believe how nice everyone is. I can’t believe so and so who I’ve idolized on Twitter for years. I just met them and they gave me great advice. I didn’t think that would happen.” And it’s like, well, in my head, I’m like, “Well, what do you think we do here?” That’s such a good description of MicroConf. But at the same time, if you’ve never actually been there and felt that, especially if you’ve been to other events, it can be pretty shocking. 

Derrick Reimer (06:15): Yeah. I think something you mentioned too, you talked about how you guys are experimenting with having some tickets for people who are there to provide services, right? But there still is this sort of special code of conduct, I guess, that everyone sort of agrees to around not pitching because I think that’s something that can happen a lot at a startupy type event where everyone’s kind of there to either sell their product or do networking in the more slimy kind of LinkedIn way. And I think there’s just this DNA in the MicroConf crowd that even if someone who comes in with those motives starts out that way, you’re not going to get very far trying to approach the room in that fashion. And I think it feels nice because of that. 

Rob Walling (07:01): Yeah, there’s that cultural momentum. 

Derrick Reimer (07:03): Where… 

Rob Walling (07:03): Everyone around you is being cool and not pitchy. And so it feels weird to be pitchy. Yeah. You mentioned this was something we’re experimenting with in MicroConf Connect, which is our online community. Folks can go to microconfconnect.com if they want to check that out. And also in the in-person event is like, have a ticket because we get asked constantly for service providers to come in, folks, both investors and folks who provide marketing services or whatever, SEO copywriting. And the reason we’ve kind of reconsidered this is we’ve actually had requests from folks inside the community saying, “Hey, it would be nice if there were some,” whether they’re vetted or whether they’re at least trusted that I can meet them in person and get a feel for them. You and I know a ton of service providers that are TinySeed mentors that have been coming to MicroConf for years that are great people that I actually do want to work with. 

Rob Walling (07:50): And so just having an arbitrary like, “You can’t come if you’re X, Y, Z,” I think is not the way to do it. So yeah, we experimented with it and it was a success. We had no issues, no complaints. And we did limit the number of tickets for that too because we don’t want it also to, and by limit, I mean, I think we sold eight out of 235 attendees. So it’ll be in that range, right? If we get to more than a couple percent of the attendees being service providers, it’ll obviously feel different. So let’s dive into some of the talks I want to talk through. We obviously can’t talk through all of them. I think there were like, was it five-ish main stage full length talks? There were a couple 20-minute talks and then a couple attendee talks. So what is that? 

Rob Walling (08:29): Maybe eight or nine talks, but attendee talks are 10 minutes and the 20 minutes obviously are shorter. So we packed the days not only with a few talks, but we really had excursions in the afternoon. The entire afternoon of the first day was us going out and about. And then we had workshops and round tables the second day to break things up. But I want to dive into our opening keynote by MicroConf favorite, Jason Cohen. He hasn’t spoken at MicroConf, I believe the last year was probably 2015. So I think it’s 11 years-ish, maybe 12. And he of course is known for the best talk about bootstrapping that has ever existed called “Designing the Ideal Bootstrap Business.” You can search for that in YouTube and watch it. Half a million views on my YouTube channel. And it is the number one video on my own YouTube channel, which Jason gives me no end of grief about how he dominates my YouTube channel. 

Rob Walling (09:19): But he was talking about breaking through growth ceilings and calculating plateaus and then how to think about breaking through them. So what were your thoughts and takeaways from his talk? 

Derrick Reimer (09:30): Yeah, it was great to see Jason back on the MicroConf stage. I feel like he’s always been a helpful guy, but now that he’s kind of moved on from day to day with WP Engine, he’s in his arc of like, “I just want to be around and help out.” And you can feel that. It’s genuine. And so yeah, it was great to hear from him. I think I always like reading Jason’s writings. He writes quite a bit actually on his blog and a lot of it is very, very rich with just ideas and he thinks a lot about strategy. I think most of his work and his career has been sort of around strategic frameworks and things. And it’s really hard to capture that in any given blog post or talk. So I feel like every time I get to hear him write or talk about this stuff, I get a little bit more understanding about how to think strategically, I guess. 

Derrick Reimer (10:18): So yeah, I think it was a good overview of like, this is the trajectory that you will see on revenue graphs of companies and it’ll show up in many different places, this sort of elephant curve as he calls it, where there’s the initial growth of things and then things sort of level out. And I think there’s a lot of us that have experienced that in our companies. So yeah, it’s just helpful to hear him sort of riff on different things you can do. He talked about optimizing your pricing. He talked about finding your ICP, people who love you for you. He was talking about making strategic choices and how ultimately that means closing some doors in service of other opportunities. And I got a chance to catch up with Jason a little bit in one of the mixers and I was just sort of telling him how personally this is something that I feel is one of the hardest things to do as a founder is actually having the confidence to say no to certain things or to hear certain advice and say like, “I understand that’s prevailing wisdom, but for specific reasons, that’s not for me.” 

Derrick Reimer (11:22): So I love that he gave a few examples of like, he talked about pricing and how the wisdom for 99% of people is to raise your pricing. Then he gave the example of Buffer who in service of their ICP lowered their prices in order to recharge their growth. So it was just a cool turn it on its head sort of example of like, “I just told you this is probably right for you, but then here’s what Buffer did.” So yeah, you need to be diligent in really analyzing what is true about your business and making the right calls for it. 

Rob Walling (11:53): Yeah. And one of the things I took away from his talk was kind of like learn the rules and master them so that you know when to break them. 

Rob Walling (12:01): Like he said, 99% of you in here are probably underpriced. And he did a whole little segment on that. You should probably raise your price. Now I’m going to show you one that just did the opposite just because it’s not 100%, maybe it’s 95, whatever it is. And I always like that about Jason’s takes. Every time I hear him when I have him on the podcast or just have private conversations with him, I learn something because he’s just so much horsepower in that brain of his. And so to have him up on stage talking about whatever is always just like, for me, it’s always like, oh, so that was the best talk I’ve heard on that topic just because he brings it and he’s thinking at the next level having built a couple unicorns now. But he’s still like a mostly bootstrap founder. 

Rob Walling (12:40): He raised money for sure, but he still thinks like one of us, like B2B SaaS, unit economics right from the start. Another great talk we had on Monday on the first day was Amanda Natividad and she has, I think, been head of marketing at SparkToro for a few years and she coined the term Zero-Click marketing. And that’s actually what she talked about, Zero-Click marketing and analytics. She talked about attribution and how hard it is these days. And with Zero-Click, there is basically no attribution. So folks listening, Zero-Click is, if you do a Google search and maybe at the top, whether in the AI summary or even in just a little box, it mentions your company, but there’s like no link or nobody clicks it, but they still have your company in their brain and maybe they go Google it or maybe they type it into the browser, the address bar or whatever. 

Rob Walling (13:31): She really dove into all of that stuff. And it was one, I went around asking attendees like, “Hey, what was your favorite talk?” And a lot of folks were mentioning hers. So what were your thoughts and takeaways there? 

Derrick Reimer (13:44): Yeah, I think hers was for sure up there among my favorites of the whole conference. I think the word attribution comes up so much at MicroConf and has over the years. And I feel like I’ve had many a conversation about that, like, how do we actually do this? Is it even possible? It was helpful to hear an accomplished marketer like Amanda just basically call out that attribution has been broken forever pretty much and is more broken than ever, and particularly because of this problem of search. The nature of search is changing, right? People used to type into Google something related to your website and you would show up in the search terms and then someone would click that. And now it’s dominated by AI summaries and ads and everything else. So the way that people go about searching and finding you and learning about you is in flux right now. 

Derrick Reimer (14:35): So it was good to see that called out from an expert and just the fact that all the platforms are penalizing outbound links. I think X/Twitter took a lot of heat for this like, Elon did this thing that’s like, what? Now everyone has to post the link in the comments below. But the truth is like they’re all doing that because all the platforms want you to stay on platform, which really makes sense if you think about it. They don’t want you to click an outbound link and go somewhere else. And so a lot of the strategy here now is to think about crafting native content, I think was the term she used, and think about like, all right, you’re posting for this platform in the way that the algorithm will reward this post. And you need to be thinking about kind of building awareness. 

Derrick Reimer (15:21): And ultimately the hope is that they will still land on your website, but search is generally the last touchpoint. So maybe if they see your native posts on the various social platforms, learn about you that way, engage with your content as they say, and then eventually search for you maybe as a branded search once they know your company name and end up landing on your site. So she talked a lot about the wisdom in building on rented land, which is, we’ve talked about owning your channels for many years. So it was interesting to think about how it’s probably wise to embrace the rented land and to maximize your benefiting from the algorithms, but then still keeping one owned channel, which is email. Email will never die. And so still trying to obviously keep at least one channel that you own, but also recognizing that you got to play nice with the algorithms if you want to benefit from them. 

Derrick Reimer (16:21): She talked about some practical advice on what a founder can do the next time you’re at your desk, what kind of habits you can start to build on, like pick two to three channels, publish one to two Zero-Click assets per week, review monthly. So she gave some high level notes on how a founder can think about applying these principles to their day-to-day, which I thought was helpful because a lot of times these things can feel overwhelming, especially if you’re a really tiny team. How do you go about producing these assets in a rigorous way that’s measurable and all that? So I think she brought it down to an approachable level even for the small team, which was cool. 

Rob Walling (17:00): Yeah, I really appreciated her take on all of that. I mean, it was just a very informative talk. It was a talk by someone who is in the trenches and you can tell and who thinks about this all the time. This isn’t a fluff talk. It was really a lot of nuts and bolts. And I liked her talk, the pieces especially about attribution because I still believe in attribution, but it’s just becoming less and less and less. They’re just signals. It’s kind of like sampling. When you want to poll or get a signal about the entire United States, you can get a statistically significant sample with, I think it’s a thousand or 2,000 people if you choose the right demographics. And I think of analytics that way these days. It used to be, especially before Google did not provide it, you could get like 80 or 90% accuracy, or at least that’s what I believed. 

Rob Walling (17:51): And that number’s just going down and down and down. But I always wonder, what is the sampling rate of that? And of course, there are certain things that fall apart and she didn’t talk about sampling, but she talked about how all this is kind of like it’s better than nothing, but also there’s, as you said, search is the last thing. And so you’re going to weight that a lot higher. Yeah. 

Derrick Reimer (18:12): And you’re going to recognize that if you think about the path that someone would take, and even if they say they go to ChatGPT and your name is surfaced there, odds that they’re clicking a link from ChatGPT to your site so that ChatGPT will literally show up in analytics is pretty slim. It’s generally like, see you over there, hop over to the browser, then maybe do a direct Google search. And she also talked about how a lot of the platforms are not even passing through referral data at all. 

Rob Walling (18:41): There was one attendee, MicroConf first timer, I was talking to her and I said, “Well, how’d you hear about us?” And she said, “I asked ChatGPT what events I should go to for entrepreneurs.” And I’m like, “What?” And that is just happening at this point. It’s not like we’re targeting it. So in the early days of MicroConf, we did a lot of talks, a lot of talks. We had 12 talks the first year, which was too many. And then we went to 10 and then we went to nine full length talks. And it was a lot of information because we were trying to get strategies and tactics. And what we realized in the late teens, it was around 2018, 2019, we started reworking the event and kind of had a MicroConf 2.0 moment where we said, look, half day in seats listening to these interesting talks, like the ones we’re talking about from Jason and Amanda, but in the afternoon of the first day, we tend to do these excursions where we get out and about. 

Rob Walling (19:30): And then the afternoon, the second day we do workshops and round tables. So you mix it up, there’s more interactivity, et cetera. The excursions each year depend on where we are. So in Dubrovnik, it was like sea kayaking and the Game of Thrones tour of the old city. But in Portland, of course, we had two hikes, not one, but two hikes. We had a pizza and ice cream tour because Portland has awesome pizza and ice cream. And then we had the retro arcade and you and I hung out at the retro arcade. Any games that brought up a history for you that you were like, “Yeah.” 

Derrick Reimer (20:08): Yeah, I played a little Mario Kart. I played some pinball machines. They had a bunch of cool kind of retro pinball machines, which was just sort of fun to zone out for a few minutes and stare at a pinball machine. It was good respite for the brain. Yeah. I did some other games where you just walk up next to a founder and you start shooting guns at a screen and you’re standing there for a while and then you start just kind of organically talking about business and… 

Rob Walling (20:34): That’s the point. It just gets us together. The speakers are just an excuse to get us together in a room. And I walked up and played Time Cop 2, the foot pedal. Yeah, you do the foot pedal to reload. And I was talking to a founder for a while there and yeah, I really enjoyed it. So it was cool. And I heard one of the hikes… So we learned what easy… Easy hike is kind of a term, easy, intermediate, hard. I don’t know what all of them are. But I guess what we learned in Portland, that easy Portland is like hard everywhere else because Tracy led a hike and was like, “This was six miles mostly uphill.” It was brutal. I had to chuckle at that. Classic Portland, right? 

Derrick Reimer (21:14): Yeah. It’s like spicy in Minnesota is not the same as spicy in California. 

Rob Walling (21:21): No. Got a lot of good feedback about the excursions, as we always have. I remember the first year launching them, I was like, “Oh no, this is such not a MicroConf thing. We’ve never done these,” and just have never received any feedback other than, “Yeah, let’s do them” or “Let’s do more of them” is what we get. And I’m like, slow down. We could do MicroConf excursions as just an event, but we do need some grounding content. So moving on to the second day, I kicked us off with my talk about AI and I had given it in Istanbul six months ago and then adjusted it. AI is changing so fast as we know and what I wanted to do… Okay, so I really didn’t want to do a talk about AI. I just didn’t, I don’t know. There was something about it. 

Rob Walling (22:01): I was like, there’s plenty of AI talks. We really need this. But when I asked on X/Twitter and in the TinySeed Slack, people were like, “How should I be thinking about this as a SaaS founder? How can I implement it in my app?” All that stuff. So I did put together a list of three different ways or tried to create categories of how you could use it. And then as I got more information from founders, I was like, “Oh, there’s actually five ways.” And I gave the talk in Istanbul and someone came up after and said, “Ooh, here’s a sixth.” And I’m like, “Oh man.” So I did this talk with six ways that you can be thinking about implementing AI in your SaaS. And there might be some folks in the Q&A brought up other ways, but I think most of them fit under the umbrella of the six. 

Rob Walling (22:41): I think it’s pretty mostly complete at this point, but it was a fun talk to give to that crowd and I’m glad that I did it and my next talk will not be about AI because I’m feeling just a little AI saturated at this point. 

Derrick Reimer (22:54): Yeah, no, I mean, I thought it was a good classic Rob Walling talk in the “let’s categorize this stuff” because that is always helpful. And I think you have a particular skill in kind of identifying how to bucket things so that it demystifies it a bit, right? I think you mentioned at the top of the talk, just thinking about how do I add AI to my product if I want to be a product that has AI can be daunting and you can, it’s like, where do I even start to think about this? So I think it was clear that this is obviously very top of mind for a lot of founders in the room and not in the room. I think the Q&A after your talk was pretty crazy. It’s… 

Rob Walling (23:35): Like 20 minutes. 

Derrick Reimer (23:37): Yeah. It… 

Rob Walling (23:37): Went long. Yeah, I know. And people were really thinking about it. Well, and could you feel the tide turning a little bit in a way that I thought was really fascinating? The gestalt, I think, of the way we’re all thinking about it started to be, what about should we maybe not do AI? What if customers don’t want their AI touching their stuff? They don’t want it in an LLM? Well, how can you… There started to be, I won’t say anti-AI, but counterpoints to this. And I was like, “Oh, let’s do this.” I wasn’t shying away from that at all like, “Well, let’s talk about that.” 

Derrick Reimer (24:07): Yeah, I think it’s like we’re still in the phase of it where it’s like, “Oh my gosh, this is incredible. We should use this everywhere if at all possible.” And as an industry, we haven’t really stopped to slow down yet and think about like, “Okay, what are the negative ramifications of this stuff? Or where should we think about not applying this for X, Y, and Z reasons?” So yeah, I mean, this is the sense that I got from conversations in the hallway as well. Just a lot of people thinking about what’s the right way to use this? How do you get your team on board with it in the way that you want them to be? Should we invest in adding it to our products now? I mean, this is something I’ve been thinking about for a year and a half. I obviously want to be early on this stuff. 

Derrick Reimer (24:53): I want to use my bootstrapper advantage of being able to be nimble and do this stuff faster than the large incumbents, but also there’s a risk in being too early with it and implementing a bunch of stuff that is now obsolete or has become a part of the core Claude app or whatever. I don’t want to build something now that’s going to in two months just be a skill and now I don’t need it in my code. So I think it’s obviously an ongoing thing that people are spending a lot of mental cycles on and it was good to swap notes with people about AI. 

Rob Walling (25:26): That’s how I felt too, where it’s like, I think I said a few times in the talk, I’m trying to create a close to definitive categorization for how you can implement it in SaaS, but for sure this is not the whole conversation, especially not in 35 minutes. This is a starting point. Now, maybe it gives us all a vocabulary to talk about it. The categories I’ve talked about, several of them on here, but it’s like generation, like the AI can generate stuff in your app, right? It can categorize things, you can have a chat interface. We talked about it this time, I added MCP and CLI and just how muddy that is, how few even TinySeed startups that are like bleeding edge, almost none of them have MCP and CLI and the ones that do have two users, three users. It is not, we are not nearly as far as Twitter would have you believe, right? 

Rob Walling (26:16): We’re like, “Oh, just everyone’s building MCP and you’re behind if you’re not.” And it’s like, “That’s not what I’m seeing across the 209 TinySeed companies.” So that was part of the conversation. 

Derrick Reimer (26:26): Yeah. I think the number of times that Formspree came up. So Cole, founder of Formspree was in attendance at the conference and I got to talk to him a bit, but he kept coming up from the stage as an example of like, for example, I just signed up for Formspree from AI. I was rebuilding my website and I needed a contact form and AI, Claude was just like, “Use Formspree.” And they just basically provisioned the service really without looking at the marketing site. Now, maybe this won’t be everyone’s product, but it does make you wonder, okay, how much of this agentic commerce, or I don’t know what the right term is for it exactly, but basically agents doing most of the buying for you, how much of that’s going to be happening over the next year? And what does that mean for us as we think about building marketing sites and building signup flows in a way where an agent can just provision an account instead of a human typing in the box, really fascinating stuff. 

Rob Walling (27:27): And MicroConf wouldn’t be complete without a talk about jobs to be done. Gia Laudi, her title was “The GTM Moat No One Talks About,” jobs to be done. There was positioning and a lot about your customer and the job they’re trying to get done rather than who they are, because I do often think in terms of, we think of our ICP as like demographics, psychographics, and she was kind of adding more depth to that and being like, “Yeah, maybe it’s a little more.” 

Derrick Reimer (27:58): Yeah, no, I think that reminder of it’s why they buy and that’s not equivalent to who they are. So going too far down the path of thinking in terms of like personas or something can be limiting. I think she also talked a bit about how it’s easy for bad data to leak into the thought process as well. So I mean, I feel like the big takeaway was like talk to your customers, but of course, what’s much more nuanced around that on how to do it. And she talked about how the cascade of things is like growth at the top, then it’s messaging, but then it’s positioning, then it’s the customer, then it’s the data. So data needs to be the foundation of it all, but the devil’s in the details on how you go about getting that data. So it’s always helpful to hear kind of an expert talk about jobs to be done because that’s another topic that has a lot of nuance to it, a lot of contours, and it’s helpful to hear just examples and case studies that they have from real world client engagements and things as they help kind of fill in the gaps on that. 

Rob Walling (29:00): In the afternoon of the second day, we had our workshops and our round tables, and then we moved on to the final talk, the closer, Craig Hewitt, “AI Doomer.” That’s what I’m going to call him. He’ll appreciate I said that about him. No, it was cool because he and I both talked about AI and Anthony Eden had an attendee talk about AI, but Craig falls, I mean, he’s really, as he kept using the term, he’s cloud pilled, he’s token maxing. He started using these terms. I’m like, “Oh my God, dude.” It was fun to hear him. So his take is different than mine. I’m much more of an, what am I? I think AI is changing things, but not as much as most people are making it out. I’ve done enough of these hype cycles with crypto and these other things. I’m not saying this is like crypto, but I’m trying to be more moderate about it. 

Rob Walling (29:51): I’m excited. It’s changing a lot of things. It’s probably the biggest technological change I’ve ever seen since I’ve been an entrepreneur, so that’s saying a lot. But I try to be at the leading edge of the present. What is actually happening right now versus what’s going to be in a year or two or three or could potentially be? And so I appreciated his take, which is like, oh, he’s all in on it and his entire staff has a huge AI budget. Did he say it was $1,000 a month or $2,000 a month? He… 

Derrick Reimer (30:16): Said uncapped actually. 

Rob Walling (30:17): Uncapped. It’s like if you’re using AI, you can just all in, everyone on the team has to use AI. I mean, he was talking about, “Hey, if your folks on your team are not adopting it,” he’s like, “I would fire that person.” So just really interesting hard takes from Craig who traditionally has been, he’s pretty chill, but AI, he has strong opinions on this one. And I appreciated that. And the interesting thing about MicroConf is all the speakers don’t have to agree. The point is to get some perspectives on these things. And so yeah, I’m curious what you thought about Craig’s talk. 

Derrick Reimer (30:51): Yeah. I think he mentioned at the start, he was like, “This is as close as I’m going to get to giving a talk on religion or something because it’s that level of controversy, I guess, or just certainly not everyone’s going to agree.” And he sort of named that upfront that these are some hot takes. These are some things that are not necessarily universally believed. But yeah, he sort of dove into it. I mean, sort of the case on, I think he said he expects the next two to five years to be really tough for the economy. And he sort of cited the, Anthropic puts out a lot of stuff where they’re like, “Here’s the graph of all the industries that AI is going to be able to automate.” And it’s some shockingly high number, like 90-something percent of jobs or something like that. 

Derrick Reimer (31:37): So I mean, you have to take all that with a grain of salt and run it through your own filters on like, “Do I actually believe this? Is this just marketing from an AI lab?” But he sort of named the case of like, this is the worst case scenario of how things might play out. And then he promised the audience that it wasn’t going to be all doom and gloom. There was going to be some things we could do as bootstrappers. But I did find it really interesting. The kind of summary of the bootstrapper advantages he named were like speed, finding niches and relationships, like forging those human connections. And as I reflect on it, I’m like, “I feel like these have always been the bootstrapper advantages.” So in a sense, it’s like, even though so much is changing in our industry, I think ultimately what allows us to succeed and set ourselves apart is kind of staying the same as it’s always been, which I thought was a good thing. 

Derrick Reimer (32:34): It’s not like, even if you think about worst case scenario, how things might change, fundamentally we have been working on the proper skills and the proper ways of operating that are going to hopefully set us up for the most success in this new economy. 

Rob Walling (32:53): And we didn’t even talk about our evening receptions, hanging out, playing video games on the final night, throwing some bowling balls over at Punchbowl Social. And yeah, just a lot of time to get together in the hallway track, which is, I think, as valuable or more valuable than the talks and the information. It’s something, I mean, I come away with it as tired as I do sound and I feel right in this moment, my battery, my energy, my entrepreneurial battery gets charged up being around other ambitious founders, some of whom are crushing it, doing eight-figure businesses and some who are just getting started. But the energy is palpable. And you’re coming back for our Europe event here in a few months. 

Derrick Reimer (33:39): I am. I’m so excited. 

Rob Walling (33:41): Iceland in late September, I think it’s 21st through the 23rd. If you’re listening to this and you feel like, “Man, this event sounds awesome.” Derrick and I will both be there. You want to come hang out with two tall gentlemen? 

Derrick Reimer (33:53): Taller than I appear on the internet is what I like to say. 

Rob Walling (33:56): This is what everyone tells me. Yeah. People come up, “You’re taller than I thought.” And it’s like, “I’m not that tall.” But yeah. So we do still have some tickets, but it’s selling fast. I know it’s going to sell out, I don’t know, in the next month or two, I would guess, but microconfeurope.com if you want to buy a ticket there. And then we announced that next year, I think it’s, is it March or April? We didn’t announce dates. 

Derrick Reimer (34:18): I think it was April question, question. That’s what it is. Yeah. 

Rob Walling (34:20): We don’t have exact dates, but we’re about to sign in Austin, Texas for MicroConf US. So of course, if you’re interested in potentially coming to that, you should head to microconf.com and just enter your email. Find a text box and you’ll hear about it. I think microconf.com/emails or /subscribe. We’ll get you there. Derrick Reimer, founder of SavvyCal, best scheduling link on the internet. 

Derrick Reimer (34:42): You’re too kind. 

Rob Walling (34:43): Thanks for not only joining me at MicroConf a few days ago, but for joining me on the show again. 

Derrick Reimer (34:48): Of course. Thanks for having me. 

Rob Walling (34:49): Thanks again to Derrick for coming on the show and helping me recap MicroConf for you. And I want to send a special thanks to YSecurity whose ad was at the top of the episode. They also put on an excellent workshop at MicroConf around security and compliance and several other things that I know many folks attended and had good things to say. So if you’re getting serious about your cybersecurity and compliance, head to ysecurity.io. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 830. 

Rob Walling (00:00): This podcast is brought to you by Mercury, the banking solution I use across all of my businesses. I manage half a dozen Mercury accounts from my personal single member LLC to MicroConf, our seven figure global events and education platform to TinySeed, our venture fund and accelerator. Mercury handles every one of them. Traditional banking forces you to duct tape tools together and work around slow processes. Mercury doesn’t. The dashboard shows me exactly where each business stands at a glance. The interface is simple enough for daily banking and paying invoices, but can also handle the multi-step approval processes we need when wiring large sums of money to the dozens of companies we invest in each year. There’s a reason more than 300,000 entrepreneurs have made the switch. Anytime founders ask me where to set up their accounts, I send them to mercury.com. It’s free to get started with no in-person visits and no minimum balance. 

Rob Walling (00:54): Visit mercury.com to apply online in minutes. Mercury is a FinTech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and Column NA, members FDIC. This is the difference between being a developer and being a product person. A good product person would never do this. Whereas a developer says, “Oh, I have these tools and email’s the easiest one and I have this whole class already built to send emails, so why wouldn’t I just do that without thinking through the ramifications for your end users?” Another Tuesday morning and another episode of Startups for the Rest of Us. As always, I am your host, Rob Walling. And in this episode, I tackle a few solo adventure topics. I revisit the core four SaaS skills and talk about what AI can do and help you with in terms of the core four and what it cannot do and what I’m not convinced it will ever be great at. 

Rob Walling (02:05): I talk about a terrible user experience decision that a local Minneapolis app has made, and I want to walk you through why it’s bad so that potentially you can learn from that. I want to talk to you about a few success factors in companies. According to Bill Gross, he studied 200 different companies and has several factors in order. And maybe I’ll finish with a little anecdote about the Beastie Boys. Before I dive into the meat of the episode, I want to thank you for listening, whether you’ve been listening for a week or a year or 10 years. Startups for the Rest of Us just recently hit its 16-year milestone. So on March 30th of 2010, my former co-host, Mike Taber, and I launched the first episode of this show. And that was obviously just a few weeks ago here, 16 years ago. And after the first few months of getting started where we shipped some episodes every other week, past those first few months, we’ve shipped an episode every week since 2010. 

Rob Walling (03:12): And the reason that I’ve continued shipping, even when it’s hard or when I’ve had a lot going on, or when I was building a company, selling a company, leaving a company, questioning whether I wanted to stay in the startup space at all, as I did in the 2017, 2018 timeframe. But the reason that I kept shipping is because you kept listening, is because it was obvious that this show impacts a lot of people. And as people have told me, it punches above its weight class. In terms of having a relatively small audience compared to someone like Joe Rogan, Tim Ferriss, even My First Million. And yet the impact that it has on people is significant. The tens of thousands of listeners of this show, I think, get a lot of value from it because of how focused it is on SaaS, on startups, on software, on bootstrapping, and mostly bootstrapping. 

Rob Walling (04:09): But really it all comes down to entrepreneurship, right? And it’s how each of us is able to change our lives through starting our own companies. And this is not something that would have been very possible at all 20, 30, 40 years ago. And that’s why I think it is, in fact, the best time ever to be an entrepreneur. So thanks for listening this week and every week, as I have to say in my sign off. I look forward to continuing shipping these episodes every Tuesday morning. I’m going to dive in to my first topic in a moment. Before I do that, I want to let you know about my premium coaching program called SaaS Institute. SaaS Institute is where we’ve gathered together world-class SaaS coaches. We have a list of seasoned mentors and we’ve curated a community of SaaS founders doing seven and eight figures of ARR. 

Rob Walling (05:06): Our goal is to give you the support and the connections that you cannot find anywhere else that can help you continue to grow your company and to help you feel a lot less alone than you probably feel today. So you get one-on-one coaching, you get direct access to subject matter mentors, you get a curated peer group, not only a mastermind that meets once a month, but our Slack channel that I think is one of the best in the world for SaaS companies. If you’re interested, head to SaaSInstitute.com to apply. As I said, we have a curated group in there, so you do have to qualify to become a member, but it’s an incredible group, SaaSInstitute.com, if you’re interested. My first topic of the day is which parts of the core four do I think AI can do? So to briefly recap, the core four are development, product, sales, and marketing. 

Rob Walling (06:01): And of course, we know that AI is making development easier and faster. Now, it’s especially working for people who already know how to write code because you can then look at the code and say, “This code is not good because AI doesn’t write great code.” Sometimes it does, but it’s very hit and miss. So we can obviously say that AI augments development. It can make that faster. It can also create a lot of AI slop that will be unmaintainable and insecure and have a lot of bugs in three, six, nine months. But realistically, AI is not terrible at helping with development. AI can also assist you with sales. It can craft outbound emails and DMs, and it of course can automate sending those. The real job of sales though, that’s just lead gen, right? The real job of sales happens when someone wants a demo and they want to have a conversation and they want to pay you five, 10, or $50,000 a year. 

Rob Walling (07:03): And that part, while AI can help you improve, it can record your sales calls and help you improve on those, it’s not doing it for you in the same way that it can with development. So AI can augment sales, but realistically, as a founder, you still have to learn to do it. You still have to learn the core skills until you are at the point where you’re doing a couple million dollars a year, and then you can potentially hire someone to take that over. And of course, you can bring on sales assistants before that, but I’ve talked about that in a prior episode, so I won’t beat it to death here. Marketing is an interesting one. I always talk about how marketing is three separate roles. It is strategy, project management, and then being the individual contributor who actually goes in and clicks the buttons in the interface. 

Rob Walling (07:47): And similar to sales, AI can obviously help with marketing. It can help generate first drafts of content, of blog posts, of social media posts. Anyone who’s publishing AI content directly to the internet, I think is making a mistake because even well-trained GPTs or Claude chats still need massaging. It’s not there yet. So is it augmenting marketing? It is. Will it do marketing for you? The way that we’re seeing these companies on social media talk about how they just clicked a button and this whole Kanban board of all these tasks happened. And then this AI, whether it’s OpenAI or one of these others is just doing it all for you. And that as of today, as I’m recording this in early April of 2026, is still a pipe dream. It’s doing mediocre and usually pretty bland work. And I’m of course using AI. 

Rob Walling (08:45): My whole team is using AI to generate stuff, but we never publish 100% AI generated stuff directly to the internet because with sales and marketing, it’s a nice augmentation. It can get you started, but you do still have to have an editorial eye, right? You have to have taste to realize that the code that this AI is putting out or the copy that this AI is putting out or this cold email it’s putting out in terms of dev, marketing, and sales, that it’s not great, that it’s okay. It’s fine. It’s passable. If I don’t know anything about cold emails, when I have AI generate a cold email for me, I might think this is amazing. And a lot of the takes that I see on the internet where it’s like Jason Cohen, I had him on the podcast a while ago and then we published some snippets of his interview on my YouTube channel, youtube.com/robwalling. 

Rob Walling (09:32): If you’re interested in following along there, it’s brand new content every other week, except very occasionally, like every six months we’ll pull something from this podcast. And in this case, we did. And Jason Cohen was talking about how AI isn’t perfect. It’s not there yet. Maybe it’s 80% there. And there were all these comments that were like, “Oh, you just haven’t tried Opus 4.6 yet.” Well obviously this was recorded before Opus 4.6. You know what? I’ve been using Opus 4.6 since it came out. It’s still the same. It’s not 100%. And the people that I see saying that AI can do all this stuff and it’s magic, they don’t have taste. They don’t have an editorial eye to realize that the marketing copy it writes is fine. It’s not great. That the cold emails and the recommendations it makes for your sales process are fine. 

Rob Walling (10:14): They’re not great. And the development, the code that it writes for your product is fine. It’s not great. You’re seeing the pattern here. No, I’m not saying it’s never going to be that way, but as of today, it’s just not there. And so as an augmentation, great, use AI, but you somehow magically pushing a button and having it generate a product that then it goes market and sells, it’s a pipe dream. It’s someone trying to sell you something if they’re saying it’s this easy that AI is just going to do it for you. Now you’ll notice of the core four, I’ve mentioned three: development, marketing, and sales. I haven’t touched on product. And of the core four, I think AI is by far, far the worst at product. It’s just not good. It’s just not good. Remember, product is not, “Oh, I want to write code. I want to build a product.” It’s what should you build? What should you build? How should you build it? What should it look like? How do I listen to my customers and give them what they want without just building everything all of my customers ask for? 

Rob Walling (11:02): Just because you can build it faster doesn’t mean you should build more into your product. We’ve all seen these Franken products that are hundreds and hundreds of features because a developer went into their basement for a year and built all this stuff and that usually isn’t the product that wins. You have to be opinionated about what you build and how you build it. And again, as of April 2026, AI is not going to do this for you. And is there a point where AI will be good at product? I don’t know if it ever will, and it requires so much specialized knowledge. 

Rob Walling (11:48): I guess I can imagine a future where it takes in all of your support emails and all of your live chats and everything on the internet and it somehow knows your customer as good as you do. Yeah, it’s hard to say in a few years, the advances that AI will make. But here’s the thing, the interesting spin on that is if you are good at product, if you have a decent idea of really what needs to be in there, maybe how it should be built, I think that AI dev boom especially is actually a pretty big win for you because if you’re good at product, you can just get there a lot faster. I think back to how much faster we could have built the first version of my last SaaS app that took, oh, what did it take till we got our first customer? 

Rob Walling (12:30): It was like seven months. And I think that timeline could have been a month or two and we would have learned so much faster and the journey would have been less painful at least in those early days. So that’s if you’re good at product. If you’re bad at product, I think your product’s going to be a mess and a big tangled web of features that no one really wants. I think your positioning is still going to suck, that AI is not going to bail you out of that. So this is where if we’re on the internet, people say AI is the savior of everything and it’s the future. Or AI is terrible and it can’t do anything and it’s neither of those. It can do some of these things and it can augment you like a mech suit if you’re writing code or doing some sales or doing marketing. 

Rob Walling (13:10): With product, can it help you maybe make some decisions? Maybe. Every spreadsheet that I’ve ever seen by a product manager who is trying to make a case why we should build things, I’m always like, “Yeah, we’re just cherry picking data here.” There is no right answer. We don’t know. And we’re going to use our founder gut. We’re going to mix that with our understanding of our customer and we’re going to make the best choice that we know how. So those are my thoughts on AI as applied to the core four SaaS skills. My next topic is around the five factors in success across more than 200 companies. And this was a post put out by Bill Gross. Bill Gross is a venture investor and he has invested in hundreds of companies. In fact, he founded IdeaLab, which was an incubator that started companies. It’s not just an accelerator like TinySeed or Y Combinator. 

Rob Walling (14:07): They would start the companies themselves and I believe they’ve created more than 150 companies. So he has just a lot of experience doing this and he looked across 200 companies that he’s involved in. And this is from October of 2025. It’s from a few months ago. But the top five in order in terms of the success factors, he has number one as timing, number two as team/execution, number three, idea or truth outlier. Number four is business model and number five is funding. And the reason I want to call these out specifically is as I read these, I realize that these apply to venture backed startups because timing is so critical when you’re trying to hit the gap and become a billion dollar, 10 billion, 20 billion dollar company. If it could have been built five years ago, it would have been. And so you have to hit things at just the right time and shoot that gap. 

Rob Walling (14:59): But guess what? If you want to build a $3 million SaaS company that’s growing fast and could sell for 20 or 30 or more million dollars, you don’t need to be so worried about timing. Even if there is already a big player that owns a big space and you jump in and you figure out why people are leaving, we used to call them refugees, whether they are leaving that platform, whether it’s price gouging, whether the product sucks, whether their sales and support isn’t great, you don’t necessarily need great timing. Now you do need team and execution. To me, that is often the number one. And you’ve heard me talk about how it’s like team times the idea, times execution, and then I probably throw in times luck. Luck always plays a factor. It almost goes with that saying, but team times idea, times execution. The business model that Bill Gross talks about, I mean, we’re in SaaS. 

Rob Walling (15:55): What’s the business model? It’s a monthly, it’s an annual fee. Sometimes you add percentage of payments that you’re processing. It usually doesn’t need a ton of innovation, whereas in the venture space, there’s always like, “Ooh, we have this new two-sided marketplace thing where we’re going to charge the this and the that.” You know what I mean? So business model I think takes more into account there versus like, I’m going to build software that when it has one user is as valuable as when it has a thousand users. You don’t need scale because everyone is paying you a certain amount of money. And funding, of course, in our bootstrap and mostly bootstrap circles is not irrelevant because it can get you there faster, but I think a lot of the companies that we see in MicroConf, TinySeed, Startups for the Rest of Us ecosystem, they probably could succeed with or without funding. It’s just going to take them a lot longer. 

Rob Walling (16:42): So funding and business model, much less relevant for our kinds of companies and timing, which he names as number one, I also think is much less relevant for our types of companies. So team, idea, and execution are the things that I see over and over either causing SaaS companies to fail or to wildly succeed. And sometimes I’ll see a team execute really well and the idea is a so-so idea and they just grind, grind, grind their way into a great little million dollar business over the course of several years. Sometimes that’s because the idea wasn’t great or the niche, the industry, the space that you picked, it was a two or three out of 10 idea. And then other times you do see a great idea and a team that’s decent, but they happen to execute pretty well. 

Rob Walling (17:34): So you’ll see them have wild success because, again, it’s kind of a multiplier. So the reason I’m calling these out is I saw this all over the internet and I have a lot of respect for Bill Gross. It’s Bill T. Gross, by the way, because there’s another Bill Gross who’s like a bond guy who does bonds and stuff. The Bond King, I think he’s called. It’s just unfortunate they have the same name. But I saw this on the internet and it’s not that I disagree with Bill Gross or that I think his original ranking of timing and team, idea, business model, and funding in that order are incorrect. It’s that this is where you have to consider the source. This is where you have to think. Is he talking about the types of companies that I’m starting, types of companies I hear about on Startups for the Rest of Us, see at MicroConf, see at TinySeed, maybe over on Indie Hackers, or is he talking about the traditional venture capital chasing $20 billion outcomes? 

Rob Walling (18:27): Because those paths are very, very different and the success factors between them are going to be very, very different. So this is where you have to be careful not only with who is telling you the information, because let’s just say on the internet, I don’t know, 80% of people are full of it. Maybe it’s not that high, but it’s a lot, especially people trying to tell you business advice and tell you how you’re going to succeed and basically trying to sell you something along those lines. But in addition, even those folks who I think have done it, have been there and have a lot of knowledge like Bill T. Gross here, they’re often talking about their type of company or their type of approach. And if you’re not going to do that type of approach, you either need to ignore their advice or find out from someone how this is different in your space. 

Rob Walling (19:14): This is the same reason I cringe when people talk about reading Zero to One and then trying to apply that to bootstrapping or that that’s a big motivational entrepreneurial book when they’re starting, when they want to start a million dollar SaaS company. It’s like, I get it. I’ve read Zero to One. Or The Hard Thing About Hard Things. Like those are cool books. They’re interesting. They got me thinking, but I never once thought, “Yeah, the information in here is going to help me bootstrap my next SaaS company.” Those books aren’t written for us. They’re written for folks who want to start these, again, 10, 20, $50 billion companies. And so is the advice that Bill Gross was giving out here. For my next topic, I want to walk you through a little decision that the city of Minneapolis is making with their parking app. So one of the luxuries we have here in Minneapolis and St. Paul is that the cities are relatively well funded and the money tends to be spent, I would say, in productive fashions. 

Rob Walling (20:08): I’m from California where the taxes are high and everything’s broken all the time. And we can talk about reasons why that is in terms of just the sheer volume of people who live there and all other types of situations. The quality of life here in Minneapolis is high for a lot of reasons, but one of them is that things just work. The schools are high quality, the city has their act together. The bike paths are plowed in the winter and they have an app that you download to your smartphone to pay for parking and that’s so cool so you don’t have to carry a bunch of quarters around. And we were actually driving out in the suburbs and we were in a city and needed quarters. And I was like, “Whoa, I haven’t done that in a long time.” But they have this parking app that helps you not freeze your butt off when you are in the middle of winter and you need to pay for street parking. 

Rob Walling (21:00): But the interesting UX decision or customer experience decision they’ve made over the last few years is kind of befuddling me. And I’m guessing they have some third party who’s building this because when I look at it, I’m like, “Whoa, this is not good.” So originally you could log in and it would keep you logged in for a long time, for a month or two, because your parking app, does it really need to be super secure and log you out every time? Well, they then started doing that. So then it would log you out every single time. And so every time you go to pay for parking, you would need to log in and it wasn’t just Face ID. You would have to enter username or password, which could obviously come from the OS remembering that, or you could OAuth using Google and other things, which is eventually what I just started doing because I got tired of the passwords not auto-filling on mobile and whatever. 

Rob Walling (21:49): So that alone became enough friction that I have more than one friend who’s just like, “Yeah, I just couldn’t be bothered and I just paid for parking tickets if I get them.” It’s like that much of a frustration, that much friction does that. And I’m still puzzled why they just don’t add Face ID if they’re going to do this. If they’re going to make you log in every time and they think it needs to have bank level security, just add Face ID. But I saw the other day, there was a pop up when I went to pay for it and they said, “We’re adding two factor authentication.” And I was like, “Oh no, are you kidding me that in order to pay, oftentimes it’s 75 cents that I’m paying, $1.25. In order to pay that at a particular meter that’s locked to my license plate, I’m going to need to log in and then enter a code from an authentication app.” And it didn’t even say that. 

Rob Walling (22:38): It said that the second factor of authentication is that they’re going to send an email. So I can’t even with this, what are you talking about? Who thinks this is a good idea? So you’re going to log in and then it’s going to say, “We just sent an email to your address on file. Go log in to your Gmail or whatever else, pull that up, enter a code, click on a link, like what’s it going to be?” You know it’s on mobile. It’s not going to work well. It’s going to turn what should be a 30 second process into at best a couple of minutes every time for hundreds and hundreds, if not thousands of people every week who are doing this. And at worst, it’s going to turn into a 10 minute ordeal where the email doesn’t get sent. The email goes to spam. 

Rob Walling (23:24): The email has a delay because of mail servers and you’re sitting there waiting five or 10 minutes. People are just going to give up. I know that’s what I’m going to do. So maybe they’ll start sending texts, maybe they’ll start an authenticator app, but I don’t particularly want to flip into an authenticator app and enter a six digit code every single time that I want to pay for parking either. So it just feels lazy. It sounds like a programmer that’s not at all a product person or anyone who gives a crap about the end user. It’s just some developer somewhere or some politician somewhere who basically doesn’t know app design is being lazy to try to enforce some standard that I’m sure someone somewhere has sent forth to justify their own job. So if you’re building an app, this is the difference between being a developer and being a product person. 

Rob Walling (24:09): A good product person would never do this. Whereas a developer says, “Oh, I have these tools and email’s the easiest one and I have this whole class already built to send emails. So why wouldn’t I just do that without thinking through the ramifications for your end users?” My last topic of the day is about the Beastie Boys and their seven platinum records. So they’re doing some kind of promotional tour, I think, because they were on Conan O’Brien’s podcast and I somehow stumbled upon this given the YouTube algorithm because I don’t follow Conan. I think he’s funny, but it’s just not the type of stuff I watch on YouTube and I’m not particularly listening to the Beastie Boys anymore. I haven’t listened to them since, I don’t know, early 2000s, but I saw that there was a clip and I downloaded it just out of curiosity and it was fun. 

Rob Walling (24:56): And of course, it’s only two of the three surviving members because MCA passed away from cancer, I don’t remember how long ago it was now, maybe 10, 15 years ago. And so there was a part of this show that I enjoyed. I enjoyed the back and forth. So Conan O’Brien says, “You guys have seven platinum selling records.” And he’s saying it as a compliment. This is a rare thing. How many artists in history have seven platinum records and Ad-Rock, that’s a stage name, his name is Adam Horovitz. He turns to Mike D and he says, “What happened to the other albums? We’ve released more than seven. What happened to the ones that aren’t platinum?” And Mike D says, kind of shrugs and says, “Everyone’s got a couple duds.” And Ad-Rock says, “Well, I liked them.” I like six things about this interchange. 

Rob Walling (25:44): So first of all, it’s such a trip that had Ad-Rock never thought before about why every album wasn’t platinum. Is this the first time this realization had happened and he had to ask this question? Because I imagine as you’re cranking out albums, and I’m guessing the Beastie Boys had 12, 15 albums, not all of them are going to be platinum and that at a certain point you would pay attention to that, but maybe they stopped, maybe at a certain point you just don’t care anymore. And that alone is kind of an interesting, I think just an interesting side effect of just shipping, of just shipping. You ship your first podcast episode and you think about all the things you want to tune and optimize and you scour through the analytics and you spend every day waking up refreshing that. You write your first book and you ship it and you track the sales and the profit and the gross profit and all this stuff. 

Rob Walling (26:34): And then when you ship your fifth book and your 800th podcast episode or your seventh album or 14th album, I do think that at a certain point the process takes over and the desire to ship things into the world overrules or outweighs necessarily these ancillary feedback mechanisms. I’m not saying a platinum record is a vanity metric because it’s a big deal to sell a million records, but I think when you have 10 records, you probably just kind of stop caring. And that I think is demonstrated by this quote. And I have myself known founders who are on their third, fourth, fifth startup and they care about very different things than they did when they were building their first. Likewise, I care about very different things these days on this, my 829th podcast episode than I did on the first one or 10 or 20. 

Rob Walling (27:28): So I like that part about it, right? Just the realization of like they’ve shipped so much art into the world that not sure if he’d ever thought about that before this. Then the critical eye of like, “Well, what happened with the ones that weren’t platinum? What happened? Why aren’t we platinum for every album we’ve released?” And Mike D says, “Eh, you win some, you lose some.” Everyone’s got a couple duds, which I think is an interesting thing as well. It’s like the non-platinum records probably still very good. They just didn’t have the public sign off or the public sales to justify it, but then it comes back to Ad-Rock saying, “Well, I liked them.” And I think that truly is the sign of an artist or a creator, maybe is a better way to say it, who has come to peace with being who they are and come to peace with the art that they produce. 

Rob Walling (28:17): And while I don’t believe that this podcast is art, in terms of the definition, one might think of art being purely for enjoyment, not having utility. And obviously this podcast has utility because it helps people start companies, but there’s definitely a certain level of creativity and craftsmanship that I put into my YouTube channel and this podcast and the books and my essays, robwalling.com/subscribe if you’re not on my email list and getting my weekly essays that I’ve just recently started writing here in the past month or two, and I’m not alone, right? It’s like you look at the creators that you listen to and you can tell they really care about their craft and it’s the craft of imparting wisdom and knowledge. It’s a craft of sharing what they’ve learned, educating folks, and generally trying to make the internet a better place, or at least their corner of it, a better place. 

Rob Walling (29:13): And I think when you first start out, you are terrified and you over index on public feedback, especially the negative comments. And then I think over time, you come to the realization of, “Man, I’ve done some really good things and I’ve also had a few duds because everybody’s got a couple of duds, but I still liked them.” So I really enjoyed this analysis, this back and forth. Ad-Rock saying, “What didn’t work? What could we have done better?” And Mike D just saying, “Look, we’ve shipped so much stuff into the world. It’s just how the chips landed.” So thanks for joining me today as I walked through a few of these fun topics for entrepreneurs and founders. Next week, I’m going to be recapping MicroConf US in Portland, recording it just a day or two after the event with fan favorite Derrick Reimer. And we’re going to talk about the highlights, the takeaways, and all the fun that happened there in Portland, Oregon. 

Rob Walling (30:15): So thanks for joining me this week and every week. This is Rob Walling signing off from episode 829.  

Rob Walling (00:00): Problem with being all enterprise is that it can be a slog and you might not close a deal for three to six months and so you’re just flat. You’re flat, you’re flat, you’re waiting. Why is my MRR not going up? And then boom, a big deal drops in. It’s like, hooray, celebrate. And then you have five more months of drought. It’s another week, and that means there’s another episode of Startups for the Rest of Us. As always, I am your host, Rob Walling, and in this episode I answer listener questions from folks just like you. Questions including, here’s what I’m building, is this SaaS? And I’m going to talk through the key three or four components that I believe make up a SaaS app. And in fact, when I ask ChatGPT what it considers to be a SaaS app, we do not agree. So it should be an interesting debate between myself and an LLM. 

Rob Walling (01:03): Then there are other questions about serving both B2C and B2B or serving very small customers and enterprise, but nothing in the middle, as well as a question about pricing. Great questions today. I’m excited to dig into them. Before we do that, I want to let you know that MicroConf Mastermind matching is closing soon. We only run matches two, maybe three times a year. And if you want to jump to the end, microconfmasterminds.com. But if you haven’t been involved in a mastermind, they have been a critical part of my development as an entrepreneur. And I’ve been a part of a couple masterminds over the years, one of which has lasted more than 15 years at this point. The idea behind a mastermind is you have someone along with you on the journey. So as you run into ups, you can celebrate. As you run into downs, you can get consolation and advice and camaraderie with other folks who are doing the same thing that you are. 

Rob Walling (02:05): These are other founders. This is not your spouse or your parent or your uncle who will probably never truly understand what it’s like to be a SaaS founder. And that’s the key ingredient of masterminds. Issue with masterminds is they’re hard to form. It’s hard to find people to be in your mastermind. And we got this question so often, where can I find people to be in a mastermind? Because I’ve been talking about this for more than 10 years. We started offering mastermind matching through MicroConf, and we base it on a ton of factors like revenue, location, experience. And we have a human look at every single application. We’ve matched almost 1,800 founders across 64 different countries. Applications close in just a few days on April 17th, microconfmasterminds.com to apply. And if you’re listening to this after April 17th, make sure you get on the waiting list for our next round of matching. 

Rob Walling (03:00): And with that, let’s dive in to my first listener question. 

Helen (03:09): Hi there. My name is Helen from England. I just want to find out exactly what I would be classified as if indeed I am a SaaS business or not. So I have a product idea for equestrian trainers, people training horses in an arena, and it essentially works like satnav to read out the next step of a dressage test or a schooling plan as you ride around the arena. So in effect, you’re getting a real time coach or caller. And it relies on obviously some plenty of software, which I don’t do, and also a little bit of hardware for some cases in the form of small BLE beacons. I’m doing it entirely on my own or together with a company I’m using. I’m paying a company in London to do the software for me in the engineering because there’s no way I could do that. I guess I don’t know whether that makes me a bootstrap startup. 

Helen (03:56): Whether a lot of what you say is relevant only to those who are coding them for themselves or whether or not I can listen to your audios and sort of absorb it as if it were directly for me. If not, would you be able to advise me as to exactly what I am and where the best place to start would be? Thanks. 

Rob Walling (04:12): Thanks for sending that question in, Helen. My short answer is I think you are SaaS. I have a pretty short description. It’s basically a one sentence explanation of what I think SaaS is, and I’m going to say it here. It’s subscription software where software provides the value. So let’s break that down. Subscription. That implies it’s not a one-time fee. And I would argue that the old model of Microsoft and Oracle, the on-prem software providers, where they would sell SQL Server or the Oracle database, and you would pay $10,000 upfront, and then annually you would pay what they call the maintenance fee. And it was usually between 20 and 25%. So another two grand, $2,500 a year for patches, updates and all that. I would not call that SaaS. We could argue, maybe it’s an edge case, but I don’t consider that because you are not charging the same every month or every year. 

Rob Walling (05:15): You have this big upfront fee and then this maintenance fee. So it’s subscription software, meaning that someone is paying on a monthly or an annual or a quarterly basis, generally the same amount for not only access to software, but where software provides the bulk of the value. Why do I add that last part in? Because every time that I go onto social media and say that there are approximately zero B2C SaaS companies that are successful at scale, I get people chiming in with, “What about Netflix and Disney+ and Spotify?” Aren’t those subscription? They are. Isn’t it software that I download to my phone or my laptop or my iPad? Yes, it is. Does software provide the bulk of the value? It does not. What is the value that you get from Netflix or Spotify or Disney+ or HBO Max? The value is the content. So this is content as a service. 

Rob Walling (06:22): The way to think about it is if there was no software involved with Netflix and all they did was mail me every month a huge hard drive with their entire library and I could just plug that into my TV and watch it. That’s the value I would receive. I would receive the value of the content without ever needing to be involved with any kind of software. In fact, in the old days, Netflix didn’t mail out a hard drive, but they mailed out DVDs. So Netflix, Disney+, HBO Max, they are not SaaS because they provide most of their value from their content. Then there are a bunch of edge cases. One could ask, “Well, what if I don’t have a user interface at all?” And I am like Newscatcher, which is a TinySeed company that is generally an API for getting up-to-date information about news stories and really current things that are happening in different industries in a way that search engines can provide. 

Rob Walling (07:20): They’re generally an API. Well, my definition is, is it software? Yeah, an API is software, right? It goes down, hits a database, probably crawling the internet to pull in a bunch of stuff. Is it subscription? Yes, it is. People pay on a monthly or annual basis, and does software provide most of the value? It does. No one could say, “Well, what if they could just mail you a hard drive of all their news articles or whatever?” The difference here is you don’t just want to point and click and watch a movie. On the backend, the Newscatcher API is doing all kinds of processing and all kinds of querying and filtering for you to provide you essentially almost real time data about… I’m getting deep into the weeds. The idea is that it’s much more than just raw data. The software itself is providing a ton of value. 

Rob Walling (08:11): So in my opinion, an API that charges a subscription and where software provides most of the value is still SaaS. ChatGPT does not agree with me. ChatGPT says that SaaS has to have a UI, and I guess that’s fine. What if you are a mobile app only, but you charge a subscription? This is one where I would probably include it as SaaS because it is a subscription software. And if software provides most of the value, I think that’s probably it. I could see an argument where someone says, “Hey, mobile apps are not traditional SaaS” and that’s fine, but I’m not picky. You can tell I’m not picky about it having a user interface or how it’s done. I see the value in building an incredible business that is scalable based on it being software and it being the best business model in the world, which is where it’s recurring revenue. 

Rob Walling (09:02): So those are the components that I look at. When I think about this question, I think about would TinySeed fund your business if you were… And would we fund you if you were Netflix? If you were a company that is creating content generally, for the most part not. Now, if you were doing the content for compliance, there are some exceptions where we’ve considered it because you can build a great business there. But if you were doing B2C content like films and music and stuff, that would not be in the wheelhouse, probably more the B2C versus our B2B thesis. That would be there. If you had a mobile app and it was net negative churn and it was doing incredibly well with monthly and annual subscribers, heck yeah, I’d want to invest. API only, we’ve invested in several companies. So to me, those are included in SaaS. 

Rob Walling (09:51): Now, something else ChatGPT said is getting into the weeds a little bit technically is like, oh, it has to be multi-tenant, meaning the single code base and more importantly, the database has to serve multiple tenants. I also think that’s an edge case because would I invest in a company where you needed to have, you were deploying on-prem even? It’s not even cloud hosted, but it’s on-prem and you have that individual database for that customer and you’re charging a quarter million dollars a year, but it is a monthly or an annual subscription. I would say that’s SaaS. The bulk of the value is software. Now there’s also some services being added to that, but you get the idea. Software, that’s a subscription where software provides most of the value. So back to Helen’s question of having an app for folks learning how to be amazing at equestrian events, I would say if software provides most of the value, even if there’s a hardware component, you can obviously have sensors and things that are feeding stuff back to your software, but the software generally is charged a monthly or an annual subscription, even if it is B2C, right? 

Rob Walling (10:51): I know I talk a lot about B2B. That’s mostly my focus because B2C SaaS is brutal and churn is high. And you’ve heard me say, “Don’t do B2C too much on this podcast. I’m not going to rehash that here.” But based on what Helen has described, she didn’t say whether she’s charging a subscription and whether software provides most of the value, but I think so. I would say based on that assumption that it is in fact subscription software and not a one-time fee that Helen’s app TekItTrak, I think it’s pronounced, is in fact SaaS. One of the things that ChatGPT said is SaaS is hosted and centrally managed, right? And yeah, kind of. But again, back to my on-prem example, if you’re charging a bunch of money, that can be the benefit. If you think about HelpSpot, which is Ian Landsman’s startup and they still have on-prem versions, he came on the podcast, I don’t know, two years ago maybe. He has on-prem and the true SaaS version. 

Rob Walling (11:48): If someone’s paying a full subscription for that on-prem version, I don’t think hosted and centrally managed having to be in the cloud. I just don’t think that should be a requirement. So thanks for that question, Helen. I honestly have never given the definition of SaaS as much thought as I have in answering it, so I appreciate you sending it over. My next question is about serving both ends of a market, solopreneurs and enterprise. 

Tibo (12:21): Hey, Rob. My name is Tibo. I’m the co-founder of Colib.io, practice management software for mental health therapists and adjacent professions. We serve counselors, psychologists, social workers. Really love your content. I’ve been listening for over four years now and really like the community that you’ve started. I actually became a local ambassador for MicroConf in Vancouver, Canada. We’ve had two successful events of eight to 10 people. Your community doesn’t disappoint. My question is about serving different customer segments. We have a clear ICP and strong product market fit with solo therapists and small clinics. Most of our competitors are shooting for the juicy middle of that market, which would be clinics of 10 to 15 practitioners. They usually take the software, onboard, use it, no questions asked. And recently, we’ve been approached by what we could call enterprise clients. So those would be 50 to 200 practitioner groups. 

Tibo (13:16): They need customization and they tell us, our competitors are not really willing to have those conversations or consider customizing things. So that’s something we can do. Our system fits what they need and we are willing to have those conversations. Of course, we cannot have an unlimited amount of them, but just to start, it feels like a good idea. Of course, the willingness to pay is much higher. We could expect churn to be very low. The question really is, have you seen companies do this where they serve the lower end of a market and then jump to the complete other end, which is enterprise and obviously the sales cycle is much longer. We’ve been in conversation for a few months already and it’s going to take proof of concept and several steps. And is it possible to adapt? And if yes, how much more resources does it take and does it divide our focus? 

Tibo (14:05): So really love to hear your thoughts on this question. Thank you. 

Rob Walling (14:10): This sounds like a really interesting opportunity, actually. Sounds like almost a textbook dual funnel where you have that low end of the market. The solopreneurs, the one to five person teams, and then at the top end, kind of more enterprise, as you said, what 50 to 200, I believe. I think there’s a lot of opportunity for you here. The danger usually is that the same product will not work for both. That’s the biggest thing that I’d be concerned about is that the enterprise often and usually wants features that no one below them, no smaller players want. And so you might wind up having to spend six to, frankly, 18 months building things out, reporting and permissions and SSO, on and on and on, building features out to satisfy the enterprise. Now, if that’s not the case, and the product as it stands today, or with a month’s worth of work or whatever, can literally do both your one to fives and your 50 to 200s, this is an opportunity. 

Rob Walling (15:13): I would jump all over this because dual funnels are so incredible because you get the small players that are signing up and mostly self-serving. I’m guessing maybe you do a demo or something, but they’re mostly onboarding themselves. They’re a small team and you get a little bit of revenue growth from each of them and “Hey, I’m growing a thousand dollars. I’m growing $2,000 a month.” And that’s nice, keeps motivation up. And then you also, whatever, every quarter, you can close one of these enterprises and then it’s like, “Oh, we just grew 5,000 or $10,000 of MRR and that’s a huge win.” And that can really be a shot in the arm for your MRR growth. The problem with being all enterprise is that it can be a slog and you might not close a deal for three to six months. And so you’re just flat, you’re flat, you’re flat, you’re waiting, why is my MRR not going up? 

Rob Walling (15:58): And then boom, a big deal drops in. It’s like, hooray, celebrate. And then you have five more months of drought. And so this dual funnel, it evens that out. It smooths out the curve and it keeps the motivation going. As you hear me say all the time, funded startups fail when they run out of money, bootstrapped startups fail when the founders run out of motivation and our motivational runway or our emotional runway is a real thing to be thinking about and dual funnels help with that. So in addition to product, I’m mentioning that the product can be a hangup. The other thing oftentimes is, okay, I’m servicing one to five, one to 10 person companies in this space, but I don’t have any marketing that’s driving leads in the enterprise space. But if the enterprises are already approaching you, check that one off the list. 

Rob Walling (16:43): And maybe later you do some outbound or you do more SEO for it as you onboard one or two of these enterprises and realize that it’s a viable option for you. But for now, you’ve checked off two of the three boxes, which is product and basically leads is your marketing working for them. So then the third thing I think about is the sales process. And that includes, that’s all the way from first touch to the demos to having to provide collateral for them for the champion inside an enterprise to get everybody on board and rally the team. And then, okay, maybe we decide and three months later they do decide. And now you go through procurement and you sign up in their janky invoicing app that is totally custom and takes eight hours with a bunch of bugs to… I’m exaggerating, it’s not eight hours, but validation, verification that you’re a this, that entity, paperwork, redlining your terms of service and on and on and on. 

Rob Walling (17:38): And that’s the sales process. And so as I often say on this podcast, you just have to charge enough to make all that worth it. If you can close these deals, I would do it. It can be a bit of, obviously it’s a bit of a slog. And some, especially like bootstrappers, don’t want to do the enterprise sales process. Frankly, as a founder, I didn’t want to either. The only time we did these larger deals that required a lot of headache was once we had salespeople who were willing to do that for, of course, their commission. It was a cut of the deals. So I guess to kind of package all that up, in your shoes, I would do this. I think the biggest drawback is maybe it can take a lot of your time and not wind up closing, and therefore you have spent time doing something that didn’t result in any new revenue, and that’s a bummer. 

Rob Walling (18:30): But if you think you actually have a chance of closing them, this could be a very interesting additional growth channel for you. It’s not a channel technically, but it is just a growth lever to start taking enterprise in. The bigger question I have though is, can you also serve the, what is it, the 10 to 50, the mid-market that you were talking about? Because now whether you want to or not is another question entirely, but on your pricing page, if you have your… I’m not going to come up with a great name for it, small business plan. You call it solopreneurs, I think, but one to five is not a solopreneur, right? It’s just like your SMB plan, your mid-market plan, don’t call them that. Those are internal names. SMB, mid-market, and enterprise. Enterprise says starts at $35,000 a year, includes your SSO and permissions and blah, blah, blah. 

Rob Walling (19:20): You don’t have to say starts at two. You could just say nothing. And then at least if there are mid-market folks interested and you do want to serve them, if they do stumble upon your site and you feel like your product can service them well, I wouldn’t be turning them away. So that’s probably the only thing that I would update in terms of, you had said, “Can I just do solopreneur, the one to fives and the enterprise?” And it’s like, yes, you can, but if your product can service the middle too, why not have that on the pricing page? What you have to be aware of is you’re going to get some chucklehead who comes in with a team of 20 or 20 seats and they’re going to want an enterprise sales process and that’s not okay because the 20 person company is going to be paying you. 

Rob Walling (20:08): I’m making up numbers, but let’s say they’re paying you $500 a month or $1,000 a month. Well, that’s not worth all the stuff I said earlier, the procurement and redlining terms of service and all that. So if you do have procurement, redlining terms of service in the enterprise call us plan as a bullet, that means the moment that someone says, “Oh yeah, hey, we’re 20 people and we should pay you 500 bucks a month, but you have to do all this stuff to fill out all these security questionnaires and blah, blah, blah.” You can instantly point to the pricing page and be like, “No, that is only included in our enterprise plan. Happy to do that, but that starts at $35,000 a year.” So thanks for that question, Tibo. I think it’s a really interesting one. And the answer is, yes, I’ve absolutely seen companies do this. 

Rob Walling (20:50): Now, have I seen them skip the mid-market? Not really. And I’m not sure why you would, but I guess if… Why not? If you can close the lower end deals and the upper end deals and are willing to deal with the headache of enterprise, I think it could be a great lever to grow your business. So thanks for that question. 

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Rob Walling (22:07): My next question has a similar bent. It’s more about having a B2C and a B2B offering and how to think about that. 

Vance (22:20): Hey, Rob, longtime listener, second time question asker here. My question revolves around businesses that have a B2C aspect and a B2B aspect. I launched my business called BudgetSheet, which is just a Google Sheets and bank account integration. A while ago, I’ve been growing it. It’s a B2C business. I am getting some requests for some B2B-like features, some financial planners and smaller accountants asking to link sub accounts and stuff so they can pull their client’s finances in and analyze it. I’m wondering how you think about either layering a B2B like offering on top of the existing B2C offering, or if you would think about splitting the business. My concern is that it would kind of bifurcate the UI and the experience, so it wouldn’t be as targeted to the use case that it is right now with managing your own finances and financial data. There are some ways around that, but I’m kind of in this spot right now where I’m not really sure whether to try and layer B2B features onto my existing B2C business, which is growing well and doing very well. 

Vance (23:27): Probably hit 10K a month, first of the year. And I’m thinking about either doing that or starting something new. I like a different offering for B2B and then doing cross promotion with my B2C. If you need business, you can go over here and use this other B2B tool. So yeah, that’s the question. Just businesses that may have both a B2C and a B2B component and how you would think about when to split those or how to keep those in one product. Thanks. 

Rob Walling (23:57): First off, congrats on building a B2C SaaS up to almost 10K a month. That’s impressive. And I like how you’re thinking about this of certainly going B2B or adding a B2B offering is going to help with a lot of your metrics in terms of churn and growth. Similar to how I answered the prior question in this episode, I think there are three dimensions that I would look at this through. There’s product, there’s marketing and there’s sales. So in terms of the product, you are the best person to know whether you can add B2B features to the current iteration or whether it needs to be a completely separate code base. And you know what I mean by code base? Maybe it lives within the same repo, but it’s like really a separate app because you feel like the two serve such different problems that they shouldn’t be combined into the same app. 

Rob Walling (24:56): And I can’t tell you honestly what to do there, but what I’ll say is I don’t think that matters. Whether you include it as a single code base with a bunch of flags to include the B2B features or not, or whether you have two separate apps running independently of each other, maybe they share the same database, maybe they don’t. I don’t think that impacts the other two, the marketing and the sales. Because if you already have a brand name and search traffic and domain authority, and folks are hitting your website and you’ve already had, as you said, these financial planners reaching out to you, the B2B side, reaching out to you without you advertising that you have those features or that you are B2B, that’s a great signal. And in the business, we call that market pull. It’s where the market starts pulling you in a direction and you get to pay attention to that or not. 

Rob Walling (25:49): So whether you combine the product and the code and the techno, that’s all tech implementation details. Let’s ignore that for now and think about marketing, which is your website, your copy, your positioning, traffic sources and visitors that are coming to your site each month. I bet that there is a way, unless your app is named something that is so B2C that it’s just never going to work for financial planners, which I don’t think it is, I think that you can tweak your current marketing copy and positioning to support both. As long as it’s serving… It sounds like it’s generally the same product. It’s just going to have more on the B2B side, but the end result or maybe the job to be done is the same, but it’s for an individual versus someone’s clients. And the job to be done is the same. So the core of the app is the same and the name could be the same. 

Rob Walling (26:42): And then now you have your H1 that it does this thing, and this is for individuals and financial planners. And on your homepage, do you have your two selectors of, are you a consumer, are you an individual or are you a financial planner looking to implement this for your clients? Boom. On your pricing page, you have the same thing, right? You have the individual plan and you have your financial planner plan and you have your call us plan because you should always have that because you never want to have someone come who should be paying you $35,000 and they sign up for your financial planner plan, which is a thousand a year or 2,000 a year or whatever the pricing is. So for marketing, I think it’s totally doable. But really, I think of this as it’s kind of just two tiers of the same product. 

Rob Walling (27:26): Even again, even if technically it’s not the same product, only you know that, no one else will care. So can the marketing work? Yes. Can the sales do both? Well, you don’t offer any type of sales process for B2C, right? It’s all self-serve. They click, they sign up, because I’m guessing you’re charging $9 a month or $5 a month or $60 a year or something. They don’t get a demo. They don’t get the handholding and the custom onboarding and a customer success person who will probably be you in the early days. They don’t get any of that. And so there is the free trial, sign up now, whatever you have right now for your B2C offering. And then you do have the requested demo, financial planners only. Are you a financial planner? Request a demo now. So can a sales process, even if it’s a one call close, can a sales process be implemented for just the B2B side? 

Rob Walling (28:15): It can. So when I hear you ask this question, I think yes, yes, and yes. And again, whether the technical implementation of splitting or not, I just don’t think that matters. That’s a decision you can make based on your evaluation of those requirements. But similar to the prior question, this in a way, it gives you a dual funnel. Now it’s not the full on enterprise at the top yet, but it could be a way to get into those higher ACVs and lower churn customers. So thanks for that question, Vance. I hope it was helpful. 

Leanna (28:52): Hey, Rob. This is Leanna, founder of Just a Job App. I’m a developer behind a job search management tool that integrates with Gmail to give users a dashboard of their job applications, their interviews, and referrals. It’s open source currently in beta with a 100 user limit until I finish a CASA tier two security audit in the next couple of weeks, hopefully. I’m not marketing it really at all, but I somehow have one paying user at $5 a month, and I’m definitely rethinking that price point before launch, but I’m also exploring a B2B angle with career coaches who can pay to monitor their client’s job search activity. My challenge is how do I price this fairly so I’m not gatekeeping access for people who genuinely need help with their job search, but I also want to make this sustainable as a side project. At the very least, cover costs. 

Leanna (29:45): I’m a developer working full-time elsewhere, so I need to keep this lean. What would you suggest for a pricing structure that balances mission with sustainability? My goal is to go full-time with this project in a few years if it lasts. Thank you. 

Rob Walling (30:00): One of my favorite topics, pricing. And another question about kind of having a B2C offering as well as the B2B side of things. So I think that we have a theme this episode. So one of the challenges of talking about mission driven anything is that means different things to different people. And it also means that you might just build this, make it open source and give it away because it’s mission driven and it’s going to help everyone. And if you feel that strongly that it needs to exist in the world, you should do that, make it free, let people do what they’re going to do. But then on the flip side, someone else might say, “Well, my mission is to make this sustainable for me first, such that there’s enough revenue coming in that I can justify the time I’m spending on it and that my emotional runway keeps me going because if I lose motivation, the project goes under, well, then I’m not really accomplishing my mission.” So someone might say, “So I’m going to charge what I think I can, what I think it’s worth and the value that it creates.” I’m going to charge that to everyone possible. 

Rob Walling (31:05): And maybe one of my pricing plans is a student, nonprofit, or need-based pricing plan and it’s free. So you have that free and it’s on our system. But by default, and maybe that’s just a line below your pricing grid, but by default, you have a $60 a year or five or $10 a month, whatever. Monthly, you’re going to have crazy high churn because people, what do you have a job search every few years and you search for a few months and then you’re done. So that’s one whole concern, but I won’t go down that rabbit hole because you didn’t ask about that. But that’s one way to think about it. If you want to be able to provide access on a need basis, I mean, unless you’re going to verify they have need, you’re not going to do that. It’s going to be kind of an honor system thing. 

Rob Walling (31:51): That will allow you to collect your five or $10 a month from folks who can pay it. If I was looking for a job today, I would have the means to pay and I would pay you. I see this all the time. I buy games like tabletop games, print and play games, and they will say, “Hey, suggested price is $5 or $10 for this PDF.” But if you don’t have the means, you can get it for free. I always pay because I have the means. And I’m not saying everyone’s like me, but some people will comply with that. Another way to think about it, an alternative is to not do what I just said, which is to have the honor system plan that you can get it for free and charge everyone in the early days to prove to you whether this is actually a need because people put their money where their mouth is and that will prove some product market fit. 

Rob Walling (32:36): It will provide revenue and motivation for you to keep going. And if you get this up, whether through the B2C or the B2B side, if you get this up to thousands of dollars a month, then it’s really easy for you to say, “You know what? I have revenue coming in. I have motivation. I want to keep doing this thing. And I want to offer it to folks who have a dire need for this who maybe can’t afford it.” When I think about having a company that’s doing, I’m going to jump ahead, but like a million dollars, two million, three million a year, don’t you have a ton of leeway there to now offer something free or very, very low cost to a lot of people because you have a business now that can support that. I’ve been involved in a lot of charitable giving and donating and just generosity since I became an adult and had the means. 

Rob Walling (33:23): Sherry and I have both given away a lot of money and a lot of time to causes that we believe in. And I believe a way to be generous and give away a lot is to earn a lot. It’s to provide a lot of value to the world in a way that people pay for that and then you can then be generous with that. If you think about my path, like imagine if we launched Drip as kind of a nonprofit, open source, mostly free, and there would be a lot of people using Drip to probably do good things, right? But how much value would we have created in the world? How much motivation would we have had in the long run to keep going and would it have been sustainable? And for me, the answer’s probably not. So I like to think about getting some stability first on your own by providing value for people who are willing to pay for it and then potentially offering this, as you said, the mission driven side of it, or you could do it alongside of it. 

Rob Walling (34:22): I mean, I guess my first suggestion was to just do it all at once and kind of make it an honor system. I definitely would not launch it and ask for donations. That’s the opposite, right? That is the opt in where people have to opt in versus, oh no, the default is you pay for this unless you have a need-based thing, so they kind of have to opt out. And honestly, if you want this to exist in the world and you feel like it can do good for people, the best thing you can do is make it sustainable, is to make it so that not only are you yourself compensated for working on it and therefore will want to work on it for years and years, but just the project itself has users who have some skin in the game and are offering feedback on an ongoing basis. 

Rob Walling (35:06): And then of course the B2B side, yeah, that’s exactly where I’d go. That will be so much more sustainable. Your churn will be a fraction of the B2C side. And I don’t know that I can even comment, you kind of asked for pricing ideas. I think I’ve given you pricing ideas around the B2C and the free-ish plan. The B2B would maybe be seat-based. I don’t know if they’re all solo. There’d be a software access fee. And it depends. If you need to do a demo, like at least one call to close, probably need to charge about $300 a month for it to make it worth it. But if it’s no demo, you can charge less than that. 50 or $100 if people, even the B2B side is able to basically self-serve. So I appreciate that question, Leanna. Thanks for sending it in. My last question of the day is about healthcare costs and startup runway. 

Rob Walling (35:57): This is a US-based question, just so folks know. And Charlie writes, “Big fan of Startups for the Rest of Us. One topic I would like to hear you cover, the impact of healthcare costs on early stage startups. For small teams, traditional group insurance can run 15 to $20,000 per employee per year, which materially shortens runway. If founders skip it, hiring and retention get harder fast.” Feels like one of those boring but critical expenses that doesn’t get discussed enough in bootstrap circles. There are some newer options out there that could seriously benefit many of these startup businesses. I’d love to hear your take on how founders should think about healthcare pre and post product market fit. Thanks for all you do. Thanks, Charlie. Yeah. I mean, oh my gosh. The fact that here in the US, there is, I guess, a group of the population that really rallied to have the right to go bankrupt from healthcare costs feels catastrophic to me. 

Rob Walling (36:56): And just the state of our healthcare system here is insane. And it is one of the biggest headwinds to entrepreneurship, in my opinion, in the states. And again, if you’re in Canada or Europe, you guys got this part locked. There are obviously some other headwinds in terms of entrepreneurship. There’s a lot of laws and such that are not in your favor, but it is catastrophic to me. And for all the lip service that the politicians pay to wanting to create jobs and entrepreneurship and all this stuff, they’re not doing anything about our healthcare costs and it is catastrophic. So the impact of healthcare costs on early stage startups is a huge deal. It’s a huge deal. And you’re right, 15 to $20,000 a year per employee, absolutely shortens runway, absolutely increases the cost of hiring. People wonder why bootstrapped startups in the US want to hire in Canada or overseas, and it’s because that cost is significantly less. 

Rob Walling (38:01): So the approach that I’ve seen bootstrappers take is they often give a stipend, which I think is legal. It used to be not legal to do this, but you give a stipend of $500 a month or $1,000 a month and have people get their own insurance on the public exchanges. And yeah, you’re not going to hire super senior talent. It’s going to be harder to find super senior talent that way. There’s another issue, which is you get a solopreneur who is building a great business and they get it to five or 10K a month, but they don’t want to quit their day job because the healthcare at their day job is $30,000 a year that they’re not paying, that their big employer is paying. And so therefore they don’t actually want to go all in because they don’t want to lose their benefits. And the fact that healthcare is tied to employers is a relic. 

Rob Walling (38:53): It’s a remnant of, I think, what is it, post-depression era. It shouldn’t exist that way. I do not think employers should be involved or needing to be involved, but that’s where we are. And so yeah, I guess that’s my take is like, if you’re pre-product market fit, you don’t need to worry about this because you’re not hiring a bunch of people and you don’t really have the money to do any of this. If you’re post-product market fit and you’re bootstrapping and you’re growing, I’ve seen folks do things ranging from, well, I guess I’m only going to hire people in their 20s and 30s because they need less insurance and they’re cheaper to insure. And maybe you set up a group plan and maybe you don’t. I know a lot of folks that don’t set up a group plan. And as I said, they give some type of stipend towards the public exchanges. 

Rob Walling (39:36): It is an interesting argument for raising money and I don’t want that to be… I want the argument to raise money to be because it’s the best tool for the job right now. It will get you there faster. It will save you years and it will lead to more success in a shorter timeframe. What I don’t want it to be is, “Oh, you need this so that you can hire good employees because the healthcare cost is so high.” But it certainly changes the game if you raise 250,000, $500,000 to where it’s not that this goes away, but it just has a lot less impact than if you are truly, truly bootstrapping. And every dollar of MRR that you earn has to go to pay that employee who, oh, maybe their 60 or 70K a year suddenly becomes an 80 or 90K a year employee because of healthcare costs. 

Rob Walling (40:25): So I don’t know of a silver bullet beyond those options. That is what I’m seeing folks do. But Charlie, you mentioned there are some newer options that could benefit startup businesses. I’m all ears to hear them if you have other options beyond what I have named. And I appreciate that question. Something we’ve touched on over the years for sure on the show, but given how expensive it is and how big of an issue it is, at least here in the US, I think it’s always worth a discussion. So that’s going to wrap me up for today. Thank you so much for joining me this week and every week. And as another reminder, MicroConf Mastermind Matching is closing in just a few days on April 17th. Head to microconfmasterminds.com if you’re interested. This is Rob Walling signing off from episode 828.