In Episode 560, Rob Walling is joined by Einar Vollset and Tracy Osborn to talk about deciding when it’s time to hire someone, how to think about which role to hire next, changing location to force productivity, and more.
The topics we cover
[2:52] Deciding to hire a community manager
[9:28] Location hacks for improved productivity
[14:52] Delta airline pilot suing Delta for stealing app
[20:35] Product → Business → Company
[27:18] Facebook Users say “No” and Advertisers are Panicking
[32:32] Tech-enabled modern banks
Links from the show
- MicroConf Remote Community Manager
- Tracy Osborn’s Tweet on Location Hacking
- Delta pilot sues the airline for allegedly stealing an app he designed | Engadget
- Rob Walling’s Tweet on Product → Business → Company
- FacebookUsers Said No to Tracking. Now Advertisers are Panicking
- Square Business Banking | Checking, Savings, & Loans
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
In Episode 559, Rob Walling chats with Andrew Gazdecki, the founder of MicroAcquire, about bootstrapping a two-sided marketplace in a competitive industry. They talk about Andrew’s previous successes, including growing Bizness Apps to $10 million in annual recurring revenue. They also unpack Andrew’s current business, MicroAcquire, and talk about how it was started, its current success, and the future plans for the business.
The topics we cover
[6:03] Why did Andrew decide to sell Bizness
[8:12] Background on MicroAcquire
[10:52] Ideal revenue for MicroAcquire
[13:29] Comparing MicroAcquire differs from similar broker websites
[16:59] The future of MicroAcquire
[20:50] Metrics since launching in January 2020
[23:08] Bootstrapping a two-sided marketplace
[26:33] Raising $22 million post-money valuation
[31:25] The hardest thing about bootstrapping a business
Links from the show
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
In Episode 558, Rob Walling chats with Einar Vollset about bootstrapping versus funding and the many options that exist in between. No longer is it a decision between a bootstrapped or venture path. With their unique perspectives, Rob and Einar talk about all of the funding options that exist. They also share some things to consider when deciding whether or not to take on funding and, if you do, how much you should plan on raising.
The topics we cover
[04:24] When funding makes sense for bootstrappers
[11:54] Raising pre-revenue vs raising with revenue
[15:29] Risks of raising as a platform (e.g. Shopify) business
[20:40] Funding options available to bootstrappers
[27:57] Convertible notes & SAFE’s
[29:16] How much should a bootstrapper raise?
Links from the show
- Episode 496 | “The Press Covers Exceptions, Don’t Compare Yourself to Slack or Zoom”
- Episode 411 | Bootstrapping vs. Funding: 19 Questions To Ask
- Einar Vollset (@einarvollset) | Twitter
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
In Episode 557, Rob Walling flies solo to talk about investing for founders, with an emphasis on retirement. Rob views investing as a long-term game, not treating the stock market like a slot machine by buying and selling stocks. As founders, we’re busy with our work, our family, and our friends. We don’t want to spend a ton of time fiddling with investments. In this episode, Rob outlines an 80/20 approach to getting the most out of investing as a founder.
The topics we cover
[02:13] How Rob made most of his money
[04:07] The rule of 72
[07:30] Investing on autopilot while building startups
[07:46] Build an emergency fund
[09:53] Max out retirement plans
[12:08] Open a simple IRA or SEP IRA
[13:00] Life insurance
[14:35] Retirement account asset allocation
[18:32] Taking your investments to the next step
Links from the show
- Rule of 72
- Haven Life
- Lazy Portfolio
- Money For the Rest of Us
- The Stacking Benjamins Podcast
- Afford Anything
In Episode 556, Rob Walling chats with Adam McCrea about growing from zero to $300,000 in ARR over the course of three years as a Heroku add-on. Adam is still a single founder with no employees and up until joining the TinySeed accelerator in their Spring 2021 batch, has fully bootstrapped Rails Autoscale. Now, he’s working to grow the app, deal with platform risk, and launch pricing experiments.
The topics we cover
[03:30] Background before starting Rails Autoscale
[07:04] Getting to 100 active users
[09:30] Platform risk
[14:59] Working on Rails Autoscale as a side project
[20:54] Rails Autoscale vs. Heroku’s Autoscaler
[24:13] Free-trial to freemium experiment
Links from the show
In Episode 555, Rob Walling answers listener questions with Ruben Gamez. They discuss different models of bootstrapping success, hiring W2 versus hiring contractors, determining if a business is an ideal fit for bootstrapping and they revisit enterprise pricing.
The topics we cover
[01:24] Bootstrappers Rob & Ruben admire
[12:25] Pros and cons to hiring contractors vs W2 employees
[23:05] Determining if an idea is a good fit for bootstrapping
[28:31] How to develop competitive pricing for large enterprise clients
Links from the show
- Churn Buster
- Episode 551 | Task-level vs. Project-level Thinkers, No Such Thing as an Autopilot Business, and More (A Rob Solo Adventure)
- Ruben Gamez (@earthlingworks) | Twitter
In Episode 554, Rob Walling chats with Sherry Walling about grief as a part of entrepreneurship and how to get better at handling grief as an entrepreneur. They also discuss burnout and properly evaluating if it’s the right time to sell a company.
The topics we cover
[02:18] Grief is part of entrepreneurship
[05:12] Getting better at handling grief and loss
[06:07] Grief and selling a company
[09:01] The importance of symbols
[12:04] Evaluating reasons to sell a company
[16:37] The three components of burnout
[20:21] Changing your work schedule for summer
Links from the show
- The Entrepreneur’s Guide to Keeping Your Sh*t Together: How to Run Your Business Without Letting it Run You
- 18 Summers
- Sherry Walling
- Sherry Walling (@zenfounder) | Twitter
In Episode 553, Rob Walling chats with Tracy Osborn about the latest bootstrapper news, including the recent Stack Overflow and Moz acquisitions, quitting instead of giving up remote work, and highlights from TinySeed 2020 Batch.
The topics we cover
[03:45] Stack Overflow acquisition
[12:11] Moz acquisition
[16:33] Quitting instead of giving up remote work
[26:44] Highlights from TinySeed 2020
Links from the show
- Episode 545 | The Value of Learning 80/20 Design Fundamentals
- Episode 511 | Raising Prices & Re-writing Your Codebase
- Employees Are Quitting Instead of Giving Up Working From Home
- Stack Overflow Sold to Tech Giant Prosus for $1.8 Billion
- Tracy Osborn (@tracymakes) | Twitter
Rob: Welcome back to Startups for the Rest of Us. I’m your host, Rob Walling. Every week on this show we cover topics related to building and growing ambitious yet sane startups. We look at building companies, not as a vanity project, a way to get power and status in the world. But we think about it as a way to improve our lives to bring us freedom and purpose and allow us to maintain healthy relationships.
It’s not about being a total bootstrapper, it’s not about raising buckets of venture funding. It’s about being capital efficient and building a company that serves perhaps multiple purposes, rather than just being an IPO in 10 years, but that actually changes our lives and those around us.
Welcome back to the show. Thank you so much for joining me again today. We’re going to be covering bootstrapper news today with Tracy Osborn. I’m excited to talk about it. We have some pretty interesting stories, actually. Stack Overflow was acquired for $1.8 billion. It came as a total surprise to me. Just a few minutes prior to recording this, Moz was acquired. We talked about people quitting instead of giving up remote work. We wrap up the episode by talking about remote work and remote retreats, and if you are a remote team, how often you think about getting together.
We also talk about a few highlights from our 2020 batch of founders and talk about what we feel went well with that. That dovetails into the whole remote conversation of not being able to get together for retreats during this batch here, and how we feel that impacted us and perhaps the cohesion of the batch itself.
Today, I’m talking about these topics with Tracy Osborn. She’s @tracymakes on Twitter. Of course, she is the Managing Director of TinySeed and the author of Hello Web Design. Within the first few minutes of us chatting, you’ll get to see that book hot off the presses. She self-published it and then later went through a publisher and has a nice hardcover copy. So with that, let’s dive into today’s show. Tracy Osborn, thanks for joining me.
Tracy: Yeah, happy to be back.
Rob: Last time you were on you were talking about your book, Hello Web Design. Before that, we did a bootstrapper news episode. You’re getting the book out. Is that a physical hard copy, hardcover of your book?
Tracy: Yeah, it is a hardcover. The publishing company wanted to up the quality of it. Apologies to anyone who’s listening to the audio format. Just imagine a book that’s hardcover. It used to be a paperback. It looks really nice now. Gosh, I don’t know the exact date it’s coming out, but it’s going to be this month. I know some people have already gotten their book.
Rob: That’s cool.
Tracy: Listen to the last episode where I talked about my design book. You’ll get the link to buy my book that teaches web design. Sorry, I have to put a pitch in there. This is the perfect opportunity.
Rob: Nostarchpress.com/hello-web-design. Before that, you and Einar Vollset were on the show to talk about bootstrapper news. We’ve had all kinds of conversations around this. Einar is out of the office today. He’s taking a day off, and so it winds up being you and I here recording. Thanks for doing it last minute. I found myself at the end of the week saying, I have no episode next week. So it’s great.
Tracy: I like how you just admitted that. I wasn’t going to say anything. But, yes, I’m very happy to be the person you go to when you are in a pinch.
Rob: Scrambling. That was a thing. It doesn’t happen very often. I mean, I often record at least a couple of weeks ahead or I get stuff done Tuesday, Wednesday for the following week. But, I don’t know, this week there was a lot going on and a lot of email. But we are really talking through news and other topics. We even have a listener question I might throw in depending on how time works out. This is stuff that’s related to developers, designers, founders, bootstrappers, and such—the folks who would listen to this podcast.
The first story, what’s funny is I hadn’t heard about it. It wasn’t until I was digging through a bunch of social news sites for news over the past couple of weeks that I read that Stack Overflow sold to a tech giant that I’ve never heard of called Prosus for $1.8 billion. It says that it’s Prosus’s biggest investment in online learning and comes weeks after it’s sold a chunk from its massive Tencent holding.
Stack Overflow, this site. I listened to Joel and Jeff when they were launching Stack Overflow. They had a podcast around it. I’m an early account, I don’t think I ever answered a question. This is like a mainstay for our communities. What’s your take on this?
Tracy: I haven’t answered a question ever either. I’ve gotten so much out of Stack Overflow, whatever I’m programming. Like any programmer I’m using it on the minute, every minute, it seems like when I’m trying to debug something. This is interesting to me. I mean, one of the reasons why I work at TinySeed is that I’m a big fan of smaller companies. I try to enable a lot of people on the internet to launch small things, and I love small teams. This goes into real life for me. I do small businesses, not big conglomerates and whatnot.
It’s been interesting to see the trends we have in (I want to say) the physical world of consolidation, of businesses like news industries. Seeing that move into online industries, and you can see that here with Prosus, which I had never heard of either. For being such a tech giant—I guess it’s South African—I’ve never heard of them.
When I was researching a little bit for this story, looking at all the different acquisitions and properties they have, they’re all around online learning. It looks like they have this plan to go through all these online learning websites, supposedly, keeping them independent and they’re still running on their own, but they’re still consolidating all these online learning websites.
It leads me to wonder about what it’s going to look like in five or so years as these companies are getting acquired and consolidated. Are we going to have these mega-corporations that are pushing for a certain way of learning when it comes to online learning. Pushing for certain ways of learning or being more (I want to say) anti-democratic. You know what I mean when a big company comes in and takes over these small companies, and then all of a sudden, they all start looking the same. They all kind of had the same processes and whatnot.
On one hand, it’s more efficient, on the other hand, I mourn for the freedom of these small businesses. I might be going way too broad here, but it made me think about news corporations and consolidation there, and seeing this happen in the tech world. I told you earlier, I kind of miss the ‘90s, where it seemed like everyone was just individuals running websites. And now we have these mega-corporations that are running things that I use actively. It makes me wonder how it’s going to look in the short future.
Rob: I wonder if you’re the only person that misses the ‘90s because, man, the fashion was terrible/ I guess the music was pretty good, but no, I’m joking. Very fond memories of the ‘90s.
Tracy: Frame websites. We’d have friends and development nonsense. I just built it with frames.
Tracy: Sorry, go ahead.
Rob: The thing is with any industry, there’s always a bunch of players and the consolidation has been inevitable. Where it’s like there were a hundred car manufacturers in the US, and now there are three. There were a hundred airplane manufacturers, and now there are a handful around the world. There were a bazillion TV stations, and then it became just three, maybe that one’s not true. But radio? Each of these things has consolidated. TV is the one where it got distribution, cable, and it actually expanded. But then there’s only a handful of companies now that own them.
There’s NBC, CBS, and AMC, or whatever, but they’re only owned by a handful of companies. I hear you on wanting the days back where it’s small players. Again, Joel Spolsky started a little software company called Fog Creek Software in 1999 or 2000, started blogging, and then start Stack Overflow. He was the CEO until 2019, I found out, and then he became the chairman. At that point, when one of the founders steps away from being CEO, I feel like the clock is ticking for an exit.
This type of thing where they did raise venture funding, I think, a lot of us were surprised because Joel was one of the few bootstrappers. He was the first person I’d ever heard who started a software company without raising venture funding. As shocking as that sounds today, in 2001 I was like, you can do that? That’s a thing? I literally didn’t know that was possible. Just every model I had seen was someone raising funding.
When they raised for Stack Overflow, I remember being super surprised and Joel was like, look, certain types of businesses, if you want to do some certain types of outcomes, you need buckets of money. To do Stack Overflow the way they wanted to do it with all the stack exchanges and all the stuff, that was what they wanted to do. Once you raise that level of money that they did—through venture, not TinySeed money, not angel money—the clock starts ticking. You have to have a liquidity event. So they needed to IPO or they needed to sell at a certain point.
I look at it as I think it’s cool for Joel, Jeff Atwood, and the founders (whoever had equity in this) that they built something amazing and that they now walk away with boatloads of money to be able to invest in and fund future entrepreneurs. Of course, I’m concerned about Stack Overflow itself. I don’t use it at all anymore unless I’m helping my son troubleshoot a 3D printer driver or something. I don’t know if Prosus is private equity, or venture equity, or what they are exactly. I guess I could have actually done some research. But basically, they’re some type of big conglomerate investment that’s rolling things up.
But I’m excited about the opportunities. There’s always the opportunity for scrappy entrepreneurs to come in. If Stack Overflow is not going to be good, should we all start a new Stack Overflow that would be a competitor? That would be crazy. You wouldn’t have done that while Joel was running it because they would win. I guess there’s just a lot more money in the startup ecosystem with Jeff Atwood, Joel, and the other founders having this money to reinvest.
Backing startups, I think that’s something that they will do. They will do interesting things with the money. They’re not going to go retire on a beach somewhere. They’re going to start their next company or they’re going to help other entrepreneurs. But I’m a silver lining person when it comes to this stuff because there’s definitely (as you’re saying) both sides of it. There’s a real negative take I think that is very real. It’s a real possibility.
Tracy: Yeah, I just looked it up actually. Prosus has stakes in companies. It still has a stake in Tencent. But they also have other education companies like Brainly, Codecademy, Udemy, Remitly, PayU—some things I haven’t heard of and some things I have. It gives you an idea in terms of their ecosystem there.
When I say something about consolidation and mourning it, when I think about radio stations, you see the radio stations consolidating to get more plans, boring, and vanilla because there are no local radio stations. It’s harder, I think, for individuals for radio to start up their own thing.
But with tech, that’s the thing that makes me optimistic about what we can do on the internet. What we can do as tech entrepreneurs is that if Stack Overflow does go in a direction that people don’t want, then it’s easier to start something new and pull out those features, pull out anything that doesn’t work anymore—Stack Overflow, as they make changes. If they make changes and that the internet evolved pretty quickly to fill in that gap as compared to say some of these more (say) physical businesses.
That brings me a little bit of comfort. Obviously, I don’t want Stack Overflow to change. I mean, I’ve never given back, which is not necessarily a good thing. But I appreciate all the people out there who have spent the time and unpaid work to answer people’s questions. I hope that that kind of community sticks around post-acquisition.
Rob: That’s a good point because starting a new car company today would be very, very difficult. As we’ve seen with Elon Musk on Tesla—even with all the money, all the influence, and network he had—it’s been a real uphill battle for him. Versus starting a competitor Stack Overflow, the network effect will be really hard, like you said, the marketplace aspect of it. But way more possible than starting a car company. It’s interesting. We have another story we need to cover in-depth, but literally 33 minutes ago, the story broke that Moz was acquired by iContact.
I got a text from Einar and I’m like, wow. You know it’s gonna happen, but I’m always surprised when it does. And really, why should I be surprised? Again, it’s a venture-backed business that was doing, I think, $70 million a year last year, it’s SaaS App, it’s worth a lot of money. The founder left a few years ago to start SparkToro. It’s probably natural that the new CEO they brought in was to groom it and get in line for an exit.
We don’t have any details about price, outcome, or anything, but this is another thing. I think this is the critique of venture capitalists is that they don’t build businesses for the long-term because there does have to be this liquidity event, usually a sale. But what’s interesting is I’ve realized over the past couple of years, an IPO obviously is also a liquidity event, and an IPO is just really just raising funding from the public. Do you know what I mean?
A lot of people will say like, oh, they IPO and they sold out, or they sold everything. And it’s like, no, they just sold another 10% or 20% just like a funding round. Oftentimes, the founders or the current CEO will stick around for that.
Tracy: I didn’t get that for a long time either. IPOs felt like this big—I mean it is still a giant event and whatnot. But still, like you said, it’s the same thing. Taking a bit of your company, instead of going to private investors and going public.
In the Moz thing, I am looking forward to seeing what news comes out of this. I hopefully will hear from Rand soon. I hope that it worked out well for him. But iContact is another company where it’s like, oh, they’re acquiring Moz to form a suite of leading SEO, email, and digital marketing solutions for small- and mid-sized businesses. It’s another example of this consolidation. A bigger company being like, okay, we need another company in our portfolio, so we have this full portfolio, this full ecosystem of different tools. I guess we’ll just see what happens with Moz too.
Rob: Yeah, and that’s it. The plus of this is hopefully Rand, whoever else had equity, and the investors walk away with enough money that they now are reinvested back in the ecosystem. I mean, Rand himself, even before this exit, is an investor in TinySeed. He’s a mentor. He’s giving back to the entrepreneurial community in ways that his means have allowed, and if Rand has more means he will, I think, give back more. That’s the plus side of this.
And of course, the negative side is if you’re a Moz customer, things are going to change. They’re pretty likely to. That’s where it’s good that we do have competitors—Semrush, Ahrefs. There are other tools out there that do similar things. It’s just a bummer if you’ve been using a tool for 10 years, it gets sold, you’re waiting for the inevitable changes. The playbook, as you said earlier. These things, they start to be run the same. It’s the playbook. The private equity or the strategic playbook.
Tracy: Got to bring the people in to make sure everything is efficient, that efficiency is reflected across every one of their properties, and then everything looks the same.
Rob: Yep. Don’t do this, but if you read The Hacker News comments for any of this or even just the comments on anything, you’re going to see things like the founders sold out. You hear this phrase. It’s almost like, no one should ever sell their company. And you know what, that’s just not realistic because people don’t want to run the same company for 40 years, (a) it gets boring, (b) there’s a lot of risks.
You can have tens of millions of dollars in net worth tied up in an asset that you have no liquidity. So it just doesn’t make sense. It’s usually said by someone who’s never built a company worth tens of millions of dollars a year who is saying these things. Of course, do you think sometimes it gets worse after a company is sold? Of course. But there’s a flipside. Are there silver linings to this as well?
Tracy: Yeah. I mean, the service is more stable because there’s more tech support within the company, more A-team, or more personnel. Are they able to add more features quickly? The consolidation with other parts of the suite. I think of Microsoft. Microsoft has a whole suite of applications. A lot of these applications, they’ll talk to each other, so there’s a lot of benefits there as well when you opt in to some of these conglomerates.
Rob: Yeah. It is still disconcerting though, I’ll admit.
Rob: Next story. We’re going to link up all these stories. This is on bloomberg.com and it says, “Employees are quitting instead of giving up working from home. The drive to get people back into offices is clashing with workers who’ve embraced remote work as the new normal.” And it talks about someone who is called into the office for a six-minute in-person meeting or something, and she’s like, that’s it. I’m quitting.
My brother lives in the Bay Area, most of my family is actually. He said that he is friends with some folks who work at Apple, and they lived near him. When the remote work started, they moved like a two-hour drive away because the houses are so much cheaper, and you can get a view on all this stuff. Maybe it was even two and a half hours.
He’s like, they think they’re going to be remote forever and I think they’re not. I don’t think Apple’s going remote with the big flying saucer campus there. What are they going to do when they come back or when that happens? We were chatting about that, and I said, boy, if they’re developers or they have skills, they can just work remote for someone else, probably. What’s your take on this?
Tracy: I mean, ignoring COVID, this is just what happened with Yahoo because they had a remote policy, Marissa Mayer came in, and then it was like, oh, we’re canceling the remote policy. Everyone has to come back into the office because there’s still this pervasive idea, that productivity is tied to butts-in-seats. I was like, oh look, we’re taking this company, or we’re making it more productive in bringing people to the office. We’re going to have all those “benefits” of having butts-in-seats. That was pre-COVID.
Yahoo is its own thing. Who knows what’s going on with Yahoo now. But I remember that happening in the Bay Area, and COVD happened. That forced all these companies to adopt a remote policy. It’s the same thing, COVID’s lessening, the pandemic is lessening. It’s allowing people to get fully vaccinated, have the possibility of people going back to the office.
Company is ill-advised, the pursuit of efficiency and managers who have maybe not a lot of confidence in their teams or they are insecure managers (I want to say) going to pursue bringing people back in the office so that they can not have that question over their head of are my workers being as efficient as possible?
So it’s not something I agree with. We’ve always been 100% remote. I love working remote. I just look at Yahoo, I look at what’s going on right now, and this is like duh. Watching these companies force people to come back to the office, people are going to quit because now they realize there are more opportunities out there.
I expected the companies to do this. What is different now is that so many companies are going to be adopting more remote work than these companies that have, say, insecure managers, and insecure C-suite teams that want to move people into the office, now, they have more competition. Now their workforce is aware of remote work.
I watch the industry, people are going to be trying to adopt these policies. People are going to be quitting. Other opportunities are going to show up that are fully remote. Again, five or so years from now, there is going to be a major shift in the industry that started now because of COVID.
I’m not surprised but I expect that this is going to be, hopefully, a long-term change. These companies that have insecurities around productivity, I expect them to have this reaction, but hopefully, they’ll change.
Rob: It’s interesting because I’m much less black and white on remote being the end all be all. Every company I’ve ever run has been remote or half remote. In Fresno, we were partially.
Tracy: Yeah, I didn’t mention that. I’m not black and white either, and I didn’t really go into that. I actually think, TinySeed, I wish we were half remote. I would love to work with you two days out of the week.
Rob: Yep. That’s my ideal.
Tracy: I think that is the ideal for these companies as well. I think the black and white thing is like whether fully remote versus fully in the office. There’s a lot of gray there. Sorry, continue.
Rob: That’s the tough part is every time I talk about remote, I talk about the best setup I ever had and it was in Fresno. There were five of us or six of us—I forget how many were in. It was two and a half days a week for me. Some people showed up three. I think Einar worked there five days a week in the office because she liked it better. She was alone half the time anyway because none of us were there, but we were able to whiteboard.
Our staff meeting was lunch, and we’d go out on Thursday. I mean, that was the best. And then I could go home, put the headphones on, and not worry about having to drive in those days. It’s really hard to do that. Not for Apple, I guess. It’s hard to do that if you’re a small company or a bootstrapper because if you’re going to pay for an office anyway, that’s a cost if you’re only using it half the time.
In addition, then it does restrict you to I can only hire within a 30–45 minute drive. You live in Canada, Einar’s in California, I’m in Minneapolis, Producer Xander with MicroConf is in Hawaii. If I had to hire everyone in Minneapolis, we wouldn’t have the team we have. It instantly breaks that. I really struggle with it.
Tracy: It’s the same thing if you were like okay, TinySeed, COVID is over. We’re going to pursue being in person in Minneapolis. I would have to quit. It was like the same thing. I don’t want to, but I have to because I’m here. I feel like that’s going to happen a lot to these companies where, like you said, the example of someone who moved out of the Bay Area—two hours out so they have a lower cost of living—is going to be very unwilling to come back into that high cost of living area. That’s maybe where this change is going to happen. There are companies that can make this work.
My first job out of university was at a tech company. That’s my example of an insecure manager. Over the four and a half years I was there, they kept adding more and more policies that make us more efficient. So (a) we were all in the office, (b) we started clocking in and clocking out, (c) bonuses were tied to us working nine hours a day, rather than eight. If you only work eight hours a day, you’re not eligible for any bonuses. These policies kept adding up, adding up because they’re like, we wanted to extract all the productivity. Curious how they’re doing now with COVID. I eventually quit because of that.
Rob: Absolutely. Hours do not equal productivity. That’s the thing is my kind of shades of grey, or my spectrum view of this is not because I think, oh, I’m going to get more productivity out of people, or I can make sure they’re in their seats those two or three days a week. It is purely for social interaction. A lot of the companies that say, we’re fully remote—Basecamp’s a typical example, they’re all remote. From what I’ve heard, they hired a bunch of introverts, and everyone in the world is not an introvert. The extroverts I know don’t love working out.
I have worked remote for 20 years, literally two decades of working remote. I had a couple of stints in there where I had jobs for a year or two. But in general, I’ve had a home office. Sometimes that was a desk in my living room when we had a small house, or in my bedroom during COVID when I didn’t have room. I generally prefer remote, but I also miss a lot of the social. It purely is social and the ability to sit in front of a whiteboard or to hash things out. It’s that water cooler conversation that just doesn’t happen because you’re not hanging out all day.
You just have other wild thoughts that you drop on someone and that spark something, then there’s a brainstorm, and then there’s a hey, can you… That’s what I miss rather than being a hardcore manager.
I think of Apple with thousands of people, that would be tough for me. There have to be people that are just totally abusing it at that scale. On our scale, there’s four of us, or at the Drip-scale there were 10 of us. That was pretty easy for me to see who was shipping, what we were getting done, and to know that everybody was in on it. But if we were a hundred or a thousand…
I mean, I’ll say, once we were exorbitant to Leadpages, which is about 180 people total, it was three days in the office, two days work from home. There were absolutely people that were slacking off. That’s tough. I don’t know how to handle that, other than to require people to be in the office.
Tracy: Yeah. I mean, that happens if you’re in the office all the time too.
Rob: Yeah, that’s true.
Tracy: I mean, not to defend myself, but I got really irritated by that one company constantly tracking hours. One other thing they did was I wasn’t allowed to have my phone out because then I could potentially be looking at my email during work hours. It’s just crazy. I wish I could name and shame them, but I’m not going to.
Rob: I know, I can’t even… this is crazy.
Tracy: I’ll tell you stories later. What I did, I just stared at the corner. I would just take breaks, stare at the corner of the wall, and let myself drift off because there was no way they could stop me because I was just so mad at their policies. That’s going off track, but it’s a funny story.
What I want to say is that it still happens. There are still going to be workers out there that are maybe not performing as well as they could have. Maybe they’re a worker that the company might want to hire a person to replace that person. I don’t like tying everything to productivity, but you know what I mean. The person is not necessarily a good fit for the company.
That doesn’t matter whether they’re remote or all in-person. What it means is that companies need to have better ways of tracking the quality of work. Instead of just being hours in the office, like that company that I originally worked at. We were doing all we could, the person’s here all the time, this is as efficient as we could be. Look at other metrics and then those metrics can apply to whether someone is in the office or out of the office.
Hopefully this forces these companies to remove butts-in-seats and find other ways of tracking quality of work, productivity, and whatnot. If those things apply to in-person or out of person, I think that overall, it’s going to be better for the company anyway.
Rob: I love that you just said in-person or out of person. That makes me feel like I’m leaving my body. I’m floating guys, I’m seeing myself.
Tracy: Oh, gosh. That’s what my brain does. I’m thinking two sentences ahead and forgetting what I’m currently talking about.
Rob: It’s all good. Our next story is a Twitter thread I’m going to be posting next week. Maybe I’ll post it the day before the day that this episode goes live. It is about TinySeed and the end of our second batch, which is our 2020 batch. I want to be careful. Audience, listener who’s sitting here listening, this is not going to be a big hooray for us or hooray for TinySeed, but I did want to visit some milestones that some batch two folks achieved. As well as reflect on things that we did well and some things that maybe we need to work on. As well as just the structure.
Someone asked me in the last couple of weeks how do you run a fully remote accelerator, and why were you running a remote accelerator before anyone else? Because we were running that pre-COVID. Now, all accelerators have been remote for the last year. We orchestrated and architected this to work that way.
Tracy: Actually, this ties into our previous conversation. We were talking about tracking performance and quality and not necessarily being butts-in-seats. For us, some context around this is that, before the first batch, we were able to talk to the founders and the accelerator in person at MicroConf. We’re able to say, how was this year for you? And kind of get the down low. Of course, fully remote we weren’t able to do that.
We have anonymous surveys because we want to know how well the accelerator is doing, which is especially important being that most of the people—actually, I’ve met a few people in batch two, our 2020 batch of MicroConf—I’ve never met in person. This is the only way we have a gut feel for how the year went, but how does this look from the founder’s side of things? How well did this year ago, being that we had no in-person events and we had to do everything remotely?
Rob: That’s right. Because if you think that hiring someone remote is difficult, imagine running someone a $120,000 or $180,000 check remote having never met them and only being able to talk to them via Zoom and email.
A couple of numbers. Our first batch, our 2019 batch was 10 founders. 2020 batch, that just ended was 13. And our spring 2021 batch is 18. But the 13 companies in our 2020 batch grew an average of 413% during the accelerator year. While fundraising is not an implied goal of TinySeed, we had—I guess there’s one company who secured their pre-seed round and two others who are basically about to wrap it up.
We had our first acquisition, which was SeekWell. The founder of SeekWell was on this very podcast probably about six months ago. ThoughSpot acquired them. We had some great milestones.
ScrapingBee is great because they are very public with their revenues. We can actually say exactly, not just percentage stuff, but Scrapingbee was at $40,000 ARR when they applied. I don’t know if it’s when they applied or the batch started, but now, they’re at north of $500,000 ARR. The founders there told us that TinySeed played a huge part in that.
And then SegMetrics. Many of you know Keith Perhac, he’s a long-time MicroConf-er and has been on this podcast. SegMetrics grew 10 times in the last 12 months and they’re on track to hit mid-seven figures ARR by the end of this year.
A lot of cool milestones. Pretty stoked about it. It was a big bummer that we couldn’t meet a person. It’s not a regret because you can’t do anything else, but the fact that we weren’t, as you said, able to make that connection I think was a pretty big struggle.
Tracy: We always knew it was going to be remote. We wanted to help companies and these founders grow their businesses, help them reach (what you say) escape velocity, which I think some of those stats we were successful in helping those companies reach those milestones. But a huge thing is also just community between founders, especially for solo founders. We talked to a lot of our solo founders. It gives them a sounding board, people to talk to. And all these things that we can do remotely fairly well, but there’s something about getting in-person and having this group of people all together in-person.
I mean, it’s the same thing as a company. Working remotely is fine with you, me, Xander, and Einar, but it’s a different feel when you do have those like in-person meetings, in-person events, and whatnot. It’s a bummer that we weren’t. We were able to have a lot of community. There’s a difference in feeling between the 2019 and 2020 batches. I think it has to do with the fact that there weren’t any in-person events. Hopefully, as things open up this fall, we are planning to have some sort of in-person event like a makeup retreat for the 2020 batch. Hopefully to add that into the end and solidify all those relationships we were able to do remotely.
I will say that I do feel like there was a different feel, and it was interesting to have that experience I guess. I think when we did that anonymous survey, thankfully it seems like people still got a lot of the program without those in-person events. I am looking forward to bringing them back in though and re-establishing that side of TinySeed.
Rob: It’s a big deal. It makes a huge difference. I think when we originally started TinySeed we said, let’s have four in-person retreats per year. That means that every four months you essentially get together. The founders told us, this is too often. I’m busy and I don’t want to travel every four months. So then we made it six months apart, which means you have three retreats.
Tracy: Beginning of the program, end of the program, and middle of the program, to be clear.
Rob: Yep. Every six months. We haven’t had a chance to do that yet, but I feel like that’s going to be perhaps our optimum cadence. And the reason I’m calling this out is let’s say we were a team of 20 people, would six months be the optimum cadence? Or would we want to meet more frequently like every three or four months? Because I know that there are certain companies that only have one—I think Zapier has like one retreat a year. There’s a lot of people working there. They spent a quarter-million dollars or more to get them together. It’s not something they could probably want to do every quarter.
But what do you think would be the optimal? Because working with founders is one thing. They’re busy, they’re doing their thing, we get together, and we mastermind. But we are not managing them as teammates, as employees versus an actual team that’s working together in a startup. What’s your take on optimum cadence, face-to-face?
Tracy: One of the reasons why it went from four to three was because we talked to the founders in the first batch, four retreats per year meant more time away with their family, more time away from their company. It’s different when it comes to say a team because maybe four retreats per year or whatever you choose, it’s not technically time away from your company. You’re still working on your company while you’re at those retreats. That’s the biggest difference between retreats for founders who work in a company versus a TinySeed if TinySeed was 80 people.
I think it’s really important for companies to have those in-person experiences, and those are the kind of things that don’t necessarily take away from work. Instead of working on the nitty-gritty day-to-day, it gives you that time you should be doing as a company anyway to think high-level, what’s the next three, six, whatnot months? That’s something that depends on the company and how remote they are. If you are very international, every three months would suck. Every year I think is doable.
Rob: If you’re going to get your team together, we’re talking about founder stuff, but if you have a team at a start-up and you’re going to get them together, I found a really nice cadence is to have about half the time be work and half the time be not. It’s even like 2/3 not work where you have a work session in the morning maybe through lunch or early afternoon, then you have an afternoon fun hang-out, and then you have a fun dinner hang-out.
Usually, if you can, have a fun dinner hang out the night before because everyone gets in and it’s like, oh man, I haven’t seen you in a while. You’re a lot taller than I thought you’d be. You have all that weird stuff and you’re chatting. And then by the time you get to the work session the next morning, you have some type of agenda.
We do masterminds but that wouldn’t make sense if you’re a team of 5, 10, 50 people. But you do have an agenda of these are the things we’re going to hammer through, and then there is space for other things to crop up. Then again, after you leave that in the early afternoon, usually that’s then a bunch of time to continue that conversation and let it go wherever. That’s where it goes naturally. That’s the best part.
Tracy: The spontaneity, the little things that you don’t expect.
Rob: Tracy Osborn, thank you so much for joining me today. You are @tracymakes on Twitter and tracyosborn.com if folks want to keep up with what you’re up to.
Tracy: Yeah, and if you are looking to pick up some design skills, I have a beginner design book that is being published through No Starch called Hello Web Design. If you google for that, you’ll probably find it on the internet. It’s a republished book. I originally self-published it, it was successful. I was able to sell it to a publisher. That’s how you know there’s a stamp of approval, it is good work. If you’re looking to add design skills on top of your current stock, check out my book.
Rob: Awesome. Thanks again for joining me.
Tracy: Thank you, nice being here.
Rob: Thanks again for joining me today. I got a five star review. “One of the best podcasts for SaaS founders.” It’s from onlyoneda. “Thank you, Rob. Loving the podcast. It’s motivating me to keep going.” We have 906 worldwide ratings, 397 worldwide reviews across 47 countries. If you haven’t left us a rating, that would be awesome. I’m on a drive to get to a thousand. I want four figures of five star reviews.
I really appreciate you listening all these years every week since 2010. We’ve been talking about mostly bootstrapping, building ambitious yet capital efficient companies that change our lives. I hope you join me again next Tuesday morning.
In Episode 552, Rob Walling is joined by co-host emeritus, Mike Taber to chat about his decision-making around whether to launch a freemium plan, whether to do an AppSumo deal, how his potential partnerships merger is panning out.
The topics we cover
[04:93] Update on the CRM partnership opportunity, AppSumo, and Freemium
[23:39] Yet another Google security audit update
Links from the show
- Episode 535 | A Bluetick Update with Mike Taber
- MicroConf Remote
- Episode 543 | All Things Startup with #Mike Taber
- Mike Taber (@singlefounder) | Twitter
Rob: Welcome back to Startups for the Rest of Us. This week, Mike Taber joins me to update us on the status, so we can hear about his decision making around whether to launch a freemium plan, whether to do an AppSumo deal, how his potential partnership/merger is panning out and what would a Mike Taber episode be without a discussion about Google audits.
For those who are newer to the show, Mike Taber co-hosted this podcast with me for the first 448 episodes, and now he is known as the co-host emeritus. He is doing a lot of work on his startup Bluetick at Bluetick.io, which is a SaaS app that does personal outreach at scale for all your follow-up emails.
We’ve established in prior episodes that Bluetick is not supporting Mike full-time. It hasn’t been growing for the past year or so, as he has switched his focus to focus on this potential partnership/business deal/merger with another SaaS app that is further along. With that, let’s dive into my conversation with Mike.
Mike Taber, thank you for joining me again.
Mike: Hey, how’s it going?
Rob: Pretty good, man. Listeners, it’s only been two months since you were on the show, episode 543. I still am getting tweets and emails about it. It was the April Fool’s episode. Two days ago, so it’s like, I just caught up and I’m listening to the April Fool’s episode. Spider-Man, Spider-Man would have won. Then he sent me a picture of a graded Secret Wars 8 with a black costume. That was fun. Did you have fun recording that?
Mike: I did. It was a good time.
Rob: After we stopped recording on that one you said, I could have gone for a lot longer. I was like, dang it, I didn’t know that. You were like, I had Wikipedia articles I was going to quote. You really prepared, man.
Mike: I did. That’s probably unfortunate for you because I knew what we’re going to talk about, so I did prepare. I probably hustled you a little on that one.
Rob: Yeah. It’s all fair. It made for some good radio. The last time we heard an update from you was in February, which was about 3 ½ months ago and that was episode 535. In that episode, we ran through for the first time you let folks know that you were evaluating a pretty deep integration/partnership/potential merging of Bluetick with this other Saas app. I think the quote that I took away from that was, “Everything’s on the table.”
You guys are exploring all types of strategic partnerships and such. You also were evaluating, potentially launching freemium with Bluetick, potential AppSumo deal, we talked a little bit about a Google security audit, and everyone’s taking their shots right now. That was about it. Those are things I think we can circle back on. I must call out since we’re on video today that you have a Dungeons and Dragons fifth edition player’s handbook over your left shoulder, and then you have the lanyard from every conference you have ever attended up on a bulletin board.
Mike: Yeah. It’s funny because every single one of those lanyards is from MicroConf.
Rob: Is it?
Mike: Those are the ones that I kept. You probably can’t see, there’s a whole stack of D&D books over there, and in the background, there’s a small handful of miniatures and stuff like that. I ran it out of the Abyss campaign. I naturally went out and bought the giant mini-figures that are probably 4–6 inches tall, painted them, and pulled them out on the table when they were not expecting to get into trouble, and they did.
Rob: Roll for initiative. We’re going to search for traps, roll for initiative. The best part is that if this episode gets boring, we’re just going to do an actual play. You’re just going to get mini’s out, I have my dice right here, we can roll it.
Rob: Before we dive into our actual play, which we’re not going to do, that’s a joke. I don’t want anyone to be disappointed, to get to the end of the episode and be like, you didn’t do it.
Mike: They’re going looking for that after-show episode with us playing D&D.
Rob: Yeah, we got to do that at some point, right?
Mike: Now you just committed us. I’m blaming you for that, I said it.
Rob: As long as your DM, I’m all about it. The lead is this partnership. I expressed some concern last episode about how you had been working together with this founder of an app that is doing ten times the revenue of Blueticks. It’s a much larger app that’s been around longer, it’s further established.
I think the concern I expressed was—you’re essentially working on it. You’re running the engineering team, I believe running product as well, making a lot of product decisions. My concern was how long do you want to do that without having something formal in place? Without knowing where this is headed. Where do you stand with that today?
Mike: Yeah. Still nothing overly formal in place. Everything’s kind of, I’ll say head nod, head shakes mode at the moment. I’ve known the founder for five or six years now. It’s not like we don’t know each other. There is a certain amount of trust there for that. I’m not really worried about getting screwed over or anything.
In terms of everything being on the table though, I would say there have been some conclusions for some of that. Like for freemium, for example, I’ve kind of pushed that to the back burner, probably not going to be a major thing that I’m exploring right now too much. There’s just a bunch of other stuff going on.
Rob: There are costs. The freemium thing was a big concern, and I get that because again when we were still bootstrapped doing freemium with Drip—Bluetick is a complex app, there are costs to it. There are server costs, there’s scaling, and there are things that make freemium maybe not a no-brainer if you don’t have buckets of money in the bank. If you really wanted to do it and try it out, I would say, cool. And not wanting to do it, that’s fine. I think there are other opportunities that are probably better there.
Mike: Right. Along with that, I decided against doing an AppSumo deal.
Rob: Did you?
Mike: Yeah. And I kind of came to that conclusion based on the same things that I looked at for freemium because with AppSumo, I’m going to get some level of money but then I’m going to have to support these customers forever. I had probably half a dozen different conversations with people who have done AppSumo deals. It was just a recurring theme over and over again that (a) it was difficult to get them to upgrade once they purchased the AppSumo deal, and (b) supporting them was just an ongoing cost, and not even just a little bit of support.
One of the founders I talked to, he’s like, yeah 80% of my support calls come from this group of AppSumo users and they’re contributing 0 moving forward. This was three, four years later. He still got 80% of support volume from those AppSumo users. I’m just like, that’s terrible.
Rob: That’s really surprising because normally users need a lot of support up front. Three or four years later they know the app and they don’t need it. That’s interesting. That’s the first I’ve heard someone run into that.
Mike: Yeah. I would say that’s more of an extreme example, but certainly not the only person who said I’m still answering support emails from that group of users. Their expectations are wildly out of whack with what they paid. Not one person I talked to really said, hey, this was exactly the target market that I wanted to get it. It added users, added visibility, but at the end of the day, that stuff only goes so far if it’s not paying the bills.
Rob: Yeah. I think AppSumo deals are good. I think there’s a time and a place to do them. In fact, I sat down a couple of months ago now with Ruben Gomez, who obviously did it for a doc sketch. It was a successful thing, he has no regrets, both the money and the users. But he has some pretty specific criteria of when to think about doing a lifetime deal like that. It was at MicroConf Remote. That was just a couple of months ago. If folks want to check that out, then go to microconfremote.com. I think the videos are still available for sale there.
That’s interesting then because I think the reason you were even thinking about freemium is because you were saying if I’m going to have effectively free users, which is kind of what AppSumo is. You get your $20,000, $30,000, $40,000, or whatever it is upfront, but then they’re effectively free users after that. You were saying I’m thinking about freemium from there. My memory was, I was probably a little discouraging of like, I don’t know that I would do freemium with Bluetick. I don’t know if that’s the way to go.
The AppSumo deal I see potentially more reason to do it just because it will get you users. You don’t have momentum right now. You don’t have growth if I’m understanding correctly where it’s at. I mean, Bluetick’s revenue is still where it was maybe a year ago because you’ve been focused on working on this other app, the partner app. Which again, you’re essentially running an engineering team. It’s a day job.
Whether you do the AppSumo thing or not is fine. I could see going either way on it. It’s a risk. I was actually just talking to a TinySeed founder a couple of weeks ago who’s also evaluating AppSumo. He was right on the fence with it, and he also decided not to do it. For a lot of the same reasons you’re saying—just the risk of it and the lifetime nature of it just didn’t make sense for him.
How are you feeling then? Because again, I struggle with you working a day job in a sense and not having equity in it. That’s not true. Actually, if you came and you said, hey Rob, I’m going to get a day job. That’s the decision because it’s simple, it’s easy, and I get a W-2 at the end of the year. I clock out at 5:00 PM, can you imagine that? But if you said that and that was the decision I’d be like, cool, that’s your choice, and you know what you’re getting into.
Mike: It’s funny that you put it that way because over the past couple of months, I’ve been trying to refinance my mortgage, not because of the interest rate per se, but because we want to basically overhaul our kitchen. We have contractors already assigned to it and everything. We’re like, oh well, we have a ton of equity in our house, not very much money left on it. We’ve got like seven years left on the mortgage. We can refinance, go to like a 15-year mortgage or even a 10, still.
Basically (because of the way the interest rates are) we could just add it on. We’re adding a couple of years, our payments don’t change—no-brainer. It turns out that if I were a W-2 employee this would be so much easier, but instead, I’ve had to go through the wringer for three months now. I’ve learned so much about the mortgage industry in the past three months that I hate that.
Rob: None of it that you wanted to know. You didn’t want to learn any of it but you know it.
Mike: None of it that I wanted to know. Surprisingly they say that I have a negative income, which is bizarre.
Mike: Oh yeah. My tax return very clearly says that I have positive income and they’re like, oh yeah, I won’t name the numbers, but it was over six figures. They’re like, oh yeah, this counts for zero. I’m like, what? And of course, they won’t take a profit. They just use a profit and loss statement to baseline, but they won’t use it. It’s like counting for anything. I’m just like, you’ve got to be kidding me.
Rob: Yeah, it’s tough. The mortgage world doesn’t understand 1099. They often don’t understand startups. Even investors, there was chat in the TinySeed Slack and a couple of founders, someone had their mortgage lender back out on them 20 minutes before their close. He had to go to Silicon Valley Bank because they understand founders. They know what 1099 income is, and they know all this stuff. They will say, have you raised funding? That’s actually something they’ll pay attention to at least you have a viable situation.
Mike: Anyway, over the past week or two, I’m just like, man, I would kill for a W-2 employee status right now, even if it’s just for a month. I mean, I would go so far as to pay somebody to put me on W-2 for like a month. I don’t care.
Rob: I totally get it. You only need a couple of months of pay stubs. That’s actually early on, when Derrick was working on Drip, he was a part-time contractor, and then he was a full-time contractor. At a certain point, he’s like, I’m going to buy a house. Could you make me W-2? I was like, sure, let’s do that. That was it, he needed like one or two pay stubs. Then it was instant. It was so easy to get approved, but without that, they wanted two years of history and all this stuff. At that point, he was young and didn’t have it.
Similar to me, when we went to buy this house that we bought three years ago, I had left Drip and Sherry had her consulting and all that, but I didn’t have a job. We went to all these lenders and they were like, yeah, you don’t have a job, bro. You don’t have the income to lend against. I was like, oh, eye-roll.
Rob: Cool. That was a good tangent. Where I’m coming from is, look, I know the person who runs the other SaaS app, the partner too. I mean, you guys are not going to screw each other. I don’t think that’s going to be the case. But is there a concern? Or I have concerns about you working on this without something in place. I’m concerned there might be mismatched expectations if you haven’t gotten down to brass tacks to say, hey, let’s merge these two apps, or let’s both focus on this one, and here’s the equity split.
Because I’ve done this before where I have an app and I bring someone on and we discuss equity, we put a partnership agreement together. These days, I would use a lawyer and I’ll say, 12 years ago, I wrote my own agreements, which is like the worst idea ever, but I was too cheap and didn’t really have the money to do it. What is the delay with that? Because you’ve been working on this for over a year now.
Mike: I mean the delay until after December and probably even after that until February was over. He had this other business that he had to sell. The pandemic pushed that off and he finally closed on it at the end of December, but it still took like a couple of months of offloading because it’s a non-trivial sale. He had several hundred employees, multiple locations for this brick and mortar business, and just wanted to get out of it.
It took a couple of months even after the close for him to kind of offload a lot of the work and the hand-off. It wasn’t like, here are the keys and I’m out the door the next day. Selling a business, it’s really not like that. You are essentially committed to sticking around through a transition period.
Then once that transition period has kind of gone, we’ve been having weekly meetings on Monday mornings for a month or two at this point. I think those are helping because they put us on firmer ground in terms of what our expectations are, how we’re going to blend to move things forward, and what we want to see out of the “partnership” or how we’re working together.
We have gone back and forth on do we work on Bluetick, or do we work on this other app? Do we collaborate on something completely different? All those things have kind of come up and been discussed to some extent.
Right now we’re working on a program for a done-for-you service for Bluetick and pitching it to their existing customers. Which I think has a lot of potential. That’s something that had originally been something we were going to do about a year ago, but because everything else was going on.
Rob: Just COVID and the sale.
Mike: Yeah, it just never really got to the forefront. Plus, we’re having a billion technology problems, which I think for the most part are more or less resolved. I mean, there’s always technical debt to take care of. But we’re in a position now where we can actually start doing that stuff. Now he has the time to start working on that stuff too. I think that that’s got a lot of potential, and it is something we’re going to be actively working on. We’re just in the very early stages of that right now.
Rob: Yeah. If the done-for-you service works because this other app has a customer base of a sizable, substantial—I don’t know what the term is for it, but there are enough customers that it could make sense and generate real revenue pretty quickly for a done-for-you service. If that works, that’ll be interesting. Because a done-for-you service is not cheap, right? I mean it’s basically a productized service. I would guess single-digit thousands per month to do it. You don’t need that many clients to get to $20,000, $30,000, $40,000 a month. Obviously, you then have the issue of hiring people to run outbound and all that. But these are solved problems.
We’ve seen Craig Hewitt do it with Podcast Motor, now Castos productions. We watch Brian Casel do it with Audience Ops and anyone else who’s in a productized service. If that works, I’m intrigued by it. If that doesn’t work, I got to be honest, I want to give you my opinion and I want to hear your take on it. What do you think? I feel like both of you should go all-in on the other app and shut Bluetick down.
Autopilot it, whatever, put it on the side and not focus on it. The reason I think that is because the other app is doing 10 times the revenue. The other app has traction. With the two of you working on it—you are development, product, and engineering. He is sales and marketing, and operations, I presume. I know he knows quite a bit about sales and marketing stuff. I mean, that’s a hot take for me. What do you think about that idea?
Mike: I think it’s interesting because you came to the exact opposite conclusion that he and I came to.
Rob: That’s funny.
Mike: The reason for that is that the growth for that business is stagnant, and it’s been stagnant for a while. There could be any number of reasons for that, but it just hasn’t grown. Right now there’s a struggle to try and find what channel or channels to tap into in order to get it to grow any further. We actually both came to the conclusion, probably separately, and together in our discussion that Bluetick probably has better growth potential than that product. Even though there is a wide discrepancy in the revenue, that doesn’t mean that couldn’t be addressed through a good solid sales and marketing effort.
That’s what I would say to it. I don’t think there’s a right or wrong answer to it, but that’s the conclusion that we had come to. I don’t know where to go from there. But I think we need to give it a little bit of time just trying to figure out how things work out.
We do have one customer who was basically (I’ll say) beta testing the done-for-you service, so we’re going through that process right now. They’re already onboarded. We’ve got the emails set up. They’re written to basically be plugged into Bluetick. The founder of that company is out this week and he’ll come back next. There’s one small feature that I have to implement in order to get things working for them. But other than that, next week we should be able to get started with it.
Rob: Got it. Just as a reminder, I realized in the last episode that you are on, we mentioned the other app we keep saying is a CRM for field sales reps. We can call it the CRM instead of the other app, the partnership app, or whatever since you’re being all coy about it. But that’s interesting. Both of them are stagnant. In my mind, neither of them is growing. I keep saying it’s 10 times. I think it’s more like 15 times. It’s substantially bigger. It has a team working on it including you and more customers.
I mean, they both seem like CRM for field sales reps. That’s a big space. It’s a space you should be able to get some type of traction. Just because you have marketing channels working now, (we talked a little bit offline) but it’s like there’s outbound linked in and email. There is a G2 crowd and Capterra. There’s content, there’s […], all these things to do. You’ve spent the last year-plus fixing a bunch of technical debt.
That app is in pretty good shape to do it, it’s full-featured, and has (again) a substantial customer base. A sizable customer base enough to be generating a good amount of revenue. That just feels like the basis from which you can really build on versus Bluetick that still feels pretty nascent, I think.
The question I used to ask you was, do you have product-market fit? How are you different from the other 5 or 10 apps that kind of do the same thing the Bluetick does? If you get a done-for-you service working and you are pulling from the CRM’s customer base—not pulling, but you are selling to them—what happens when you get through all those customers and you convert 10% of […], 20%, or whatever? So then Bluetick has more revenue, but now it’s stagnant again because you still haven’t figured out how to market, sell, and grow Bluetick.
Mike: Sure. There are two things I’d probably bring up. The first one is your point about the revenue difference between them I think is probably closer to 15X. That is accurate, but at the same time revenue—you know as well as I do revenue and profit are not the same things. And if you’re talking about profit, I think profit-wise, Bluetick actually has more profit, which is a hard pill to swallow. I think that’s kind of a big contributing factor. There are just a lot of moving parts, there are hundreds of thousands of lines of code. There are hundreds of customers.
The types of support issues that we get are things like (I told you this offline) somebody said, hey, your app isn’t working you need to reload it. It’s like, okay, well, clearly you’re not a developer so we’ll just let that slide. Can you send us a screenshot of what you’re seeing?
They sent us a screenshot, and in the background, you can see the app, in the foreground you see the Chrome waiting for web browser window where it basically shows that message when it’s locked up. The message we got with the screenshot was, it’s been like this for three days. What gives? It’s just reloading your browser man.
Rob: Yeah. Command + r.
Mike: Yeah, exactly. Something along those lines. The person just didn’t reload their browser because they’re like, oh, I’m just waiting for this web page. It’ll eventually get there. They have no concept of time-outs or trying again.
Rob: Right. It’s customer pain, I’ve talked about this. Competitor pain versus customer pain. That makes sense. I mean, you and the founder of the CRM are much closer to this than I am and have spent more time thinking about it. That’s my hot take or my assumption that if I had these two apps and knowing what I know about them, I would double down on the one that’s larger that has had that. But we don’t need to definitively agree on anything on this call.
I think that the thing I’ll ask you before we get into the Google security audit discussion is do you have a timeline in mind? The next time we talk will be a month, two, three months down the line. Do you feel like things will be settled by then?
Mike: I think we’ll have some sort of a definitive idea of where we’re going because I mean really, it’s only been about like the past two months or so where we’ve really started to dive in. And honestly, I’ve been somewhat distracted because of my mortgage debacle and several other things. There’s that, there are taxes, there’s all this other stuff.
I feel like I’ve jumped from one major fire or fiasco to another over the past six months. It seems like it’s nonstop, I don’t know why. I’ve mentioned it in FounderCafe. I put in this long thread the other day about the part of why I’ve been absent for the past couple of months. I just listed them all out.
I think things are starting to close out on some of that stuff. We’ll see how it goes. I really think that he and I will come to some sort of conclusion about what the direction is from here moving forward over the next month or two. I think that partly because we are meeting every single week, we are having pretty in-depth discussions, we have a couple of different calls each week with the team. There’s a marketing call and a couple of other things we do. We’re in constant communication.
I think something will sort itself out. I don’t know what that is. I have a good feeling that that’s going to at least move forward in some way, shape, or form. I just don’t know what the outcome looks like.
Rob: I wish you and he the best of luck in figuring that out for sure, and I’m curious to hear an update once that’s all settled. Google security audit.
Mike: One painful topic to another, man.
Rob: I mean, these are the things that we talked about last time. I’m just touching base. Is that all done? I mean, I think everyone in the audience is like me. They both like hearing about it and really don’t like hearing about the security audit. But it was the second time and you had to have done it already. Was it a lot easier? I know they weren’t going to charge you more for the second year, which makes no sense because it’s way less work to do. And you were negotiating back and forth, I believe at the time. I don’t even think you started any of the technical stuff, but catch us up there.
Mike: How much dirty laundry do I want to air on this one?
Rob: I don’t know.
Mike: You want me to just throw it all out there?
Rob: It’s up to you. It’s your call man.
Mike: Sure. I did not do it. After getting the price quotes, looking at everything, and evaluating whether it made sense to do it or not—based on what Google was telling me was going to be the outcome of that—I decided against doing it. Right now, if you log into Bluetick and you go to add your email account and it’s a Gmail-based or G Suite-based, you have to go and see your G Suite account and you have to whitelist Bluetick.
You just go in, I’ve got documentation on how to do it. You just search for it, plug in Bluetick, save, authorize, whitelist, and you’re done. Then you can add your email accounts in and everything’s fine—nothing changes. The only thing that not having the audit does for me or counts against me is if you have an actual gmail.com account, you have to use IMAP authentication, you have to enable that in your account, and you have to create an app password. It’s a little bit more complicated.
Rob: I’ve had to do that before.
Mike: Yeah. But Bluetick really isn’t aimed like gmail.com users. It’s aimed at business users who use their business accounts for sending out those emails. The conclusion I came to was that it didn’t seem to be worth the money for (I’ll say) the paper-thin-veil of security that is supposedly offered.
Because last year I went through it and they came back with some pretty ridiculous things. They’re like, oh, (I’m going to misremember the details on this, but it was something like) you should protect this port, make it HTTPS instead of HTTP. I’m like, that’s not even my server. It was a Dreamhost server for something, I forget what. They’re like, well, you have this listed in one of your DNS entries. I’m like, that makes no difference, whatsoever, it’s not connected to anything. They put up a fuss about it.
I pulled it out just to appease them and get the documentation, but they’re looking at some really stupid things. Given the background that I actually have in security, I can point at those things and say, yeah, this is a dumb thing that you’re looking at and it doesn’t make sense. But they’re like a bank, and if they have their own policies around certain stuff, then they’re going to say, hey, this is enforceable and you have to do it.
The other thing I found, and this is where the dirty laundry gets in, I’m going to start throwing people under the bus. The first piece is that when Google said that they were going to do this, essentially all of the existing accounts would still work as they were supposed to, nothing was going to change there. I did proactively go out to my customers and say, hey, you go whitelist Bluetick, and a bunch of them did.
I did not notice any accounts that have gotten disconnected since the deadline passed and Google emailed me and said, hey, you are in violation of such-and-such terms. You are no longer going to be authorized to do this. But everything else seems to still be working properly the way that it’s supposed to do. Nothing made a difference at all. Hasn’t impacted sales, hasn’t impacted anything else.
At the end of the day, was it really necessary? I don’t think the answer in my case is yes. If I were running something where people were authorizing the Gmail accounts and we’re using that, then it would be a problem because then I literally couldn’t do what I’m supposed to do for them.
The other piece when I was talking to the three different companies, one of them, basically let slip that Google came to them and said, you are required to charge at least this much money. Apparently, they get copies of the invoices, which to me seems like a violation of the NDA that I had previously signed, but apparently, Google gets copies of those invoices.
Rob: Seems monopolistic too. Was it—what’s that thing?
Mike: Anti-monopolistic. Anti-competitive behavior, racketeering is the charge. If you search for racketeering on Google of all places it basically says you’re organizing to extract money from somebody for your own personal gain. The only reason that this whole thing doesn’t fall under that umbrella is that I have to pay a third-party company in order to get this audit done.
But because Google is dictating what that is and they’re saying you have to charge at least this much money or you couldn’t possibly have done the audit, which I disagree with, but that’s an aside. They’re forcing it.
Rob: Yeah, I didn’t understand. It didn’t make sense to me why they would enforce a minimum. You just corrected that in my head. If they say, you have to charge at least this much, then somehow Google has the confidence that they spent enough time, that it was worth that much or something? They’re doing it so that they think that a real audit was done so that I can’t come out with Rob’s security audits and come and try to charge you a $100 and say, oh, I audited them.
Mike: Well, you can’t do that anyway because these are the only three companies that are authorized to do that.
Rob: Three companies.
Mike: I see what they’re trying to do. What they’re trying to do is say, well, we don’t want those three companies to be bidding against each other and then lower the amount of services that they’re offering to the point that they’re basically skipping all these things that they really should be doing.
The problem with that stance in that argument is that Google is outsourcing this specifically because (a) you would want to avoid a federal racketeering charge, and (b) Google’s not a security company, these other companies are. Why are you dictating to them what constitutes a security audit instead of letting them decide? Because they’re the ones who have to sign off on it. They’re the ones who do all the tests and everything else.
Something feels really shady, it really, really does. I’m sure I’m going to get emails from somebody who works at Google at this point. I’ve thought about taking all the information and data that I have, all the notes, and just putting them in a zip file and sending it to the state attorney general and say, you deal with this because I’m done.
Rob: The opinions expressed by Mike Taber are not the opinions of Rob Walling or this podcast.
Mike: Exactly. I mean, you could look at it in a bunch of different ways like, oh, this is just one more thing that Mike Taber’s ran into. I’ve had to stress about this for a long time, and it sucks. It sucks that I have to deal with this.
Rob: Yeah, we know. We’ve lived through with you, Mike. Was it all for nothing? Do you regret doing it last year? Was it just a waste of time and money?
Mike: I think so. Yeah.
Rob: That sucks.
Mike: Yeah, it really is. I mean, I blew five-plus figures easy getting this stupid audit done, and it murdered my profitability. Then they doubled the price the following year and I’m like, forget it, I’m just not going to bother. I’ve had zero problems since then. Not to say that somebody from Google isn’t going to hear this and then go invalidate all the tokens. But that just comes down to retaliations like, oh we did something terrible, and we’re going to cover for it. We’re going to drive your business into the ground. Could that happen? Sure. It hopefully won’t happen.
Rob: But the idea that you can work around it by whitelisting because you’re right, if I have a Gmail account, I’m not the optimal fit for Bluetick. I’m going to have a G Suite. You support G Suite, Microsoft Office, Outlook, or whatever.
Mike: Honestly, anything that supports an IMAP connection.
Rob: IMAP, okay. You’re on all the platforms, and Google has been the most painful one.
Mike: They’re the jerk hippo in the rooms, that’s what that is.
Rob: I don’t know that reference.
Mike: I guess the elephant, whatever. Elephant, hippo.
Rob: The jerk elephant in the room, I see. I both feel bad for you hearing that, but I also feel good that you didn’t do it. I’m happy that you made the decision not to and that it hasn’t had adverse effects. Now, going forward, you’re just kind of shoulder shrug. I mean, are most of your customers using Google inboxes, is it the majority?
Mike: It is, yeah.
Rob: Okay, interesting. I guess it is one of those super popular—I mean, G Suite is so popular especially with startups.
Mike: It’s very easy to get on and very easy to start. Once you’re there, you’re probably not going to switch my email providers anytime soon. I mean, it makes sense to have that stuff. I really feel like the way Google has gone about this whole thing has been extremely poorly implemented.
Their communication is terrible. You can’t get answers. You can’t talk to anybody. Their policies were extremely heavy-handed, and they don’t make exceptions for anything, really. Then when the one place where you could feasibly get around this whole audit, they kind of really downplay that whole option for doing it.
Because had I known that, I wouldn’t have paid the money in the first year. I would have just avoided it. Hey, if I could just have people whitelisted and get around it, then why would I bother? Why would I pay all that money? After going through the audit, they found almost nothing. The few things that they did find were extremely ridiculous. Some more requirements, okay, I get this, I understand that.
I would say the things that they came back with, there were maybe two, possibly three that it was actually an issue that I looked at and said, yeah, I really should fix this and I fixed it. But otherwise, there was a handful of stuff that they’re just like, you should do this and that. It’s like, no, that doesn’t make any sense.
Rob: And right here, I want to play an audio clip from the last episode where Mike was angry about the Google security audit. We can hear his rant. I want to compare the two rants to figure out if you used similar verbiage or whatever.
Mike: Similar swear words, profanity.
Rob: Similar swear words. We haven’t had to bleep you this episode yet. Well, sir, that’s the end of my list for today. Is there anything else you feel like we should chat about that’s been going on the past few months?
Mike: I don’t think so.
Rob: Very good. If people want to keep up with you, you are a prolific tweeter, @SingleFounder. I think your last tweet was about the time the last podcast episode went live three months ago. But no, if they want to keep up with what you’re doing Bluetick.io, that’s it.
Mike: That’s probably it. I don’t really pay attention too much on Twitter anymore. I don’t even remember the last time I actually logged in. Occasionally, I will find things where it’s like click on this and you go see the tweet or whatever.
Rob: It’s not a bad thing.
Mike: Yeah. Mostly, I’ll just post random stuff my kids say on Facebook and that’s about it. I don’t even read it for the most part.
Rob: That’s not a bad way to do it. Cool, man. Well, thanks again for taking some time to join me today. I know folks like hearing from you, and I like catching up as well. Until next time.
Mike: All right, take it easy.
Rob: Hope you enjoyed that conversation as much as I did. I always enjoy having Mike back on the show. It’s just easy chatting because we’ve known each other for so many years and spent so many guests, literally hundreds of hours talking about this kind of stuff. It’s good to have him back on the show. I’ll be sure to have him back again in the next couple of months.
What I do with Mike is I’ll text him and say, hey, do you have anything to report? Is there anything interesting to update folks on since last time? Last year in 2020, there was a seven-month gap where just nothing really was happening that he was able to talk about on the microphone. This time it was about three months. We’ll see how quickly things sort themselves out, and I’ll get him back on the show just as soon as I can.
Thank you so much for being a loyal listener and a subscriber. As always, I’ll be back again in your earbuds next Tuesday morning.
In episode 551 of Startups For the Rest of Us, Rob does another solo adventure to talk about hiring owner-level thinkers, the fallacy of an autopilot passive income software business, and more.
The topics we cover
[1:25] Hiring task-level thinkers, project-level thinkers, and owner-level thinkers
[07:43] The fallacy of an autopilot passive income software business
[15:21] Our bootstrap community
[20:45] Questions you should ask yourself when building/growing a company
Links from the show
- FE International: Professional M&A Advisor
- Quiet Light Brokerage
- MicroAcquire – Startup acquisition marketplace. Free. Private. No middlemen.
- Empire Flippers – Website Brokers
- Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork
- Invent and Wander: The Collected Writings of Jeff Bezos, With an Introduction by Walter Isaacson
This episode is sponsored by Rewardful, turning your biggest fans into your best marketers.
Get 30% off your first 3 months by heading to getRewardful.com/startups. Offer expires May 31st.
Welcome back to Startups For the Rest of Us. This week, I’m your host, Rob Walling. In fact, every week on the show, I walk through topics related to building and growing startups, using an ambitious yet a sustainable approach. We’re not willing to sacrifice our health or relationships to grow our companies, but at the same time we want to build real businesses with real customers who pay us real money.
We value things like being meticulous, being disciplined, having a process that’s repeatable, and not relying on so much luck or a one-in-a-thousand chance to build a business that can change our lives or the lives of those around us. We know that starting a company is hard and more than half of being a startup founder is managing your own psychology, as well as making hard decisions with incomplete information, where the right answer is impossible to find through math or data.
It’s great to have you back. Thanks again for joining me this week. I am flying solo this week at Rob solo adventure, as I like to call them, and I’m going to bounce through a few topics that have been on my mind recently. I’ve used these solo episodes almost as ways to communicate things that 10 years ago I would put in a blog post, but now I like to put them in a podcast and potentially turn them into a Twitter thread at some point. Someday if I have more time, I would love for each of these to be a blog post.
One thing I want to cover is something I’ve covered briefly, danced around it in Q&A episodes, but it’s around hiring folks with different mindsets. Most specifically—I need to think of a good name for this—I think it is a task-level thinker, project-level thinkers, and owner-level thinkers.
Back in the day when I was hiring virtual assistants—it’s fresh off before our work week, this is 2007 or 2008—I realized I could try to replace myself by hiring a $5 an hour virtual assistant in the Philippines. They were very much task-level thinkers. I would record a screencast and it would take me 30 minutes to upload to a website and then send it to them—this is before Loom and all those things—but I could outsource some (I guess) rudimentary, truly just repeatable tasks, almost things you could almost automate with code but maybe they would take you too long to do, or things that were just easy to throw in a Google Doc or a screencast.
For years, I operated with task-level thinkers, and I was happy, basically a solopreneur with seven or eight, I think I actually peaked at nine contractors who are helping me. These are folks who were doing design work, folks who were doing administration, folks who were doing email support, developers, and it was like, all right. Here’s your next task. Take care of this.
But what I realized is I was then doing all the owner-level thinking which was longer-term stuff, and the project-level thinking which was this project needs—this is project management—seven things to happen, so now I get to manage all those people. That was fine when I was small, that was fine before I wanted to grow a multi-million company, but there was a turning point for me—let’s say it was around 2010–2011—where I hired a couple of people who were more project-thinkers. I can hand an entire project and they would then either manage the resources for me or they could do the whole thing themselves because they were essentially full-stack employees. That’s a developer term; I think most of you know it. It’s someone who can design, who can code, who can do database work, and maybe even DevOps work, but is someone who has a multitude of skills.
That’s when I realized this is the achievement that I’ve unlocked here. This is why when folks do raise a lot of funding, they will hire individual contributors who you could say they’re thinking about their own task, but you’re also able to afford project-thinkers which I was not able to afford prior to that point because I never had a business that generated enough income.
Beyond that after we were acquired—we sold Drip in 2016—I started seeing folks working inside a company who were not the C-suite, they were not owners, they were not founders of the company, but they really owned an entire segment and they thought creatively around it. So someone who’s a marketing strategist who ran this whole team of people, wasn’t just thinking about projects.
Actually, each of his people have their own projects, but he was thinking long-term, what do we need to do in 12–18 months? Coming up with new ideas, listening to the audio books, listening to the podcast, reading the books, and being what I call an owner-level thinker where it’s not about the equity that he owned but it was about ownership of the the results—soup to nuts—from the vision to the implementation, and working with the team to do it. So task-level, project-level, and owner-level thinkers are how I now classify in my head. That’s my mental framework.
The hard part is, of course, we want owner-level thinkers, these are senior-level people who can get a lot of things done but they’re very expensive. They tend to be (a) hard to find, and (b) out of the price range of a lot of bootstrappers. If you’re going to hire a contractor or someone who’s going to work for you part-time, I haven’t seen that work. Actually, I’ve seen it work in a couple of […] but it’s very rare. In general, I think these roles need to be thought about more full-time. I saw it again in the latter days of Drip when we had funding.
Of course, with TinySeed these days I get this question, Rob, you work on so much. You work on TinySeed, MicroConf, and a podcast. You do other stuff on the side. I hear you’re working on a book or whatever. How do you do all that? The secret, really, is that we have a great team. I don’t actually implement most of what happens with MicroConf. Producer Xander, who’s been on the show—you should follow him @ProducerXander on Twitter—he is that owner-level thinker of MicroConf.
He and I (I would say) share that role in essence, where we are both thinking about the vision, the brand, and the long-term, then we start getting to the short-term and the day-to-day. Producer Xander is able to go off, implement, and be a project-level thinker, even get into the nitty-gritty of it, be a task-level thinker and be that individual contributor who grinds it out and gets the task done.
The same thing on the TinySeed side, with Tracy Osborn who is the program director of TinySeed. She not only keeps the trains running on time. She’s not just thinking about how can I run this accelerator batch for this next month or two, but in conjunction with Einar and I, we’re all thinking what we need to do to make improvements and what does this look like a year from now, what does this look like five years from now, and really, what does it look like we’re running multiple batches in parallel.
This is a lot of things to be thinking about and it’s great to have someone who is committed to it and is thinking about it at that high ownership level. Again, its ownership of the results of wanting this to be successful. Tracy, you’ve heard around this podcast many times. She’s @tracymakes on Twitter if you want to follow her.
That’s really where I’m at in terms of a mental framework, is that having moved from hiring task-level thinkers—$5 an hour in the Philippines—to project-level thinkers, and then being able to work with owner-level thinkers. In the Silicon Valley parlance, it is just really senior folks who can drive entire efforts, both see strategy and tactics, get things done in the early days, then hire people to get things done, and manage them. That’s a lot of skill sets. Those are my up-to-date thoughts on hiring.
What’s interesting is until you’ve worked with or hired a project- or owner-level thinker, you usually think they don’t exist. Oftentimes, they are not cheap. When I think of inexpensive $5 an hour, it’s a $30 an hour contract or something, these folks require more budget and often funding to hire them, but it’s the way that you can often move faster and grow a bigger organization, if that’s something that you need to do or want to do.
My second topic for today is around this idea of an autopilot business or a business that you run on the side, don’t pay any attention to you, and it just generates income forever. I want to go on record saying there is no such thing. There is no such thing. Now, you can have an autopilot business for 6 months, 12 months, maybe 18 months. This is both from my direct experience where I used to have (I think it was) about a dozen small apps between $1000 and $10,000 a month, usually, and they all combine to make more than a full-time income for me. I had a bunch of those and I was trying to manage them all at once.
This is also the experience of folks that I see—MicroConf—and even folks who apply for TinySeed or who have talked to us on his podcast. There’s this sentiment where I’ve seen someone post a business for sale. It’s doing $10,000 a month. I want to sell it for this. I spend an hour a month on it or an hour a week.
There’s always someone who chimes in with, if it’s doing $10,000 a month and you’re only spending an hour a week, why not just keep it forever? The answer is because it’s not going to generate revenue forever on one hour a week. It’s in a maintenance mode, and what will ultimately happen is a competitor will come up and eat your lunch; or the organic rankings that you have in Google, YouTube, the app store, Amazon, or whatever will go away and you’ll lose your traffic overnight; or your ads that you’re running will stop working and you have to dive back in; or that API you’re connected to and relying on will change, go out of business, or quintuple their prices.
Things change. In this tech world that we live in, things change. That’s why I always say you can have an autopilot business for about 12–18 months, has been my rule of thumb. Again, I could probably name five examples of my own where this has happened, where the Google ranking stopped working, the Google Ads stopped working, the API broke, a competitor came into the space started eating my lunch because I wasn’t paying attention to it, because I was focused on Drip instead of my previous efforts.
I’m not saying you should never strive to have something that generates “passive income” and be an autopilot business. What I am saying is don’t delude yourself into thinking that you will be able to put something on the side and just have it running for years and years and years, generating income without you being involved or without an owner-level thinker driving it. If you just have folks doing task-level and maybe project-level work, you have your leads coming in, and you have your money coming in and such, that will work for a bit. But the odds of that going more than 12–18 months…
Look. If you have a dry cleaner or a grocery store, that’s not what I’m talking about. I’m talking about a tech business, a software business, something that uses a website to generate leads, usually, and it’s something that is in a space, like ours, that is pretty rapidly evolving. I’m mostly thinking about businesses that generate between $500 a month and maybe upwards of $40,000–$50,000 a month, some range of that.
I think, at a certain point if you have a $5–$10 million business, yes you can hire a CEO. Again, an owner-level thinker who maybe can run the business as good as you can or better. In that case, this is no longer autopilot. You’ve replaced yourself with a GM or a CEO.
What I’m really talking about, these businesses like the software product doing $5000 a month and it just kind of sells automatically because of these channels that are coming in—the Shopify addon I built, this Heroku addon I built. A lot of these are step one businesses. Although I have seen people try to keep on the side and be unwilling to sell it because it’s still generating so much income. Once I sell it I have this money in the bank that I’m essentially drawing down.
I get it. It’s a hard decision. It’s a hard decision to let that go and let the income go. But what I’ll say is then be prepared for every 6–18 months, 12–18 months to be drawn back into that business. You’re going to get drawn back in because the business is going to start to decline. That, of course, is the hard time. You’re not going to get drawn back in to tweak something or optimize SEO. You’re going to get brought back in because your traffic got cut in half, or your revenue got cut in half, or a key component of the business is failing—whether it’s an API, a long-time virtual assistant, a developer, an employee decides that it’s time for a change for them. And it’s tough.
I guess the bottom line is, again, I’m not saying don’t do autopilot businesses. I had them, they were great. They just all had a lifespan. That is a reason that, as I started moving on to larger efforts like I moved on to HitTail, I moved on to Drip, I either shut down or I sold those at a certain point. Now, some of them I held onto too long and I thought this is autopilot and the income’s so great, and they did get crushed by Google. I didn’t have the focus, didn’t have the time to go back.
Other ones I was smart enough, at least looking back, to get rid of them and get the cash to then invest in my future efforts. Both the purchases are okay. Keeping them around for income for a while if you play it right, I don’t think that’s a bad call. But again, just realize that there are trade-offs here. You will get pulled back into the business and be mentally prepared for that. That was always a big struggle for me. If I was focused on something, I had a really hard time going backwards and looking at this “old business.” It was a business that made me super happy three or four years earlier, but which I had kind of gotten over.
This is why I think it’s great that there is now this whole ecosystem around reselling apps. We have from FE International to Quiet Light Brokerage, Empire Flippers, and now we have Micro Acquire. There are ways to get value out of an app you’ve built if it has revenue. This was not really the case 10–12 years ago where I would buy an app at 18 months net profit—it was crazy—and to try to sell it for even 2 years was not easy.
Obviously, the multiples you’ve heard me talked about on the show are much higher for the types of products we build. That is (I think) a real benefit to those of us who do build businesses and either hit a point where they plateau and maybe we lose interest, or maybe we do need an influx of cash, or maybe we do want to move on to our next effort, at least these days we can get some type of reasonable compensation for these companies that we’ve built.
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My third topic is around two books I read recently. One is called Billion Dollar Loser, and it’s a story of WeWork. The other is Invent and Wander, which it says it’s essays from Jeff Bezos. It’s his shareholder letters, which are (I’ll say) not super interesting, but then there’s an interview at the end that I found was pretty fascinating. It was excerpts from interviews.
Overall, I don’t recommend Invent and Wander as a read. It was interesting for me to read both of these books, and Billion Dollar Loser I would recommend if you want to be really angry at just the stupidity and this whole charismatic founder who convinces one person to give him a bunch of money and continues to just everywhere, the press is saying this isn’t going to work, it’s just real estate, and you know it’s a new way of doing things. This stuff is infuriating. It’s infuriating to me that people fall for this.
That said, I struggled with both these books and it was interesting as I listened to it because Adam, who is the founder of WeWork, was dating Gwyneth Paltrow’s cousin, and when he needed his early money he had these contacts in New York. He borrowed a million dollars from his girlfriend’s parents, buy the first building. I just couldn’t relate to that. I struggle with stories like this where, yes, he built something that winded up being worth something, but he didn’t start where the rest of us did.
The same thing with Bezos which I don’t know that I had realized that he mentions, when I was at Princeton and blah-blah-blah, and instantly I’m like, oh wow. Yeah, I went to a public university in California, University of California Davis, and I don’t even remember $3000–$4000 a year that I attended, and that was it. There were 25,000 people there and I went there to get an education. I didn’t go to Princeton, I didn’t go to Harvard.
He talks about, my parents were my first investors. They took out a bunch of money to make Amazon go. Again, unrelatable friends and family rounds, I always shrugged my shoulders, just like I didn’t have friends or family with money when I went to start things. I had to work a day job making $17 an hour, then I taught myself modern programming because I had graduated from public university. Everything was 10 or 15 years behind, so I was checking out books at the library to learn Perl and HTML because we didn’t learn web stuff.
I guess all that to say, this is why I like our community, the mostly bootstrapped MicroConf founder community that really is people coming together with the desire to build ambitious things, to provide value to the world, to change their life through frankly raising themselves up from making $4.50 an hour at their first job, or coming from a public school, or not even going to college. It just matters so much less in our circles and I’m really thankful for that.
I mentioned this in an outro of an episode the other day, but in case you didn’t hear it there was a study published in, and I forget the exact numbers, but it was like 80% of venture capital, maybe 90% of venture capital in any given year goes to people who’ve attended Harvard or Stanford. I was curious in that, in TinySeed, we’ve now done 3 batches of companies, 41 companies we’ve invested in, and I posted, I’m curious. Did anyone here go to Harvard or Stanford? I was like, no criticism if you did. I’m just curious out of all the founders that we have. I didn’t even know the founder count is now. It’s probably north of 70 if I were to guess.
Then I said, I went to a public university and a public high school, a public grammar school in junior high. People are weighing in and laughing, like, no, I went to this junior college or I didn’t even go to college. This (I think) is why people start to talk about founding startups being a meritocracy.
While I do see insiders making it, Jason Calacanis is a good example, I like the fact that he was from Brooklyn, didn’t know anybody, just hustled, became a journalist, an investor, and a founder. I just have a lot of respect for what he’s built. You can like him or you can not like him, you can agree with him or not, but he’s worked really hard and built himself a pretty incredible life.
I admire that about him and other folks who have done that and truly did it without going to Princeton, having your parents as the first investors, traveling in circles with Gwyneth Paltrow and borrowing a million dollars from your girlfriend’s parents.
Am I saying that these folks, that Jeff Bezos or Adam don’t deserve it, they didn’t work as hard, that they shouldn’t have used those things? Of course not. Use every advantage you have. But I did find myself struggling with the stories of the early days of WeWork and Amazon. I struggle to relate to them because I’ve never been in those situations and I’ve never had the advantages that they have. I’m guessing if you listen to this podcast, that might resonate with you as well.
I like this community, I love being a part of it, and frankly I’m glad you’re here as well. I hope that this podcast or MicroConf or just something that I’ve worked on or touched over the years has been an inspiration to you enough that you are able to, hopefully in the long-term, change your life but in the short-term just keep going, just keep putting one foot in front of the other, and using whatever advantages you have to get that product off the ground, to get that next customer, to make the next sales call, to do the next sales demo, to ship that next line of code, and to build a business that brings you freedom, purpose, and allows you to maintain healthy relationships.
My fourth and final topic for the day is a question (I think) you should ask yourself as you’re building, launching, and growing your company. So much for being a successful founder is knowing yourself and a question that took me a really long time to answer—in fact is still in flux and maybe for a lot of you in terms of getting your app off the ground, getting your company launched, getting traction—is what are you really good at? What are you naturally gifted at? Or what do you really want to get better at and something that you find yourself drawn towards? Other people often say that’s really hard, but you’re exceptionally good at this.
I want to say that in terms of shipping software, of course, being a good developer counts, but in terms of building a business, unfortunately, it doesn’t count for this question because there are a lot of good developers who can write code and ship code. There are even a lot of good (I’ll say) developers and UX folks who can ship a good product, so being good at product, let’s set that aside. What are you good at aside from that?
I want to give you a few examples. You may know Matt Wensing. You’ve seen him on Twitter, he’s a TinySeed batch one founder, and he’s working on Summit. That’s @usesummit on Twitter and usesummit.com. As I’ve watched Matt build, ship, and iterate, even evolve his product, what he seems to be really good at is connecting with other people, networking, and building relationships.
He’s a developer, day-to-day writing code. He came on this podcast and said, I don’t love doing sales, but I’m good at it. He’s good at having conversations about partnerships. He’s a phenomenal business development guy. He came to one MicroConf and he met all the people that he needed to integrate Summit with. I think it was Baremetrics and ProfitWell. I guess the original from ChartMogul there, but he didn’t even ask me for intros. I knew these people. I think he just went up and started building relationships. Suddenly, they had integrations and they were cooperating.
That is a super power, and it’s a super power I don’t have. But some people do, and if that’s you, you should take advantage of every advantage you have, and therefore set yourself up for success by getting into a space where business development, enterprise sales, partnerships, and networking can be an exponential driver to the business.
If you go into something where it’s all SEO, Facebook ads, and you’re selling for $10–$20 a month, I guess you could do partnerships and affiliates. There are ways to do it, but it’ll be a real exponential driver if you have larger contracts. There are just certain spaces where […] makes sense.
Another example is Ruben Gamez, who has been on this podcast several times. He’s building DocSketch and he’s TinySeed batch two founder. He’s good at building and managing teams. He’s good at a lot of stuff, but he’s really figured out marketing. As a developer who taught himself how to market 10–12 years ago, he has really doubled and tripled down on SEO.
He still runs Bidsketch but went to start his other app, which is again DocSketch, electronic signature. He was looking for a space with massive keyword volume, and less worried about the difficulty because he knew that that was a super power that he had developed and he had built, and thus wanted to get into a space where that would have a massive exponential upside for his business.
There are all kinds of things you can be good at. You can be good at building an audience. You can be great at having stage presence and maybe building a podcast following, being on YouTube, public speaking. Maybe you’re a great writer and it’s going to be a big content marketing and SEO play. Or maybe you have skills that don’t translate to SaaS apps and maybe you don’t go that route at all. Maybe you decide to launch courses.
There are other ways to use your gifts, but if you’re great at doing webinars and being on camera, then I would lean heavily towards getting into a space where doing webinars, getting on camera, and doing conference talks are going to exponentially move the needle. This is something that took me way too long to realize and recognize it myself, so I think a lot of these solo adventures when I have frameworks to make points, I’m talking to myself from five or six years ago.
To cap off this topic, of course, I will name the exception that proves the rule, and it is Derrick Reimer who’s building SavvyCal. Derrick is exceptional at product. He can design, he can build, he ships features like a team of five people. If you look at how often he’s shipping, it’s amazing. You could say his gift is building in public. He’s developed that.
Obviously, he’s developed an audience on The Art of Product podcast with Ben Orenstein. You could say he’s good on the mic. He developed that. If you go ask him, he wasn’t good at it when he first started. He was very nervous about it. But he’s someone who is so far off the charts in terms of his ability to not only write code but to design amazing features, ship the right things at the right time, and build them quickly as a one-person-team. He is using that to his advantage by competing in a space with a number of large competitors, essentially using his velocity to outmaneuver them, and then hiring out the things that maybe are not his core gifting.
As you probably know, he’s hired Corey Haines, who’s helping him with all the marketing efforts these days, and they’re obviously seeing positive results from efforts from both Derrick’s ability to ship features quickly and Corey on the marketing side.
To put a bow on that, so much of being a successful entrepreneur is knowing yourself. I do think it’s worthwhile asking yourself the question, what are you really, really good at? Then looking at building products that can exponentially benefit from that unique skill set.
This is the final week of our Rewardful sponsorship. I really want to thank Rewardful for supporting Startups For the Rest of Us and supporting independent SaaS founders. We haven’t had many sponsors of the show and it’s not something I plan to do every month, but sometimes there’s just a really good fit, it makes a lot of sense to do it, and helps us have the budget to continue with the transcripts. You may have seen us putting more effort into social media and video clips, and all that takes time and money, so it is helpful to have support from companies like Rewardful.
As a reminder, Rewardful has everything you need to start referral marketing for your SaaS, your membership, or ecommerce business. You can get 30% off your first 3 months by heading to getrewardful.com/startups. The offer expires in just a few days—May 31st—and I like to roll their final ad spot here.
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Thank you so much for joining me once again for this Rob solo adventure. I’ll be back next week in your earbuds with our regularly scheduled program, probably a conversation with an interesting founder, maybe bootstrapper news roundtable. I’m really enjoying the variety of the show these days and I hope you are, too. I’ll be back in your buds again next Tuesday morning.