In this episode of Startups For The Rest Of Us, Mike returns to the podcast to give updates on the fate of Bluetick as well as progress updates on his motivation and health.
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In this episode of Startups For The Rest Of Us, Rob answers a number of listener questions on topics including starting a marketplace, marketing channels, resellers and more.
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Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This week I’ll be covering a few listener questions about starting a marketplace, which marketing channels to pursue with the new app, evaluating re-sellers, and why the path from the agency work to SaaS is so hard. This is Startups for the Rest of Us episode 457.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob and today I’m going to share my experiences to help you avoid the mistakes I’ve made in the past.
I’ve tweaked the intro a little bit today based on suggestion from my 13-year old. He said, “Built your first product or just thinking about it” is too narrow. He says, “Aren’t there people who’ve started their first, second, third, fourth that are still listening?” and I said, “Yeah.” So, tweaked it there. Each week on the show I talk about topics relating to building and growing startups, in order to better your life and improve the world in a small way.
In our world of startups, we strive to have a positive impact on other people, be it your customers, your team, your family, yourself. We are ambitious founders, but we’re not willing to sacrifice our life or our health to grow our company. We have many different show formats. Sometimes, we come on and we teach a tactic, talk about philosophies and thoughts of starting startups and growing them. Other times we do interviews, then several of those over the past weeks. We have listener questions which is what we’ll be doing today, founder hot seats, and other things like that.
My co-host Mike Taber is on a brief hiatus. I do think he’ll be back in the next few weeks, and we can catch up with him, find out what he’s been doing with the enormous amount of free time he’s had not doing this podcast. Listener questions have been piling up, including a couple of voicemails. Today, I’m going to run through a few of those and give you my thoughts and insights on them.
First one is a comment from Adrian Rose Brock, fan of the show a long time, many times a MicroConf attendee, and his comment is about our Gmail clients, and even paste and match style which I was complaining that Mailplane didn’t support.
He says, “In the last Startups for the Rest of Us, you were discussing Gmail clients two tips. Number one use Kiwi for your desktop client for Gmail. Amazing client, works really well, has good integration with other G products. Number two, if you need to paste and match style, you do Command+Shift+V on a Mac. It will work in the majority of applications and saves a right click.”
Good tips. Thank you, sir. I have not checked out Kiwi yet, but it is definitely on my list. I’ve actually ceased the exploration for a desktop Gmail client for now. I have enough going on and somehow flipping back to doing it in Chrome it’s not bothering me anymore. There was some real performances which I was experiencing and I’m not seeing those any longer.
Our next question involves starting a two-sided marketplace and TJ’s asking whether he should charge from day one.
TJ: Hey, guys. This is TJ Astro calling. I’m focusing on a startup for artisan makers to get them more exposure. You guys have been a tremendous help to me, and I’m just trying to figure out if I can launch with a charging right away or what I should be doing. My gut instinct is to onboard them for few months. It’s a double-sided marketplace, so the synergy of all of them together as a collective community is where the value will be coming from eventually.
My instinct is onboard them, show them I’m active in the pro-members chat only in those forums, and that I’m committed to helping get more exposure and sales by offering strategies, advice, and such, then maintaining transparency with my site analytics as it modestly grows. I’m hoping that I’ll be able to get it quite grassrootsy and the way that I’m providing them these services and such, and they’ll be able to share the site because I don’t really have a marketing budget. Let me know what your thoughts are. Thank you so much.
Rob: TJ also wrote in and he said, “Hey, I just recorded a voicemail, it wasn’t very clear or well-spoken.” TJ’s launching a two-sided marketplace, no marketing budget, and it is a membership site. Primary focus is to aggregate the Instagram post of artisan brands. He has an email list of 2000 artists who he’d like to curate on the site, but they’re mostly cold contacts.
He’s going to have both free and paid monthly memberships. He says he has no market validation, everything he’s heard or read says, “Charge. Don’t give away your product or you won’t know if you have real product market fit. But since it’s a double-sided marketplace, both shoppers and artisans, I need to be able to demonstrate value to the artisans by attracting shoppers to the site.”
TJ talks about the different pricing tiers. There will be a free plan for artisans and also a paid plan. He says, “My gut instinct is I should onboard the artisans for a few months, a free trial of the paid pro member level but not collect credit cards on sign up. Show them I’m active in the pro-member only chat forums, that I’m committed to helping them get more exposure in sales by offering strategies and advice, maintain transparency with my site analytics as they modestly grow, encourage them to share my site with their list as it play to help them and other members gets more exposure. See where the analytics are in a few months, emphasize to them a growth trajectory. I’m hoping I’ll see and try collecting a card to charge them to stay on as pro members.”
Obviously a complicated question TJ. There’s a lot here. We’ve talked about two-sided marketplaces before, and my advice tends to be for bootstrap or indie-funded companies, is to not do it because they’re just so hard to get started. You even heard Tracy Osborn a couple of weeks ago, talking about WeddingLovely.
While we didn’t delve into the difficulties of two-sided marketplaces, she definitely has had some thoughts on that. It’s very hard, it’s hard enough just to get one funnel working, but you literally have to get two separate funnels working, and you have to have them at scale before things will work. You are definitely pushing a boulder uphill with this one. The way I always think about this is thinking back to how Uber did it. With Uber they needed at least a couple drivers in the field before they could release the app and have it provide any value.
If my memory serves me correctly, Travis Kalanick and his co-founder literally were driving the black cars just as a test. Obviously this doesn’t scale, it’s not what you’re doing, you’re just testing. If people have this app, will they call a car in Downtown, San Francisco? That was the hypothesis.
Once they started getting people calling them, then they had some data, enough metrics that they could go to black car drivers either cold-call them, or just approach them at the airport, or whatever and say, “Hey we have this app. Do you want to be on the receiving side of it? Right now we’re getting two calls, three calls a day, but it basically takes you right to them, and then you get paid directly, and you have to go through your dispatch basically.” That’s how they built it up.
Now it’s an incredibly long and painful way to build an app until the two-sided marketplace has a network effect. Then it’s amazing and it grows super fast. But almost knowing gets there. That’s the hard part. The challenge is getting past those early days. In the early days that you’re in, with zero marketing budget, the odds are even less in your favor. They’re very very difficult what you’re trying to do, but granted that this is what you want to do, you have to be super scrappy and it sounds like you’re thinking in those terms.
All the stuff you’ve read about […] charge, don’t give away product, if you have a SaaS app that provides value, people only pay for something that is providing them value. If I build an email service provider, or a long-tail keyword tool, or invoicing app, or whatever, when someone puts a credit card in, they pay, the next day they can get value out of it, or that same day they can get value out of it. That’s not the case with the two-sided marketplace with a no consumer, no demand side so to speak.
Getting suppliers on to your marketplace without the supply side, you’re going to have to have it be free to some extent. Whether you just have the free plan the whole time, whether you tell them, “You’re on a paid plan, this is the difference and in three or four months, by the time we have demands, I will be charging you $49 a month, is this interesting?” That’s the conversation to have.
I don’t see major problems with the plan aside from two-sided marketplaces are really hard especially when you have no money. But aside from that, I don’t see how you can possibly charge suppliers when there is no value being provided. I don’t know anyone who would pay for that without that supply side. The one thing I would say is if you haven’t already started building up the supply side, because you have the artist list, is there a way to get an email list, a blog following, an Instagram following, a podcast following, just some demand side built up so that you’re not starting at a standing stop?
You said you’re relying on defenders or the suppliers to promote it and while that’s fine, it’s not going to be enough, I’m guessing. I think that you are doing some type of marketing, you’re going to have to get creative. It sounds like a pretty creative having again, no budget and you’ve thought through pretty well. I would be looking at ways to have enough interested consumers.
Think about it this way, Groupon is also a two-sided marketplace. When Groupon went to a new city, they would cold-call the stores, the retailers, the supply side, and then they would post a landing page for the demand side. Getting the demand side is the consumers, and that landing page would then, they would advertise it, they would promote it in any way they can.
Obviously you’re saying you have no budget, so it’s hard to do this, but that’s how I would approach it. I would have a landing page up of like, “We’re coming here soon,” or “This is something were going to have soon,” and then I would have whether it’s Facebook ads, Instagram ads, or if you need to do it for free, then you’re going to have to put it in sweat.
It’s going to be a blog post or many of them, it’s going to be interviews, it’s going to be viral content, whatever it is that you can get. Guerrilla marketing style essentially with no cost. That’s one way to build up that demand side, and then you can point to the artist and say, “Hey, I do have 5000 or 10,000 people on an email list that are interested in hearing about it.
I still think your approach of going with no credit card, not charging them but giving in the expectation upfront, is fine, but then you don’t have to start from a standing stop. That’s how I would think about it, I hope that’s helpful.
My next question is another voicemail. Voicemails always go to the top of the stack. This one’s a bit long, but I will have our editor clean it up a bit and it is from Keith Gillette with tasktrain.app.
Keith: Hi Rob, my name is Keith Gillette, My founder-funded B2B SaaS startup tasktrain.app is in private beta right now. TaskTrain is lightweight process management platform that allows service managers to integrate standard operating procedures, and just-in-time training into everyday workflow, enabling teams to deliver service quickly and correctly.
Based on our expertise and our early customer development feedback, we’re targeting IT operations directors and digital marketing agency COOs as our initial customer segment. Our launch plan has been to market and sell per user subscriptions directly to customers via the web. I have two questions. One, what marketing channels would you recommend pursuing? We have a PR plan when we’re ready for a full public launch, but are not sure how aggressively to invest in building a social media presence and/or in paid advertising, neither which we have yet tried as we’ve been too focused on getting a functional product.
Rob: We’re going to cut the voicemail there and I’ll answer this question and then we’ll roll in to his second question. Congrats Keith on getting to launch. It’s sounds like, you’ve been too focused. You’ve made a traditional mistake of heads down basement coating. I know you’ve been having customer development feedback, but you haven’t done any marketing. I guess the first thing I would say is go to robwalling.com and enter your email address and you’ll get a book that I wrote called Start Marketing the Day You Start Coding. Whether you read the book or not, just having the title is really what I would say.
It’s typically before I have anyone break ground, I will validate the idea and then put up a landing page, such that even if you only have 50 people on an email list at that point, that’s your starting ground. That’s where you begin when you launch. Talk about having a PR plan in place, which is fine. I haven’t seen PR work for apps like this that are just line of business apps. They aren’t that interesting and PR likes to tell a good story. If you happen to have a good story, that’s fine. I don’t think you need a social media presence at this point.
Reserve your twitter handle or whatever. That’s not going to bring you customers yet, especially if you don’t have an audience, if that’s not your thing. Obviously, if you have a podcast, or an audience, or a blog, or something and you are on Twitter talking to people, you’re taking the Ben Orenstein, the Derrick Reimer, the Brian Castle approach, then that would be one thing. But you’re not doing that yet, so I would not spend any time really in building that out.
What I would do is, there’s an endless number of traction channels you can go after. Obviously SEO and paid advertising are two nice ways to get traffic. But whether that traffic converts is a real question. An outbound sales is the third and those are the three avenues that really scale well.
Which of these do you have experience with? If the answer is none, pick one and dive in. That’s how it is when you’re starting out. One reason why I espouse the stair-step approach to bootstrapping is that which your first product from the standing stop, trying to manage all the complexities of building and launching a SaaS app and then looking at the massive array of marketing options available, it’s hard and it’s overwhelming. Without the experience, the confidence, the budget, it’s not an easy question to answer in essence.
I’d say, of all the episodes of Startups for the Rest of Us—what is this? 457?—more than half, I would guess 2/3 maybe ¾ deal with this question of how do I market? How do I get more customers? How do I get more leads? What do I do? Literally, books have been written on this topic. Two books I would recommend, number one is Traction by Gabriel Weinberg and Justin Mares, they go through 20–22 traction channels. You can look at those as starting point for zeroing on each of those areas. It includes paid acquisition and SEO, running events, and all kinds of stuff. The other book is SaaS Marketing Essentials by Ryan Battles. That’ll be a pretty good start for you because this question of, “What marketing channels would you recommend?” really depends. For me, just looking at it I would do some content and I would do some LinkedIn ads. That’s probably where I would start. That’s not to say they’re going to work. It’s just the two things I would start with—Facebook ads and Google AdWords—just to see, are they going to work? I don’t know.
Audience building, is that a skill of yours? If it is, build an audience. If it’s not, then don’t. There’s a lot of variables in terms of how much budget do you have, how quickly do you want to need to grow, what is you skill set? Do you have experience with any of these? Any desire to try any of them? It’s a pretty broad question, but that’s where it comes down to doing your own research, making that list. Basically, your marketing gameplan.
I’ve talked about them on the podcast in the past about how with each app I would build or acquire, I would make this marketing gameplan. The HitTail marketing gameplan, the Drip marketing gameplan, it was a huge bulleted list. That was seven pages, single spaced, bulleted list with some headings of, “These are the types of things we want to do right at launch,” and, “These are the people I’m going to talk to who’ve agreed to perhaps promote it.”
Then, I want to try Facebook Ads here in the market segments. I wanted to try AdWords in these segments. Then, you’re going to a spreadsheet and you put out the ones that you think are going to work at this stage. You take a guess at how much traffic you can generate, how much cost you think, time you think it’ll take, and figure out, do you do it yourself? Do you hire it out? Do you hire someone internally to do it? There’s so much to think about it here. You have a little bit of research and thinking to do. Good luck with that, Keith.
Now, let’s dive into Keith’s second question.
Keith: Second question, one of our beta users has expressed interest in becoming a reseller of our platform as a value-added offering in his virtual CIO consulting service portfolio. I had the potential for bars in mind when designing TaskTrain. I had not expected to pursue the channel until we were bit further along. Now, we have zero paying customers at this point, no data on margins, customer acquisition cost, or lifetime value of a customer, on which to base sales commission or revenue sharing. How would you recommend we think about structuring a potential reseller contract? Thanks for any guidance on those early stage marketing and sales questions.
Rob: Every product that I have launched typically gets interest from resellers and whitelabelers. This is very common for you to get reached out to by folks who want to resell or whitelabel your software. When we launched Drip even really early, we were getting two emails a week from people. “I want to do this but for realtors.” “I want to do this but for mortgage brokers,” “or for the hair salon,” or whatever. “Can I whitelabel it?” It’s just a totally different market. Whitelabelling is one.
I realized you’re asking about reselling here. Whitelabelling is one thing that I discourage people from exploring in the early days. It dilutes your brand equity to huge distraction. It’s almost a completely separate product. It’s very rare that people make it work. It, of course, can work, but it’s not something I would encourage you to do unless that’s really what your heart is set on. Don’t let it be a distraction.
Resellers are different because it’s not a product distraction. It’s going to be more of a, I would say, almost a founder distraction in terms of having to come up with the model, sign a contract, work with them to help promote, and make sure they’re not reselling it to people who don’t want to be part of your customer base, I guess. That’s the thing. With the SaaS app, are they just an affiliate? Are they reselling it? I guess the difference with affiliates is affiliate would just sell it based on your pricing and they would keep a commission to pay them 10%, 20%, or 30% of the recruitment revenue. Whereas a reseller, maybe they have an account that they can put a bunch of people in and they’ll pay you a certain amount. Then, they just sell it for more. That’s probably the difference I would think about.
I know in the IT, since you are targeting IT operations directors, marketing agencies, COOs, maybe resellers would be helpful. I would only consider it if this reseller already has a huge network, already has leads. If this person’s just going to go out, run ads, and do cold outbound, you can do that. You don’t need them. If they have a list, if they already have an audience that they essentially want to pitch it to or market to, it’s worth considering.
Personally, I don’t have enough experience with it to do it. I would get offers like these and I would basically say, “Nope, not right now,” or “Not until we know our customer acquisition costs, our margins, our LTV,” all those things that you’re saying you don’t have. My advice would be to kick it down the line a bit. Once you get some customers, you know what your churn is and your revenue share. You want to be in your sales commissions and all these stuff. It’ll be a lot easier to get something like these done. It’s just there’s so many things flying in so many directions right now that having yet another distraction is not something I’d be super stoked about unless this really is a golden opportunity.
In my experience, people who want to resell a product that has zero customers, it doesn’t tend to be a golden opportunity. I’d be pretty surprised if they did actually have an audience that they had a lot of reach into. I would kick it down the line, three months, six months, and just say, “Hey, we need to revisit this. There’s so much going on right now with the launch.” It’s easy to say that you’re busy because you are and you have competing priorities. I would try to revisit that later.
Keith: A final postscript. I want to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the Startups for the Rest of Us community. As a fellow still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenges he’s facing and deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next. Gratitude for you both for your Startups for the Rest of Us work.
Rob: Thanks for that, Keith. I appreciate it. I hope my discussion was helpful.
My next question is from Ash and it’s about agency to product journey. He says, “Hi, Rob and Mike. I’m a big fan and listen to almost all episodes over the past five years. In the past episode, Rob mentioned the path from agency to product especially Saas, is a hard path which I understand. Could you please dive a bit deeper into why? If one is on that path, how to run that transformation successfully? Thanks a lot. Keep up the great podcasts.”
Good question, Ash. So many of us have done this. I didn’t run an agency per se, I’m more of a consultant. I did have some contractors working for me, so I was a micro agency. It was a handful of us. I was doing sales, doing some of the codings, and such. The reason it’s hard is because when you’re an agency or a consultant, you can bill $150 an hour. Whatever it is you’re billing, it’s really hard to not just book more hours and to make that $250,000 a year or $300,000 a year just by coding for someone else with frankly very little risk.
You have some headache dealing with clients, of course, but there’s not a ton of risk in it versus turning down work to block out a day or two, a week, to work less, to get paid less, to build something that you don’t know if it’s ever going to work. You don’t know if you’re ever going to get it launched, if it’s going to have a product market fit, if it’s going to make enough money to ever pay it back.
There was a good MicroConf talk a few years ago. It was one of our attendee talks and it was by Ted Pitts from Moraware software. He talked about how he and his co-founder launched good jobs and then they launched the software. When he traced it forward, they were doing millions a year and pulling out quite a bit of profit before he felt like they hit the breakeven line of how much money they could have made if they just kept working their jobs, if they have just stuck at day jobs with promotions and bonuses. Just a steady pitch the whole time versus the ups and downs of some years they make more and some years barely make any in their early days, and not paying much. But they wouldn’t have any other way. They didn’t do it for the money. That’s part of it, obviously, but they did it for the freedom and satisfaction. The freedom, the purpose, and the relationships.
It’s hard to see that. It’s hard to look ahead. It’s especially hard to convince a significant other that instead of making $300,000 a year like you could as a consultant, or $250,000, or whatever it is, I want to make $125,000 and I want to launch this app. It’s going to take me six months or a year to launch. Then, maybe two or three years to get to the point where it’s even making as much money as I could be making if I just work full-time on this consulting work, and then the payback period of the money I lost is even years out from there. That’s the hard part. That’s a big part of why moving from agency work which pays well to starting a SaaS app which doesn’t pay anything for a very long time, takes a really long time to get going, and here’s a bunch of risk that’s why most people don’t make the transformation.
If you were in college or if you were like me when I first started launching products, I was working construction. I was an electrician. There really wasn’t much downside to me. I did it all nights and weekends, obviously, because I was out on a construction site. I had learned to code when I was 8 years old. I’ve been coding for years, but I didn’t know a lot in the modern web languages. I literally went to the public library. I got books on PHP, HTML, a little bit of Perl—this was obviously years ago—and I started to hack in the way of stuff on nights and weekends. That’s how I learned.
I eventually did make the shift into full time employment as a developer. That helped increased my […] really fast. Then, when I went to build stuff on the site, I was way, way, faster at it. But it still was a 9-5 and it was helpful for me that I could go in 9-5 and when I left, my time as my own.
Once I transition to consultant and I was billing hourly, I was obviously making a lot more money, but it became hard for me not to just do consulting work all the time because to consult 50-60 hours a week, I can make more money than I had ever seen or ever heard of anyone making. It was crazy to bill $125 an hour and works 60 hour weeks. This is 15 or 20 years ago. That money really went a long way. It’s tough. It’s a long term view. It’s having a confidence in yourself. It’s being able to look in five years and say, “It’s going to hurt for now, but long term, I think this is the better path.”
In addition, this is why either stair stepping your way up is better because you can get some small wins along the way. It builds confidence in yourself, builds a little bit of recurring revenue, build confidence from your spouse or your significant other if you have one. But also, acquiring. Acquiring small products or even large products is a nice way to do it. If you are running an agency and you have money—you should be making a decent chunk of money—acquiring a product gets you past that product market fit, that wall. It puts you forward, hopefully, in 18 months, maybe 24 months depending on the space that you’re in. That’s one reason why I acquired products early on. I did have more money than I had time. Once I was at that level where I could build $125 an hour and stay busy full time.
Not everyone has that. Maybe you’re scraping by to get agency work. Maybe you do have downtime during the week or during the month. That’s nice because then, you can use that to focus on the product. I always felt guilty just focusing on the SaaS product, not going out and finding more work. I thought to myself, if I ran out of work and I don’t have any in three months, am I going to look back on this and regret it? You get over that guilt if you’re going to do it.
I’m guessing a lot of folks listening are experiencing this or thinking. It’s the conundrum of nights and weekends are hard. This is one reason why people raise funding so they don’t have to do that. It really is interesting to see someone raise around $150,000– $300,000, with the sole purpose of they don’t have to make this decision. They don’t have to scatter their focus. They don’t have to worry about agency work or doing it nights and weekends. They can just focus for a year or two on getting something to the point where it’s viable, where it’s making enough money, that it’s sustainable, that’s it’s default alive, as Paul Graham would say.
I’m not saying you should raise funding or shouldn’t. Obviously, I never did. Building my stuff up, it also took me a really long time to get there because I did it this way. It was nights and weekends for me. It was building an app, acquiring an app, parlaying one, stair-stepping from one to the next, and that’s why it took me so long to get to Drip. If I had raised funding 5–10 years earlier, I would have built a larger SaaS app like Drip. But I just didn’t have the resources, the experience, perhaps the confidence to do it at that point.
It’s a good question, Ash. I appreciate you asking that. That was helpful.
That about wraps us up for the day. If you have a question for the show, call our voicemail at (888) 801-9690. Voicemails go to the top of the stack. Or you can email us at email@example.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob interviews Ruben Gamez of Bidsketch, about his 10 plus years of bootstrapping, lessons learned, improved decision making, and his new product.
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Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in a way that’s organic and sustainable and that works around your life. We’re ambitious founders, but we don’t sacrifice a life in order to build our startups. These are not the typical Silicon Valley Startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses.
In this week’s episode, I have an in depth conversation with Ruben Gamez. We talk about the new app he’s building, Docsketch, in the electronic signature space. But more importantly, we look back at the 10 plus years that he’s been bootstrapping. We look at lessons learned, how he’s learned to make better decisions, how he’s meticulous and disciplined, and how that leads to him being able to make repeatable progress and being able to have repeatable successes. This is Startups For the Rest of Us Episode 456.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob. I’m with Ruben Gamez. We’re here to share our experiences to help you avoid the same mistakes we’ve made.
The first email I received from Ruben was in January of 2009, which is more than 10 years ago, and he was asking about something I had written up, a few essays about acquiring software products. From there, he and I struck up a friendship. He had been reading my stuff for a while and wound up being one of the first four or five members of the membership website that I launched called The Micropreneur Academy that was teaching software developers, really teaching engineers how to market.
This is back in the day just as SaaS was starting to become a thing and Ruben was an early success story. He hustled and as I said in the intro, he was meticulous, disciplined, and just shipped stuff every week, even though he was working a full-time job in “managing managers who manage developers,” as he used to say. What I’ve always respected about Ruben is his analytical nature, but he has the gut instincts of a founder, and he’s someone who you know that no matter what the chips deal him, he is going to succeed at what he’s doing.
Today, in the interview, we talk about both his first product which is called Bidsketch and it started as proposal software made for designers, and he later expanded it to creating professional proposals as a horizontal play. We talk about trying to upgrade that from Rails 2.0 to Rails 3.0 and all the technical headaches that went with that in the six months of essentially wasted engineering time. And we talk about his new app that he’s running in tandem and building that in tandem with Bidsketch. It’s called Docsketch and it’s an electronic signature app. We talk about his AppSumo deal and why he decided to do that and his whole thought process of whether to do that or not. We dig into free plans at marketing first before building a whole bunch of stuff.
Ruben doesn’t do a ton of interviews. He doesn’t do conference talks, even though I ask him every year to speak at MicroConf. Every time you hear him talk, you will hear someone who’s been doing this a long time, someone who’s had substantial amount of success, and someone who’s really thought through these issues. I thoroughly enjoyed talking to Ruben today about the ups and the downs and the sidewayses of being a bootstrapper for more than 10 years, and I hope you enjoy this interview as much as I did. So, let’s dive in.
Thanks so much joining me on the show today, Ruben.
Ruben: Thanks for inviting me.
Rob: You and I talk every few weeks and have for several years, so it’s fun to get on the mic every once in a while. You have several popular Startups For the Rest of Us episodes, actually. You have the one about beating plateaus. There was one where you and I just talked about metrics. Remember where you’re doing trial-to-pay and all that? To the listener, if you go startupsfortherestofus.com, search for Ruben Gamez.
He has been on the show several times, but today I wanted to dig into stuff you’ve been working on for quite a while, Ruben, both in terms of your new app, Docsketch, but also the decision process. You run a bootstrap SaaS app for 10 years which very few people have done that. Most people sell, or they shut down, or they move on, or they find a CEO to run it or whatever, and you’ve been through a very long journey in it in a short amount of time. Ten years running a SaaS app is like 50 years in a lot of other business.
Ruben: Yeah. It’s funny you say 10 years. In some ways it doesn’t feel that way and in other ways it does.
Rob: I know because so much has changed when you think back to your very first homepage and what that looks like, or your early demo videos, or what pricing felt like back then. There’s so many things have changed and yet, you have Bidsketch. Folks who want to check it out, it’s bidsketch.com, and it’s a successful SaaS app that has employed you and your whole team. You have a team of four or five people?
Ruben: Yes. We’re hiring more people right now, so rebuilding in that process. We could talk about that a little bit later.
Rob: The first thing I want to ask you about that’s interesting is when you first launched Bidsketch, it was proposal software made for designers and you targeted the design space. It was a vertical proposal app and it caught on really well. Then a few years later, I don’t remember how long it was, you went horizontal. The headline stay as, “Create professional proposals in minutes.” You’re going after anyone who would send a proposal, any type of freelancer, contractor, agency or whatever. What led to that decision? You really did the land and expand which is a playbook in MBA speak or whatever, but you came across that organically and made that decision to expand.
Ruben: I’m trying to even think about why I chose designers to start with. I think it had to do with the amount of keywords for people searching for proposals related to web design or just graphic design. That helped me make that decision. Later on, we’re just getting customers that weren’t that, and we were getting people asking us, “Does it work for my business?” There was nothing in there that would prevent them from using it successfully for the business.
There were a lot of different signs that made it clear that we should move beyond designers. Plus, the market just for designers was too small. It was maybe a good starting point, still not sure about that. We could have just started where we ended up later, but I didn’t know back then if that was a good idea.
Rob: I was going to ask if there was any regret or if you feel like it was a mistake to start small and then go horizontal, or if you should have just started horizontal, or do you think really matters?
Ruben: At least for the app that I had at the time, there weren’t any proposal apps. So, we were creating that category. It probably didn’t matter as much for our product at that time.
Rob: Since you’ve built Bidsketch back in 2008–2009, it was written in Rails 2 and then you upgraded to 3 or you built it in 3, if I recall. You went through a painful year or so of trying to rewrite it in Rails 4. If I recall, you had a tough time finding Rails 3 developers and maybe patches weren’t coming out for it anymore. This was just 2–3 years ago, you were doing this. It’s a real struggle, I remember. Can you talk us through that? Why did you make the decision and what was the process there to try to get it rewritten?
Ruben: We actually started in Rails 2 and it’s still in Rails 2 now, which is crazy.
Rob: Oh, that’s what I forget. I say 3 because that sounds old enough, but you’re right.
Ruben: 3 is the thing we wanted. We were eventually trying to get to 4 at the time. We were like, “Okay. We can’t jump straight to 4. We need to go to 3.” From what I understand, going from 3 to 4 takes some work, but it’s not the end of the world. Going from 2 to 3 is, if you have a really mature app with a lot of code that’s been around for a while, that’s a beast and that’s what we were trying to do.
Rob: You had the bulk of your team working on that for, was it a year? Is my memory correct?
Ruben: It was maybe like eight months or so. A lot of developers working on just that and at the same time I was working on the design side. Just going back a little bit, the decision to upgrade had to do with us hitting plateaus and like you mentioned, there’s that episode that we did about plateaus and stuff. We hit three or four plateaus at different stages of growth. I don’t remember exactly what they were, but we did things like change pricing, 10X our content strategy, just different things to break out of each plateau at each time.
I got pretty good at breaking out of plateaus, but now what I know or what I feel is that if you’re hitting that many plateaus, fundamentally, there’s a problem there that needs to be fixed. We were hacking out of the plateaus for a year or two of more growth, but there was a bigger issue. Part of it was just going back and trying to figure out, “What’s going on here, how can we just stop doing this, and fundamentally fix what’s wrong?”
We did a lot of customer interviews, a lot of analysis of the data that we had, did over 100 jobs-to-be-done interviews and using the Switch framework. Switch framework has to do with when somebody switches away from a product to your product or when somebody switches away from your product to something else, during onboarding and people that canceled. You can imagine people getting people on the phone to do 30–45 minute interviews. Once they’ve canceled, it isn’t that easy, so we bribe them with Amazon gift cards, like $100. In theory, you don’t need that many, but we were interviewing a lot different segments and trying to find patterns and stuff.
After all that, we came up with three things that we could do. One of them was go upmarket enterprise, which the majority of the funded startups that were going into the proposal space were doing. They start off like we would and then just wasn’t big enough and they would go upmarket. The other one was just better served as a couple of specific segments within our market, build out better team features, agency features, go deeper in that direction. Then the third was just sell more to our existing customers. They were using products that were related. That’s why we built up Docsketch later.
The first thing that I decided to do was basically build out version 2 of Bidsketch and go with option one—better serve a segment of our market that would pay more money, that would stick around and all that stuff. But out existing product was lacking some features and to add these features and to change how it did the main thing that it did which is create proposals, we had to use new technology and hiring developers that could work with that was really hard.At the time also, Rails 2 was really old and everything was just hard because of that. We had a bunch of technical bet and we were in a bunch of code. If we were going to rebuild core parts of the application, that was a big project and we just needed to add a whole bunch of unit tests and all this stuff. We spent six months going in that direction, adding unit tests.
About that time, I saw a talk, it was DHH from Basecamp. This had already been out for a while, but I had just caught onto it, just watched it, and he was talking about how they made a mistake by trying to do the same thing that we were doing. It really gotten my interest. I watched the whole thing and basically what he was saying was that they had a very hard time. He spent six months to a year trying to make Basecamp into the next version of Basecamp. He just talked about it in terms of trying to make a chair into a desk or something like that. It was really hard. It just didn’t work and they abandoned it and started from scratch.
I watched that night and I thought, “Hmm, I think we can do it.” Of course. We kept going for a little bit longer, but I kept just thinking about that. So, I went back and I was looking at how much progress are we making. I started doing some forecasting and estimating, given our pace, that the entire team is working on this. It would have just taken way too long. We made very little progress, so then I just decided to abandon that effort.
Rob: How was that, when you decided to abandon? That must have been a really tough choice for you. What was your emotional state like once you made that decision or as you were making it?
Ruben: It’s always tough because you spend so much money with so many people working. It’s tough on several different levels. You don’t want to fail at something and just be like, “Oh, this was a really big mistake.” A couple hundred thousand dollars maybe in salaries. I didn’t calculate it out still to this day. It’s probably pretty expensive.
Rob: Too painful.
Ruben: Yes. Just a lot of developers working on it for eight months or whatever it was exactly. That’s a ton of money to just say, “Nope. This didn’t work out. Let’s do something else.” It’s tough from that perspective but also for the team. You have the team working on just this one thing and you really sell them on, “This is the direction. This is what we need to do.” Then, having to tell them, “No, this is not going to work. You should do something else.”
Rob: That’s got to be hard. When you talked to the team, did you do it on a group call? What was their reaction?
Ruben: It was on a group call. I don’t remember the specifics, but I remember that they took it much better that I thought they would. I think they were burnt out.
Rob: They were probably relieved.
Ruben: Yes. There was a little bit of relief, basically.
Rob: That’s crazy. Probably some relief for you, too, to make the decision as hard as it is. You let go of the sunk cost, right? The sunk cost was all the time, the money, and your ego of like, “Well, I made a bad call here.”
Ruben: Exactly. Before I actually had that call, it was tough just thinking about a lot. Then after the call, it was just a relief. It’s like, “Okay.” Once you make the decision, once you know you’re starting over, it’s different.”
Rob: Yeah. Wipe your hands together and say, “What’s next?” you turn your sights. That brings the question, now you are building Docsktech. Was it an immediate realization of, “I want to build an electronic signature app”? Or was it, “We’re going to build like how they do Basecamp, 1.0, 2.0, 3.0. They are all project management. They are all just approached differently. Did you think of doing Bidsketch 2.0 that would essentially be proposal software as well and complete with yourself in the sense that Basecamp did?
Ruben: Yeah. That was the next thing. It’s like, “Okay, maybe we should just build this from scratch.” We actually started doing that and spent about six months doing that and realizing that we had to make it backwards compatible and all the stuff. That’s years of work-arounds, codes and all these stuff. This is crazy. This is a lot of stuff.
Rob: So it’s a new code base, but what was the backwards compatibility? Was is like the data model or something? To import in one direction, you needed to adhere to certain standards?
Ruben: We have a feature that allows people to create proposals from scratch using HTML and CSS, so there was a lot of that, just making that old templating system work with whatever we were building, trying to make everything fit. There were just many, many examples of this. This one was a little bit shorter, it was maybe four to six months where it just felt like, “This was going to take years. I think we should go with option three,” which was basically sell more to our existing customers and better serve them.
This was the creation of the electronic signature tool, our new app, Docsketch. It felt like this one’s way easier, this one’s much smaller, doesn’t have that many features. We’re not doing a bunch of what-you-see-is-what-you-get design, development and all that stuff. You are uploading files, your over link fills, sending them out, getting documents signed. Let’s go in this direction.
We stopped again. There were a couple other reasons. Our progress was super slow with the new rebuild of Bitsketch because the team had a Rails background but not a React background. We decided to build this version 2 in React and we started to do that, but they we’re so inexperienced that as they we’re learning more, they were like, “Oh, let’s rewrite this or restart this. Oh, this is the wrong way to do that.” That was not good. They just slowed everything down even more.
Rob: Do you wish you hadn’t built in React or if you were going to do it, you need developers who were verse to it.
Ruben: Going back to that point, the better decision on my end would have been, we either build it with what we know and what we are good at, which was Rails, or we need a new team that is very experienced in React and what the direction that we’re going in.
Rob: That would be a really hard call to make, to fire most of your development team or I guess you would keep someone around maintain Bidsketch, but that would have been a tough call.
Ruben: It would have, but we wasted a lot of money because I didn’t make that call back at that point. Even when we started with Docsketch, it was also like, ” Okay, let’s do this in React. We know way more. We have six months of experience,” which is not a lot. Having a background and managing what development department a lot of developers. This is all the stuff that I’ve come across and had known. For some reason, I just made decisions that, now thinking about it, don’t really make a lot of sense.
I’ve gone back and really thought about that a lot and worked on improving both my decision-making and my ability to change and switch earlier once I recognize that we’re going in the wrong direction.
Rob: Here’s the thing that I have respected about this journey that you have taken, is that you shoot through let’s say 14 months, 16 months, 18 months, whatever of two false starts. It was to upgrade the app and then to rewrite it from scratch. It was super brutal, painful, irritating, but you did it anyway.
During that time, I remember asking you, “Are you impatient? Do you feel stressed?” And you kept saying, “No, I’m not stressed. I just want it to move faster.” But it didn’t seem to bother you the way it would bother me. I would have been super stressed and anxious. There’s just so much. I have such a tough time standing still like that. You’ve said you do, too, that you have a tough time standing still, but what does that feel to you and how did you deal with it? Most of us in our product ownership career, we’ll never stand still for 18 months or however long you did. It’s a real anomaly like how did you manage your own emotions around that?
Ruben: I think part of it has to do with me just being optimistic about my ability to do things successfully, number one. Number two, having spent so much time doing things like SEO, where you have to make these bets. It’s not like ads. You can run ads and immediately as soon as you put money into it you know that it’s working or not.
With SEO, you’re going months without any sign that it’s working a lot of times. Then eventually it starts working and I’ve done that so many times where I’m used to grinding for long periods of time. I was really thinking about this the other day, which is probably a bad thing where having grown up just feeling uncomfortable for a lot of my childhood because of being in bad situations, bad neighborhoods, bad everything, and just having this constant feeling like I’m working towards something and it’s really […] right now, but I know I’m going to eventually get out of it, so it makes it so I can deal with that a little bit better nowadays, but maybe it’s a bad thing.
Now I’m focusing on setting up these trip wires beforehand. Before a big effort, I set an expectation or a deadline or something that lets me know, “Okay, if we are not here at this stage, then either I’m going to take a really close look at stopping, or changing what we’re doing, or something, instead of enduring and grinding.”
You said many times that if I have a lot of patience and a lot of people say that about me, but I don’t feel that. I feel very impatient a lot of times and I don’t remember where I heard this, but that when there’s this mismatch of what you feel about yourself and what other people think about you, that has to do with the mismatch between your internal dialogue—which makes a lot of sense—and your actions.
Internally, I maybe saying something like, “We need to move faster. This sucks.” But externally, I’m projecting maybe something else and just continuing.
Rob: Show up everyday, shipping, getting it done.
Ruben: Right. Getting it done. There are a lot of things that just take a lot of time. I’m good with making progress when it comes to things like that.
Rob: Yeah, it makes sense. Folks want to hear more about your background. You mentioned it earlier, there’s a cluster of episodes that are really popular of the Zen founder popular podcast where Sherry interviewed several founders of their origin story. Yours is episode 25 and you go through a pretty in-depth story of your upbringing which is shocking to a lot of people and is just super interesting tale to hear, how you grew up, and how you came to start your own company.
I want to get into Docsketch, but I have one more question before we do that. Did it ever cross your mind to sell Bidsketch and just start fresh with a new app or was your plan C was to sell more things to the Bidsketch audience? Was that too compelling to make you consider selling it?
Ruben: I don’t think I ever seriously thought about selling Bidsketch because even if you think about how I started Bidsketch, I started Bidsketch when I had a full time job. I just like the approach a lot better of not starting from scratch like some people who quit their jobs and they do their new thing.
I think I would be stressed if I sold it and I had a bunch of money in the bank, but that money was going down and nothing was coming in. For me that’s different and I’m not sure why.
Rob: I’ve been there and I did the same thing. I had HitTail, I didn’t sell it, and then started Drip because I didn’t want the bank account going down every month. I was trying to run it on the side and have it throw off cash and […] the asset because then you can have your foot on two islands. You don’t have to swim to the other one and you can do it. That makes sense.
I’ve been impressed with how you approach the process of building Docsketch, not from a technical point of view, but just the thought process you went through. You started with the marketing and in this day and age, obviously you want distribution first and you want a channel, but you were way ahead of it. Before you had mock ups, before you guys had really started digging under the code, you had this whole plan of how you were going to build up this momentum and this marketing engine. Can you talk about how you were thinking that through?
I’m specifically thinking, obviously about the organic, like you are really good with SEO, but also there’s this whole thing about free plan and getting people to use something, any type of tool first and then turning that later into a Docsketch customer. I really think that, that would be interesting for folks to hear about.
Ruben: Building an electronic signature tool was basically starting from scratch. Before building it out, I just spent some time figuring it out how am I going to get customers because I’m not sure how much I’m going to be able to leverage the Bidsketch audience and I don’t want it to completely depend on that either. This is a much bigger market. Much bigger market like DocuSign is the biggest company in the market and they are at $600 million a year maybe more. They’re way more signature electronic apps in that category. There were a lot of things that appeal to me.
Freemium is being done by a couple of them, so I also wanted to play around with freemium and add some viral traffic and stuff. The first thing that I did was just look at, okay if we are starting from scratch, do some analysis in the organic traffic side, what are people searching for, what’s there?
Okay there’s a lot of traffic that we can get. A lot more than the proposal category. Then look at what the competitors are doing, not just look at what where they’re getting traffic, where’s it coming from, but I also did interviews with a bunch of DocuSign and HelloSign customers and this was targeting them with Twitter ads, sending them to a survey. If they were a recent paying customer, bribing them with an Amazon gift card.
Also, going to review sites and just analyzing everything that people liked and didn’t like about each of the competitors, creating a document with all that information, trying to figure out where are the gaps, what type of product would we need to build to position ourselves favorably in this market, and how can we do it in a way where some of the traffic that opportunities that I see, we can flow into a product. That was the high level of the whole process.
Rob: A couple things that you touched there. I find it fascinating that you’re going on a free plan especially with one of the very popular essays on my website from August 2010, was a guest post from you called Why Free Plans Don’t Work. I just think it’s hilarious that nine years later, you are actually going all in on a free plan. You want to talk about how your thinking changed?
Ruben: Back then, I did freemium with Bidsketch for about a month. It was a very short amount of time and with freemium, that’s just too short to know whether it’s working. It wasn’t until later that I realized a bunch of these things. Then, I didn’t know how freemium worked and what types of products would be best for freemium products.
Looking back, some of the reasons why it didn’t work for Bidsketch and for many of the proposal apps that I’ve tried—it hasn’t worked until this day—is because the markets is okay, but it’s not that big. The time-to-value is too long. People have to create documents, set them up, design them, and copying content. That just takes way too long. Ideally, you would have a much shorter time-to-value, like with Docsketch, you upload people’s documents, add some fills, send them off, that’s it, you’re done. Big difference.
The market is really big with Docsketch. It’s perfect for that. You did have a bit some of the viral stuff going on with the proposals, but given that the market is small, that you would need a lot more volume for it that work, it didn’t make sense.
But looking at Docsketch, the electronic signature space just has a lot of the things that will help a freemium approach work. In the early days, really you will make more money not doing freemium. That’s another thing about Freemium. It’s oftentimes a longer-term bet and like content marketing, a lot of things build that up.
Rob: That makes a lot of sense. It’s an advanced distribution tool. It’s not a pricing strategy, it’s a marketing strategy as people say. It’s something that, in your early days, when you’re trying to bootstrap and get to $8000–$10,000 a month, you can quit your job. I do think freemium is detrimental. It’s a long-term play and you have the luxury now with having this other app that is funding you and your whole team, that you have a long-term horizon to play with.
Ruben: That makes a big difference. The situation I was in was totally different. That time, I needed revenue as fast as possible. Now, the strategy that I ended up going with free trials or getting people to pay up front first is really good; worth well for that. Being in that situation is not […] for trying out freemium.
Rob: Yeah, and you spent quite a bit of time getting pages out there with organic traffic to it and the product is quasi-launched now. I feel like you’re soft-launched, but you’re not doing heavy marketing.
Ruben: Yeah. Officially, it’s open now. This was the deal, a couple months back we did an AppSumo deal. I wanted to leave it in early access when we did the deal, but they required that we open it up and let people sign-up and pay before we do the apps, which makes sense. They don’t want to be selling something that’s an early access. We did the deal. Lasted a long time, it was very different from when I’ve done it in the past. It was like three weeks.
Then I put it back into early access up until a couple of weeks ago to where I opened it back up. I felt like we have enough features at this point and we’re getting a lot more traffic. It’s just ridiculous to be an early access with the amount of traffic that we’re getting and not trying to take advantage of some of that. Last month, it’s getting more traffic than BitSketch. In a few more months, at that pace, it’ll double what we’re getting there. The strategy is different.
Rob: It’s such a larger market, right? That’s how I view it.
Ruben: It’s a much bigger market. There’s just a lot more opportunity there. I just know more now than I did back then. I’m having an easier time executing on that part.
Rob: Stair-step approach. Small SaaS up to a big one. I like it. Talk about the AppSumo deal. I actually get asked relatively frequently from folks who run a SaaS app and are considering an AppSumo deal but don’t know how to think about it and don’t know if they should do it or not. The revenue share is not huge. I believe it’s 70-30 or 80-20, where you as the founder get 30%; you get the smaller of the two. It’s really quite a cut that they take. How did you think through that because it sounds like from what you’ve told me it was the right choice for you. Why was that?
Ruben: I feel like it was a really good choice for me. Given my context of doing freemium right now and still being from a positioning standpoint, we’re not focusing on any one segment yet, even for marketing. Leaving it open, trying to learn, and see where are the most valuable customers, so that we can focus on that. The more volume we get, the more different types of companies we can get using the products, the more learning we can do the better. Then we’ll just figure out who the best types of customers we should go after are, and maybe chain positioning or maybe just put our marketing efforts in there.
AppSumo, I just saw it as a way to get a lot of different companies using the product and a lot of them that were using existing products, like DocuSign in getting a lot of feedback from them. There’s a tricky part to it when it comes to getting customers from these deal sites because a lot of the feedback that you get is just not good. You have to be very selective as far as who you’re listening to.
The framework that I use for this was anybody who’s seriously using another product and is paying a decent amount of money for the other product—they have a team of 10 people and they’re paying a couple of hundred dollars a month to use an existing product, and they’re very motivated to switch—those are the people that I’m going to listen to a lot more.
We found out that there’s some really very valuable segments that we hadn’t encountered yet through the deals. That was helpful. We got some very good feedback. Since they were highly motivated to switch because they got such a good deal and they were spending a lot of money with the existing tools, they were willing to tell us what’s really important to them before they switch, like, “Okay. We want this snap. This one thing as the thing that we really need to switch.” That helped.
Rob: Super important to have that. Those learnings are valuable and they’re hard to get in the early days of the product.
Ruben: They are very, very hard to get. Also, I almost think of them as freemium users because just looking at the stats for the amount of documents that they’re sending. They’re sending a lot of documents a month because people who get documents see that they’re sent through Docsketch, there’s some of that viral stuff going on that helps us. That helps us with word of mouth, that helps us in a lot of different ways.
It doesn’t work too well with companies that have really high support per customer. That was another thing. With Docsketch, it’s just a low support app. We can get a bunch of people here, that’s another reason why we could do freemium and it’s not that big of a deal. I know a lot of other SaaS founders that they’re in the hundreds of customers and they need a full team of support people. Between Docsketch and BitSketch, we’re serving thousands each. One person’s fine when support person, not a problem for everybody.
Rob: I’m envious of that. Certainly with Drip, we were one of those where we need a lot of support people because it’s a big complicated product. It can do a lot, but as a result, people have a lot of questions.
Ruben: Right, and Drip is a really good example. I’m not sure I would do an app […] for that. I would have to design it very carefully, but I probably wouldn’t do it because you have expenses of how much it costs each email to get sent out there. It’s just not the right type of product for that.
Rob: Yeah, and that’s the thing. Just like with freemium, AppSumo is something that can work for you, but you need to know the criteria and you need to be smarter about making the decision. It’s not an always yes or an always no. It sounds like you got a lot of learnings from it, you got good feedback, certainly there’s some SEO help there because you’re going to link to from some places.
Ruben: Yeah. You get branded searches, they shoot up a lot, and that helps on the SEO front.
Rob: And some cash out of it. Typically, if you have a successful AppSumo deal, you can make tens of thousands of dollars that comes to you and that can be a game changer that allows you to hire that next developer or put more money into some type of spend.
Ruben: The average they said was somewhere like 2500 buys. Given the average payments and all that stuff that they do, that’s more likely above $30,000–$35,000 somewhere in there.
Rob: Dollars for a company that’s running the deal.
Ruben: Yeah, after AppSumo gets their cut and all that stuff. So, that helps. You can’t count on that. It’s just a one time thing. In my mind, there has to be a lot of other benefits besides the cash.
Rob: That’s right. To start closing us out here, someone might be listening to this thinking, “Wow, you’re nuts to go after such a competitive space.” It’s huge, but in terms of a lot of potential customers, I can throw a rock in hit an electronic signature app. One of the advantages that you have is you’re good at organic. Frankly, you’re just good at marketing. You’re good at copywriting, you’re good at testing and looking at all the things.
Let’s assume you can out market some of them, or all of them to a certain extent in different areas. You know you can get channelling, get people in. But there’s this other thing that you really looked at pretty carefully and I feel like you’ve been very deliberate about it and it’s figuring out a point or two of differentiation.
It’s something I find a lot of founders don’t think about enough, they either want to build something completely novel, in a completely new category which is very, very hard or they will exactly replicate another tool. I find that both of those are very hard ways to go. And if I were a beginner, for SaaS app, I would try to build a tool and figure out one or two key points of differentiation. Bill in an existing category in a sense like email marketing software or electronic signature which is what you’ve done.
How did you think through the differentiation? What are your one or two points where you think you’re really differentiated from HelloSign, DocuSign, and all the other myriad of tools?
Ruben: This evolved over time. We had a couple of pretty good ideas and things that some people are excited about, but then either the technical side just wasn’t going to work out and wasn’t going to be as smooth as we thought it was going to be. I had to look at building out features that wouldn’t help us stand out and change that about three times for different reasons. But we didn’t go too far into it. It was just like, “Okay, I think I found something. Let me run some screenshots, get some feedback, or things like that and then see if this is something we want to move forward to.” And then after just getting some feedback, doing a little bit of testing, realizing that, “Hmm. This is probably not the way to go.”
One of the ideas had to do with giving better guidance to people who are filling out the documents on the other side. It was fresh, new, and people got excited about it. Everything looked good about that, but then, when it came down to the sender would have to do a little bit of extra work, nobody wanted to do a little bit of extra work. The thing was just not going to work, that type of positioning.
Really, it just came from looking at all the products that are out there, the ones that people most know about and then finding out what don’t people like about these products. Some of that research took place in T-2 Crowd and all the other review sites that are out there where you can find just tons and tons of reviews. This is going through hundreds of reviews, putting them all on the spreadsheet, categorizing them, figuring out what the patterns are there, and beyond that interviews with people that are paying for these products.
Like I said, there are a lot of different ways of doing that. We leveraged the BitSketch email list a little bit for that, but then we also just did add some call to people that we didn’t know, bribed them with some Amazon gift cards and all that stuff, and just finding out where the opportunities were.
We found a few areas and the next step was, “Okay, what could a few solutions that are positioned a little bit differently, what could they look like?” Nowadays, our positioning is more focused. We’re not completely there, but we continue to move in that direction. A lot of attention is paid on the uploading and setting up document side for these electronic signature tools. Our focus, and where we continue to add features and make it better is on the recipient side, on the people that are receiving the documents, making sure that they are able to fill them out faster, and making sure that they have a better experience that what’s out there.
Rob: Yeah. Your headline is ‘Sales documents signing that cuts turnaround time in half.’
Ruben: Right. From a position […] standpoint, the benefit going back to the user is that because we’re focusing more on the recipient side, they’re going to get their documents back faster.
Rob: That’s good. When people are zigging, everyone’s zigging, and you’re going to zag. That is such a nice differentiator where it’s just not a single feature. We have this one feature that […], our whole focus is this other thing and as long as that resonates with enough people, you’ll own that positioning, you chew away at that corner of the market.
Ruben: Yeah, but at the same time we may learn that there’s something that’s more valuable for us to focus on and build out and position ourselves in a different way and if we learn that, we’ll change again.
You did a really good job of this with Drip. I remember when you start off with little widgets and you changed from that to just marketing automation which was way more valuable. This is a mistake I see a lot of people make is that they’ll get stuck on their initial thing. Right now, we’re positioning that way, but we’re losing the position that way. We’re open to seeing what’s more valuable.
I feel like a lot of people just stop listening. They just feel like, “Okay, this is what we are, this is what we do, and that’s it. If it doesn’t work, what’s wrong?” and they don’t revisit some of that fundamental stuff, some of the core stuff.
Rob: Something I really like and I’m impressed with as I watched your entrepreneurial journey in the past 10 or 11 years is you’re super meticulous and you’re disciplined. That’s what this whole story as we talk through it with the transition to Docsketch. You made hard decisions, but you did them with a bunch of research and you’re meticulous in figuring out that it was the right choice. Then, when it was the right choice, you had the discipline to make the hard call.
This is the same thing, this positioning. You have been meticulous about figuring out this is the right way, you’re going to be disciplined to stick with it until you get another answer and when you make that choice to change it, it would be the right call, at least given the information you have.
What that all leads to is, there are certain founders that I’ve watched become successful, that I question if they could do it again. Maybe they got a little lucky with something. You’re not one of them. You’re going to do it twice and you could do it five times if you wanted.
You look at David […], Jason Cohen, Heathen Shaw, Dharma, we could list the people who have done it over and over again and there is something about them. Maybe they’re not specifically meticulous and disciplined—that happened to be your trait—but those are the traits that mean that you could do this at will, you just figure out the space, you would experiment, you put in the time, you don’t look for trails, whether […], you use the data to make the best decision you can, and then you push forward. It means it’s just repeatable and you could do it over and over.
That’s what I hope folks listening to this interview take away.
Ruben: Thanks. That’s a big compliment. I do respect people a lot, that are able to do it multiple times. That’s one of my goals, is just to basically learn how to do that for myself. It’s important, or maybe not. Maybe if you get lucky and it’s a really big hit, who cares? You can make a lot of money and sell it, it’s not that big of a deal.
Rob: Yeah. Funny, when I say getting lucky, I’m not thinking of anyone in particular, honestly. I just know that there are folks where it’s like, yeah, I got really early to a space and then they struggle after that or whatever. In any case, we’re at about time. If folks want to keep up with you, aside from hitting docsketch.com to check out what you’re up to today, where they can keep up with you online?
Ruben: Probably Twitter. I know you love Twitter.
Rob: That’s my favorite.
Ruben: @earthlingworks on Twitter, just Ruben Gamez. That’s probably the other place to keep up with me.
Rob: Sounds great, man. Thanks again for coming on the show.
Ruben: Thanks for the invite.
Rob: It’s always a pleasure to talk with Ruben. He’s been on the show a few times. If you Google his name at our website, you’ll find those episodes. If you have any feedback for me, I’d appreciate if you leave a comment, send an email, the firstname.lastname@example.org or tweet it out because I’m investing more time into the podcast at this point, and I’m being very deliberate about trying to change things up a bit while Mike is on hiatus. I’m just curious to know if it’s working, if it’s impacting you, if it matters, if it makes a difference, because obviously, we’ve had a format for 449-ish episodes and that is something that we can go back to really easily and it takes a lot less time, but I’m curious if there is more value in the new approach that I’ve been taking with it.
If you have a question for the show, call our voicemail number at 1-888-801-9690 or email us at email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob talks with Tracy Osborn about things she would of done differently during the 9 years she ran WeddingLovely.
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Rob: In this episode of Startups for the Rest of Us, I talk with Tracy Osborn of WeddingLovely about things she would have done differently during the nine years she ran WeddingLovely. This is Startups for the Rest of Us Episode 455.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob, and today with Tracy Osborn, we’re going to share our experiences to help you avoid the same mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. On the show, we talk about building startups in an organic sustainable fashion and while we are ambitious founders who want to grow our companies, we don’t do it at the expense of our life.
We have many different show formats. Oftentimes, we will talk about tactics and teach things. We answer listener questions. We have some founder hot seats. Today, I’m doing an interview, but it’s more of a conversation with Tracy Osborn, founder of WeddingLovely which she ran from 2010 until late 2018. I believe she actually shut it down technically in early 2019.
Tracy and I now work together at TinySeed. She’s the program manager for the accelerator. We’ve known each other for several years now. She spoke at MicroConf in 2016, and I believe that was the first time we met in person. Obviously, we’ve gotten to know each other much better over the past three or four months as we’ve worked together on TinySeed.
What I like about Tracy’s story is that it really is a story of high highs and low lows, from teaching herself to code to bootstrapping the company in 2010 and then going through two accelerators—although one of them really didn’t put much money in—winding up going through 500 Startups. WeddingLovely was really hitting on all cylinders and then catastrophic stuff happens. It’s fascinating to hear her thought process of some regrets, things she would have done differently, and other things that didn’t turn out, but she made the best decision she could at the time.
I really appreciated Tracy’s honesty and transparency in the interview today. It makes for an interesting story, like several of the guests we’ve had on recently who were able to dig into decisions they made, things they might have done differently, as well as things that they did do right, and the learnings that they took away from running a startup.
As a quick background, WeddingLovely was a blog and a wedding marketplace that matched up wedding vendors with couples who were going to be married—the engaged couples. With that bit of background, we’ll take you right into the story. Thank you so much for listening. If you enjoy this interview, I’d really appreciate it if you’d reach out on Twitter. I’m @robwalling and Tracy is @tracymakes. Let’s dive in.
Tracy, thanks so much for joining me on the show this week.
Tracy: Thanks for having me.
Rob: Listeners already have some context about WeddingLovely and how you started it. I want to start by looking at the decision you made to move from bootstrapped to taking $50,000 in funding from 500 Startups. What led to that happening and how did you make that decision?
Tracy: That was a really tough decision because before 500 Startups happened, I was fully in the bootstrapped camp. This is 2011 so TinySeed didn’t exist. All these other alternate funding or different paths, they didn’t exist. It was like, “Are you going to do a full funding route or are you going to go bootstrapping?” That was it. There was no middle ground.
I was fully in the bootstrap camp. I was already following Patrick McKenzie’s (patio11) writings about this at the time. I joined the Designer Fund in San Francisco, which is totally different than how they are now, but at the time, it was a small accelerator-ish thing where we got a really small chunk of money and we just worked together for three months meeting up every week just to work on our projects together.
One of the Designer Fund founders was a mentor at 500 and he decided to set up interviews with 500 just in case for everyone who was in Designer Fund. For me, I was like, “Okay, this is a good practice. This is great for me to go in and practice pitching and whatnot.”
It was a really interesting experience because I met with Dave McClure and Paul Singh, who I don’t think is involved with 500 anymore, but I met with Paul first. Paul was like, “I’ve seen your articles. I’ve seen you talk about WeddingLovely and why you’re building. I think you’re awesome.” He called me a cockroach which I thought was awesome. He’s like, “You’ll never die, you’re persistent, you’re in there. You’re in.” I was like, “Wow, that was easy.”
Then I sat down with Dave McClure and I gave my presentation. He said, “All right, we’ll get back to you soon.” I was like, “Oh, Paul already said I’m in,” and that totally threw Dave McClure off because I didn’t talk about this. I totally threw everything off for Dave McClure and probably what they were planning.
At that time, I wasn’t sure I was going to take it yet, but it was a thing where it’s like, “Okay, cool. I have this opportunity to go through 500.” My husband had just gone through YC. I knew I was really into bootstrapping beforehand, but it was like, “Okay, I have this offer on the table. Let’s see what happens.” That was the thought process about it.
Not everyone gets this offer, this chunk of money. I wasn’t ready. Hindsight being 20/20, that’s where I hesitate right now because I look back at the decision and be like, “I should have thought more about this. I should know more about what goes into a funded company, the growth that’s required when you’re a funded company, when you have investors, what’s involved with raising a full series A,” that kind of stuff. But it was, “Okay, this is going to be a learning experience. I have this opportunity here. I watched my husband go through YC. Let’s do it.”
Rob: Yeah, the hard part that I see with the 500 Startups investment was that they only gave you $50,000, but it came with the expectation of, “Now, you’re on venture track.” It’s not enough money to act like a funded startup in my opinion, but it sounds like you wanted to, or felt the pressure to start acting like a funded startup.
Tracy: Yeah, for sure. There are so many other complicating factors. My time in 500 was I did not utilize it as well as I should have. I’m taking a lot of stuff I’ve learned, actually, from being in 500 to what we’re building at TinySeed. Some of it was, I was a solo founder and complicating factors, I funded another wedding company the same time in my batch. They also required you to get desks at their space and they’ve set us across from each other and we were not friends. I want to be friends with them, but the other people were very aggressive. That’s like a stereotypical startup, that bad stereotype you might think of a start-up founder. That’s how they were.
Rob: Something from HBO show Silicon Valley or something.
Tracy: Exactly. We are not friends. I just felt so awkward being there with a competitor and they actually pivoted more into my space during the batch. I didn’t show up to any of the networking stuff. I didn’t do anything like the evening stuff. I didn’t really connect with the other founders. I just decided to stay in my own little world, heads down, work on things, hired someone at that time, brought her on.
This is a time that I found a co-founder, which we can talk about later, but in terms of 500, I didn’t really involve myself in the program. I didn’t really utilize the mentors that were there. I didn’t use any of the help that 500 gave me and I look back at that time being like, “Wow, I wish I could redo that,” because my social anxiety just came into play there and I didn’t use it as well as I should have.
Rob: Right, because as we’ve heard from so many people in the TinySeed batch, the community and the mentorship is at least as valuable, if not more valuable than the money they invest. It sounds like you feel you squandered that opportunity a bit.
Tracy: Absolutely. That working is so important to one’s career and the connections I could’ve made during that time. Who knows where I could be right now? Maybe the same, but if I use those connections… There are some people in my batch that have gone up on to really big startups, really amazing things. Those are the kind of connections that would have been really awesome if I was trying to find a job somewhere, but I’ve completely lost contact with them. I wasn’t friends with them during the batch. Who knows what would have happened? I look back at that time. If I could have redone the accelerator program, absolutely being involved in using the opportunities that are available, it’s something I didn’t do and I regret that.
Rob: Do you regret the decision to take the funding?
Tracy: I would say no. We can do a whole podcast on how insane the wedding industry is. I talked to a lot of people who are jumping into the wedding industry because they look at it as this industry where a lot of people are spending a lot of money and therefore is going to be really easy for someone to build a startup and just take some of that money. If you’re spending $30,000 on a wedding, of course, they’ll pay $10 for an app. It gets way more complicated than that.
With wedding history, because there’s so much competition, there are so many startups, so many people are trying to compete for people’s attention, and you have a 100% churn after a year because all these people are dropping all of your platforms, it means that advertising is a really big thing. Advertising is really expensive and that chunk of money did help. I could apply it to things to help boost the business as absolutely necessary in the wedding industry if you’re targeting people who are getting married.
That money was used. I also used that to hire someone; that was great. I did learn a lot from being in the program. I look back on it being like, “Okay, that was a really good learning experience and I wish I could redo it, but I don’t wish I did something differently,” I guess is what I would say. It wasn’t perfect. It wasn’t a perfect experience, but I learned from it. For better or worse, that’s how I got to where I am right now.
Rob: At the end of the program, there’s a demo day and that’s where folks essentially raise their seed round or preseed round these days, I guess. You decided not to raise a round. I believe you had a co-founder by that point. Do you want to talk a little bit about the co-founder and then a decision you made to pause funding right as demo day approached?
Tracy: The roller coaster of WeddingLovely; this is the peak. I was in 500. Again, I wasn’t using the program as much as I could have, but at the time, I was like, “Cool, I’m doing everything right.” There’s this absolutely amazing awesome person, Julia Grace. I believe she’s the Director of Infrastructure at Slack now. She reached out to me asking me if she can become a co-founder. I was like, “This person is amazing. She’s an amazing engineer. She would be a great CTO,” I was like, “Absolutely, come join WeddingLovely.”
Julia joined, I was in 500, and at the time, I was traveling in New York and Kellan Elliott-McCrea was the CTO of Etsy and he invited me to come into Etsy for lunch. I was again, cloud nine. I’m kicking ass, everything’s going awesomely, CTOs of Etsy are inviting me to lunch. I go over to Etsy for lunch and he drops the bomb on me saying, “Hey, let’s talk about acquiring WeddingLovely,” and I was just like, again, cloud nine, “Oh, my God, I’m doing everything right.”
The demo day was right around the corner and Julia and I decided not to really pursue it because we wanted to focus on being acquired by Etsy because I loved Etsy. Etsy would be a great fit for WeddingLovely. What they were doing at the time were switching some focus into wedding so it would have been a really awesome fit for both of us.
I did do demo day through 500 and I got to say, I bombed the first two ones. I’m much better at presenting now, but I look back on my first two pitches at demo day. They gave us two minutes to be on stage. It’s really stressful, there’s an audience of people, and I did not do well for the first two. By the third one that we did in New York, I finally got my stride. But I was like, “Oh, it doesn’t matter because I’m going to get acquired by Etsy.” Long story short, that didn’t fall. That fell through, we can explore that in a second.
Rob: I was going to ask, you didn’t do well because you weren’t preparing, you weren’t focused on it because you were counting on Etsy acquiring you, is that right?
Rob: Do you have a regret around that of just knowing most acquisitions fall through? But it doesn’t feel like that when you’re in conversations with them. It feels like it’s going to happen. Do you feel like your judgment was clouded there or do you feel like you made the right call?
Tracy: Again, hindsight being 20/20, definitely judgment is clouded. I’m just not as good as a public speaker as I am now and I know that I didn’t prepare enough. It’s a silly thing to think about, but I was like, “Oh, just roll up,” and I just gave my little two-minute presentation.
Speaking of, two-minute presentations are the hardest thing in the world. It’s really hard to give a proper presentation in such a small amount of time. It’s really hard to hit all your marks and stress about making sure you remember every single moment in that presentation because you have such a small amount of time. There’s a lot of regrets for that.
Again, that’s also an opportunity. If I kicked it out of the park, even though I didn’t decide to raise money then, but the connections I could have made in that audience, of the VCs who were there, the people I could have met, the people I could have connected with is another thing that I regret not doing. I’m a huge fan of networking and meeting as many people as possible and becoming friends with as many people as possible because those are the things that are going to transform one’s career down the line.
A lot of the things that where I am right now is just because of connections I made beforehand. Like this TinySeed thing is probably because I met you at MicroConf and I spoke at MicroConf. Who knows what’s going to happen down the line? I regret not trying to pay attention during those demo days, making those friends, making those connections, and just being consumed by anxiety, making my presentation, and then running out.
Rob: I’ve done very similar things, especially early on. This is probably 10 years ago, but I would go to conferences. I’m an introvert and I don’t like meeting new people. I get stressed about it, I wouldn’t meet the other speakers, and I was anxious to go talk to people. I know how that feels.
I learned from that pretty quickly because I saw other people having those relationships and I saw what they did both for their sanity and well-being, but also for their businesses and just the opportunities that it affords. Saying yes to things that scare the […] out of you often will lead to things years down the line, as you’re saying, that you never could have predicted but that they changed the game for you.
I literally look back at my history. Not to go off on a tangent here, but I had a very similar experience where I had never met Jeff Atwood of Coding Horror. He and I blogged, we used to email back and forth, and we’d link to each other’s blog post. This was 2005–2007. I never met him in person.
He was running an event and I was super terrified, but I went up and I was just like, “Hey, man. I’m Rob Walling.” He’s like, “Hey, I love your blog,” and we were talking and he’s like, “You go into business of software?” I was like, “No, I’m not really good. It’s not my thing.” He’s like, “You should go. Let me just link you over to Joel Spolsky.” Just that step moving forward, these are the things of overcoming fears and taking risks is really what this is about, even though it’s hard.
Tracy: I have something similar. If we’re going to go even farther back in time, I feel like my career directly leads from my university graduation. I was graduating with an art degree, I was really into web design. All my classmates were into product design or physical mediums. Our keynote speaker at our commencement was a designer from Apple, came in and speak. I was like, “Whoa, a web person,” she’s talking about web and stuff. I talked to her afterwards—this was 2007—and she said, “If you want to get into the web industry, you need to go South by Southwest,” and again, I have so much anxiety. I could tell in our podcasts about how much social anxiety I have.
I did a keynote at DjangoCon US about it and it was the most terrifying thing. I took her advice and I booked myself a hotel room. I went to South by Southwest alone, didn’t know anyone there, and it’s so overwhelming. Most of the parties, I just walked in, panicked, and walked out, but on the flight back, I happened to be sitting near some attendees. Those people became my friends in the Bay Area, that introduced me to more people that I went to conferences with, and that’s a direct line to where I am right now.
Rob: There’s a concept that Jason Roberts on TekZing talks about what’s called your Luck Surface Area, increasing your luck surface area by doing a lot of things. I love the little quote from Thomas Jefferson, “The harder I work, the luckier I get,” but this is different. It’s not necessarily hard work unless you consider just getting over your own fears is hard work, which I guess I probably do, but it’s like taking risks often equates eventually. You take enough of them and it gets you to some “lucky outcomes” but they really aren’t luck.
Tracy: Right. On the anxiety topic, it still rears its head now, but 10 years of actively working on reducing it and making sure that I’m going out there and being open to these opportunities has been hard, but it’s been worth it. I’m glad that I’m a lot better now.
Rob: To resume this story, you were talking to Etsy. You weren’t putting much effort into the fundraising, into preparing for demo day, counting on that Etsy thing working out. They did ultimately make you an offer. What was that like when you received the offer? Was it via email? was it a phone conversation? Talk me through the emotion of that.
Tracy: They stepped back one step. It was funny because I had the final meeting in New York, and again, cloud nine, we’ve got flown into New York, put up in a really fancy hotel. I’d offered a non-fancy hotel and they’re like, “No, we’re going to put you up in a fancy hotel.” We had the whole day’s meetings, met with Chad Dickerson, went out to a fancy dinner afterwards with me and Julia and all the top level team. Again, I’m just like, “I am kicking butt.”
Throughout this time, I’m talking with 500, Dave McClure helped me out, getting me prepped for what happens in an acquisition, how to compose everything, and how to compose myself. I had other advisors in the Bay Area, they’re helping me figure out valuation, didn’t want to give the first number ourselves, but I wanted to have a good range of what a good valuation for my business would be so I don’t make bad decisions. I thought the prep work was great. I did everything right for that.
But it came in a call and it was the financial person. It’s not the CFO. It was actually a financial analyst or someone at Etsy. It was a call, sat down with me and Julia, and they gave us a number. The number was one-fourth of what the lowest valuation all of my advisors said that WeddingLovely was worth, especially considering that Etsy had told me that they were going to keep the website up. So, it wasn’t just going to be an acquire-hire or they were going to use the properties. I was like, “Okay, thank you.” Don’t say anything on the call, hung up. Julie and I are like, “Oh, crap.”
We went back and forth and like, “Okay, it’s a negotiation so we’ll just give another number and see if we can meet somewhere in the middle. We sent them back an email saying, “Thanks, that was not what we’re looking for. Here’s what we actually think the business is worth,” they responded with—completely unexpected; I did not expect this— “Okay, it does not look like a fit. Goodbye,” which is devastating because I expected this whole negotiation process and it was so weird. It’s so weird to me today that’s how it happened and all of my advisers in the Bay Area were like, “What is Etsy doing? This is not how an acquisition process is supposed to go.” We just went through all that effort and it just went away. It wasn’t my counter was outrageous.
So, that was weird and really devastating. Like I said, we didn’t do the full fundraising process when we had the best time for it, which was demo day, we didn’t follow up any of those meetings.
Now, this is two or three months afterwards. Our momentum has stalled. There’s no big 500 Startups demo day anymore. It was like, “Okay, what do we do? Do we launch a new product? At launch of that, do we then raise money?” Then it got really confusing, really weird, very depressing, and very crazy. That was around the time that Julia decided that she wanted to move on to other opportunities. This high that was on before just free-fell. It was horrible. It was the worst part of the business.
Rob: Just a couple months, it just went from the top top to the bottom bottom. Looking back, do you wish you’d taken Etsy’s offer? Have you ever thought about that? Even though it was low, it wouldn’t have made sense at the time. If you had, everyone would have been like, “You’re nuts.” But what if you had? Do you think that would have been a good thing?
Tracy: Oh, I go back and forth on that all the time. I can’t say numbers, it came out to being a hiring bonus essentially. If I’m going to be a proper startup founder, I’m glad I did not take it because that was a ridiculous number. Everyone agreed that was a ridiculous number and I shouldn’t take it. But having that stamp of approval, that, “Oh, I got acquired by Etsy,” on my resume, what doors would that have opened? Because people just look at those titles, that achievement, and then assume you’re so much more awesome than you actually are, which I wish I had that. I wish I had an acquisition on my record.
Working at Etsy probably would have been really great fun. I would have avoided that devastating drop of what happened afterwards with Julia leaving, I had to layoff someone. That’s when I switched the business back to bootstrapping because there was no way I was going to be fundraising at that point. I just gave up on it.
The way that WeddingLovely was built, I could just put it on autopilot. It’s at that point I was just like, “Okay, business, go do your thing and I’m just going to go over here in a corner, curl up, and be really sad.”
Rob: You’re at the highest point and within a couple of months, you have lost this acquisition offer that you really thought was going to come through. Etsy essentially walked away from the table which is surprising. In different acquisition talks that I’ve had, companies have walked away from the table, but they’ll come back a couple of weeks later. Did you expect them to do that or when they said they were gone, you were like, “This thing’s done”?
Tracy: It was a while ago. I’m trying to member exactly what happened, but I know that the feeling was this thing is done. We had an advocate at the company and we reached out to the advocate. He was like, “This is weird. I’ll get back to you.”
What happened in the end is it sounds like there was some weird miscommunication. Something happened on Etsy’s side that I am not privy to, but something happened on Etsy side where they’re like, “Wait, this is a bad decision. We’re not going to do it,” and it wasn’t how you do with WeddingLovely. Something with financials or something, but it’s just like, “No, we can’t do this right now.”
Rob: Wow. That falls apart and then Julia leaves shortly thereafter. What is that like? When Julia calls, or emails, or however that happened, how does that make you feel? Obviously, there’s got to be some despair and stress, but were you at that point thinking like, “This isn’t going to work, I should just shut this down, everything’s falling apart”?
Tracy: The day Julia sent me an email and saying, “I’m going to come to your house to work.” We didn’t have an office. We had an office for a little bit in Mountain View, but at the time, we shut it down also because everything was free-falling and she asked to come over to my house.
We sat down at my house and she was like, “Okay, I’m just going to open up with this.” I figured the exact words she said, but essentially it was like, “This has been a really interesting experience, but I’m going to move on to something else.” I was […] back, I did not expect that, and I think, “Okay, maybe you should go home now. I need time to process this. Thanks for driving all the way down to my house.” She left and I walked around the neighborhood with my dog just dying, just like, “Oh, my God, what just happened? I can’t believe this happened.”
I was really bad at Julia for a long time and I’m not mad at her now. But at the time, it felt very personal. It was very much she didn’t believe in me. A lot of it, a lot of the business, a lot of WeddingLovely, a lot of it’s my personal mistakes I’ve made as being the founder, the person who started as “CEO,” and that was never my title, which is weird. There’s a lot of mistakes I made, but I took it so personally and I did not like her, I was so mad at her for so long, but we’re friends now.
It was hard not to take it personally. It’s hard not to take the company failing personally. That’s a lot of the reason why I didn’t shut it down because I was clinging to this idea that I’m not a failure. If I shut down the business right now, then it’s me admitting that I’m a failure, that everything fell apart, and it’s all my fault. By keeping the business up, it was just like, “No, I’ll keep growing. I’ll keep building the business.” It’s still going on and it’s still making me money. I’m glad I built it in a way that I don’t have to continually spend marketing money on it because it was a marketplace. The marketplace part was pretty active at that point, so I had these businesses working with me. It was just me just trying to prove to the world that I can still make WeddingLovely a success.
Rob: I guess the question that comes to mind is, Julia was with you for eight months and she was a co-founder who came on two years after you started the company, It’s all hindsight again because you thought it would work out, but do you regret that decision of bringing a co-founder on? Not Julia. I mean, you’re friends with Julia, she’s a rock star so not for her in particular, but do you think this would have been better, easier, different if you had just not evaluated the idea of taking a co-founder on?
Tracy: Hindsight being 20/20, I wish that I was like, “Okay, I’m going to stay the founder, but you can be the CTO,” because that would have switched something in my brain. A lot of my being so offended about her quitting was like, “But you’re a founder. This is supposed to be your baby,” but no.
Because she started so late, it’s not her baby. It’s my baby. I built the first version of all the websites. I built everything from scratch myself. Of course, it’s my baby and she came in and she updated some things, she built some things herself, but she didn’t have that personal feeling like I did.
It was a disservice to everyone to call her a co-founder when it’s CTO or some of these other titles would have been a better fit. Then when she left, mentally, just like a weird logic thing, it would have felt a little better, I don’t know. That’s how I feel about it. You can’t bring a co-founder a couple years in. They’re no longer a “founder.”
Rob: I agree with that. The title is the issue here and I don’t think bringing Julia on was a mistake at all, especially at the time, it was a good move and even in retrospect, you made the best decision you could at the time. But it rings true to me that that title maybe wasn’t right because a co-founder wouldn’t have left. I shouldn’t say wouldn’t have, but there would have been more conversation and more consideration, because you’re right, having only been there eight months, she was less tied to it than you.
Tracy: Yeah. We didn’t have a lot of good conversations back and forth. I didn’t actually treat her like a co-founder and that’s my fault. I was running all the administration of the business. I was running all the vision for the business like where we’re going, what we’re doing, whatnot. I wasn’t really involving her in those conversations, which is absolutely a huge mistake because I wasn’t allowing her also to make it her baby as well.
When she left, I remember being gobsmacked. I had no idea she was unhappy, or that she wanted to leave, or if she was looking for other things. I had wished that she had told me that she was out there looking for another job because she told me she had another job lined up.
Years later, I looked back in that being like, I wasn’t involving her either and we should have had that personal connection if we’re going to be founders together of talking to each other, talking about things are going right or what’s wrong, involving her in how the business is going, and letting her be part of that planning. In those processes, I probably would’ve found out from her earlier on that she was unhappy, but I didn’t know that and that was a big failure on my part as being a founder of WeddingLovely.
Rob: You mentioned earlier that after Julia left, you went back to bootstrapping. Was that the point where you put it on autopilot? I have a blog post from you in 2016 where you talked about putting it on autopilot, but what was the timeline like there?
Tracy: This is where things get a little bit wavy. It was 2016 to now. There are points where I was like, “Okay, WeddingLovely’s running itself. I’m just going to spend a little bit of time on it.” I started working on my book business around then. It wasn’t really a business, it was like on my side, I’m going to start writing a book because I need something to bring me joy in my life and right now, WeddingLovely is not it.
Rob: This was 2016 or this was 2012?
Tracy: It’s been so long that some of these dates get mixed up, but after Julia left, I just started ignoring the business for a little bit, not really working on it. I don’t remember what I was doing, I spent a lot of time just in a depressed state.
Rob: How did that manifest itself with you? Were you just sitting at your computer, responding to email, and not actually working, but feeling like you were trying to work? Or were you just avoiding work altogether?
Tracy: I did the bare minimum to feel like, “Oh, I’m still running WeddingLovely.” I was still responding to support emails. I was still running the blog. That was a big part of WeddingLovely is that there was a weddings blog. A lot of WeddingLovely’s income came through that because we had affiliate revenue. I was so dedicated to at least doing a daily post everyday because one of my things I did well with WeddingLovely was by having this big group of businesses that WeddingLovely is representing and I tied them into our blogs. We got free content from them by sharing what the businesses were doing. It would be like photo post from our photographers, real wedding posts from our planners, or looking at invitation designs from our designers.
This allowed me to work with the companies that were on WeddingLovely and give them something of value and also encourage them to move to paid accounts by running this weddings blog. That was probably the largest piece of involvement I had was I continued to run this blog, grabbing the content from these people. I had a contractor I was working with so I didn’t actually have to move things to WordPress. I just took what the email said to her, she put onto WordPress for me, and then I came back in and set up on social media, set up the scheduled posts and stuff.
I ran all of that and it was like, “Oh, I’m still running a business.” I still told myself I was running a business, but I wasn’t looking at the numbers. I wasn’t looking at how many businesses were joining over time, was that number going up or down? What was my traffic like? It was complicated because I had 11 different properties I was running so looking at traffic for all 11 properties was terrible. That’s why I never looked at my analytics and I didn’t pay attention to any of the data that’s going on. I just ran the blog and accepted the money that came in that went straight to my bank account.
Rob: Ran it almost as a side business or like a true lifestyle business, that definition of it, it literally just is a salary and you weren’t more ambitious with it, it sounds like. At that point, you have a blog post from 2016 and I’ll quote yourself back to you, but you say, “The planning and marketplace sides of WeddingLovely would probably grow faster with dedicated marketing and sales work, but will grow naturally, slowly, but surely on their own. 2016 is already shaping up to be the biggest year yet even though I haven’t had much time to work on WeddingLovely. I’m not going to shut WeddingLovely down even though I’m looking for a full-time job since it does largely run and grow by itself. Ideally, I’ll be able to keep feature growth as well by eventually hiring a remote developer, that’s my baby WeddingLovely.” How does it feel to hear that?
Tracy: Oh, my God. I haven’t read those in a long time. I really should reread them because I have almost no memory of that. It’s so funny. Who is that person? WeddingLovely had this little peak. The marketplace was growing, like I said. It was growing and that was great because I didn’t have to worry about it.
Then the affiliate sales on the other side was growing pretty steadily. It’s one of those things I knew that would go away, but Google’s magic SEO turned in our favor and one of our blog posts got to the top of the results for a very big listing, and therefore there’s tons of money was coming in through affiliate revenue. At that time, I was like, “Oh, wow, I’m doing this lifestyle business right. Our income has doubled overnight. I can use this income.”
Around this time is when I decided to hire someone full-time to run everything for me, like a marketing person, but she also helped do emails. Ideally, it was supposed to be like she was going to help do vision and run the company and that ended up not happening which is fine. But I hired someone in Florida. I had a contractor, the same person doing WordPress, but she grew into more social media stuff in Washington, I also hired a full-time virtual assistant in the Philippines and she did all the nitty-gritty stuff. I was able to train her to help out with the social media stuff and do all the support emails and release me from doing a lot of those day-to-day things. So then I was only doing salary, taxes, bookkeeping, that kind of stuff.
That was like going back into, “Hey, I’m doing this right.” I’m doing it like a different way than when I was doing the whole Etsy stuff, but I was like, “Cool, I’m doing this lifestyle business the right way. I have people employed, the business is growing, I can start paying myself again at some point.” At that time I started paying myself, a $1000 a month was just peanuts, but it was cool to be able to employ all these people and pay myself.
Rob: Was that the right call?
Tracy: It was fun. I don’t know if it’s the right call. It’s so hard looking back on that, because…
Rob: You don’t know what’s going to happen, right?
Tracy: Yeah, but in terms of what I’ve learned in that time of having employees and running a remote business, I brought me so much joy, honestly, to have these employees and be able to, especially, Jenny, my marketing person, I reveled in being a good boss. I did everything correctly. She was engaged, she was working on things, I was hands-off, I directed her, I was able to pay for online classes to help improve what she was working on, and hopefully, now I hope she takes it to her current jobs. It was really fun.
I loved being like, “Okay, cool, I’m working on this book business that’s bringing enough money to run myself,” so I’m happy taking majority of the income of WeddingLovely and putting it towards these other people and giving them an okay lifestyle. They seem to be pretty happy. It was fun.
Rob: What happened between then and 2018? Because in October 2018, you wound up shutting it down.
Tracy: This whole time, for the last five or so years, it could be like, “I’d like to sell this business someday.” I’m just waiting for the right moment and that ended up not ever panning out and 2018 is when that Google magicalness just reversed itself. I knew that was going to happen. Google giveth, Google taketh away. One day you’re the number one on search results and then one day you’re not. I rescued this post a few times already by switching things around and returning the SEO juice back to where it was and this time, I wasn’t able to do it.
I knew that to fix the post or fix the affiliate income that was coming in, I would have to spend a lot of time on it, write a new post, or do something because instead of our income increasing by half overnight, it drops by two-thirds overnight and I was like the big panic moment. It was that moment where I was like, “Finally, I have to make a decision about this, because now it’s just not easy money anymore.”
Rob: It forced your hand. Was the majority of the income of the business coming from this one post?
Tracy: I leaned into it and that might be a regret. Because it started happening and I was like, “This is going really well. I’m going to start more posts. I’m going to do more things for affiliate revenue,” and that helped buffer everything and maybe worried less about the income that was coming on the business side, worried less about income that’s coming from other sources. When it dropped, I was not bad, I was just like, “Oh, look, it happened.” I was expecting this to happen someday.
If I wanted to continue working on WeddingLovely, at that point I could be like, “Okay, cool. Let’s switch our focus really quickly back over the business side,” because our metrics on the business was not great. The people we had almost 9000 businesses and maybe 100 paying customers—this is embarrassing to say—but I wasn’t really worried about it because I had those income coming from those sources and I wasn’t really looking for 10% month-over-month growth, I was just looking for just enough to keep things running and so when it drops, it’s like, “Okay, I can go back and spend time and work on the other side of this business or I can finally face the music and be like this is the time that it needs to go away.”
Rob: This is something that I hear people talk about and I don’t think that they totally understand how hard it is to “autopilot” a website, or a software company, or a start-up. I’ve heard people talk about a SaaS app should just be built to be profitable just like a dry cleaner or a car wash. The thing is, is (a) most dry cleaners and car washes don’t last 10, 20, 30 years, they do go out of business, and (b) it’s way more volatile with these types of businesses because as you said, Google can change overnight, another competitor can spring up.
Just the online marketing stuff changes so fast that truly having a business that is profitable and lasts for 10 years online without quite a bit of concerted effort every 12–18 months to just fight the fires, I’ve done it. I’ve owned at least 15 different software products and another probably 10–15 different websites that made money from every conceivable thing, from ecommerce to content, to Adwords, to selling software one time, to selling multiple software or subscription software, to info products. I’ve done them all and in the end, putting something on autopilot is so, so hard to actually last anything more than one, two, or three years.
That is why the multiples on a lot of these companies are so low. You’ll see a content site sell for two years of its net profit, it’s like, “That’s preposterous, that’s just crazy, that’s such a deal,” but then you get into it and you realize, “Oh, Google smacks it around every six months,” and you experience that in full force. It sounds like if you had been focused on WeddingLovely, you probably would have diversified the revenue streams, you would have had used the SEO because getting money from SEO is great from affiliate stuff. It’s a great way to do it, but to rely on it as a core focus and to build most of the company on it, it obviously isn’t going to last forever.
Tracy: Yeah, and ike I said, I was not mad when I went away. I knew that day was going to happen. It happened earlier than I thought it would. It’s funny listening to this time because I just like, “Ah, that was a lot of effort.” It was never like you said, it never was completely hands-off. My brain power, even when I hire people, I was playing so much brain power on it. After I shut it down, it was this whole process of laying off people I hired and shutting it down. After I shut down, any hackers article that I wrote at the peak which was great at the time, but now it’s like, “Oh, no,” because it’s talking about how amazing things are, like that blog post, it talked about how amazing things are and people are like, “Why don’t you just keep running it? Why don’t you just keep it off the background? Why don’t you put it back to its autopilot?”
I get this email pretty often and it’s because the brain power required just to even have something there and knowing it’s there, getting even a few emails every day or every week about it, having the deal when something changes in your server and you have to upgrade the server because everything broke or something like that, it takes a lot of time. It’s really hard to focus on doing something else appropriately when you’re split focus like that.
Rob: Yeah, focus. It’s such a huge thing and it’s undervalued in our space. In a blog post that you published in, I believe it was October 2018, about shutting it down, you look back and you talk about your decision to put it on autopilot and you said, “My passion has largely moved elsewhere to Hello Web Books, it’s been my focus for the last couple of years, but WeddingLovely largely ran itself and is making a good amount of revenue through affiliate and subscription accounts so I hired a team to keep it running a few years ago and stayed on as an advisor. It was the lazy way out. The business wasn’t evolving significantly, no new features were being launched, but the businesses and engaged couples that used our services seemed happy. I was able to employ a few folks who seemed happy as well so why not continue with it?”
It sounds like you still feel that putting it on autopilot probably wasn’t the best idea, but it was working for people. People were using it, you were employing people, and it was just the decision you made at the time.
Tracy: Yeah. The theme of this episode is always hindsight is 20/20, now that I’m working at TinySeed or just having a job. At the time, I was so hesitant to shut things down because I knew that I’d have to go in the process of actually finding something else. The book stuff wasn’t supporting me full-time and I had this decision whether I wanted to launch a new book, turn my book thing into a publishing platform, go all in on this other project that I was working on, or find an actual job. I was so scared of finding a job after working largely for myself for the last 10 years. The only other two places I’ve been employed were terrible, terrible experiences. I was dedicated working for myself because I thought that I could not have a boss.
Now that I have a job that I really enjoy, it could’ve been four years ago when I just run this business and I had employed people and it wasn’t really something I was interested in, but I was working on these other things. What if I made a decision four years ago to shut it down? Where would I be now? I don’t know what the answer is. I’m really happy again with the path that I had taken, but it is interesting to look back on that with the knowledge I have now and looking at my previous decisions and being like, “Oh, interesting.” It’s funny having those blog posts because I could see my thought process back then for better or for worse.
Rob: That’s the hard part. You said you had two jobs, you didn’t like them and therefore in your head jobs are bad. You’ll hear the same thing. You’ll hear people talk about venture capital, “Oh, I read two TechCrunch articles of a founder getting screwed by his VC, therefore venture capital is bad.” Or you’ll hear “Oh, a business built their revenue on organic search SEO and then Google smacked them around and now they went out of business.” It’s a common story. “I’ve had entire products just go under because of Google. Therefore, I’m never going to do organic search.” But no, these conclusions are too broad and they can shift, they frame your mindset in a way that you don’t even realize.
Often times, if you found the right job, then it would be good. If you find the right money under the right terms, it would be good. If you use Google for the right purposes, which is to get you enough money so that you can hire people to have other revenue streams so you’re diversified, then it’s a good thing. But it’s thinking about it in that way.
We’re all guilty of this and it’s not something that’s easy to do, but I think about some roles that I’ve hired for where I remember thinking there’s no way I can find someone to do this. We just can’t hire for this role, so I’m going to have to do it. Even program manager of TinySeed, it’s like, “This is my accelerator. Einar and I started this. Who can possibly run it in a way that it will work?”
I remember I kept telling myself, “But if we find the right person, then it’ll work.” That was what I had to tell myself to take that risk and of course, we found you and you’re the right person. It makes sense and I’m so glad that you have taken over so much of the role that I would be just bogged down with day-to-day and not able to do the other things that I need to do.
Tracy: Yeah. It’s funny about momentum, or maybe not momentum, but it’s just feeling I come on a certain path and it’s so hard to change that path. It’s so hard to consider the other paths that are available when you’re currently in a rut. I was in that rut for a really long time and it’s really hard for me to see over the edges of that rut to see what else was out there or to conceive of the work that would be required to jump out of the path I was on.
I just kept pushing it year over year over year and telling myself, “Okay, it’s great that I’m only making $30,000 or $40,000 a year because of this place that I’m working for myself. I got to travel a lot. I’ve got to work abroad for a long time. I got to do a lot of really great things. It allowed me to launch this book thing which also led to a whole other interesting set of experiences and learnings. But a lot of it is just I got into this rut and it was so hard to move myself out of it.
Now that I’m out of it, it’s interesting to look back on this experience. I’m glad I had that experience. I learned so much from it, I’ve done so much with it, but I wish that I shut down sooner. I wish I looked at the metrics. I wish I looked at how things were going. I wish that I considered that there are other things out there that could fulfill me the same way it would. I know that I’ll take those learnings to whatever I’m doing in the future. It’s all a really great learning experience. I learned so much from it. I wish I did some things differently, but I’m glad that I did it.
Rob: Final question as we wrap up. WeddingLovely could have worked. As an idea, it provided value and it could have provided you with a full-time income and employed people. Why didn’t it work?
Tracy: Wedding industry. I could talk for ages about this; I’ll try to keep it short. I actually don’t like the wedding industry myself, which is funny running a startup on the wedding industry, but I jumped into the wedding industry because I wanted to switch how it was done. I didn’t really like this focus on consumerism in the weddings and I wanted to have a place where instead of worrying about building this event where you have a to-do list of 500 to-dos long, what if you had a website that was more like a friend helping through the process, telling you the big things you have done like getting a photographer, why should you get a photographer, and what’s going on. I thought that was a good idea. I want to lead into this even better ideas.
In the wedding industry, I wish there was a place with an all-in-one booking platform like Airbnb. How great would it be if you’re getting married and you had this one platform to find people, read reviews, talk with them, do some messaging, and then do the payments and have everything under one area rather than juggling all these different vendors? That’s one of the reasons why weddings are really crazy. There’s such an opportunity here for that, but because it’s such an insanely high churn business where if you’re going to work with people who are getting married and these people are going to leave the platform in a year, you have to find a whole new set of customers that kills anyone jumping into this industry.
I did the best I could by working on the business side of things, but combining the fact that the wedding industry is really hard, it’s really hard to have repeat customers, it’s really hard to build a sustainable business on it, and then the fact that I am not interested in going to wedding fairs. I eloped in Vegas. I was not even going to touch a full wedding myself. It’s not something I’m really passionate about. I’m passionate about changing it and I always able to use that passion in that way. But a lot of that also went into why it was not good for me to run WeddingLovely as long as I did and also why WeddingLovely itself didn’t work.
Rob: Tough business, tough industry, and a little lack of product founder fit, it sounds like.
Tracy: Exactly. Again, fun process. I taught myself how to program. By building WeddingLovely, my design skills improved. I learned how to do all is crazy back-end stuff, build this crazy marketplace. I learned marketing and sales to an extent. It was a huge learning process and it was fun working in the industry. I made many amazing connections.
Would I ever do a wedding startup again? No. I liked advising wedding startups and telling them all the terrible stories I have. I won’t ever tell someone to change, but I try to tell all the problems that happens in the wedding industry when you’re building an app and why it’s not as easy as you might think. A lot of people I find think it’s easy, but I tried to be the person who is very clear about the problems I’ve had so other people can learn from it.
Rob: Thanks so much for coming on the show, Tracy. If folks want to keep up with you online, where would they do that?
Tracy: Personal website is tracyosborn.com. I’m also on Twitter as @tracymakes, Instagram, and other social media.
Rob: Sounds great. Thanks again.
Tracy: Thank you.
Rob: I want to thank Tracy again for coming on the show. I like her story because it’s not very often that someone runs a startup for nine years, puts it on autopilot, hires a team to run it, and just has these ups and downs. The experience she did and her willingness to relive that with me today is much appreciated.
That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob does a throwback episode. Almost 9 years to the day Rob and Mike published episode 14 about overcoming fear and taking risks which is a message that is still applicable today.
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. On this show, we talk about building startups in an organic, sustainable fashion, in a way that focuses more on your personal life and your lifestyle rather than focusing on building a billion dollar business.
We like to value freedom, purpose, and relationships on the show. You’ll notice that, while my co-host, Mike Taber, is on hiatus, I’ve been experimenting and dabbling in a few different show formats. If you’ve enjoyed the change-up and the focus on improving the podcast quality, including the recent interviews with Laura Roeder and Jeff Epstein, the Q&A sessions I’ve had with Tracy Osborn, Jordan Gal, as well as the hot seat with Matt Wensing, let me know. Reach out email@example.com or you can tweet it out. I appreciate any feedback you can provide. Of course, if you’re able to give a five-star rating in any of the podcast apps you use, it’s much appreciated.
Today on the show, I’m doing a different intro because I’m trying something I don’t know we’ve ever done before. It’s to do a throwback episode. What I did is I went back through the archive and I picked out one of the all-time most popular episodes of this podcast. It’s episode 14. It was published July 13th, 2010. It’s almost to the day. It was nine years ago. What’s also interesting is that when this episode went live, my second son was five days old. That’s just an interesting coincidence.
Now and again, I go back and listen to old shows. Typically, I don’t go back prior to where they are […] just because it’s so hard to do, but this episode sparked a lot of conversation when it happened and it’s one of those where the content itself holds up pretty well even nine years later.
Some funny things I’ve noticed relistening to this episode is we just sound so young and so naive. It’s so impressionable. The intro’s slightly different. I’m going to play the whole episode. There’s a Q&A section at the end. We did a whole episode of content and then two questions that I find are not that interesting, so I’m going to cut those out, but the intro and the outro is slightly different, which I think is funny.
The audio quality is not great, but for a 14th episode, for it being 2010, and for use just figuring this out, it’s not so bad, but it’s definitely a lot fuzzier than it is today. As well as the editing. You can hear the editing is really choppy because we didn’t really know what we were doing back then. Now we have a professional editor. And it’s hilarious. My book launch. I talk about my book about to come out. I think I threw out a URL, but this is pre-Start Small Stay Small.
Again, I wouldn’t go back to an episode if I didn’t really think the content is still so applicable. This is one of those evergreen timeless episodes that I listen to and still get something out of, and I think that you will, too, because this is about overcoming fear in your own head, whether it’s to launch that first blog post, launch that first podcast episode, launch an app, take a risk, and it just always applies. I find that the conversation is as applicable today as it was then. Even the examples we used are still strong even here in 2019. So, I hope you enjoy revisiting this topic, especially if you weren’t a listener back nine years ago.
This is Startups for the Rest of Us episode 14. Welcome to Startups for the Rest of Us, a podcast that helps developers be awesome at launching software products, whether you built your first product or just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experience to help you avoid the same mistakes we’ve made. What’s new this week, Mike?
Mike: I am having tons of fun getting a development box set up for a website. For those of you who don’t know, Rob and I run the Micropreneur Academy. It’s more or less to help developers learn how to do sales and marketing for their products. We’ve got tons and tons of content out there, but the problem that we have whenever we’re doing changes to the site, because it’s all built in WordPress, it’s very difficult.
One of the problems we have is being able to do development work on that box without bringing it down or crashing it because we’re making some changes and trying to see if they work. What I’ve been doing lately is we’re using a product called JumpBox to essentially bring up a development server very quickly so that I could dump all the content onto that JumpBox.
Essentially, what it is is if you go to jumpbox.com, they’ve got a couple of different pricing plans, but the one that I’m using is basically a LAMP stack. It allows you to download a virtual machine and it’s pre-configured with an OS and everything you need to just run a LAMP stack. All you do is you fire it up, it grabs an IP address, you specify a password for it, you can just log in, and you’re up and running in literally three minutes after you’ve downloaded this JumpBox. It’s really, really cool.
Rob: That’s awesome. How much time did you spend getting that going?
Mike: It probably took me more time to download it than anything else. The download really wasn’t very large. It was like 100–150 megs, something like that for the JumpBox itself that I downloaded. Like I said, they’ve got a couple of different pricing plans. The first one’s free, but then they’ve got a pro version and a business version. You can get a 15-day trial for free. It’s pretty cool.
Rob: It’s nice to have a dev environment. I know that’s something we’ve talked about for a long time. Good. Anything else?
Mike: No. That’s about it. What about you?
Rob: The hell I have been doing. Good grief.
Mike: Nothing. You slacker.
Rob: Yeah. I’ve been amazed at how much extra time this book has taken. The book’s done, the final proof arrived, I ordered copies, go to the printer, that whole thing. But like starting a company, you think that writing the actual code is going to be the bulk of that work? That’s 50%–60% tops.
The same thing with the book. I thought that putting together all the material and writing everything would be the bulk, but I had such a number of tasks to take care of, like building the website, getting the emails out to the list, and a number of other things. Getting an ISBN number and working with formatting. Of course, I’m not a designer, so it takes me a long time to do that stuff. It’s not as easy to outsource as, say, HTML work, or maybe it is. I just don’t have the right contacts. I’m out of my element with it. I chewed up a lot of time over the past week.
I actually made, what I consider in retrospect, an error in judgment. I basically had a four hour estimate to create the sales website, which is just a one-page thing—click here to buy the PDF, click here to buy the paperback. By the time I integrated with two payment processors, it took me 16 hours, which was just painful, and the integration is not an integration. It’s just a click an Amazon button and click a Google Pay button. That’s not even some fancy form that does it all. I was amazed at how long it took, so disappointed with it.
I wasn’t going to outsource it just because I literally thought it would take me two, I had estimated four just to be on the high side, and by the time I got everything the way I wanted, it was way high. In retrospect, definitely should have outsourced that.
Mike: I can think of two other mistakes off the top of my head that you have made. The first is, I don’t think we actually talked about the fact that you were writing a book on this podcast.
Rob: No, we did on episode 11.
Mike: Did we? All right.
Rob: Yeah. I edited it today.
Mike: My bad. All right. We’ll score that a point for you today, then. The other one, though, is that if you just asked me, my wife used to do print layout for a magazine.
Rob: That’s right. You’ve told me that like 10 times. How did I not do that. Yeah, it’s not going to look nearly as good if she give it 30 seconds of look, I’m sure. Well, that’s been my week. If you’re interested in the book, if you’re listening to this, startupbook.net. It will definitely be out and available in PDF and paperback format by the time this podcast goes live.
The other thing I wanted to mention this week is, I was talking to someone about a week ago and they listened to the podcast. I was like, “Yeah, you can stay up and tune in to what Mike and I do in our blogs.” He’s like, “Oh, you guys blog?” and I was like, “That’s it. We were doing this podcast for two months and we’ve been blogging for five years each.” I was like, “Oh, I thought the blog was our deal.”
Anyway, I realized we never mentioned our blog URLs, or maybe in passing we have, but if people are interested in hearing more about this type of micropreneur stuff, my blog is softwarebyrob.com and Mike’s blog is singlefounder.com. This is where we actually write original articles and new posts on starting a software company, launching products, being a micropreneur and such.
Mike: What are we discussing today? I think we actually had a listener comment from somebody on the startupsfortherestofus.com website, right?
Rob: That’s right. At startupsfortherestofus.com, that’s where you can download and listen to all of these episodes. In episode one, a guy named Scott Herbert made a text comment at the bottom and he said, “First, thanks for a podcast that doesn’t think I have $10 million of VC funding and want to tell me how to spend it. Secondly, I’d love to hear a cast on fear. Someone has offered to review my application for their blog—I’m scared by this—I said yes, of course, but does it get any easier?” That’s what we are going to be talking about today.
Mike: Cool. The short answer to that is you did the right thing and yes, it does get easier. The key to making it easier faster is to do it more often. We’ll obviously talk about that a little bit more. I think when it comes to fear, there are a couple of different options that you have and I boiled it down to four basic options.
When you’re faced with fear, these are your choices. You can either cave, which basically you give up. You can struggle with it and challenge it head on. Number three is you can accept it and do nothing about it, but you’ve accept it. You’re fearful of that and there’s just nothing you can do. The fourth one is you can try and work around the fear, try to avoid it. If you’re afraid of heights, you just never go into tall buildings or something like that. Some of those wok better than others, but obviously challenging your fear head on is going to help you get over those fears a lot quicker.
Rob, why don’t you talk a little bit about what sort of things people are typically afraid of? I think this pertains specifically to business. We could talk about arachnophobia and fear of all sorts of weird other things like short people, but I think this question relates more specifically to building your own business.
Rob: The things that I most commonly see software developers and people starting startups dealing with are thoughts like what if nobody likes my software? What if nobody buys my software? What if I fail and I invest all this time and it’s just wasted time? What if I can’t get any traffic to my site? What if I don’t get this right the first time? And what would other people think of me? Even if this does or doesn’t work out, what will people think of me while this is going on?
I think that’s a big part of fear is dealing with how other people view you. It almost takes me back to junior high in high school. I think it takes all of us back. Someone’s going to laugh at us or make fun of us or point something out publicly that is just going to really embarrass us. Those are the most common fears. I think everything stems from the fear of failure and the fear of other people seeing you fail.
Mike: I think that’s the biggest thing is people seem to think that whatever they do or say, people think of that as a reflection of themselves, especially when they’re writing software and they want to put it out there. I see people pushing off their software releases because they’re afraid of what people are going to think of their software. They always say, “I want to get it right. I want it to be perfect.” You know what? It’s not going to be perfect. You have to get over that.
Honestly, some people probably have a fear of launching a product. “What do I do when those support calls come in? What do I do when a customer’s irritated that this bug crashed and they lost all this data?” You know what? Those things can happen. Nobody’s perfect. That stuff is going to happen sooner or later and the only thing you can do is deal with it head on, accept that you made a mistake and move on.
If you sit there and try and live in the past or in the future, you’re not going to get anywhere. You can’t sit there and just worry all the time about, “What happens if this?” You know what? Why are you thinking about that now? Why don’t you continue living your life, moving on, doing your development, get past your launch? Then if that happens, then you worry about it.
I think maybe there’s a difference between doing that versus if you have critical bugs in your software that you know is going to cause somebody’s machine to crash and burn, yeah, you have to fix those before launch, but you can’t just let the fear of having bugs in your code or the fear of people running into problems with your code take that as a reflection upon you because it’s not a reflection on you.
Everybody is human, everybody makes mistakes, and when you create bugs in your software, those are mistakes and they’ve got to be fixed. Getting over those fears is just a matter of accepting that that’s going to happen and you can fix those bugs, you can move on, and version 2.0 is going to be better than version 1.0.
Rob: The two things that I think about when encountering fear like this is that the first time you do anything, you’re going to be scared. The first time you publish a single blog post, you’re going to be scared. The first time I did it, the first time I published an essay, a bunch of people read it, and people started ragging on it, I had anxiety about this. This is just natural. The first time you record a podcast, you’re going to have anxiety. The first time you speak at a user group, the first time you speak at a conference, anytime you do something publicly, you’re going to have some type of fear.
There’s some natural inclination in all of us that we feel like we’re going to be judged by everyone, and whether it’s realistic or not, knowing that the first time you do something, you are going to feel this anxiety and this fear, is really helpful because then you can identify very quickly and say, “Oh, this is that feeling again. It’s that same old thing that comes very naturally. I shouldn’t be scared of it and I shouldn’t let it talk me out of doing this thing.”
I’ve actually started following that fear, just a little bit like Seth Godin with a linchpin where he kept saying, “The lizard brain has its negative talk. If go towards the lizard brain, when the lizard brain talks to you and says, ‘Don’t do this thing,’ you typically stretching yourself and you’re actually doing something good. You’re actually moving in a direction that will grow who you are.”
The second thing is that as software developers, most of us have this natural anxiety of wanting to be perfectionists. I was talking to a developer today and he said, “I want my software to be perfect. I know it’s not going to be, but what if I launch it and there’s a bunch of bugs in it?”
There are two different types of people. There are the people who don’t care enough and those people don’t tend to be really good software developers they don’t tend to want to launch a software product. The ones who are doing this tend to be more of the perfectionists, tend to be more of the people who are stressing out about it, and that’s us. We have this anxiety that actually provides productivity.
If you’ve ever heard about Yerkes-Dodson curve, it’s a psychology theory that anxiety helps you—to a point—be productive. If you’re not anxious at all about a deadline, it’s very likely you’re going to miss that deadline and that you’re not going to be productive. Anxiety which translates into fear is actually a good thing to a certain extent and it actually will make you perform better and do more work quicker, to be more productive.
Mike: I know what you’re saying about being able to have a healthy dose of anxiety because I remember back in college, I used to feed off of deadlines. It was my job, it kind of just was. The fact is, if I had a deadline for a paper coming up or a project or something like that, as that deadline got closer and closer, I would just use it to energize myself and really focus in on what it was that I had to do and what I had to get done. Somehow it just helps me to meet a lot of the deadlines.
Don’t get me wrong. There was a certain amount of procrastination in there, but I’ve also seen studies where if you take three groups of people and you give one a deadline at the end of the quarter or semester, then you give another group of people regular deadlines throughout that time period, and then you tell the third group of people they can create any deadlines they want, people will tend to procrastinate until the end. I would just feed off that natural energy for those deadlines.
For me, the anxiety helped a little bit, but you also have to be a little bit realistic about in keeping in your head, “Am I actually going to meet this deadline or is it just a completely lost cause?”
Rob: That’s the thing with fear. I’m kind of equating fear with anxiety because when you say fear, you think a lion is attacking us. An anxiety is more of a realistic explanation or a realistic description of what we really feel when you’re going to go up and speak in front of people or we’re going to release a software product and maybe have someone say something bad about it or something. I think anxiety might be a better word for it.
There was a study—I wish I could quote it—done at UC Berkeley. It compared the anxiety levels, the stress levels of cops who were working in East Oakland versus students during finals week. The anxiety levels were actually higher in the students during finals week. What that shows is that anxiety, a lot of it if not all of it, is in your head. Some of it can be a chemical as well, it can be prone to be an anxious person, but a lot of it is in your head.
Ever since then, I have really learned to focus in on my anxiety and realize when it’s coming, identify it, then do something more productive with it, and allow it to motivate me rather than cause me to cave.
Mike: You bring up an interesting point about the difference in fear and anxiety, though. Personally, I have my own fears and my fears tend to be more long-term things that I’m afraid of happening. There are certain anxieties that I’ll go through. I’m a pretty good public speaker, but I think everybody gets at least a little bit nervous when they’re about to go up and do some big presentation.
In terms of fears and stuff, one of my own fears is, as the sole breadwinner of my family—my wife stays home with the kids so that I can go out and work—what if my income stream comes crashing to a halt and I’m not able to support my family? What if I’m on the road and something happens to me? Will my family be taken care of? How will that happen? How are they going to deal with that?
Honestly, I generally don’t worry about myself in terms of my health, but it doesn’t mean that I didn’t go out and buy a life insurance policy just to make sure that that sort of thing is taken cared of.
In terms of my income streams, I know that if it came down to it, I would do whatever needed to be done in order to make ends meet. If I had to go to Barnes & Noble and get a job stacking books or something like that, so be it. I’ll do what it takes to take care of my family. That’s one of the long-term fears that I have. I don’t really get anxious about those. I think about them, but I also think about how to deal with them and how to alleviate those things as concerns.
What about you?
Rob: The long-term fear that I have is the same thing. Being that we’re both self-employed, it’s a reality that our income could be majorly impacted very quickly. In fact, these last few months I talked about it, due to the recession there are several different income streams that I have that have substantially decreased 50% or more. I’ve been staring at it in the face, realizing if it continues like this, there’s going to be some issues down the line over the next few months. So, this is all happening. I’m about to have my second child. So, absolutely, any entrepreneur, the fear of just making ends meet and continuing to have a solvent business is a valid fear. It is for me as well.
Mike: That’s one of the things I’ve heard from people as well and I get to ask that question, “Aren’t you afraid of going out of business or this or that?” The way I see it, being self-employed actually gives me a certain amount of control over it because I am in control of my own destiny. I get to make the decisions that ultimately affect how I do in life. If I were working for some corporate employer someplace, they could decide to let everybody go on any given day and there’s literally nothing you can do about it.
You think about it in terms of job security, most people think of it that way, but you can also think of it in terms of financial security. You go to work for somebody, you’re complete at their mercy in terms of your income. Sure, they let you go and then you can go find another job, but right now, it’s hard to find jobs for most people. There’s tons of people out of work and the unemployment rate is really high.
I look at that and say, “Well, you know what? I could either work for somebody else where I’m completely at their mercy or I can work for myself where I’m at the mercy of my own bad decisions, so to speak.” Honestly, to make the choice between those two, I’d rather work for myself any day of the week. Now, granted that you have to be making money in order to be able to do that sort of thing, but it’s certainly an interesting way to look at it.
Rob: You make a good point there. No matter which avenue you choose, whether you work for an employer or start your own company, you’re going to have fear about something. You should have some fear that maybe you’ll get laid off, maybe the company will go out of business. You should have fear if you’re an entrepreneur that maybe you won’t make ends meet.
It’s not like you can escape it by choosing one route over the other. People can talk themselves into not having fear if they work for an employer. I think you’re kidding yourself by saying, “Oh, I’m not going to get laid off. This company’s never going out of business,” those kinds of things. There are fears in really any choice that you make. There’s no way to escape the realities of what might happen.
Mike: Right. One of the quotes that I keep, and it’s actually related to fear, this quote I keep actually on a Post-It note right next to my monitor and it reads, “It is possible to commit no mistakes and still lose.” It was actually in a Star Trek: The Next Generation episode from Patrick Stewart. It was in reference to Data was playing this game against somebody else and he ended up losing to this other person. He couldn’t figure it out how it was that he lost. That’s what Captain Picard told him. It’s like, “It’s possible to commit no mistakes and still lose.”
That true in life as well. You can do all the right things and still come out at the end of the pack. There are times when there’s absolutely nothing you can do and you’re going to lose. That’s just a fact.
I don’t want people to think that you’re going to lose every time, but there’s always a chance that you could lose and there’s always a chance that you could fail at whatever it is that you’re doing. But if you’re in control, you’re making those decisions.
Most people generally think they’re smart people. They’re going to make reasonably decent decisions and you have to keep that in mind when you’re going through those motions. You’re going to make the right decision with the information that you have at the time. If at the end of the day, you came out at the end of the pack, you have to accept that, move on, and say, “Okay, well that was a learning experience.” Take that forward and go on with the next task. You can’t let those things bother you.
I know people who let things bother them for years. I can think of one person in particular who let things bother him for years and years and years. And you know what? He’s never going to make it past it. It hasn’t happened yet. You can either let it get in your way of life or you can put it behind you and keep going.
Rob: The other thing I like about that quote is that it’s a good reminder that you have to take risks in order to do something worthwhile. You have to take risks in order to start a company or even to have a child or buy a house. Any of these things that I personally hold dear and that other people may as well. You can’t just stay in your safe zone all the time.
That’s what I really take away from that quote is you can make no mistakes and never do anything and still fail. If you decide, “Oh, I’ll never going to get married because I might get hurt, never going to have a child because it’s too hard, never going to buy a house because I don’t want to take on the risk, and never going to start a company.” In my life and my goals, I would consider myself that I would not have succeeded if I hadn’t done these things.
What I take away from that quote is that taking risks is a necessity if you are an ambitious person and if you have goals. You’re going to have to risk something to achieve those goals. And if you sit back and don’t do it, that I would consider that failure, not taking the risks.
Mike: And taking the risks doesn’t mean you’re guaranteed failure or success. It just means that you’re taking those risks. You’re gambling either way, but honestly, it’s not like the odds are in Vegas. I mean, your odds are a lot better when you’re putting that faith in yourself and your own decision-making powers as opposed to the dice or the roulette table in Vegas. It’s a completely different type of gambling, I’ll say. Calculated risk is what I’ll call it.
With that, why don’t we talk about six steps to dealing with that fear or anxiety?
Rob: Step number one is to take small steps. If you try to leap out too far, if you try to start a huge company or try to start two companies at once, it can be just too much and it can overwhelm you pretty easily. If you’re the type of person that fear tends to hold you back, take a small step.
Maybe instead of putting up a bunch of money or putting in a bunch of time in order to start a company, try to either start a smaller version of that or just do a little baby step of it, try to get that minimum viable product out, do some traffic testing, and see what’s going to happen. It’s a much smaller step but it can still help move you in the direction of, say, starting a company.
Mike: The other thing you can do is if you’re trying to get into, for example, product marketing. You don’t necessarily have a product yet. You can sign up for any number of affiliate programs. amazon.com’s got one where you can become an affiliate to sell their books and by referring traffic back to them, if those people buy things from Amazon, you get credits for those.
That’s a very small thing and I’ll be perfectly honest to say that I don’t think that you’re going to make a lot of money from it, but you will probably learn quite a bit from it. You can use that to help yourself as a baby step to become a better marketer, for example.
Step number two is to get some concrete motivation in the right direction. What this really means is that if you’re trying to do something, find somebody else who’s done that and pick their brain. Get some help from them. Ask them how they did it. Ask them how they dealt with their fear or their anxiety about it.
For example, public speaking, you can go talk to somebody who does public speaking for a living or join Toastmasters or something along those lines. You really need to find somebody else who can talk to you about it or you can talk to them about it, ask them questions, really get down to the bottom of what it is that you’re afraid of, and have them help motivate you in the right direction.
Rob: Step three is to look at failure and rejection in a new light. What we mean by that is instead of taking failure and rejection as a negative thing, realize that it does tend to be a valuable learning experience.
Mike and I already talked in a previous episode about whether failure is a learning experience or not, or you should only have successes, the whole discussion of that. Both of us believe pretty firmly that you will learn from your failures and that rejections will ultimately teach you to overcome these hurdles that you’re facing. I know that every time I faced rejection, it’s impacted me, but the more that I faced, the less each of them impact me.
Becoming aware of that, failure and rejection, are going to be inevitable as you do anything that has risk in it, but becoming aware of that is a big part of it because once it comes, you’re much less surprised by it.
Mike: And there’s obviously different levels of that failure and rejection. Rob and I have also talked about when we first started getting into AdWords and we blew an excess of $1000 apiece in the first month of doing our AdWords campaigns. Don’t get me wrong, $1000 is not pocket money or anything to be blowing out on AdWords, but I’ve made some much, much greater financial mistakes on that in the past. You just take them with a grain of salt and say, “Look. You know what? I understand what happened and it’s not something I would repeat,” but you learn from those things.
Number four is to not get too caught up in the past or in the future. You really need to keep your mind working in the here and now. What I mean by that is, if you’ve made mistakes in the past, don’t dwell on them because it’s certainly not going to help you. It’s just going to drag you down, it’s going to drag your morale down, and you’re going to be constantly thinking about them.
What that will do as a byproduct is basically distract you from the things that you have going on today. While you’re doing that, your basically dividing your mind with half of it saying, “Oh, my God. I can’t believe that thing that I did last Thursday or three years ago and it still haunts me to this day.” Everybody makes mistakes and how you deal with them is just as important as the things that you take from them.
Similarly, you can’t worry too much about what’s going on in the future. I’ll go back to the one I mentioned before. I travel a fair amount for my job. What happens if I’m on a flight and the plane goes down? Now, granted the chances of that happening is pretty slim to none, but it could happen. What do I do? I went out and I got a hefty life insurance policy. If something does happen to me, at least I know that my family is going to be taken care of. It’s all about mitigating those risks so that you can take your mind off of those fears, put them together, and focus on what it is that you’re doing today.
Rob: Step five is that things don’t happen overnight and that you need to keep working on it. The bottom line is that fear goes away the more times you do something. If you have a fear of public speaking, the more times you do it, it’s going to get better. If you have a fear of publishing a blog post, if it takes you 10 hours and 20 edits to get a 500-word post out, you need to do it more. You’ll get a little better at it, but you’ll get over the fear that it has to be perfect.
The bottom line is it’s not very complex. you’re going to be scared the first time you do something and you need to do it over and over if it’s worth it to you to actually get good at something.
Mike: And the sixth step to dealing with fear is to get a sanity check from someone else. Whenever you’re working on something, whether it’s software, a blog post, a piece of marketing collateral, or a press release, anything along those lines, anything related to your business, or even in your personal life, just get a sanity check from someone else. That can be a close friend, that can be someone who barely knows you.
I had somebody contact me who said, “Hey, I’d like to get your input on something because I don’t talk to you very much and you don’t know anybody that I know. It would be great to hear from you about what you think of this.” That’s a perfect scenario where you can get that sanity check from someone else with virtually no fear of anyone else being informed about what your fears are.
One of the things that Rob and I actually used to do probably 5–6 years ago, something like that, when we were first getting our blogs started, we actually started sending some of our blog post back and forth just to get a sanity check on it, to say, “Hey, what do you think of this article? What do you think of the wording of this? Does this strike a chord or is it just too bland?” et cetera.
We did that for—what was it—six months or something like that and we just went our separate ways. By that time, we have gotten over our fears about doing any sort of blog post and publicly voicin what our thoughts and opinions were.
Rob: I think we did it for a closer to a year, actually. It was certainly helpful for me. It improved the work that both of us produced as well as—at least from my perspective—reduced the anxiety I had when I went to publish something because I knew that someone had already looked at it pretty critically. If I sent over a new… kind of said, “No, this is not very good,” or there’s a big flaw in this logic, then I would rewrite that piece and then when I posted it, I knew that it essentially had a sanity check done to it and it really reduce the fear that I was going to get slammed online.
To recap, the six steps when dealing with fear are: (1) take small steps, (2) get some concrete motivation in the right direction, (3) see failure and rejection in a new light, (4) don’t get caught up in the past of the future; work in the here and now, (5) keep working at it; things don’t happen overnight, and (6) get a sanity check from someone else.
Mike: Thanks to both Jonna and Trey. If you have a question or comment, please call it in to our voicemail number at 1-888-801-9690 or you can email an MP3 or text format to firstname.lastname@example.org. If you enjoyed this podcast, please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. A full transcript to this podcast is available at our website at startupsfortherestofus.com. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob interviews Jeff Epstein, Founder of Ambassador, about building and selling his multi-million dollar startup as a non-technical founder. They dive deep into the details of the acquisition and the toll it took on him.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, I talk with Jeff Epstein of Ambassador about how he, as a non-technical founder, built and sold a multi-million dollar SaaS startup. This is Startups for the Rest of Us Episode 453.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first one or you’re just thinking about it. I’m Rob, and today with Jeff Epstein, we’re here to share our experiences to help you avoid the same mistakes we’ve made.
Welcome back to Startups for the Rest of Us. On this show, we talk about building startups in an organic, sustainable fashion that allows you to focus on your personal freedom, purpose, and relationships. We have different show formats and this week, I sit down with an accomplished, impressive founder named Jeff Epstein. I’ve known Jeff for around eight years and watched in awe as he built Ambassador—it’s at getambassador.com—into a $5–$10 million ARR SaaS company, and all the trials, the tribulations, the struggles of what he went through to get there. He exited about seven or eight months ago.
What I like about Jeff is that at heart, he’s a bootstrapper. He bootstrapped Ambassador—which was, at the time called Zferral—for a year and he had to pay a developer essentially out of his own pocket. Then he raised a very, very small round between $25,000 and $50,000 just to basically keep the product moving forward. He’s a scrappy founder. He was doing sales calls constantly in the early days, really, a founder who was ambitious.
One of the interesting things we dig into today is how he has a kind of what a bootstrapper mindset had to raise funding to keep the company growing and we talked through his decision to do that. We also talked about the toll that the company took on him over the course of this time. He said he didn’t sleep very well, he did feel stress, he put on a lot of weight that this company took a toll on him, and we walk through any regrets he has. It’s really a fascinating story.
The latter half of the interview focuses on the acquisition because I find that level setting people’s mindsets of what a real acquisition looks like. The fact that Instagram was supposedly sold in a weekend for a billion dollars is like, (a) we don’t even know if that’s really true or if that’s just kind of a myth and the story around it, and (b) even if it is true, that’s like a once-in-five-year thing or once a year, once a decade, whatever, very, very, very rare.
The other thousands and thousands and thousands of companies and startups that are acquired happen much more like what you’ll hear Jeff talk about today. Again, the latter half of the interview focuses on that. Then it’s fun to talk through with Jeff to hear what he’s been doing for the seven months since he was able to leave the company. I always enjoy sitting down talking with Jeff, really enjoyed the conversation and digging into his victories, his struggles, his failures, and everything that came along with it.
Oh, and one side note before we dig in, it was an absolute comedy of errors trying to get this recorded so I’m actually impressed that we’re even able to ship it. I was in a Starbucks—which I normally don’t work from coffee shops—I especially don’t record interviews from coffee shops but due to extenuating circumstances, that’s where I was. Fire alarm started going off an hour before the interview then stopped, then went back on, then went off, then went back on.
Eventually, I went out to get my car and take off and fire trucks had blocked the driveway so I literally could not leave so I sat in my car, I hooked up my hotspot to my phone and this entire interview was recorded using that USB headset plugged into just a laptop sitting on the passenger seat so it was a funny moment. I couldn’t cancel the interview because the episode wouldn’t have gone live on time. But the show must go on, we ship every Tuesday morning. I hope you enjoy my conversation with Jeff Epstein.
Thanks so much for joining me on the show this week, Jeff.
Jeff: Yeah, great to be here, Rob. Thanks. I appreciate it.
Rob: We go way back. We were in a mastermind with Ruben Gomez for a couple years, if I recall back, when I was doing HitTail, 2011–2012 timeframe.
Jeff: Yeah. It seems like a long time ago but it was a lot of fun and I know, at least for myself, it was a really valuable time to chat with folks. Also, there wasn’t a huge community and we’re all in interesting areas where there weren’t startup communities and it was really important back then and, obviously, so today. It’s cool that we remained friends for so long.
Rob: I agree. I see you at MicroConf every so often. You made it this year. It is cool that we ran across each other. I remember you and I originally met. I came and spoke, I believe it was in Grand Rapids and you live in Detroit, Ruben was in Florida, and I was in Fresno, California so we were all in these places where there wasn’t a huge startup community around us and we found each other through these channels.
Today, I want to walk people through your story because, as I was saying right before I hit record, your story of growing Ambassador as a non-technical founder is so compelling, it almost writes itself. We just cover the points and it’s like, “Oh, man, that was amazing.” “Oh, man, that was brutal. How did you get over that?” These are the best kinds of stories where there’s a lot of adversity and struggle and it was probably pretty painful at the time, the different things that happened with co-founders and whatever, fundraising, and working 24/7 for a few years, but I do think the folks are in for a pretty good ride today so thanks again for sharing your story.
Jeff: My pleasure and I’m excited to tell it. It is interesting and there’s certainly a bunch of highs and lows, so hopefully I can help some people avoid some of the stresses and struggles that I had but definitely interesting for sure.
Rob: To summarize, so we don’t have to spend 10 minutes going through details, you started Ambassador in 2010, you exited, sold the company in 2018 to a company called West Corporation. Ambassador was originally called Zferral and you did raise a few rounds of funding, I believe. You started working on Zferral/Ambassador in 2010 and you raised a small angel round between $25,000 and $50,000 in 2011. You’ve been self-funding it since then.
You mentioned to me that your wife was making money and you were pumping the money out the back door into the app. What was the impetus to raise the angel round? Because I think of you more as a bootstrapper. You just have that capital-efficient, you’re not the Silicon Valley go-big-or-go-home billion dollar valuation, you’re ambitious, but you don’t fit the mold of, “I’m going to topple Salesforce and become the next Dropbox, Facebook, and Airbnb.” What was the impetus for taking outside money in 2011?
Jeff: Good question. For me, it was really in a sense kind of bad, but it was almost desperation mode. I didn’t act like that—I don’t think—at the time, but for me, I had done pretty well, I guess, for being an adult without having an actual job, I was investing in real estate, I was doing some odd things, I had just come out of law school, and I had sold a small business that helped me pay off my loans. I didn’t have that much money saved up or capital, and again, it was coming off of the 2008 financial situation, so there weren’t a lot of jobs.
I basically self-funded Zferral and it was maybe $4000 or $5000 a month to pay for developers to build the product. A couple of things led to me raising money. One was there wasn’t this playbook that exists today in terms of how to bootstrap even. Bootstrapping at the time, was just grinding it out and getting money wherever you could. I kind of exhausted all avenues. The problem for me—I mentioned this earlier to you—was I couldn’t stay up late and get the app done. I wasn’t able to just do the work because I couldn’t write code. I had to basically pay for it.
At the end of the day, I had an opportunity to raise $25,000 and I took it because I got married in 2010. So, right before this money came in 2011, I had to think about my wife in terms of, “Hey, it’s not just my money I’m risking now. It’s our partnership.” She was kind enough, she believed in me, and allowed me to do it but it was at a certain point, literally, the money was coming in and it was going right out. She wasn’t making, even maybe me, even more than what I was paying out. Our household was a net deficit, which is pretty tough to do when you’re just getting married and just bought a house.
She’s used to always joke, “I thought I was marrying an attorney and this isn’t what I signed up for.” She was a good sport. She’s joking about it, but I don’t know if she knew that was what she was getting into. It was a big relief at the time and $25,000 was probably six months of expenses. I was fine not getting paid, but money going out was tough when I wasn’t making anything.
Rob: And at that point, you had maybe a couple of grand in MRR, you think?
Jeff: Right. The other thing is, at that point, we probably just started getting customers. I don’t think the customers could fund the development and sustain the business. As that started happening, again, I probably didn’t take a salary until maybe after Techstars are around Techstars which was 2012, but again, just not losing money. I remember that was a big turning point in my family. It was like, “Alright, we’re not losing money anymore.” We’re just not making any money, but we’re not losing money. That was pretty big.
Rob: Getting back to break-even. It’s tough, man, in an early, I won’t say new relationship because you guys have known each other, but a new marriage and then trying to scramble and start a startup like that. Do you have any regrets around that, either raising the money initially or not learning to code at some point? Anything you would do differently? Or do you feel like no, you came to play, you showed up, and you made it happen?
Jeff: I don’t have any regrets about it. I do think it would have been smart for me to learn how to code. That would have saved a ton of stress and heartache. As you know, I’m willing to do the work so being able to do the work would have been hugely valuable for me instead of having to rely on somebody else. Even just being a control freak, which you think a lot of founders are, it would have been better if I could do it myself.
That being said, I think the value and what I was so lucky was that my wife was supportive and understanding about it, so as hard as it should have been, it wasn’t nearly as hard as it probably sounds. But overall, no regrets.
Rob: That makes sense, you look back today and you’ve had this successful exit. Everything worked out, but at the time, when you’re grinding it out for a year and you’re at $1000 or $2000 MRR, you just started taking customers, and you’ve spent tens of thousands of dollars, I’ll assume it’s hard. That’s not an easy place to be in, I can imagine.
Jeff: Absolutely. It was super tough. It was a perfect storm of being naive and young enough where it would be a lot harder for me to do that where I am in my life today in terms of age and expectations. Fortunately for me, I was willing to do it. It is hard and looking back, you’re like, “Wow, I can’t believe I did that.” But you also don’t know any better. That’s part of the beauty of it.
Rob: I know you’re under NDA for the acquisition terms, but I’ll ask it in a more vague way that I feel like people have asked me on the record about the Drip acquisition as well. You sold the company last year. Did you make enough money that you don’t have to work again if you don’t want to?
Jeff: Yeah. For the most part, we definitely can live a comfortable life based on how things went. We could survive and be pretty well-off. The reality is we both want to continue working. My goal is really just to focus on things that I’m passionate about and just have the cab of more fun. That’s a big change going forward and has been already.
Rob: That makes a lot of sense. I’ve done the same thing. The passion is like TinySeed’s what I’m excited about and it’s nice to have the luxury of basically not getting a paycheck for a year or two, or three or five. Einar and I got our first paycheck from TinySeed last month and it was like, “Yay,” but I couldn’t have done that 10 years ago. You can’t just not take a check for a long time, so it is nice to have the luxury.
I know how much of a hustler you are and when you find that next thing, while I hope you don’t go as all-in as you did on Ambassador—because you’re right, and I walked through a year or two of it with you when I saw the toll it was taken on you—I do think that you’ll find that spark again and you’ll go mostly in on something that you’ll be working on.
Jeff: Yeah, it’s funny you say that. It’s something that I’ve even talked to my wife about is that I’m concerned that I won’t be able to do 80% or whatever the number is. That’s a healthy amount of all in this because I always tell people, “I’m not all-or-nothing kind of guy.” I’m not good at, “Oh, yeah, I’ll just work for X hours a week.” Even if it’s 20, or 40, or whatever it’s supposed to be, or 60, if I say it’s that, I’m not realistically going to stop unless I feel like I did everything I could. It gets harder and you just get worn down. For me, it definitely had that happened.
I’m getting close to 40 years old so it’s like, “All right, I need to start reevaluating my life and looking at it a little bit differently than feeling like you’re a college kid,” which is what I felt like for the last 10 years, probably.
Rob: It seems like one of your goals with the next one should be to control your work, to work 35-hour weeks, or 40, or some reasonable amount.
Just to wrap up the intro story so that we can dig into some of the points, you mentioned you went through Techstars in Austin, that was mid 2011, that was back when Techstars wrote really small checks, so it was like $18,000. It was just a stipend. Then I think the next year, they started giving $100,000 notes which probably sucked for you to not get that. I’m imagining you could have used that money at the time.
Jeff: Definitely, and we were in New York so it was even more expensive to live. But yeah, it was during the class, they announced the $100,000 note and it was super big bummer for us because we were one of the few B2B companies, and at the time, 2011, that also meant we were completely unattractive to investors especially in New York. We had a really hard time raising money while all of our cohort, basically all the B2C apps, all the mobile apps, they easily raised money. I don’t think any of them are around now, but they had a much, much, much easier time raising money than we did. It was really tough.
Rob: Then you raised a couple of hundred grand in a note in 2012 and then you did raise a Series A in 2015. So total over the course of several years—that’s almost five years—you brought to about $2.75 million. I know you mentioned earlier, you needed that early money to fund development because you couldn’t write the code itself. In 2015, when you raised $2.4 million, what was the thought there? Was it that you’d hit product-market fit, you’re growing super fast, and you need money for bodies? Talk me through the logic.
Jeff: Yeah. It’s funny thinking about this. Someone asked me the other day and thinking about my thought process, I didn’t run a process, which is a little bit different than most people. It was an opportunistic fundraise. I had—and you probably know this personally—at the time, fundraising wasn’t on my radar.
We were mildly cash flow positive. I would say five figures cash flow positive and then maybe the team was 10 or 11 people. There were certainly people there. It was a ragtag group of folks. I would say most people weren’t experienced startup or tech people, it was like you’re hiring people that would be willing to work with you even though you could offer them almost nothing in terms of benefits or comps. That’s always tough.
One of the reasons why we raised money and one of the goals that I had before I even started Ambassador was I really wanted to help build the community in Michigan, I wanted to create an environment where these companies survived and thrived, and where people wanted to go to work every day. That was what I wanted to build. I realized that incrementally adding one person at a time and being really, really lean, I mean, I was super lean. I was paying myself $40,000 a year. Our office was all IKEA furniture. It was just really hard to create that environment with such a lack of resources.
When Arthur Ventures came along and pitched me on a partnership where they said, “We’re not going to make you step out of your comfort zone and try to grow at all costs. We do respect the way that you’ve built the company and that,” I think the director said, “you wouldn’t die. You should have died, but you didn’t because you were willing to just fight.” I just saw this alignment there and I said, “You know what? This could be really good.” We had great people and we got lucky that the people that we hired early all ended up being amazing and grew into amazing pieces and teammates. Even more awesome to begin with, but being able to spend ahead of where we were, it was a big accelerant for us that we needed. It allowed us, again, to give people benefits, to up comp, and do some of the things that I wanted to do. There was no money to be had before that, so really that was why I raised money.
Rob: It sounds like you found money on terms that made a lot of sense for you to raise and didn’t come, perhaps, with a lot of the strings attached that maybe a lot of the Silicon Valley money would come with. Whether it still does today, it’s still evolving, it’s becoming more founder-friendly. But is that accurate? You found someone willing to give you a couple of a million bucks in a way that made sense for how you wanted to grow the company and didn’t negatively impact your optionality down the line.
Jeff: Yeah. I have a ton of respect for Arthur Ventures and Pat. They were awesome and it was a really great fit. Did we want to build a $100 million company? The answer is yes. The expectation was we were going to try our hardest to do that, but what I always said to him is I don’t want to leverage the business to be successful. I don’t want to get to $100 million or die. I think that’s something that many VC’s, if they hear that answer, they’d be like, “This isn’t the person for me,” which is fair and in some cases, they want you to take that swing and if you miss, they’re okay with it and they can go to bed at night. I didn’t want to sleep at night and saying, “Everyone could have had a really great career and a really great experience,” but I selfishly went for it and we all went home and that was it.
I think there was an agreement there. I know for a fact we weren’t the best outcome for Arthur’s. I definitely do feel bad about that and I know that I tried my best to be both smart enough and calculated to maximize the outcome without killing the business. We got pretty low, to be honest, in cash multiple times, way lower than we agreed to get because we were trying everything we could to continue to grow as fast as possible to get to the next stage. But yeah, it was definitely founder-investor fit for sure and we have nothing but great things to say about Arthur and Pat who’s awesome. When they offered, we negotiated a little bit and that was what we did.
Rob: That makes a lot of sense. Something that I want to dig into is the fact that you said you got pretty low on cash multiple times. You and I both mentioned that you were all-in and you were basically working 24/7 for several years. This all sounds like not fun. That sounds very stressful. Was it that in the moment? When you were doing it, were you thinking to yourself, “Oh, my gosh this is brutal”? I would have been stressed, let me put it that way. There are people who just absorb that and they just don’t feel the stress about this stuff. Talk me through. It’s an eight-year period, so it’s hard to nail anything, but I’m just curious. Were there moments when you were like, “I don’t think I can keep doing this. I’m going to explode”?
Jeff: To be honest, not really. I like stress for the most part. I used to always tell people—maybe this is a bad advice—I would say if you care about something, there’ll be a level of stress. To me, that shows that you care. There was, looking back, more stress than I would have liked, but I’m also the kind of person who loves to dive in and obsess over something. When it doesn’t go exactly as you want, then it becomes what I would consider to be stress. Whether that, at one point in my life, was playing poker, or another time in my life, it was wondering to play sports or whatever, those things were, at a certain point, super stressful to me but in a way that it didn’t bother me that much.
To me, it manifested in things like gaining a lot of weight, not just being exhausted, not working out or not being able to sleep, things that I reasonably should have been able to do but I just couldn’t focus or prioritize for those things because I was so concerned about doing everything I could for the business.
There were very few times where I’m like, “Oh, my God I need a vacation.” I always thought like, “Man, I’m really stressed,” but day-to-day, I really enjoyed it, especially post-Series A when we had a little bit of money in the bank and I was surrounded by more people that felt like peers. Some of the early employees became good friends, so it’s not that but people that had experience.
For a long time I felt like I was doing everything myself. Of course, my CTO and co-founder, Chase, was an amazing help, but when we added a couple of more folks and we had a leadership team, so to speak, that took a lot of burden off of me. The problems became different problems. It never got less stressful, but it became a little bit more fun for me and allowed me to keep going despite some of those other challenges.
Rob: I know you applied to Techstars one year and you didn’t have a co-founder. You had an agency or was it an offshore developer and you got rejected. One of the things they said was, “We don’t really want a non-technical single-founder type of thing.” So, you came back the next year and you applied with a technical co-founder but he was almost like employee number one, is that right?
Jeff: Yeah. The next year I had applied to Techstars. I had done some networking in between the two applications. I had a reasonable feeling that I might be able to get in the next time in New York. I had known some people that were in the prior class and they’re like, “You need to have a technical person show up with you,” so I hired somebody who, again, technically we’d called him a co-founder and certainly he deserves that title, but he was basically hired a couple months before TechStars New York, to just basically help rewrite that code base from the original Zferral one, which was what I applied with into Ambassador, which we ended up leaving with, so to speak. So, we had rewritten the code base.
Rob: That was your first to rewrite of the code base. Didn’t you rewrite it again in 2012–2013?
Jeff: Yeah. We rewrote it again. Soon after when Chase joined—he’s still part of the team and actually onto bigger and better things at West now—one of his first projects was really to undertake start migrating the code base to something a bit more scalable and in a more modern technology. We were previously PHP and then we moved it over to Python and Angular, which became React eventually. It was a big undertaking. We probably started that 2013 and it may have taken a year or so, but we did it in a compartmentalized way. We didn’t really slow down the site too much, but there’s a lot of extra work probably to do it that way.
Rob: And the reason that you wound up leaving the mastermind is you, Ruben, and I were like, I had HitTail and maybe was just starting Drip, no employees, Ruben had two contractors or three—I don’t know—two employees, and you were hiring your 20th employee. You were putting out culture and vision documents, trying to get everybody on the same page. We’re like, “Look, we like each other, we’re all ambitious,” but you’re just at a different place. That’s what wound up happening.
But during that time, I remember, that rewrite was not super fun. You just had a team of developers trying to rewrite it and then you had folks trying to add more features. You were basically building the parachute after you jumped out of the plane. I don’t know what there is to say about that, but do you remember that as being super painful? Because that was my memory of it. Or do you remember it as, “No, we handled it and we got it done”? I guess the fact that you rewrote it twice was the real brutal thing.
I remember when we talked about it, I was like, “Gosh, do not rewrite this code base.” Coming from a developer, my own perspective whenever I come into a new code base, I’m always like, “Oh, this is a whole piece of crap. I’m going to rewrite this whole thing,” and then I eventually resist the urge and I push the business forward instead. But you made a very, very hard decision to do that.
Jeff: Yeah, it’s funny you say that. I remember even when Chase joined, when he was thinking about joining, and he had done some diligence, we agreed like, “Hey, let’s not rewrite it.” I think even you said something like, “The first thing he’s going to want to do is rewrite it.” So, one of the things we talked about was, “Okay, let’s try to keep it as is and we’ll go with PHP.” I remember we hired a PHP dev and we hired someone else who was competent in PHP but also knew Django and Python as well. After a couple of months he’s like, “Dude, we got to rewrite this. I’m sorry. There’s too many issues with it.” Like you said, it was building the parachute on the way down or he used to say it was like changing the tires on the highway while you’re going 70 miles an hour.
At that time we had $20,000 a month maybe in customers, so we made $250,000 ARR maybe. Your customers don’t care if you’re rewriting it until it’s done. At the time, we might have had even T-Mobile or we were getting a customer like T-Mobile, so it was super stressful. Knowing that you’re building something that’s going to get ripped out eventually was way more stressful for them than it was for me.
As you know, anything technical always takes a lot longer than you hope and that probably happened, but what went well and what I learned from Chase—I knew even then—was he was super money when he recommended we do something. It always seemed like it was the right move. It was one of those things where he was like, “We have to do it,” and I said, “Okay, let’s do it.” It wasn’t what I wanted to do because obviously, it doesn’t feel like you’re moving forward.
We were rewriting it this year, too. We rewrote a lot of the front end, we rewrote some of the back end in terms of scalability, going from a few hundred thousand or a few thousand people on your site to millions of people on your site, the growth in terms of requests was insane. They were 10X-ing the site every year just to maintain it. It was pretty insane.
Rob: Yeah. I’ve been a part of one of those. Insane is the right way to describe it. So, you grew it. I remember in the early days you had a lot of focus on sales. You were doing a lot of one-on-one demos and that’s how you’ve landed, or one of the ways you’ve landed to customers like T-Mobile and these big enterprise deals. I was super impressed with that.
At a certain point, you and I lost touch for a year or two. I was doing Drip and you were really digging into growing Ambassador. When you sold the company in 2018, how big were you, guys? I don’t think you’ve been public with revenues so I won’t ask that, but employee count or some other indication?
Jeff: I’ll tell you a couple things. We were between $5 million and $10 million in revenue and about 40 some-odd employees, give or take.
Rob: What was the acquisition process like? Were you getting approached by people who wanted to buy you? Did you have to go out looking for interest? How long did it take? Talk me through. There are folks listening to this who don’t get to hear a lot of inside stories about these because a lot of them are so opaque. “It’s a TechCrunch post of X company sold for Y million dollars.” “Wow, isn’t that great?” and you feel like it happened in three days. The Drip acquisition from first email to close was 13 months, and 6 of that was me working 20 hours a week on it. It was incredibly stressful for me, so I loved if you can walk me through bits of it so people can hear what it’s like on the inside of something like this.
Jeff: Sure. It was definitely intense and it was probably close to, like you said, a year of planning total at least. For me, because we were funded, because we had a board, the first part of the process really came about through board discussions of, again, when you have a board, you always have to look at multiple years out. One of the things that we were doing was trying to figure out how can we get to where we want to be and what are the strategic options, and that includes either fundraising or essentially selling or buying somebody.
Once you raise money, you’re on the clock. So, the worst thing you can do is grow slowly or decelerate. Not say that it was happening, but I think it was a concern. We were kind of in-between a Series B, it was possible we could raise to B and that was one option. Then all the factors you have to think about if you raise a B between dilution, and lots of times people want new leadership teams. That was one path potentially and another path was, of course, selling. Another path was going to stay in the course, but having to figure out a way to accelerate growth instead of decelerating, which happens to most companies that usually don’t grow faster the year after.
We came up with the idea that we’d kick the tires and see if it made sense to explore strategic partnership which really usually means a sale, but it could have been different kinds of investments, too. We’re pretty open and we’d also looked at other types of alternative financing. So, we were looking at all options.
As I mentioned, money was getting lower than we had planned. Again, we were with 40, 50 people, we weren’t burning a lot, and some years, we were cash flow positive, but the swings with 40 people, payroll was several hundred thousand dollars a month. So, the swings are pretty big. You need to have enough cash-on-hand and again, relying on checks from companies and things like that.
That was going to begin the process. We didn’t end up hiring a banker, which basically was much more work from my perspective, for me personally, to get ready for working with a banker than working for fundraising. It was like putting a whole fundraising deck together but then including everything, even things that you would normally maybe not tell or you wouldn’t want to advertise, but you need to be really open about and just get everything together so that you can share everything, and that they know everything so that things go well and they give you an accurate idea of the value of the business.
When working with a banker, one of the things is the process. First, of course, they speak directly with the companies, companies are interested. Then they reach out to the team and they have what’s called a management meeting. We probably had a couple of dozen management meetings which are basically calls with the entire management team, giving them an overview of the business. It’s extremely stressful. For us, we had to do them and keep them private.
I like the idea that we were talking to potential acquirers, couldn’t be that obvious to the company. It was really stressful and we did probably a dozen or more of those. Some companies were some of the biggest companies that everyone’s heard of, some of them were known, private equity companies, and range across the gamut. We did that for several months and then eventually you get IOIs and LOIs. Eventually, once the LOI is signed, there’s a lot of work to do, you actually meet with all the folks, and try to really talk about get down to brass tacks in terms of integration and real items.
It was incredibly stressful. For me, I played a point person on most of the stuff. Obviously, the banker did a lot, I did a lot, it’s a lot more stressful than I anticipated, and it’s a lot harder, like a few times investors be like, “Why don’t just wait like two years and just sell?” I was like, “Man, it’s not as easy as it sounds,” but people always say that.
Rob: But you’re eight years in it at this point and it’s like, “This is eight years and it’s been really hard.” I imagine you might have been feeling some burnout. There’s a certain point where I feel like you start to hear that there’s an opportunity to not have to continue doing what you’re doing. I don’t get the feeling that you hated what you were doing. I think you were still into it, but at a certain point, you start to think about the next phase as well as, “When is this going to pay off? All this hard work, my whole life’s work, and my net worth is tied up in this company.”
Jeff: Yeah. That was one of the things where I felt bad because truly, my investors, some of them would have been excited if we would have kept going. The business was in a good spot. It wasn’t the best deal ever. We did well and generally, everyone was pretty happy, but it also wasn’t a no-brainer. You always hope for a no-brainer and everyone’s on the same page. The reality is, investors are smart. If something’s going well or something’s going good enough, they want to keep going. They’re only making so many bets or investments per year and if it’s working and there’s a pretty clear path to the next milestone, they don’t want to sell, which makes sense.
We got mixed feedback. Lots of people were happy. No one was mad, but people were like, “Hey, have you considered continuing on and going?” Like you said, Rob, I got to the point where it was so close, you could taste it, you see the outcome, and a lot of us have worked hard for it. They knew a year before that we were going to try to do this. It was one of those conversations that I had with them was like, “Guys, I know we’ve been working hard, but I need you to work twice as hard this year. Hopefully, they’re going to pay off and here’s all the incentives and reasons why we should do that.” I think everyone was pretty burnt. I think we were fried. As what we used to say, “We were totally fried. It was tough.” From that perspective, it was really hard to just walk away.
Knowing that, it obviously makes it a little bit more stressful because at any point in my time in Ambassador, I always felt like I had a lot of optionality where I didn’t need a specific outcome. This was one of those situations where I was like, “Alright, if we don’t sell here, we’re going to have to start looking to replace people because I don’t know if they’re going to be able to handle it.” That’s my analysis of it and, of course, we never got to that point. I’m really good friends with everybody, so if I would have also said, “We need you,” they would have stayed, but I just felt I would have been doing everyone a disservice by pushing. We pushed really hard for a long time.
Rob: I know the deal closed last October of 2018. When did you tell your employees and how did they react?
Jeff: We told them that day that we signed the deal. We had done all the diligence up into that point and had not told them. The reason for it was, based on everything that I heard, you really don’t want to tell people. I know that with big companies, with really big transactions or public companies, as soon as the LOI is signed, they tell the companies.
For us, we had the LOI signed a lot earlier. It wasn’t 100% that it was going to get done. That was just like in bigger companies, there’s a lot of shareholder pressure and things, like when you make the announcement, the expectation is that you’re going to close the deal. We had a lot of deal points that were not ironed out yet. Actually, multiple times during that period, I thought we might not close.
We told the team early October. I would say 95% of the people were super pumped. A lot of them were way more pumped when they heard what they would get out of it. I like to say that I prided myself on really trying to build a great culture, especially over the last couple years. Really, that was my main focus.
I think a few people were sad that, that might be happening and the uncertainty with an acquisition is scary for a lot of people. We were super transparent and we immediately had like a town hall Q&A. Everyone felt good after, but there were some things that we couldn’t control.
Right after closing that, I think West didn’t do very well and that got everybody unsettled again. Luckily, things went as smooth as they could have been. Behind the scenes, it was a lot of scratching, clawing, and tough conversations. I’m really proud for the leadership team and for what we did to hopefully make things work out as well as they did, but I think I’m very happy with how things turned out.
Rob: I know you’re someone who takes a lot of personal ownership over things, obviously, over your company but over the culture and over the well-being of your employees and such. The deal closes, you’re obviously relieved, probably pretty happy that went through. It’s a life-changing moment for you, but I know, as you just mentioned, over the next several weeks or whatever, a month or two, West maybe fumbled the ball a little bit and you weren’t in charge anymore. These weren’t things that you could fix. How did that impact you? Was it really hard to see it? Was it something that you knew would iron itself out so it didn’t stress you out that much?
Jeff: It was really hard actually. There were multiple times after the fact where I was like, “I wish we wouldn’t have done this, wouldn’t have sold.” A couple deal points weren’t fully fleshed out because West Corporate wasn’t able to disclose the particulars because they were still fluid. We agreed, “Okay, we won’t agree to this in terms of we won’t specifically memorialize it in the agreement,” and that ended up being a big mistake for me. I don’t want to say anything harmful, but what we got in that particular agreement was a lot worse than what we expected and it was again, to me, directly affecting the people and culture, and it really was a gut punch.
I did a couple of things that cemented my place with West probably and wrote some really aggressive emails and took some pretty aggressive stands that I hope paid off and set the tone for my team. Luckily, only a few people ever saw or heard it, but I felt good that I took a stand. I felt it was the right thing to do. Luckily, I know the folks who were going to stay there after me, I needed them to see that we need to stand up for the folks. Everyone was in agreement that we did.
Rob: Yeah, that comes back to that ownership piece, that’s what I was pointing at. That’s your personality. I figured you would do something like that. You mentioned that during that post-acquisition, you were struggling with it and that there were days where you regretted selling.
I guess I was lucky or whatever, I never woke up a single day after the Drip acquisition and thought, “I wish that we hadn’t done that.” It just worked out. There were some hard days, but it never made me think, “Oh, I would go back on this.” That tells me a lot. That tells me that it was hard, that it was really hard knowing you and knowing your psyche and ability to take stress and deal with it.
You were with West for about a month or two after the acquisition, really the first of the year, you were able to move on. It’s been seven-ish months, seven and a half months. Have you had any regrets since that point about selling?
Jeff: No, definitely not. A couple of things have changed those, I should add, the team, I would say, has worked really well with West. West just recently has put Ambassador in a position to be successful and that took a lot longer than we hoped it would, but even just as recent as last week, I still talked to a bunch of folks there, everyone’s doing well, I actually played in the softball team yesterday so it’s a lot of fun and everyone’s really excited, which is really great and that’s what we wanted to do.
West has really done a great job of correcting course and working with Chase, specifically, but other folks at Ambassador to try to continue to allow it to flourish and be successful. From what I’ve heard, things are going really well and people are happy.
Rob: That’s great to hear, man. It’s easy to have no regrets when it did work out in the end for your team. It worked out financially for you and several folks on your team, and then obviously life is substantially better for you at this point. I’m happy to hear that things are a lot better.
I think that leads us to our final question. Do you know what’s next for yourself yet or is that just something that you’ll wait and see? Because there’s no rush. That’s what I would tell you. Jeff, don’t rush into the next thing. There is no need to rush into the next thing.
Jeff: Yeah, I know. It’s funny. I’ve even told my wife, “Let’s be super intentional about what we do going forward,” because we’re fortunate enough to have that flexibility. I’ve tried to be really intentional. I’ve spent a good amount of time just advising, not formally, but I wrote a couple blog posts and just said, “Hey, if you’re in the area or you want to chat, I’m happy to talk.”
Rob: You’re a TinySeed mentor, thanks for that.
Jeff: Yeah, hopefully I can even do more but I’m excited to be on the Slack group, answer some questions, and be available for when it’s my turn to […] folks. I’m staying busy a little bit, looking to maybe do some lightweight consulting where I’m still keeping a lot of flexibility. I’ll be honest, I’ve talked to a couple of business brokers, just looked at what’s available, and tried to see what piques my interest.
I’ve floated out a couple of offers for companies that were maybe not the best offer for the founder. No one’s accepted anything yet, but I’m kicking the tires on a few things. But as we talked about earlier, my biggest concern is can I do it in a way that’s not all in and that allows me to be flexible? If I were to do something, I would really focus on that work-life integration or balance or whatever you want to call it where it’s much more flexible than the traditional company. I think that’s the future.
Rob: Thanks again, man, for coming on the show. I really appreciate you taking the time.
Jeff: Absolutely. It was great catching up again, Rob, and always good to chat.
Rob: If folks want to keep up with you online, where’s the best place to do that?
Jeff: Best place is probably Twitter, it’s @jeff_epstein. I’m on Medium also, but Twitter, I’m pretty active. If you tweet at me or DM me or something, I’m sure to see it and I can follow-up and chat from there.
Rob: Sounds great. Thanks again, man.
Jeff: Of course. Yeah, my pleasure.
Rob: Thanks so much for listening. As you can tell, I’ve been changing up the format over the past four or five episodes. Mike is on a temporary hiatus and an update on him, he took some time completely off. He was on vacation and he’s interested in coming on the show in the next few weeks to talk about his thoughts and his progress. So, we’ll hear from Mike soon.
In the meantime, if you have a question for me or one of my guest hosts, call our voicemail number at 1-888-801-9690 or email them to us at email@example.com. Thank you for listening.
If you haven’t left a five-star review, would really appreciate it. If you liked the change-up in the format and the fresh voices, fresh perspective, even just the fresh show format, I’d really appreciate if you could lend a five-star review, even tweet out particular episodes that you’ve been impacted by. It really does help to show me that what I’m doing here matters.
I’m spending a lot more time on the show. I’m dedicating time to trying to raise the bar. If it doesn’t make a difference and I don’t hear anyone talking about it—I’ve heard two or three people compliment me on, that was super appreciated—if it doesn’t move the needle, then obviously, I have to invest my time in places where it really moves them forward. So, I would appreciate hearing your thoughts, sentiments on Twitter. You can email us directly, obviously, firstname.lastname@example.org or five-star review always helps as well. I appreciate it and I’ll talk to you next time.
In this episode of Startups For The Rest Of Us, Rob and Jordan Gal answer a number of listener questions on topics including LinkIn outreach, building features versus fixing bugs and more.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, Jordan Gal and I discuss the LinkedIn outreach, how to divide time between new features and fixing bugs, and we answer more listener questions. This is Startups for the Rest of Us episode 452.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob and today with Jordan, we’re going to share our experiences to help you avoid the same mistakes we made.
Welcome to this show. Each week, we talk about building startups in an organic, sustainable fashion that allows you to build yourself a better lifestyle, maintain freedom, purpose, and healthy relationships. Some weeks we talk through tactics, other weeks we do interviews, we have founder hot seats, and some weeks we answer your questions. This week, I was very pleased to be able to sit down with Jordan Gal and answer some listener questions. I hope you enjoy this episode.
Jordan, thank you so much for joining me on the show today.
Jordan: Thanks very much for having me, Rob. It’s post-4th of July Q&A session. I’m excited.
Rob: I’m stoked to have you. Folks will know you from Bootstrapped Web and you run CartHook. Before we dive into the questions, I’m curious what your take is on where you’ve come from and where you are with CartHook because CartHook is approaching 30 employees. It’s a fast-growing SaaS app. When you look back a few years ago, I think when you and I first started talking—I angel invested in CartHook for those who don’t know—I think you were like 5K MRR.
Jordan: I was going to say way back in the day.
Rob: Yeah. It was really early like what? What is that like? Did you pinch yourself? Is it surreal? Did you dream of one day having a SaaS app with 30 people? I can’t imagine what that feels like.
Jordan: I think it’s the opposite for me that before this, the struggle was like a nightmare, and this is like, “Oh, this is where I was supposed to be.” That’s how it feels to me. This was the plan and I always telegraphed in my mind, like, “This is how it’s going to feel like when it’s the way it’s supposed to be.” Before that was just this annoying nightmare to go through to finally be like, “There we go. This is how it’s supposed to feel.”
Rob: It’s such a trip. As you go through it, it’s these small changes. I remember thinking, “Wow. If I had a team of 10 or whatever, it would just be these huge thing and it would be so bazaar and it would be amazing.” When we got there, it was like this just feels normal now. You didn’t go from 0 to 10. I didn’t go from working alone having 10 people. We just hire them one at a time and you just build the team. Does this feel the same way to get to where you are?
Jordan: Yes. It feels incremental. In hindsight, it was fast. We worked from 4 people to 24 and we’re hiring a few now. That happened over the span of two years, I think that’s pretty fast for a 24 in two years. It was incremental along the way, weeks go by, months go by, new people get added. We have that additional element of having two offices, one inPortland, one in Slovenia. I would feel it in Portland when you hire a new employee. All of a sudden you have someone new in your day-to-day life, but we only have 11 people in Portland. Slovenia, I go back every 4 months. Everytime I go back, I have two new people to meet. That was more abrupt changes on the Slovenian side and the Portland growth felt more natural; it’s one by one.
Rob: Your role as CEO, I know in the early days, you do everything. You do anything that is falling through the cracks, basically. What’s your role like today with that many people? What are your top three high-level priorities over the course of six months or a year?
Jordan: It has changed and I’m happy with the change. I’m not very good at doing things day-to-day. I don’t have amazing work ethic, I don’t have good discipline, I can’t sit down and focus for many hours at a time. I’m just good at thinking and strategizing what should be done and I’m generally not that good at executing it. To have people now in positions where they are far better than I was in those positions feels good and right.
Now, the nature of the role is worrying about what’s going to happen externally, but mostly worrying about internal. Do people have what they need? Do they know what they need to do? Are they happy? Are they going to stick around? Are they happy with their interpersonal relationships inside the company? Does everyone know what we’re trying to accomplish? It’s a lot of like worrying and checking in on that worrying like looking under the hood a little bit to see, “Hey, is this functioning properly?” Every once in a while, something will pop out where it’s evident, “Ooh, this is wrong or broken.” I have to go to action mode for a week or two to fix it. That’s what it feels like.
Rob: I think it’s a venture capitalist that said that with venture-funded startups—which you are not, to be clear, you raised a couple of angel rounds but not taking institutional money—they view a CEO’s priorities as three things. One is hiring the high-level folks, not every individual when you hit the certain scale, but making sure that, basically the right people are getting on the bus, keeping enough money in bank so the company can make payroll.
Jordan: The money, the bank thing, that’s very clear. I used to think that relatively risk-loving in my personality, but what I have found in running this company and speaking to other founders is that I’m actually pretty conservative when it comes to the runway, to the cash on hand. Some people push it. They go 90 days, 60 days of cash and I’m always 12 months. I am very uncomfortable with less than 12 months of money in the bank.
For me, one of the driving forces is the mojo, for lack of a better term, the happiness that’s happening inside the company, how much people love their job, and that would get wrecked by layoffs. Not only do I want to avoid laying someone off because that just sucks all around, especially if it’s your fault, and that they have to pay the repercussions. At the same time, I really, really want to avoid what that would do to the energy in the team. So, I keep it pretty conservative.
Rob: It makes a lot of sense. It’s more like a bootstrapper mentality. That’s how a voice for you do is like a bootstrapper who happened to raise funding because he wanted to grow quickly and wanted to go into a space that was competitive, but still, you’re ethos has always been that. Much of the bootstrapper, that MicroConf ethos.
Jordan: Yes. That’s proving yourself out.
Rob: I remember the third thing the venture capitalist said. The reason I forgot it is because it’s just so fundamental, it almost doesn’t need to be stated, but it’s setting the vision for the company and the direction, the high level stuff. It’s obvious, right?
Jordan: Yes, but it’s surprisingly hard. Everyone tells you, the advice is always repeat yourself a hundred times more than you think. Once you’re sick of hearing yourself, that’s about right, all those things about repetition, but it is true that it is hard to keep everyone aligned on what you’re thinking. As the number of people grow, it becomes more and more challenging.
We, at this point, anyone that gets hired, I talk about that vision in the interview so they know where we want to go and the right fit person gets excited by that vision as opposed to, “Woah. This person is crazy.” Then, when someone joins and I do the first one-on-one with them a few days after they joined, I talked about the vision again and I always offer like, “I’ll go to the whiteboard right now.” It’s pretty much not their choice, I’d set them up in the white board anyway. Once a quarter, we also do it. Once a quarter, we talk about our roadmap, right back to the vision, right back to the core tenets. It’s becoming a lot of repetition and it’s still not enough.
Rob: I want to come back to the comment you made earlier. You said that you aren’t necessarily disciplined or get stuff done day-to-day. I question that reality. Maybe that’s the reality now when you have this big team, but back in the day when you were at 5K a month, I remember you were cold emailing, cold calling, doing sales calls, you were getting […] done. I wonder if it’s just the situation you’re in.
Jordan: You know what it is? It is the situation you’re in and I think I have some advantage in being a little older where I’ve gotten to myself more over time, so I’m able to fool myself or force myself into action. The cold email I would do and then I would outsource as soon as possible. Then, demo appointments would pop up in my calendar and it wouldn’t be my choice whether not to do them. It is just on my calendar. I’m doing it.
Rob: In code, we call that a forcing function. You just force yourself to do it. That’s funny.
Jordan: Yes. A lot of forced habits. Even if I don’t want to do this, I’m just going to commit to it anyway. Kind of like the first time you asked me to talk on stage at MicroConf. I was like, “No.” Just answer yes and then you’ll be forced to do it.
Rob: Then figure it out because, “I can’t back out of it once I told Rob yes.”
Rob: That’s funny. Cool man. Thanks again for coming on the show. Are you ready to dive and do some listener questions?
Jordan: Yeah. We’ll see if we can be helpful.
Rob: First question is a voicemail about setting up developers who are taking deferred compensation.
Chris: Hey, Mike and Rob. This is Chris Bowls, I’m calling from Kentucky. Working on a new SaaS concept involving the building industry. I’m early right now, but I’ve got three developers who have agreed to take deferred compensation and stock before we began receiving revenue for their compensation. My question is, for these three developers, they’re all in the US, is it best to set them up as an employee, or as a contractor plus investor, or as an employee who is awarded shares? Do you recommend these developers have Class A or Class B shares with voting rights? I’m currently a solo founder, but one of these developers could transition into a CTO. What do you recommend for that? Thank you.
Rob: Obviously, you and I are not lawyers. We can’t give legal advice. I’m curious if you have a gut feel if your face with this scenario, a gut feel of how you would approach it, or even you would find the right answer to this. It’s not a clear-cut solution, at least from my perspective.
Jordan: It doesn’t sound clear-cut, but I think what happens often with business people like us is we conjure up legal realities that are wrong, then we start making assumptions based on that wrong belief, and then we complicate everything. I think this requires a re-orientation and that is best with a conversation with a real lawyer.
I think a lot of this stuff is a little off-base like voting rights. You don’t need to talk about voting rights. It’s early for voting rights. If you’re the founder, you don’t want to talk about Class A and Class B shares. It’s way too early for a lot of these stuff. I think a lawyer would help orient the person toward just getting things set up easily and cleanly. Same thing with independent contractor versus employee, I think you go independent contractor. You keep everything simple as possible before it has to be complicated. It ends up complicated, so why complicate it off to that.
Rob: Right, why start there? I think that’s my take, too. This one does sound sufficiently complex that I really do think that he should talk to a lawyer because I just think you can easily make a misstep with something like this. And I agree, the Class A, Class B, the voting, it doesn’t seem like it’s relevant yet.
Jordan: In our company, the only time that came up is when investors come on board. That’s still a question of whether or not you want to create a different class. Not all investors will force you to create a separate class. The separate class is the thing to avoid because what that creates is a situation where investors have X voting rights and you have different voting rights. Deferred compensation, not ideal, but you can understand how it happens if the developers are saying, “Yes. I’m willing to work and you don’t have the cash flow yet to pay me, so let’s defer it.” The second you touch employment, you’re talking social security taxes, you’re talking employment taxes, benefits, and so on. An independent contractor would keep that much cleaner.
Rob: As long as they fit the definition. I mean, the IRS has a definition of that. If you’re managing them day-to-day, directing them what to do and when, controlling their schedule, then they’re not independent contractor. You don’t want to mess with that kind of stuff. My guess is when you’re in this early stage, you could just give them a block of work and say, “Here’s the deliverable, here’s the deadline.” They can get it to you.
The fact that you have multiple developers working on it, I feel it might be easy to actually make that reality. I hope that was helpful, Chris. Not sure if it was, but if I were in your shoes and you don’t have a lawyer, I would head to upcounsel.com and just have a 30-minute counsel with someone could be helpful.
Our next question comes from Marcelo Erthal. He says, “Hey guys. I’m a digital entrepreneur and a big fan of your show. I’m in Rio de Janeiro, Brazil. We have a web app for the B2B market where we need to contact a specific person in the enterprise that we are prospecting.” I assume that means a specific title. “We found LinkedIn a great tool for this kind of job, but the problem is that when one of my sales guy leaves, he leaves with all the contacts and connections in the space, forcing the new person to start over again from scratch. Do you have an opinion on this? Should I have a LinkedIn profile owned by the company?” What do you think about this?
Jordan: I’ve never even considered that, but it sounds like a reasonable problem. My default was, “Oh, just do it under your own account,” but maybe you’re trying to connect with someone, you’re trying to have one of your salespeople to connect to them directly and then have a conversation. It would be pretty awkward to switch in the middle. What do you do about this?
Rob: It’s a tough one. My gut is that the company account is going to just be so impersonal. When you get contacted by a company account, unless there’s a human being attached to it with a headshot, it’s just a logo contacting you gets no response. I don’t feel like that’s really a good answer.
Jordan: I’m going to say, LinkedIn itself, it’s impressive that they’re making it work.
Rob: Yeah. That they’re making sales on LinkedIn.
Jordan: Yes. LinkedIn is tough. Maybe for enterprise, it’s different.
Rob: I can’t help but wonder if you could start the prospecting on LinkedIn, but then basically, bring them into a CRM essentially, or bring them in to somewhere where, when the salesperson leaves, they don’t have all the connections. I think of it like the hub and spoke model of social media where you have your Twitter account, your Instagram, your Pinterest, whatever, but you’re really trying to get them on your email list because your email list is the core thing that you own and everything else you’re just a digital sharecropper. Twitter, Facebook, whatever, they can ban you at anytime, you don’t really own those followers the way you do with email list.
I wonder if he couldn’t approach it in the same way where you are using LinkedIn as a channel but it’s just the spoke, and you’re actually trying to get them into either a conversation with you team or you’re trying to get their email address or you’re getting them into a CRM where you can have data about the interactions and all that. That’s what the big companies do. Even they have people prospecting on LinkedIn or cold calling or whatever, their relationship is documented in a CRM somewhere so that when that salesperson leaves, they don’t take everything with them.
Jordan: Yes. I think the personal connection and conversations that had been had on LinkedIn sounds like you’re going to lose. But if you get them into a CRM, then the company actually has that asset and that value. If you want to do that as early as possible in the LinkedIn process, my guess is a lot of CRM these days have direct integrations with LinkedIn. If you think about something like SalesLoft, they’re deeply integrated with LinkedIn, and that’s how I would approach it. It’s not really a prospect, it’s not really a lead until they’re in your CRM.
Rob: And unless your sales cycles are really long, there shouldn’t be so many hanging relationships at any given time. You have people who have become customers, you have people that you’re reaching out to, and then you have people who I guess didn’t become customers, but then you have that in-between and there’s always so many in that in-between for now. Well, I may buy in the next month or two. I feel like keeping that number small is probably the way to go.
Thanks for the question, Marcelo. I hope that was helpful. Our next question is a voicemail about how to balance time between new features, refactoring, and fixing bugs.
Colin: Hey guys. Thanks very much for the show, really enjoying it just now. I am Colin Gray. I run a podcasting company in Scotland, thepodcasthost.com, so we people start podcast. We also created a SaaS product last year called Alitu which helps people to produce podcasts and there’s a lot of automation for them.
The thing I’ve been struggling with as we’ve been running for a year now, I have a team of four developers, two full-time, two part-time. I’m struggling to figure out how we should be balancing our time between brand new features, fixing bugs, maintenance, refactoring, that type of stuff. I’m really interested to hear what you guys think around how you balance a new development work with the reliability work because we still get bugs, we still get people that get in touch, it’s not very many. We must be in the less than 2% […] by now in terms of reliability, but what do you think is reliability to aim for in terms of support tickets, bugs, that kind of stuff, and how much time should you be spending on that versus new features? Thanks very much.
Rob: I like this question. Thanks for sending that over, Colin. I think it’s a pretty common thing that, as first time founder, you wouldn’t even think about this before starting an app but at a certain point you have to. I’m curious to hear your thoughts, Jordan.
Jordan: This is the ongoing struggle between making progress on the roadmap and how much time it needs sprint to give to fixes and how much should you have a few sprints in a row that are just features and then a sprint entirely devoted to bug fixes. Everyone has a different way of doing these. A lot of it ends up on gut feel on where your customers are and what you need to be doing.
Generally speaking, I have a few thoughts on it. The thing I like to keep in mind is to make sure we never go too long without giving customers new features. Yes, we have all known issues internally and we’re thinking about, but we need to keep the momentum going. Momentum in the product, momentum in sales, momentum in all the different things, and pushing out new features keeps that momentum going.
For some of the detail that Colin talked about their year in, which tells me, yes it’s starting to pile up and you’re starting to deal with things that are popping back up, but it’s still relatively early on. I assume the codebase isn’t a hot mess the way it gets into it after a few years. The other thing he said was that they get a few support tickets here and there. It sounded from the words he was using and the tone of his voice that it’s pretty minimal. I would say that the tolerance for bugs is a big issue. I know our product is a check out product so the tolerance is extremely low if we have bugs that costs people money, so our tolerance is very low.
Depending on the type of bugs and the type of customers, those bugs might be annoying or might be absolute deal breakers. I think that helps guide you on how far to push it, on how hot to let the fire get before you start throwing water on it. I would lean more toward new features even at the discomfort of the shame and embarrassment of people getting in touch with things that are broken. That’s my general take on it. It sounds like he’s in a pretty good spot. It’s an ongoing struggle to figure out, but I would lean toward being a little bit uncomfortable and a little bit embarrassed.
Rob: I think that’s pretty good advice. I categorize these in my head into two buckets where it’s like there’s user-impacting or customer-impacting bugs or cruft, or there’s UI cruft. It may not be a bug, but it’s all the stuff that is maintenance, like bugs plus an old-looking interface, plus a clunky interface you know needs to be revamped, that impacts the users in that they notice it. That’s one bucket.
The other one is the cruft, bugs, and other stuff that users don’t notice but are a pain in the […] for your dev team. It’s stuff that needs to be refactored or it’s that one the alert that dumps too much information once every few weeks. It just floods the Slack channel or floods your error logs with something. It’s one-off things and users don’t know it, but you know it’s getting on the dev nerves.
I agree with you. You are going to want to probably let some of these go longer than you want to, but I would encourage that you let your developers, give them some leeway to fix the things that are bugging them. What we did in the early days when you’re just shooting from the hip all the time and it’s like, “Hey, what’s the next feature we should work on?” We were literally planning one feature out and we were doing that. We had three developers full-time. We were probably doing 50K MRR and we were still doing that approach. It was super agile and we could make decisions very quickly as we respond to customer needs.
At that point, we would often say, “Let’s just look in the stack and if there’s stuff that we think is bothering people or is bothering devs, just pull the next one off, spend the day, fix it,” and then we all felt good about ourselves and like, “Ah. We got that done.” Then went back to features. Another few weeks later, we’ll be like, “You know? We haven’t really attacked something like that in a while,” and we go back to it.
When we started formalizing it, as the team got bigger, by the time we had 8 or 10 developers, that’s when we started saying, “One morning a week,” which winds up being about 10% of your time because it’s about 3 or 4 hours, “everyone would pull one thing out of the queue, whether it was user-facing,” because a lot of the designers would do user-facing stuff and a lot of the devs would do the cruft that they wanted to refactor, you basically have one morning to pick something and fix it.
That became a cool cadence.It sounds like it would be drudgery, but they actually really like it because it makes their lives better and makes their lives easier. I always felt like there’s something between 10% and 20%. 20% was a full day and that felt like too much to give up every week to just fixing these stuff. Codebase would have been immaculate, but as you said, it negatively impacts your feature velocity. I think that’s how we’ve approached it.
Jordan: I like that. It does end up being seen and felt as a little break. We’ve had entire weeks where we go by and it’s almost a break. We’ve been pushing really hard on this ramp. We just went six weeks straight, all out. The end of it was stressful. Everything went to QA at the same time like it shouldn’t and then everything got out the door. A week of refactoring, going back, and polishing things up is almost a little bit of a breather.
The thing that we had to watch out for is that some engineers have a tendency to refactor as they go. They’ll be in the part of the codebase working on a feature, they’ll be touching an adjacent part of the code, and it won’t be up to snuff compared to what they’re building now. It has some logic in it that we thought was right 12 months ago and then the tendency to want to refactor that before coming back to the feature that you’re working on is dangerous. That’s how things start floating and not being on time. We definitely had to figure out the engineer personalities and help guide people away from too much refactoring.
Rob: I agree. Like with anything, it’s good to know the personalities of the people that you’re working with and know if they err on the side of being much more, “Hey, I’m just a hacker. I’m going to throw stuff in,” and then you know that they need heavy code review to bulletproof their code, and then other people take a really long time to build their stuff, but it is super bulletproof. You often have to encourage them to maybe go a little faster, let’s have a little bit of risk in this to get it done 20%–30% faster. I hope that was helpful, Colin.
Our next question is a bit of a long one. It’s from Dragos. He says, “Hey guys. First of all, I want to thank you for doing the podcast and giving your thoughts on so many entrepreneurial things. Writing to you about my startup, it started as a dream and ended as a lack of motivation and a desire to sell it.
More than a year ago, I started working on an idea where I would change the way people build WordPress sites, make it easier and smoother. It began as my problem because everytime I had to create a WordPress site, I had to search for a theme, buy it, do a bunch of other stuff.
Even if I was a developer, I didn’t have the knowledge of the technology required to build the app nor the cash needed to make an MVP so I borrowed money from my sister and I hired a small agency from Eastern Europe. Seven months later, I had a rough MVP…” Wow, seven months. That’s a long time. “A theme builder that allows people to create one page WordPress sites in just a few minutes.
During the development, I tried to create anticipation and manage to build a list of around 200 people. The problem is the post-launch. I only got one customer. Since then, I’ve had a few thousand visitors, but I have not had any new customers. I blame the execution, the fact that I do not know who my customers are, and I don’t know what to do next.
I’m in a position where I don’t have the technical knowledge which is AngularJS to continue the project. I don’t have motivation, I don’t believe in the idea like I did in the beginning, and I’m afraid to invest any other money. It’s easy to quit as I have tons of other ideas but should I persevere on the initial plan? How do I decide when to do that, when to stop, and just consider the startup a failure?” What do you think, sir? This is a tough one.
Jordan: It sounded like it was going to be a tough one, but then when you get to his tone toward the end, you start to realize this is just a failure. There’s nothing wrong with that. It’s time to move on. That’s my gut feeling after hearing this. The amount of energy and probably money also to turn this from where it is right now into something that works and turns out to be a success, I don’t think it sounds like it’s worth it. I don’t think he has the motivation and drive to do it. I would just choke it up to a lesson and move on.
Rob: I think I would agree with you. It’s funny when I said this is a tough one. I didn’t mean it with a tough decision but that’s how it sounded but it’s a tough email to read because I’ve been there. We’ve all been there and it’s hard.
Jordan: What makes it tough is that pretty much everybody listens to this, including you and I, have been in this exact same situation. It’s tough when you’re in it, but it is one of those things that people from the outside that have a bit colder approach to it, just look at it and say, “I’ve been there too. There’s no shame in it. It’s just one of those things you should just move from if it didn’t work.”
Rob: Yeah. I think if he had the motivation, that’s the thing from me. When you’re a bootstrapper or doing stuff from the side, you never run out of money. Running out of money is what kills venture-backed startups because they burn through the cash and they shut down. Since he’s not a developer, I guess he has run out of funding that he wants to put into it.
Realistically, if he was super motivated to do it, he could learn Angular himself or he could take some of the money he’s making out of his day job and invest it in. If he had the motivation and really thought it’s going to work, but when you don’t have the motivation or the desire, it doesn’t matter. That’s what kills startups. You just get fed up with it at a certain point, you don’t believe it in anymore, and if you still believed it was going to work, you could totally try to make a verticalized version of this like, “I’m going to make this for pet groomers, or for designers, or for whoever.” Pick a niche and you can try to go after it, but it doesn’t sound like that’s that interesting and he wants to move on to the next thing.
It’s the hard balance. I feel like it does come back to knowing yourself like do you tend to just skip from one thing to the next, to the next? In which case, you should stick with things longer than you normally do. But if you are someone who tends to just grind it out and spend two, three, four years working on things that then fail, well maybe you should move on quicker from things in the future. It sounds like given that it took seven months to get that MVP, which is brutal, and that he has said thousands of visitors, this is a real tough one to turn around.
Jordan: Yes. It’s almost a blessing in disguise that it got so little reception. The really dangerous ones are that get just enough reception to keep you motivated to keep going, but will probably not lead you to where you want to go.
Rob: Yeah. That take years and years to get to 5K MRR, 10K MRR, whatever, right?
Jordan: Yes and then say, “Oh, man. I should just stop it,” and then that sunk cost is even more painful. It’s never seen as a sunk cost. It’s always look back at, “Well, I’m two years in. Should I really stop it at this point or should I keep going?”
Rob: Our last question for the day comes from Robert. He says, “So many products fail, but when does fail early not apply? It’s not like fail early can be a universal practice because almost everything seems to fail anyway. None of the advice that seems reasonable seems to work without getting hung up and never shipping. When is it a good idea to spend extra time getting it right from the get-go? Have you ever seen someone fail because the MVP was shoddy, only to see something similar succeed with a higher quality MVP and a more thorough team? Likewise, have you seen a really thorough product with thorough marketing and industry experienced co-founders fail miserably?” There’s a lot of questions here.
Jordan: Yes but it sounds like he’s searching for what is it that makes things successful and other things fail. That is so intangible. There are so many factors there. That mystery has no solution. Everyone has seen these things. Great team, great product rate, everything total failure, and the opposite of someone who doesn’t know what they’re doing and get lucky or looks like lucky and have spectacular success. I don’t know if you can expect to find that intangible thing that makes something successful while others aren’t. It’s tough to define.
Rob: I agree and some parts of his question, of his letter or his email, he said so many products fail. When this fail early not apply? He’s talking about building an MVP that’s thorough versus not. I think back to last episode where Laura Roeder was talking about launching a competitor to pager duty. That’s where you can’t build a shoddy MVP.
I think another one is like to compete against MailChimp, like what we did with Drip. You’re building an ESP, you can’t have a shoddy MVP and get that done. Now, you can go circuitous and you can build an addon to things and then slowly branch in, but I think what I’m getting to is like a mature market where there’s a lot of competitors who have mature products, that’s where just an early MVP that doesn’t have a huge differentiation is very unlikely to get traction.
I think of Josh with Baremetrics years ago, where he is first to market with this one-click analytics. Even with Peldi with Balsamiq where he was the first one to really build this mockup tool in the way that he did it, you can build a pretty basic version because no else was doing it and that basic version was good enough. People would put up with either bugs or just a lack of features because it was a novel new thing and you really couldn’t get it anywhere else.
Jordan: It’s like it requires practice to get a sense of whether or not something is on the right track. I hear you on the MVP, but I think the MVP is internal facing. We know that this is not quite good enough but we’re just getting it out there. The reaction from the market that external pieces is what tells you whether or not you’re on the right track and should keep going or should stop.
Our check out was an MVP when we launched it and it effectively tortured people and then they would cancel but not before the torture. They went through some torture first. The reaction from the market was so strong that we knew we were on the right track. We couldn’t have a shoddy MVP in a check out product, but we did. The reaction was so strong that we said, “Okay. We’re just going to have to bite the bullet here for six months and re-build this thing again, but we know we’re on the right track.”
MVP is one thing. The market is the other. Beyond that, it takes some practice. I went to see Jason Fried talk in New York a good 10 years ago. Basecamp was the hottest thing ever then. I went to go see him talk and at the end of the conversation, I asked him effectively something to the effect of, “Why are you guys so good at this? Why is this product making money when others aren’t?” His response was that they effectively have more practice making money. The more practice they get, the better they get at it. The sense of whether or not a product is working, or the MVP is good enough, or the market is responding properly, I think that stuff just takes practice.
Rob: Thanks for the question, Robert. I hope that was helpful. I realize ‘it depends’ is not always the answer we want to hear, but some of these are just difficult to answer.
Thanks again for coming on the show today, man.
Jordan: Rob, thank you. I appreciate it.
Rob: It’s great having you. If people want to catch up with you every week or two, they can go to bootstrappedweb.com which is where your podcast lives.
Jordan: Every week or two, that’s very kind of you.
Rob: You like that? You ship two or three episodes a month, right?
Jordan: Yes. It’s the summer that throws us off, with all the travels, Brian’s out there in the world, but we’ve got big plans, come back strong in the fall. I’ve taken real effort into this […] to be more open. It’s turning into the low light podcast and those are my favorite business podcasts these days, the super successful stories. Sure it’s entertaining, but the values of someone like your last episode with Laura Roeder, that’s it right there, man.
Rob: It’s the struggles, right?
Jordan: Struggle especially when you come across someone like Laura where she’s ridiculously good at what she does and you get the sense that everything she does works. You have a podcast episode like that and it helps you identify everyone struggles. It’s always just helpful to hear someone in her shoes be open about it.
Rob: There was one line in my MicroConf talk this year that I keep coming back to and it is there are no Cinderella stories. You can look at any startup, she got to seven figures in a year. That’s crazy, but you know that under the covers, that was probably very hard to manage. The things that we see from the outside, they just look amazing, and it’s like, “I wish my company was doing that.” Maybe you do, maybe you don’t.
Jordan: I think that line in your talk, sparkle a lot of conversations in MicroConf that went somewhere to the effect of, if you’re jealous or envious of some situation, just go ask them about it. As soon as they start talking, you’ll realize, “Oh okay. It’s not that amazing.” It’s nothing that you should be envious about. As soon as you actually get the details, you’ll realize how hard it is.
Rob: The growth might be envious but the challenges are not. If you have a question you would like to hear us answer on the show, call our voicemail at 888-801-9690 or email us at email@example.com. You can obviously attach an MP3 or a WAV file to that email. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes or any podcatcher of your choice by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of US, Rob interview Laura Roeder, Founder and CEO of MeetEdgar. They talk about her fast success with growing MeetEdgar, dealing with platform risks, and the humbling experience with her second venture.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, I talked with Laura Roeder about here uncanny ability to power through roadblocks. This is Startups for the Rest of Us Episode 451.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob and today with Laura Roeder, I’m here to share our experiences to help you avoid the same mistakes we’ve made.
On this show, we talk about building startups in an organic, sustainable fashion that allows you to build a better life for yourself. Every once in a while, we’ll sit down with an experienced, knowledgeable, founder who has overcome seemingly insurmountable odds, and we learn from that founder. We learn from their experience of growing their startup, of facing the roadblocks and turning them into speedbumps. Today is no exception.
I’ve been a longtime fan of Laura Roeder since she started Edgar several years ago. That’s at meetedgar.com. It’s social media management software. Laura grew Edgar to seven figures of annual revenue within the first 12 months. It was one of the fastest bootstrap SaaS growth trajectories I had ever heard of.
But in 2017, 2018, Facebook and Twitter, some of the underlying platforms that Edgar relies on really started to pull some shenanigans with their APIs. Edgar ran into some pretty intense turbulence. We dig into that. I had not heard her talk about this experience on a podcast before. Frankly, I wanted to hear what it was like in the inside and how that felt. She talks about the ups and downs of it in a very honest, raw, and transparent way. I really appreciate that about the interview today.
The other thing we dig into is she went and started another SaaS app, raised an angel round, and rented some pretty major roadblocks with that early on. It’s fascinating to hear, essentially a third time founder, looking around and realizing, “Wow, this may not work like my other companies did. This may not go as well as my prior startups.” You can hear her thought process in what it was like to experience that in today’s interview. With that, let’s dive in.
Laura, thank you so much for joining me on the show today.
Laura: Thank you. I’m excited to be here even though we’re going to talk about some tough topics. I’m a little nervous.
Rob: I know. We were talking before we got on this call that just like entrepreneurship, is about bumps and bruises; sometimes it’s a speedbump, sometimes it’s a roadblock, sometimes it’s hard to tell the difference. You’ve certainly had your share with the past few years.
Laura: Yes. I’ve had speedbumps and roadblocks.
Rob: Yeah, that’s tough. I wanted to start by talking a little bit about Edgar, which is frankly, a widely successful app. I remember that when you launched, I believe, you made it to seven figures within 12 months of launch. It was ridiculous in a great way. I don’t know that I had ever seen a bootstrapped SaaS app hit that level of success that quickly. What do you attribute much of that to?
Laura: So much of it is just right place, right time, right brand. When we launched, we were really innovative in the market. Social media, scheduling tools, had been created, but they were literally just like, “Type your tweet in this tool and then hit send.” That was kind of all they did. The innovations that we created within the Edgar when we launched, it was just very noteworthy, like, “Wow, this is a tool that can do a lot more than any of the other tools can.”
Rob: Yup. That makes sense. You had this amazing success early on. You say, “Right place at the right time,” but I remember you also had worked your ass off to build an audience in that space. You would set yourself up for success. You weren’t just blindly going in and doing this. I think there’s a little bit of nature and some nurture in that one. Two factors came in—multiple factors. I think the thing that I want to chat with you today about is over the years that you’ve been running Edgar, there have been just crazy API changes and partner changes—Facebook and Twitter. I don’t know if other APIs have changed as well. I got the impression from the outside that has to be tough on your business. Has it? Talk me through that.
Laura: Yeah, 2018 has been our toughest year at MeetEdgar. We’ve got hit with a lot of changes at once. Some of them were in 2017 as well. The biggest one was Twitter not allowing repeating content. A big angle of what we do differently at Edgar is we allow you to keep a library of your content that gets repurposed. That’s a big reason why a lot of people use Edgar. All of a sudden, Twitter came out with this rule that said, “If you have the exact same tweet, if you sent it out more than once, that is against our terms of service.” There was no nuance to this rule. If you send out something that says, “Good morning.” Then you sent out something else that’s just says, “Good morning,” four years later, that’s technically against their terms of service.
Things like these are especially frustrating when you’re a tool. Obviously, people aren’t getting their accounts shutdown for sending out “Good morning” twice within 10 years. But as a tool, you have to make sure that you are in 100% compliance with the APIs, with the policies, and the terms of service because we’re putting our customers at risk if we’re not following Twitter’s terms. It would really suck for someone to sign up for Edgar, the tool is doing something knowingly against Twitter’s terms and conditions, well, now we’ve put our customers at risk for getting their accounts shut down.
There have been many tools out there that did that especially for Instagram. There used to be a lot of tools that went against Instagram’s terms and they all got shut down. No big surprise there. We did talk about, “How do we want to handle this. Is there anyway that we want to try to fudge this?” We’re like, “No, we can’t put our customers accounts at risk.” We are going to stop repeating content on Twitter. That was the biggest one.
Around the same time, Facebook stopped the ability for third party tools to post to Facebook personal profiles so you can still post to Facebook pages and groups but not personal profiles. We just got our access cutoff to Facebook groups for a while just from bad luck. All the social media tools are doing a lot more invitations and manual approvals, and that kind of thing as opposed to just open API. We just hit some bad luck for we got stuck in the approval queue. They didn’t have any problem with what we’re doing or anything like that, we just got to the bottom of the list somehow. It ended up being two or three months where our customers couldn’t post to their Facebook groups where a lot of our competitors didn’t have any downtime or had a week of downtime for groups.
Rob: Wow. That is brutal. What a tough space. Take me to that moment. Let’s start with the Twitter stuff because that, I imagine, was just like a punch in the stomach when you read that. That moment where you read the email or whatever it is from Twitter—the press release—what were you thinking?
Laura: You know, I’m such an optimist. I actually didn’t even realized how bad it would be. Because I was thinking, okay, the good part about this is that all the tools are in the same boat. We’re not going to be able to repeat content on Twitter, but no one else either. It’s not like they have nowhere to go. It’s not like our customers can leave us and choose a different tool. I’m like, “This is really frustrating, but maybe it won’t be that bad.”
It did help that I understood why Twitter was doing this. Obviously, why Twitter’s doing this is to prevent spam. They don’t want people setting up Twitter bot accounts repeating the same message over and over. It’s just frustrating that they did it in such a way where they made this just extremely broad stroke that in addition to eliminating spam, is also eliminating just some really standard usage of the tool.
Rob: Yeah, the collateral damage of the Google, Facebook, Twitter, when they change their APIs or change policies, I don’t think that they fully understand what they’re about to destroy. Oftentimes, they are doing it, I think, in a way to take out spam or for the better of their platform or for the better of the internet. I think internally they do believe that. It’s kind of like, “Are you questioning that?” Totally. Maybe not. Are they just doing it to grab more market shares? Is that what you think for their clients? That could be, I guess, a negative motivation.
Laura: Yeah. I think in this case, Twitter was, I do think that they were just trying to cut down on spam. They just didn’t think of it much beyond that. That was kind of it. I don’t think they’ve given out much thought since. It wasn’t something that they announced very widely. I find that most small businesses still don’t know about this, which makes it even more frustrating for us because it kind of makes it seem like we’re the ones enforcing this rule because people have never even heard of this Twitter rule. They try to use our tool, we say, “You can’t use it that way on Twitter.” It can be a frustrating experience for the end user.
Rob: Yeah, I’d imagine. You just talked about three kinds of breakages of your built-on platforms, these platforms can make a change and can really have a serious impact on your business. Of those three kind of, I would say, semi-catastrophic events, did you see an increase in churn? Did you see reduction in topline revenue? How did it impact your company?
Laura: Yes. We saw just a certain percentage of our customer base. Here’s what we discovered. I thought, when they made this announcement, some people are going to leave because some people are going to say, “Well, I use you guys for Twitter. I’m repeating on Twitter and I can’t do that anymore.” What I didn’t anticipate was that a certain percentage of our customers were just like, “This was the only thing I used you for.” I didn’t realize that a percentage of our customers were, “I used you guys for repeating on Twitter. You don’t do that anymore. I’m out. I’m not going to another tool. I’m just not going to use Twitter anymore.” That’s actually a big thing that we heard. There are other social platforms out there like, “This doesn’t go with my strategy. Maybe I’ll post to Twitter manually every so often but I’m out.” That was a surprise.
I thought, “We’ll have an announcement. It’ll change then we’ll see who leaves.” The first month we had to make the change, people left, and it feels like, “Okay. You never want customers leaving, but this feels manageable.” The nature of our tool, like I said, you have a library that at some point, if you’re only sending things once, obviously, that library is going to run out similar to the way Buffer is. It’s like a one time queue. When you get to the bottom of the queue, it’s gone. For Twitter, our tool became that way.
The thing is people load a lot of content into our tool. People had sometimes content for a month, three months, or six months, before their Twitter content ran out. The good part was we had an extra four months or whatever it was, obviously, a revenue from them. But that part, it just kept going. We’re like, “Okay. The people who don’t like the Twitter changes left.” Every month, more and more people would figure it out because obviously people don’t read every message that you send. People will just be like, “What happened? I’m not sending out content anymore on Twitter. Is the tool broken? What’s wrong?” We’re like, “Oh, no. You’re not sending out content anymore on Twitter because you used up all your content. You need to create new content now.” They’re like, “That sucks. I’m leaving.”
Rob: Geez. That was such a big selling point of Edgar above other tools. As you said, like Buffer, you create a content, you schedule it, and you post it and such. I can imagine that hit really hard. Churn went up, which obviously means you’re growth either stalls or flatline, whatever that does.
Laura: Declines, yeah. For us, we had a decline in our user base. It ended up with these three changes together. We lost a significant amount of our customer base; maybe we lost a quarter or a third of our customer base.
Rob: Oh my god.
Laura: It was really big. I don’t want to make it sound like it’s only external things. We made mistakes, we could have responded faster and better. The positive thing is that it forced us to innovate. One example of that, now we have a feature we call autovariations where you put in your blog post and we automatically pull five poll quotes from that post to serve as your status updates. That’s just one way to paste it in the URL and get five status updates to Twitter and all the other social networks, but we didn’t have that ready when Twitter shut down. We didn’t introduce that until nine months later, something like that.
You have to roll with the times when these things happen. But yeah, it was a significant loss for us. We had to make some layoffs in our company which we never had to do before, but we did remain profitable and survived through the whole thing which I’m really proud of.
Rob: Yeah. I would be as well. Honestly, it could’ve been business ending to lose 25% or 30%, whatever the number of customers would end a lot of companies. In fact, the interesting thing is, I don’t hear many bootstrapper who have to do layoffs because it tends to be this very slow growth over time. You build up as higher as your revenue. With SaaS, unless you have an odd event like this, almost like a black swan thing that comes and gets you, your growth is just going to keep steady or whatever. I think you’re in a unique situation that you had to deal with. Have you ever had to lay people off before?
Laura: No. I’ve let people go, but I had never had to do layoffs before. I’m very thankful that we had a really great team backing us up especially our head of finance, Tanya Crino. She was very cautious about seeing this coming. Like I said, we saw the initial way, but then we kept having more and more customer loss. If you Google, “How to do layoffs?” The first thing you see is only do one round. Whatever happens only do one round. Tanya and Sara Park—who’s our head of operations at that time and is now the president of the company—they were really looking at, “What do we need to do so that we can only do one round and so that we can offer some kind of severance?” We were able to offer two months severance to every person who was laid off and help them find other positions at companies we were friends with and things like that.
Another thing that was so fascinating from the layoffs is we have full financial transparency within our company. We don’t share individual salaries, but we share everything else. We do financial reviews with the whole company every month. Everyone can look through all of our expenses and income. People saw the writing on the wall, you know what I mean? These are obviously, very intelligent people working at MeetEdgar. You can’t say, “Hey, we might have layoff soon. Don’t worry. We’ll let you know.” You can’t really say that until it’s a done deal. But people are smart. They see us losing customer base. They’re like, “Okay. This is a bootstrap company. It has to remain profitable.” The only way that’s going to happen is lowering expenses. We found that while, of course, it is a terrible, heartbreaking, and incredibly stressful thing to be laid off from a job, we also were able to maintain positive relationships with everyone who was laid off. Everyone understood that it was something that needed to happen for the company to survive.
Rob: Yeah, which is a big deal. It shows that you handled it with care, thought, and deliberate action. It’s impressive. It’s easy to flab that, I think. It’s easy to accidentally screw that up.
Laura: Yeah, it is. Especially because it’s often something you haven’t done before. We were able to do it in just one go. We didn’t have to do anymore after that. It was hard because the way that you do it in just one go is you have to make deeper cuts than you think you need to. When you first look at this problem, obviously, you’re hoping to just let one or two people go. We had some people that were laid off and then some people, just because it was just a tumultuous time at the company, some people ended up leaving on their own kind of before or after, just along with the tide. I think we had eight people that left. The other, maybe, six layoffs and two people leaving, or something like that.
Rob: Yeah. How big of a morale blow is that to the rest of the team? Do you feel like they recovered quickly or were they pretty devastated?
Laura: It’s interesting because I think it was kind of an emotional rollercoaster for everyone. It’s devastating, and at the same time this means, “Oh, the company’s going to make it.” They have the same numbers. They’re like, “Oh, this is the choice that the company needs to make in order for me to still have a job and the company to still survive.” Obviously, it’s always really hard when that happens, but we were really focused on rebuilding with the team that remained.
Rob: Yeah. I think I’ve been at companies, either worked for them or had colleagues at companies who’ve been laid off, and I think such a big piece of the reaction and the morale comes down to the trust of the leadership. Do they trust the CEO? Do they trust you, Laura, when you’re saying, “This is why. This is what we’ve done. Now, we’re going to move forward and we’re going to survive.” Do they think that somehow you manufactured it? Or made it up? That you haven’t cut deep enough or that you cut too deep or whatever. That’s when there’s this big toxicity comes about. It’s definitely going to be an emotional rollercoaster if they recovered. It shows that you had a good relationship with your team.
Laura: Yeah, I think so. We were able to still have a few people in each department. It didn’t feel like, “And I’m the only engineer now. This is not going to work out.” I think it felt to people like, “Okay, I can see how the company can continue to survive and grow with the team we have left.” Luckily, it wasn’t so dire that it felt ridiculous.
Rob: Yeah. Was that in 2018?
Laura: Yes. In early 2018, yes, that we made the layoffs.
Rob: Okay. You were still acting CEO at that point?
Laura: Yes, although I was actually on maternity leave. Now, I’m remembering the timing. I guess my daughter had just been born when we actually did the actual cut. We have been doing the math and planning up to that. I was actually technically on maternity leave when we had to do the layoffs. I just hopped on and wrote everyone personal emails because the actual conversation happened with our hiring manager anyway. There was only one person who’s a leadership level that we had to layoff, so I had a conversation with them. Weirdly, I didn’t do a lot of the actual conversations.
Rob: Sure. That’s still baller for having a baby and two days later, being involved. It’s tough when the timing works at that way.
Laura: It’s not ideal.
Rob: Yeah, not at all. It’s got to be stressful. Did it take a toll on you personally? Like your psyche and such?
Laura: It was a relief because it made it clear that the company was going to make it. I don’t mean to say that disrespectfully to anyone who’s listening who is working on ur team. It was a very hard decision, but the day that it actually happened, it was a relief to get it over with, get it done, and be like, “Okay. Now, I can move forward.”
Rob: Yeah. Some time after this, you decided to start another company called Ropig. When was that? That was probably mid-2018, I’m guessing.
Laura: I’ve never put the timelines of these things side by side in this way. I think there’s sort of separate compartments in my head, but now that we’re going to put them side by side, that sounds crazy. It’s a lot of tumultuous things happened all in the same year. Ropig launched in March 2018.
Rob: Got it, okay. Launched, meaning, the website went live, product was live, people could use it?
Laura: Launched, meaning the product started taking customers. We’ve actually been working on it for about a year prior to that.
Rob: Okay. You were doing both of these then?
Rob: You were working on both. Ropig was alert management for dev teams. Is that right?
Laura: Yes, exactly.
Rob: Obviously, the punchline—the jump to it—is that you decided to shut it down pretty quickly after launching. Let’s talk through that a bit. I know that you actually raised funds for this. Was that a first? Had you raised an angel round before?
Laura: That was a first. I had never raised money before Ropig.
Rob: Okay. How did you go about that? Did you have a network of people? Did you have to go to […] road and hit the angle groups?
Laura: We raised money in January of 2018. My daughter was born in June of 2018. I was being visibly pregnant when we were raising money. I was like, “I’m pregnant. I don’t want to travel. I don’t want to do it.” I decided that I’m going to get this done my way. By this point, I’ve been an entrepreneur for, I guess, 11 or 12 years now. I’ve built up a pretty strong network. I felt pretty confident that I can raise a small round with my own network. I’m like, “I’m not going to travel. I’m not going to go to San Francisco. I am just going to ask people that I know if they would like to invest in my company.” I looked up the numbers in preparing for this.
I think I contacted about 300 people. These were all people that I have personal relationships with. Some were just acquaintances, but people that I actually knew, not professional investors, people that are either just entrepreneurs, or people who work in tech, or people that maybe did some investing on the side. 300 people just got emailed or texted or Facebook messaged or whatever by me saying, “Here’s what I’m doing. Do you want to invest?”
Rob: Right. You ended up raising $320,000 on a safe? The audience knows, you emailed me. You and I actually had an email thread about Ropig. The only reason that I didn’t invest was because, well, I guess there were two, one was because your pre revenue. I don’t, in general, tend to invest in pre revenue companies just because there’s so much risk. But the second was that it was such a new space. I have confidence in you as the founder that you’re going to execute on it but my gut said it was going to be this very long, very arduous, very painful journey. You would get there eventually, but you didn’t have an audience in the space. I didn’t feel like you had […]. That’s what you and I talked about it in the email. Was that on your radar? Obviously, I must not have been the only person that mentioned that.
Laura: Yeah. A big advantage that I had in MeetEdgar is it’s a social media tool. I had already been in the social media space for years prior doing courses and consulting. I’d already built an audience in that space. With Ropig, the tool was systems admin, people, and developers. It’s not me. I’m not a developer. I’m not in that space. I’m not in that world. Not only do I have no lists built up but I can’t speak at that conference. I can’t go to those meetups. It’s not my thing, it’s not my langauge.
I do think that a big reason why Ropig didn’t work out is that I underestimated how much value I had and continue to give to Edgar in that way. Because with Ropig, I just thought, “Okay, I know I can’t do that but I can just hire people who can,” which is totally a viable strategy and a lot of people do that, but I didn’t raised enough money to do that. The problem was the strategy that I had in my head was really a much better fit for a company that was going to raise a lot of money. Even though I was raising this $300K—that ended up being $320K—I did not want to raise more money after that. I did not want to do big fundraising, I did not want to do VC, I did not want to do any of it. In retrospect, the game plan that Ropig needed to succeed was just not a match for only having a small amount of fundraising.
Rob: Yeah. You didn’t want to do the Series A, the shuffle, and you kind of just want to do this single seed round. I think call-in from customer.io calls it’s fundstrapping, is raising this single round to hit escape velocity. That makes sense. That actually fits my perspective of who you are as an entrepreneur. You are much more a bootstrapper than someone who raises. But raising that one round, really these days, it’s not against bootstrapping ethos anymore. You know what I mean? In some spaces like this one, the alert management tool. It competed with PagerDuty. Is that a good comparison? It’s a very crowded space with a lot of funding in it. It’s competitive. You’re going to need some superpower to get in there. You were saying that you didn’t raised enough money to hire someone to be an influencer. Is that what you were saying?
Laura: Yeah. That’s part of it. I just didn’t raised enough money for any of it. You mentioned that it’s a very competitive space, but it’s also a really expensive tool to build. My husband Chris is a developer. He’s the cofounder of the tool. He also, for MeetEdgar, built the initial version of the tool. He could not build alone, Ropig. It’s not a tool that you can just sit-down-in-your-free time-in-some-weekends-build. We had already spent, we decided to invest our own money, $500,000 of our own money into this project.
By the time we raised the money, we already had a fulltime team of developers just to get the initial product out. It’s alert management. You can’t be like, “It’ll probably work sometimes. It will get most of your alerts.” It’s just not the type of thing that you can have sort of shoddy, half-baked. Also, a lot of the advice is like, “Just ship people a minimum version.” No one really wants a minimum to manage some of their alerts. It just doesn’t make sense. You can’t really just test out some sort of halfway done thing. Like all the advice, “Pretend you have software, but then just do it yourself behind the scenes.”
Rob: You can’t do that with this. This breaks a lot of those rules. One of the reasons is because it’s so competitive in the market. It’s fair. It’s somewhat mature, I would say. An MVP in this market, very very different than an MVP in whatever—the VR space or something that’s still a nascent market. That makes a lot of sense.
Laura: Yeah. I think, that was another thing I underestimated because when we launched MeetEdgar, we had funded competitors. HootSuite had raised a ton of money. We’ve still been able to be a successful company in spite of that. I think I was kind of, “Oh, funded competitors. I can do that. I’ve done that before.” But MeetEdgar is also something that Chris could build on his own. The first version, he just built on his own in his spare time. If we don’t send out a tweet, it’s okay. No one’s business falls apart. It’s just a very different space.
Basically, what happened is once we raised that $320K, so we raised the money in January, we had our launch in March. The launch was just like a dud. We put it out there. We opened the doors and not a single person paid for it. Some people had free accounts, but not a single human paid for it which is a very bad outcome—in case anyone’s unclear—not what you’re looking for a launch. We’re going to have to make some big changes if this is going to work.
Rob: How does that feel? You’re a successful founder. You’re a serial entrepreneur. You’ve built up wildly successful online training course and business around training folks for social media. Then you launch MeetEdgar to one of the bootstrapping Cinderella stories, in my opinion, of getting some figures in a year, and then you launch this third app. At this point, you know what you’re doing. How did that feel when it just went completely sideways?
Laura: I was just like, “We picked the wrong market.” That was something we had been worried about when we were developing it. Basically, the whole idea with Ropig is that there are a lot of smaller companies like us with MeetEdgar where we were using PagerDuty but it really wasn’t designed for us at all. Then we saw a lot of other smaller companies on our space that just didn’t use an alert management tool and sort of dug through the logs manually when they had time.
If you look at the Ropig website or look, I don’t know if it’ll be up when people are listening to this, but we had a whole page. The whole point with the page, it said on the headline, “Why would I need an alert management tool?” I look at that now and I’m like, “Duh!” The fact that I had to build that page should have been a really bad sign. Why would I need an alert management tool? Why are you looking in this website. You’re clearly not going to find anything.
I think it’s possible. Obviously, there’s companies that have done it to introduce people to a new idea, a new concept. Again, maybe none would fit with bootstrapping. A fit with bootstrapping is, “You’re already using a competitor, let me show you how we do something different that makes us so much better fit for you.” I think this hurdle of, “You don’t think you need an alert management tool, but we’re going to show you why we do.” It was a failed experiment.
Rob: Yeah, that makes a lot of sense. That’s the thing with mature markets. You know that PagerDuty wants to expand that market, so they’re probably already putting a bunch of time, effort, and money into trying to convert everyone they can away from digging through logs. I’m just imagining, there is only so much blood that you can squeeze out of that turnip. They’ve already done most of that, probably.
Laura: Again. It’s just expensive. PagerDuty is geared more towards enterprise. Maybe there’s a spot in the market here. Maybe if we have spent another year going to every meetup around the world, and tweaking our product to get a better product market fit, maybe it could’ve happened. It was like that small fundraised combined with a dud launch was like, “This is bad.” Because all of our financial projections were like, “We’re going to be at 1 million revenue in the first year because that’s what happened with Edgar. Isn’t that how all businesses go?”
Rob: Yeah, oh man. You launched in March. You basically stopped operations a couple months later. It was a very quick decision that this wasn’t going to work.
Laura: Yeah. In May, we hadn’t told our investors we are shutting down. Basically, what happened is we launched. It kept going badly obviously because no major changes happened. Again, this coincides with my maternity leave because my daughter was born in June. My cofounder was my husband, also a parent to this baby who’s going to be born. It is not a time where we’re like, “We’re going to work 80-hour weeks now to try to make this work by ourselves.” All the factors in this equation do not add up. I’m just going to shut the machine down so that we can take our expenses to zero. Like I said, we had full time developers on the team. Some of them we were able to move back to Edgar.
It’s funny, you asked me if I’ve done layoffs, I was like, “No, but actually I had.” It’s funny because I didn’t even think of that that was a layoff. It was only one person because the other two we could move over to Edgar. Anyway, I actually had done layoff before. We let the development team go. We shutdown the tools. We kicked off our free users so our costs for running the tool would go to zero. I’m just like, “I’m going to take a few months of maternity leave. Then I’m just going to figure out what to do when I come back.” I don’t know what to do with this. I know we need to stop hemorrhaging money for our no customers and no time to work on this. I’m just going to stop it.
Rob: Put the breaks on. 2018 was not a good year for you. It was great because you had a baby but all the other stuff it sounds like, “Oh, good Lord.” Then you go on maternity leave, you must have been thinking about it for solid two months stressing about it, I imagined. Was it pretty stressful?
Laura: It was stressful. This is what’s interesting about the fundraising. If I hadn’t raised money, it would not have been stressful. For me, that was the element that made it stressful because I was so worried about letting other people down. When you raise money, you paint this picture of how successful it’s going to be which obviously, you believe, especially because all of my investors were friends. I had this dream of writing huge checks to my friends. What would be more fun than that?
If I didn’t have investors, I think, I would have been just like, “This sucks. I don’t want to do this. I’m just shutting it down.” After the launch that didn’t go well, I realized that I just did not have the same passion for this product. This product was much more, “Okay, we see a problem and we think we have the solution for that problem. Maybe there could be a business here.” Our audience with MeetEdgar, “I love entrepreneurs. I love entrepreneurs. That is my world. I love listening to podcasts like this one. I talk about entrepreneurs. I love reading books about it.” That’s our customers that we support at MeetEdgar, so I can live in that world. I have no interest in living in systems administration world. It’s just really not interesting to me at all. If I didn’t have the investors I think I would’ve just been like, “Yeah, this is really not for me.” But because I had the investors, I felt this pressure, “How can I make this work? I need to make this work?”
Rob: Yeah, I totally get that. Had you burned through all of the investor money by that point? Or there’s just some left?
Laura: That was the good news. We had not burned through much of it at all. The launch, we didn’t do paid advertising or anything. The only cost that we had incurred was just paying the developers for that few more months. When we put the breaks on everything, we had the 75% of the investors’ money still in the bank.
Rob: Yeah, okay. That’s a good thing then. How did you finally make the decision? Obviously, you shut it down. I’m assuming you returned the money to investors. How did you come to that? Was it really just like, “It’s going to take too long. I’m not interested in this space.” Talking to system administrators don’t have the influence, was it just all those factors that eventually led to that?
Laura: Yes. I was thinking, “What’s going to happen with this? How can I make it work?” Any path to make it work clearly involved raising more money—a lot more money. At this point, you can’t just keep hitting people up for another $200K or $300K. I would really need to do institutional fundraising. I had got a glimpse of institutional fundraising doing my friends and family fundraising. By the way, not family in my case, just friends. I don’t have any family with money. Friends and friends fundraising. There’s no rich uncle, unfortunately. I wish.
I had met with some institutional people in Austin and San Francisco, had phone calls. I think as bootstrappers, we have this really negative view of institutional money. It was all true with the conversations that I had. Every horrible stereotype I had about traditional VC was just 100% confirmed. They would ask me how big the business was going to be. They were not interested unless it was an ubersize situation. They were not interested in anything less than like, “I’m going to keep raising money, as much money as I possibly can, as fast as I possibly can.” That was the path that they wanted to see. They’re not interested in profitability, just interested in growth. Because I have seen that little glimpse, I was like, “No, this is not for me. No way.”
The thing that finally convinced me to make the decision, I was talking to a friend of mine, and I’m like, “I really think it’s going to be really hard. I don’t know what to do, but I have this duty to my investors.” He said, “You have a fiduciary responsibility to your investors, to return as much of their money as possible. Knowing everything that you know, if you were an investor, would you ask to just get your money back and get out? Or would you want to continue?” I said, “If I were an investor and I knew everything that I know from the inside, I would want to get out.” I would say, “Thanks, give me my money back. I don’t think this is going to work. I’m out.'” That conversation just absolved me of all of my guilt and stress because it made me see that shutting down was being responsible to my investors.
Rob: Yeah. It’s crazy how a conversation or a single question can get your whole mindset to shift and make a decision. It sounds like you knew the right answer too, but you’re burdened by this other piece, and it was the fact that you felt an obligation to your investors. Suddenly it was, “Wait, the obligation actually goes better.” You actually serve them better if you make the decision you already know you want to make.
Rob: That’s fascinating. That’s a good friend. He’s a good friend to keep around. He’s a keeper.
Laura: He is. It was November—I looked up the timeline—it was November 9th that I sent the email to investors saying, “I decided to shutdown and here’s why. You will be getting 75% of your money back.” That felt really good too.
Rob: How did the investors react? Were they supportive? These are folks that you knew, they were at least acquaintances or friends, was there any negative reaction to it or was it mostly like, “Sorry, this sucks. Thanks for the money,” type of thing?
Laura: It was very positive. People said, “It’s very unusual to be able to make this call and return the money. I really respect you doing that instead of just trying to burden through every last dollar.” People were very kind and very supportive which I’m very grateful for.
Rob: Yeah, that’s cool. I’ve found that with angels—angels are investing their own money—they just tend to be more relaxed. I’ve done about dozens of angel investments. I’m nowhere near the VC level institutional money manager in terms of how they view these stuff. I think it’s an interesting callback because you were saying the VC stuff you heard about is true, like the stereotypes you’ve heard are true. That’s why I believe that this world needs funds like Indie.vc and TinySeed to be that in between where we can write checks.
Now, maybe we could’ve written a check as much as you needed. You really did need a legit Series A to compete in the space, but there is an option for people to take money where it doesn’t come with that same stereotypical stigma of, “No, you have to be $100 million. How are you going to get there in three years or less? How are you going to hire 20 people a month?” All this stuff. You and I both know that we can build businesses and help those eyerollable constraints that venture capitalists are going to put on it.
Laura: Yeah. All the investors knew what they were in for. I hadn’t tricked anyone into thinking this was a get-rich-quick scheme. Anyone can afford to lose the money. It was just one of those lessons of always how important it is to be in integrity. I felt like I’ve been in integrity throughout the whole process. I’m still in integrity when I ended the process.
Rob: Yeah, for sure. Laura, we’ve covered quite a bit in this interview. I really appreciate you taking this walkdown bad memory lane of 2018. The positive end of the story is Edgar is doing really well after all the tumult that you went through with it.
Laura: Yeah. We are growing again. We’ve had growth every month in 2019 which has felt amazing. It’s just so good for the team after having such a hard time for such a longtime. I mentioned that it has forced us to be more innovative. I feel like it’s made me a new entrepreneur because I had never been through anything really hard before as an entrepreneur in retrospect. I thought I had, I had little ups and downs, but I had never had, “Okay, we have to do layoffs. We’ve lost a huge amount of our customer base. I’m shutting down this other company,” all happening at the same time.
It’s true that it makes you a lot smarter because you no longer have these false assumption that everything would always go up. You know that if you’re in this for the long haul, you’ll have ups and downs, and that’s okay. It’s not a disaster when something goes wrong. It doesn’t mean that nothing will ever get better and that your company is over forever. I’m really glad that I’ve had this experience of proving that to myself.
Rob: You took several things that looked like absolute roadblocks and turn them into speedbumps that you drove over and to come out to the other side of that successful with the company that’s continuing to grow after all these years. It’s quite a testament to your chops as a founder.
Laura: Thank you.
Rob: Well, we’re going to wrap up today. If folks want to catch up with you, I see your website at lauraroeder.com. Obviously, if folks are looking to manage their social media, they can go to meetedgar.com to see what you’re up to there.
Laura: Yes. I’ll do a MeetEdgar plug. They can enter the coupon code PODCAST and get a free month of Edgar.
Rob: That sounds great. Thanks again, Laura. Thank you so much for coming on the show.
Laura: Thank you.
Rob: I hope you enjoyed my conversation with Laura Roeder. I was truly impressed and impacted by her ability to turn roadblocks into speedbumps, and just her fortitude and perseverance in getting through hard things. These are hard things that we face as founders. She really stepped up, made it happened, kept her company alive, and made hard decisions about the next companies. Really impressive.
With that, we’ll wrap for the day. If you have a question for this show, call our voicemail number at 888-801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of US, Rob does a Founder Hotseat interview with Matt Wensing of SimSaaS. They talk about how to develop a strong cadence of work as a one person company.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups For The Rest Of Us. I’m your host Rob Walling. On the show, we talk about building startups in an organic, sustainable fashion, in a way that allows you to build yourself a better life. I think that startup should provide you with freedom, and purpose, and help you maintain healthy relationships. That’s what we talk about on Startups For The Rest Of Us, that’s why we call it, “For the rest of us.” It’s not the traditional Silicon Valley venture-backed startup path. We have several different formats for our shows. Sometimes we do a lot of tactics, and we teach ideas and thoughts that we’re thinking about; sometimes we interview interesting founders, we answer a lot of listener questions.
One format that we’ve only done a handful of times, and it’s been a few years since we have, is one called the founder hot seat. The founder hot seat is where we bring a founder, live on the show, and we talk through an issue that they’re thinking about or that they’re facing in their business. Sometimes, this is a marketing approach. It’s something they’re wondering, whether they should do this approach or that, whether they should hire this person, this role, or whether they shouldn’t, and to just keep going on their way. There tend to be no easy answers to these questions, and that’s why we can spend 20, 30, 35 minutes talking through the pros and cons of it. Hopefully, the founder leaves with food for thought and perhaps an answer to what they’re looking for; hopefully, you as a listener, just hear two smart people trying to talk through an issue, and troubleshoot it, and think about the best way to proceed.
I’ve long said that being a founder is more than 50% mental. It’s managing your own psychology, and much of this is about making decisions with incomplete information. Today is episode 450 of the podcast. I’m doing a founder hot seat with Matt Wensing of SimSaaS. We’re going to be talking through how to make consistent, needle-moving progress on your startup. Welcome to the show, Matt.
Matt: Thanks, Rob. Great to be here.
Rob: Matt is the founder and former CEO of Riskpulse. Matt, this has the sexiest tagline I think I’ve ever heard for startup, “Multi factor, prescriptive analytics for supply chain performance.” Did you come up with that yourself?
Matt: I did not.
Rob: Some copywriter? No. It totally describes exactly what it does. Anyone who knows that they need it, I bet is like, “Yes, have some.” For someone like me, when I read it, I’m like, “I’m not sure what that actually means.”
Matt: You’re going to qualify out.
Rob: Yeah, no, that’s exactly right, that’s what you want in your subtitle, especially when you’re focused on such a tight niche. In plain English, do you want to describe what Riskpulse does?
Matt: Riskpulse really started out as a forecasting company focused on weather, and really over the last five or six years developed expertise in how trucks, and trains, and even ships, get products from manufacturing sites to market, so supply chain, broadly speaking, but transportation, and logistics more specifically. What we created—right about the same time as data science and machine learning were coming in vogue in the enterprise space—is a way for companies like Unilever, Anheuser-Busch, especially food and beverage, to essentially predict and decide much farther in advance than they used to be able to, how and when they want to ship their products.
If you can imagine manufacturing Hellmann’s Mayonnaise literally by the truckload, then asking yourself the question of, “What’s the best way to ship this from Chicago to Los Angeles?” That’s what Riskpulse helps those companies do now. It’s serving hundreds of companies like that, and actually doing that kind of forecasting days in advance for millions of shipments per year.
Rob: Does it use machine learning, artificial intelligence, whatever the buzz words are these days, you were kind of doing it before was in vogue, it sounded like.
Matt: Yeah, we were doing it before it was in vogue and really didn’t call it those things; we just called it forecasting, and in some cases just bringing two things together. But yes, it does use machine learning. Think of it like, if I go on Google Maps right now as a consumer, and I’m about to actually have a pretty long road trip this summer, if I punched in right now, “How long is it going to take me to get from here to Yellowstone National Park?” It’ll give me a time to get there, but it’s assuming that I never stop, that’s also assuming that it doesn’t really know what the traffic is going to be like a day from now, two days from now.
What Riskpulse does for those companies is that it lets them put in, “I’m shipping Chicago to Los Angeles next week.” It does try to look at all of the external factors like stops, and traffic, and weather, and congestion, and all those things that are outside of people’s control and give them a realistic estimate of when they’re going to arrive.
Rob: Love it. I love these vertical plays where—I guess you’re a horizontal, across industries—but I mean it’s very tight knit shift, it’s a successful SaaS app, and employs, how many folks work there?
Matt: 15 full-time.
Rob: I mean it’s non-trivial, it’s a full-on company at this point, and you actually don’t work there anymore, you found a CEO to take over your duties, is that right?
Matt: I did. I certainly have been thinking about—as I call it succession planning, the grandiose description—had been thinking about that. I have a family, enterprise SaaS is a pretty difficult lifestyle, and I’ve done it for five or six years at that point.
I was looking for a sales leader, ended up being introduced to a very experienced enterprise sales executive, who also had built and scaled companies from kind of the 10-50 headcount range, so very much the same year that we were about to hit. He worked as chief strategy officer with me for almost a year and a half, and then I realized, “This would make a really great opportunity to transition.” I told the board, the board was happy that I had come to that conclusion on my own.
There was no pressure or reason for them to tell me to do anything other than me just saying, “From a lifestyle standpoint, I think this would be best and frankly, for the business.” I really think of myself—in all the businesses that I’ve been a part of—as an owner first, as a shareholder first, and not as a, “I’m the CEO or I’m the CTO,” whatever the role is. That’s not actually what’s going to make you rich, and successful, or whatever your goals are; it’s making sure the right people are in the right places. As a shareholder, I just thought to myself, “Wow. I could have this person take over the CEO role.” I can take more of a sidecar seat which is what I did for about six months, and then ultimately, transitioned out to a board member and adviser at this point.
Rob: Yeah. That’s a mature viewpoint that I think a lot of founders don’t necessarily have naturally. It’s nice that you are able to think about it in that respect and to realize that if your lifestyle goals weren’t meeting up with your company that there’s—I’ve said on the podcast in the past—it’s like, “We started our own company so that we can be in control of that, and so that we can help ensure that we are enjoying what we do on a long term basis.” It’s cool that you’re able to transition away from that, and you started your next effort, which is a SaaS app called SimSaaS, and that’s really what we’re here to talk about today. You and I have gotten to know each other because you’re part of the Tiny Seed batch—the first Tiny Seed batch.
Something that really attracted us to what you were doing is the fact that you’re a repeat founder, that you’ve had success already, that you are a developer so you can build your own software early on; you’re good at product, you are really good at partnerships apparently which is what I discovered recently. Your business development skills, your sales skills, and even copy and positioning, you’re like that triple or quadruple threat, and that’s what attracted us to SimSaaS. SimSaaS, for those who don’t know, again, I just pulled your tagline off your side, but your headline says, “Great teams forecast early and often. Upgrade your gut feelings to forward-looking metrics,” and that is for folks running SaaS apps.
Matt: Yeah, that’s right. SimSaaS is an app that’s built for SaaS founders. What it’s really helping them do is take a forward-looking view of their business. Obviously, there are a lot of tools that are available, ProfitWell, ChartMogul, Baremetrics, etc. A lot of people just use Google Sheets to tally up their Stripe account data and figure out what their current MRR, RPU, and LTV, and all those metrics are.
What SimSaaS does is it takes those historical metrics, also puts them into a simulator, and then generates forward-looking trend of what all those numbers are going to be in the future. I built it, originally, as just a python script prototype a couple of years ago while I was running Riskpulse because I had investors asking me questions that were pretty difficult to answer just using Excel. Things like, “I see your MRR now. I see what your pipeline is but what if your sale cycles get longer? What if your receivables don’t come in when you think they’re going to come in? What if your pricing goes down? What if it goes up? How does your business look then?” Those are very fair questions when you’re going out to raise money, especially or even when you’re making decisions like hiring. It was very difficult to answer those just going back to Excel and saying, “Okay, I’m going to delay our revenue by three months because our sales cycles are longer.” It doesn’t really just work that way. It’s a lot more complicated.
Everything’s connected. We all know all these interdependencies in your business are just very complex. I realized that this is something where software could actually help us, “If I could just punch in six months instead of three months on my sales cycles and have it auto-generate a new forecast, that would be really handy,” that’s what it does. It’s connected to those data sets that the founders have. If you have a Baremetrics account, for example, you can connect that in, and it gives you a fresh and live forecast for all of your metrics as often as you need it.
Rob: Very cool. It sounds like you’re taking a machine learning AI stuff that you did and predictive analytics with Riskpulse and applied it to SaaS metrics. Is that a reasonable summary?
Matt: That is a reasonable summary. I have a friend of mine that’s at Riskpulse that teases me that I’m kind of a one trick pony. You take things, and you forecast. You rinse, wash, and repeat. It was amazing to me when I went out there and looked at the landscape, and I looked at the forecasting components because each of those tools that I mentioned does have some forecasting component to it, but they’re all really simple linear extrapolations of where you’re going to be next month based on this month.
I was kind of surprised that there was nothing more sophisticated than that and just as a quick beside my background, pretty deep involvement with weather forecasting. I actually gave a lightning talk at Business of Software last year, and one of the examples I used was hurricane forecasting. There is a forecast that says, “If the hurricane keeps moving exactly this much North and exactly this much West each day, this is where it will be,” but we all know now based on physics that the real world doesn’t work that way. I think SaaS companies also don’t work that way. There’s all kinds of chaos, and complexities, and sudden changes, that is why so oftentimes, our forecast end-up being wrong which is really frustrating for a founder, that’s what I’m addressing, and you’re right, I took a lot of my domain expertise, and I was able to apply it here.
Rob: Very cool. Today, we’re talking in the Tiny Seed Slack. I was asking, “Are you interested in coming on the show? Is there anything you’re kind of struggling with or really thinking about top-of-mind that we could try to think through to give you some clarity?” In your message, you said, “One thing I could talk about,” with some real conviction, “is how to develop a strong cadence of work as a company of one person managing a huge amount of context switching required to make consistent and needle moving progress on every front over a 12-month period.” In other words, the length of the Tiny Seed Accelerator. “How can I find that groove and sustain it?”
I like a couple of phrases in there, “Consistent needle moving progress,” I think that’s a powerful kind of statement. “On every front,” because we know there’s product, there’s marketing, and there’s sales, and there’s support, and there’s all these things over a 12-month period which is an extended period of time. Do you want to talk a little more about that? That was your summary of it, but what are you thinking about?
Matt: Going back to what you said earlier, which I’m very flattered that I’m capable of making some progress on a lot of different areas whether it’s business development, or marketing, or coding. The double-edged sword of that is that you can end up feeling like, “Am I supposed to just take it as it comes?” Meaning, “This week, these are the urgent and important things. Clearly, that’s the most important box to focus on, and I’m just going to tackle one item from each of those categories of work each week.”
What I’d like to do—I’m leading myself into this—but what I’d love to discover is, “You know what, I’m going to treat weeks or two weeks or months as my unit of work.” I hesitate to say sprint but if you want to think of it that way we can. I’m going to be a little bit more disciplined about, not just my daily routine but maybe even a week over week routine, or maybe even within a month that I set aside a week to work on a product that’s meeting-free because I can’t have that luxury. If I have a week where I know I’m going to have a bunch of meetings anyway, that’s my week to do sales, and business development, or partnerships.
It’s an awesome opportunity to have a year of a fun way to work on your startup, thanks to the Tiny Seed program. Just thinking about as a company of one especially—I can’t parallelize very well, there’s only one of me—How do I sort of acknowledge my own natural rhythms, my own lifestyle, but then also, just kind of the nature of each of these kinds of work and start trying some structures that could help me maybe on a one month view?
Rob: I think that’s important. I like that you’re asking the question of yourself. It shows that you have like an insight into how you work. Obviously, each of us has strengths and weaknesses, and until you identify those strengths, especially when you’re a company of one, I think that you’re at a disadvantage until you know yourself pretty well, until you know yourself as someone who either is that, I’d say, the more impulsive context switching founder who likes to bounce around and get a lot of work and a lot of things all at once.
I’ve worked with founders who do that. I’ve worked with founders who tend to focus too hard on one thing and get stuck on it. Whether it’s a mental perseveration or whether it’s, “I am going to work on this email. I’m going to work on this code until it’s done,” and then like 12 hours later they’re done and they’re like, “That was the whole work day,” and they got stuck on it. You strike me more as someone who moves around a lot; works on a lot of different things as they come up. Do you think that’s an accurate assessment?
Matt: I think that is. I think that’s probably what’s natural for me. People that know me from the Tiny Seed context are probably—I’m in the Slack a lot asking questions. I’m just naturally, a very curious person. I get a lot of enjoyment out of just knowledge; sometimes for knowledge’s sake, sometimes I just want to store it away and say, “That might come in handy later.” I do have a habit—I was about to qualify it as a bad habit—I’m just going to call it a habit for now. A natural habit to want to bounce around, look at a lot of things, have a lot of tabs open at the same time.
I’ve got to write real code. I’ve also got to think deeply about copying it. I think one thing that’s caused me to think about this more is just the deep work, I was going to say mantra, but that theme that’s come up quite a bit lately in the circles. I listen to podcasts, a lot, etc. where it was hard to actually get deep work done in a company of 15 people that were all on Slack at Riskpulse sometimes. Now, I can have this luxury of saying, “Okay, how would I do it differently knowing what I know now? How can I get myself into those groups without ignoring anything that might catch on fire.”
Rob: Yeah, totally. I think you have the luxury right now of, not only being a team of one, but you are still early enough that you don’t have 1000 customers all asking for things, things that are on fire per se. I think there’s a couple of things that come to mind right away. As much as I like Slack for the community, I’m only in may be in two or three Slack groups including that the Tiny Seed one that you and I are in together. I do not disturb Slack multiple times during the day kind of almost premeditated.
I know that my best times of day to work tend to be in the morning until about 11:00 AM or 11:30 PM, then I get really hungry because I don’t tend to eat breakfast. I eat and then I get a little sleepy, so then I will tend to do Slack in the early afternoon, and then I get this second wind. I either do not disturb Slack or I use email a lot more than I think some other people do these days because Slack has given us that. It gives us the instant communication and feedback. I think you could certainly have a team. We had a team at Drip with Slack and it wasn’t super noisy because we only used it for things that needed realtime.
If you didn’t need it realtime, as new people would start I would tell them “Hey, we value maker time,” like that’s a big thing. We’re a software company with three or four engineers out of this full-time team of eight, and then we have a couple of contractors. We were engineer-heavy because the product was such a focus. The way I communicated it was like, “Look, if you need to interrupt a developer, that’s fine. If you need to interrupt someone, that’s okay. But if you don’t need to, if you don’t need an answer within 20 or 30 minutes, send an email.” That was like an intro thing and that was the culture that I had set up at the company. How does that resonate with you? Does that seem crazy or does that seem like something that would be interesting?
Matt: Definitely interesting. I probably over estimate. I’m probably bad at judging whether or not things need to be real time just because of some of those habits. We signed up for HipChat first before Slack was a thing at Riskpulse. It was basically pretty noisy and pretty engaged. We, as a company, culturally had to try to enforce those maker times. Now, I’m self managing. Does that make sense? One crazy admission here is, I don’t think I’ve ever used Do Not Disturb on Slack. I think you’re probably just thinking I’m probably just a bad citizen where I’m ignoring people’s messages and they’re wondering, “You’ve got the green dot.” But certainly, that’s a great little tip.
One thing I wanted to jump off of as well is, I have a similar kind of natural rhythm in terms of my work. I am a very early riser. It’s been tough this Summer since the kids are out of school, everyone is staying up late. Typically, I get up at 4:45 AM or 4:55 AM and I’m at my desk with a cup of coffee after drinking some water by 5:00 AM or 5:15 AM. I have found that my coding abilities and my deep analytical work abilities are really that 5:00-10:00 AM period, which is five hours. It sounds like not much of a work day, but that is one thing I’ve noticed too. I can probably do myself a favor and hide from Slack during those times.
Rob: Yeah, I mean, I can see that five hours of straight work, that sounds like a tremendous amount of time. Think of all the people working at startups or companies, for that matter, that are running Slack and how often developers get interrupted. To have four or five hours of uninterrupted focus time to me, you can get two days of development done in that. Two days compared to just being part of a 20-person development team where stuff is flying all over the place, every minute you’re getting interrupted.
I think that’s plenty of time to get almost a full day’s worth of deep work done from 5:00-10:00 AM. If I were in your shoes, the fact that you’re online at 5:00 AM is awesome. I would say I’m the opposite. I wake up later and I’m tired when I wake up. I’m groggy for 30-40 minutes. I’m typically, at my computer by nine if I’m lucky. This isn’t about my habits, but it’s definitely not—I think you have a distinct advantage is what I’m saying.
One of the things I was going to talk about or wanted to bring up is, when you’re a single-person company or a very small team, I mentioned it earlier, but it’s so important to know your strengths, and to know your weaknesses. One of your strengths is deep work. It sounds like it or being able to write your own code I think is a big deal. Another one is that you’re online at five in the morning. That is a strength whether you realize it or not because I couldn’t do that. I would be trucked, I would get no work done, I would be worthless, I’d just be too tired.
Obviously, I think when you’re this small, you got to focus on strengths and you need to really forget your weaknesses or work around them. Ultimately, you can hire people to take over those or to cover those areas. Again, to come back to me, I don’t enjoy doing demos, I don’t enjoy sales like enterprise sales and all that stuff. It just doesn’t resonate with me and my personality, but it does with you. I would say the fact that you’re a developer who knows how to do sales and how to do these partnerships is another big strength and something that you can leverage over the course of this year.
Matt: Yeah. Two thoughts came to mind. Mikey Trafton, for those who don’t know, he’s one of the founders of Capital Factory here in Austin and he’s a frequent speaker at Business of Software that I’ve gotten to know fairly well. He has these categories of work or strengths and he talks about how you have a super power that is something that you’re insanely good at and for you, it’s kind of effortless. There’s this category of things that everyone has where they are really good at them, but they find it draining. You do it and every else looks at you and says, “Wow, you’re really good at that.” But at the end of the day, or if you do a lot of that, or right after you do that, you’re just kind of exhausted or maybe just worn down.
For me, interestingly enough, I do find that the deep work is that the coding, the design and some of the things I do in isolation are the first kind. They’re the things that I really feel energized afterwards. Enterprise sales, although I’ve done it and I’ve closed 6-figure deals consistently in the past, they are really draining I find. The demos, I can totally relate to that. It’s kind of funny, it’s like one of those things where, “Yes, I can do it, but I do find it to be difficult.” I’ve learned in the past, the one thing I can’t do is I can’t do one of those and then get into any kind of deep work. After I do that, I’m ready to be done.
Rob: That’s really good to know, right? All your demo should be after 10 or 11 in the morning. That’s something so good to know about your daily cadence. That’s what we’re talking about here right? It’s is to bring it back, how do you make consistent needle moving progress on your business, and it’s showing up every day, and having a schedule that is as ideal for you as possible. I feel like if you could not check email—this is very hard to do—but if you could not check email or Slack before you start your 5:00 AM sprint in essence, I’ve never been able to do that I will admit. I always check email first thing in the morning. I always have. I don’t know if I will break that habit.
I think, in a perfect world, you wouldn’t have the distraction, but sometimes you just need to feel—I need to feel okay that nothing’s on fire, or if there’s somebody who needs a quick answer—if they’re relying on me that I get it out to them quickly. But sometimes of course, it takes you off track, you want to do 15-20 minutes of email instead of your deep work. That’s kind of the sacrifice that you have to make if you do that.
Matt: Yeah. I think I’m the same way. I’ll check it first, but I have an incredible ability to unless it’s actually on fire, to just kind of ignore it and wait, but then I get that closure that, “Nah, everything is good.” I think what I would say next is, if we can zoom up one level or going up one level and looking at a week or a month and asking—I’ve got in a program let’s say a 10 months remaining not that anything magical necessarily happens at that time. We’re not working towards a demo day per se, but if those are actually my units, so a daily routine sounds pretty solid. How do you think about juggling or moving between marketing, sales, product development, design, and I can think of one example. You really shouldn’t be building things before you design them. Jumping and writing a bunch of code might not be the best thing to do. If you look at it a week or even a month context, what does that look like?
Rob: Yeah, how do we think through that? It’s fascinating because so many founders at your stage don’t even think about that. I feel like it’s the fact that you have already grown a company to the level of Riskpulse that lead you to think about the longer time frame. I honestly, think it’s less important in these early days, but it will quickly become more important as you get even a couple months down.
Because right now you could literally think just a couple days out or a week out tops and be like, “What are my goals this week? It’s to ship this feature and to get another customer, another five customers,” or whatever the number is, but you’re going to hit a point in the next you know 12 months where you do have to start thinking just a little further. At first, you think two weeks out and then you think four weeks out. Then of course, as you get bigger, you have to think two months out because you have all these people working on things and they need to know where they’re going. When you have 15, 20 people, your horizon has to go out further.
At your stage, I don’t know how much time I would spend thinking about a month out, because it really does feel like a long time given how quickly things are changing right now. I feel like there’s all these friends you can be fighting on, or all these friends you can be switching to and from, there’s development, and there’s design as you said, there’s sales, there’s marketing, there’s kind of internal operations, there’s processes, there’s all this stuff, I feel like right now, just moving the product forward, and doing sales, and/or business development. I almost kind of count that as sales, but I guess technically, it’s more marketing because it’s generating leads that you would sell.
Almost all the other fronts can go by the wayside for the next few months, which is hard to do, but that’s how I would mentally prioritize them right now. Because if you’re not building features, or getting new people using the product, everything else is substantially less important. Does it feel that way?
Matt: It does. If I look back the last few months, in the way that I started SimSaaS, is I really did the new classics soft launch on Twitter, sharing it with all my followers, and it got a good amount of interest. What I ended up doing was having this kind of open season where anybody could sign up, and I learned a lot, and then I essentially shut it back down into a private beta where now I have a handful of folks that I really care what their experiences, they’re definitely my target market, and I’m trying to get them signed up, willingness to pay, that’s the focus.
The lead gen part is kind of just doing its own thing right now, people are opening their email address saying, “I’m interested early access,” sometimes filling out a survey. That feels really good to just be automated. I don’t know if those folks are going to get bored of waiting around for me to get back to them, but I agree, for the next few months, I should just be focusing on a bottoms up acquisition of happiness of these handful of people.
If I do put my second time founder hat back on though, I do have an end-in-view, which is half by the end of third quarter of this year, which is I think a quarter, because of the company enterprise faced. By the end of September, I do want to launch self-service, and I’m not self-service now, so I do think about what do I need to do to get to that point. That is an interesting blend of products, and sales.
Rob: Yeah, for sure. I think to touch on SimSaaS, specifically, you’re in a unique position where you just have incoming interest, and you’re in a unique position that—fairly unique—where you don’t have to do a bunch of marketing right now. Because typically, the advice that I would give right now is, you have to be focused on marketing, and product, those to be the two.
The level of inbound interest you have, and how quickly it spreads, because it is this insular SaaS community, it’s like we all talk to one another, and you appear on one podcasts, and then everybody has heard of you, and then you apply it so well to so many of these companies that I do think, I mean, that’s what I was specifically saying its product, because you’re trying to push more features to keep the customers you have a happy, and its sales to land your inbound prospects as folks who are going to use it. But marketing for now is taking care of itself.
You obviously will hit a point where that changes, but I wouldn’t be thinking out that far right now, because I think that’s 6-2 months out. By the time you get there, you’ll be at such a different place product-wise, and revenue-wise, that you can either decide if you want to go attack marketing, you’d do it if you want to hire it out, you’ll do it because you’ll have the budget. But that’s something as you get closer, I think, you’re going to now. I don’t think you need to be preparing for that yet because it’s a way out.
I even think, what month is it, it’s June, and you want self-serve by September, which is three-ish, three-and-half months out. I mean, I would ask two questions about that, one, why do you want to go self-serve by then? And two, what level of planning does that take, given the fact that you had all the code, and do the design, could you hammer that out, literally in the last two weeks of September. If that still the right decision when you get there? It’s like just in time decision making. It sounds a little flippant, again, if you’ve worked at a 60-person company, it’s like, “You can’t possibly make a decision that close to the wire, because you got to get product marketing on board,” you don’t need to do any of that. I would almost push that absolute decision off until the last moment where it’s like, “Yes, now that’s what I have to do. Now, I’m going to build this.” But tell me if that resonates or if that sounds like, “Nope, I think that’s a bad call and here’s why.”
Matt: This is interesting. I have used SimSaaS to forecast SimSaaS. Self-service, what is it? It’s a way to get more, because I’m going to go with trials with credit cards, and if you think about self-service, it’s really just a way to remove all the friction because I’d love to think it’ll be zero percent friction, but it will remove me as a gatekeeper for people to get on board. Interestingly enough, do I need it by then or is that just kind of artificial? That’s a great question, or am I imposing that on myself, because I think I need it.
One thing that is interesting, I’ll say, is that out of the early adopters I already have, there is a fair amount of investors, or mentors, or even just experienced founders who are already referring other folks to it. Lead volume, again, getting back to marketing is not a problem, do I need to undo myself as gatekeeper? Maybe, what I should be thinking is also taking a bottoms up approach to that and saying, “I am on boarding folks manually right now.” Every time I do that, I just get more efficient at it somehow, and let my own sort of irritation with having to do things manually drive me to make it ultimately self-service, but it doesn’t have to be necessarily.
Rob: There are a number of products now, Superhuman is the example everybody brings up, but there aren’t many products of stay invite only for a very long time. Some do it intentionally for the scarcity, but others don’t. I think, as a single founder, you have a pretty good, almost excuse or a reason to. As long as you’re not finding that more of these leads are waiting so long that they’re degrading, and they’re not converting, because they’ve been set in the queue for too long. I think setting in an arbitrary date for it that’s three and a half months out might be premature.
If you get to the point where it’s like, “No, this is just too much volume,” and you need to automate, then you can do it earlier, or you could do it later. But I don’t feel so strongly about having to have it done by the end of September. I was thinking about it as we’re talking about how the onboarding is somewhat manual, I love the idea of trying to automate a little more each time. Also, hiring a customer success person, if it literally is just light sales, like it’s inbound warm leads who need you to walk them through the product a little bit, give them a little bit of a demo, show them how to use it, get them set up, that’s a customer success role, and that is not that hard to fill, and it’s not that expensive either.
Could that be something that’s a better option, even if it’s a part-time person, you give them 10 or 20 hours a week, starting at a month from now? Does that shape how things happen because now you have someone who’s on your team learning the product, and you’re not in as much of a hurry now to do self-service especially if they’re converting, right?
Matt: Yeah, that’s interesting. I think there’s an open question of how zero-touch any of the stuff can be these days. I mean, I know that there’s 1% say any amount of human touch sales involvement, lifts your ACVs, lift your attention, it’s just a good thing if people want to have a relationship with your company, and that would feed that. I’ve been there, that’s the playbook I’ve run before. I think the other one, which is the company of one, maybe, let’s say to a fault, but even more strict is, now that’s all going to be automated in the product. I don’t know which one’s the right approach.
Rob: I was going to ask you, which one do you want to do? Because the right approach, given that you’re building a company for you, and you want to grow and stuff, but that’s going to come. You have an opportunity here. Does bringing in customer success person on feel like, “No. I’m not interested in it. I’ve already run that playbook. I really do want to try to give it a first crack at spending timing, getting on boarding up, and making it truly self-service.” Is that more interesting to you? Because that certainly could be your first crack at that, and then if it isn’t working out the way you want, you can always backfill it.
Matt: Yeah, I think it’s probably the more, to me, it feels like the more ambitious one. I don’t know that I would say it’s the right one though; I do have my doubts as to whether or not that’s really the right way to do it. I mean, especially when you’re dealing with a financial app, and it’s pretty complex. Having a human there to set you up, and to take you through that, that’s a pretty well-worn path, and we know it works. Maybe that is what I do is, I push as far as I can, and then see if I basically, hit a wall where, “No, there’s that 5% more, but then I can scope that down to exactly what I need.”
Rob: Right, that’s what I was thinking. Because in the early days of Drip, I really want everything to be self-service, and that’s just a lot of apps I had; pretty much all the apps I had before that were almost all self-service, and we built a lot of onboarding, and it worked well, and we had good growth. But I definitely found the people who are willing to pay us more money—the several hundred dollars a month clients—which obviously isn’t even that big. They really wanted to talk to somebody, and that was where I eventually got to a breaking point because I was doing demos, and talking with them.
As I said, I don’t enjoy it, not much like you. I’m good at it, but it wasn’t a thing that gave me life. We eventually did hire someone, and it was the right decision, but I had to give it a shot as the self-service first because we wanted to see if we could truly make that work. Again, it did work, it’s just the larger customers benefited a lot more from having that high touch.
Matt: I think that maybe the reality. I could see self-service, it does work for so many apps, and instances where the product’s a little bit more, category especially, I think that’s actually something I keep coming back to, and that might be just the reality is that this is a new product, metrics is the category. But the idea that you’re connecting all the state, and you’re doing all these forecastings, not having a human at all to explain what this is, how it works, and when to use it, it might not be realistic, and actually might create some glue and loyalty to have that involvement, which is what I’m providing right now. I think this is a good kind of re-scoping of where I want to be by the end of September.
Rob: Yeah, and it’s good to have goals. I know you’re driven and trying to think out a few months because you’re thinking where you want to be, and you don’t want to stand still. Some folks are super goal-oriented and motivated, and then for others, I think it de-motivates them. It sounds like you want to know where the puck is going, and where you’re headed, at your stage, I feel like dates might not be helpful. Unless it really is motivating to you. I should probably state that differently, for me one, when I’m that early in an app, or that early in the company’s development, there are too many variables for me to possibly throw a day out of when something should happen.
Matt: There’s kind of two ways to get to that date: you either change the definition of success or you move the dates, and you know you can timebox things. I’ll change the definition of self-service, not to the point of cheating, but I’ll change it to mean, “They can sell service, but that’s not what I want them to do, maybe there’s a way around that.” But yeah, I think I am pretty driven from the standpoint of reverse engineering, kind of where I want to be.
I think that you’re right. It’s like I’m trying to connect lightning from two sides here, I mean, that’s where I’m at. I think it creates a mental frame for me to just go, “Okay, it’s bottoms up, bottoms up. It’s the people I’m working with right now.” That’s why I knew last week was going to be sales and marketing heavy week. I scheduled a lot of meetings for that, and essentially, knew that I wasn’t going to get a lot of deep work done. But I kept the slate clean for this week and knowing that I needed to shift gears. Then that’s the other skill I want to develop is just getting myself in a mode, and being able to say no to things that are going to knock me off.
Rob: Yeah, I was going to bring that up, maybe as a last point a conversation because we’re running long on time, but I was coming back to cadence, which I believe you mentioned or at least—in your Slack, I was thinking cadence, and I was going to ask, “Do you do better with a one day on one day off cadence?” Or, “Would a one week on, one week off cadence work?” It sounds like that’s what you tried recently is kind of like the BD sales a week, and then a development week. Because I feel like most of us tend to bounce around, and handle whatever is the next thing that we think is most important.
But if you are able to say no, whether it’s just for that one work day, like I’m going to say no to everything that is not pushing the product forward in some form or fashion, and then the next day, “I’m going to push it—I didn’t say no to everything that’s not pushing the sales, like revenue forward in some form or fashion,” whether that’s one day or one week, I think that most of us are helped by that.
I’m surprised that you did it for a whole week, or I’m impressed, I should say, that you were able to do that for a whole week because that would be hard for me to do. Do you feel like that was successful, and that’s something you want to continue to do? Or was it like, “It was too long. I should probably only do three-day sprint,” so to speak?
Matt: Yeah, I think it will shorten naturally to three or four days a week to focus on something, and then you’ve got your bonus day to catch all the stuff where somebody just says, “Look, I can’t meet with you next week.” I think I’d like to keep trying that. That would be a good way to kind of follow up here and see, “This is the product development week for me then I’m going on vacation.” That’ll naturally lend itself to maybe just checking email, and following up on sales related things, and then we’ll have to see which mode I fall into when I get back, or maybe I shouldn’t fall into one, I should pick one.
Rob: YYeah, that’s right. You sent me a tweet from James Clear, and many people may know James Clear as an author, and blogger about kind of forming good habits, and motivation, and stuff. His tweet said, “Most people need consistency more than they need intensity,” and he says, “Intensity is running a marathon, writing a book in 30 days, or a silent meditation retreat. Consistency is not missing workout for two years, writing every week, or daily silence. Intensity makes a good story; consistency makes progress.” I really like that tweet, and I’m glad you sent over.
It reminds me of a quote that I’ve used over and over, I’ve written a blog post on it, there’s an episode of this podcast titled this, but it’s a quote from Steve Martin. He wrote it in his autobiography. The quote is, “It’s easy to be great, it’s hard to be consistent.” He’s a standup comedian, and he said, he would come to the shows, and he would watch a comedian just kill it one night, just blow the doors off, but that comedian couldn’t do it every night and that was the challenge. He said, “It is easy to be good once in awhile,” and that’s what James Clear is talk about with intensity, it’s easy to be great, but how do you show every day, how do not have the splashy tech-crunch launch or this big one time hit, where it’s not a sustainable thing.
We see a lot in the startup space, we see it in pop culture, where things come and go quickly in this place of glory, that’s not what we’re here to build. We’re here to build these longer-term, these sustainable, these 5-year, 10-year, 20-year companies, and whether we run them for 20 years or not, it doesn’t matter. But is it this something that can be around for the long term? I believe that the way that happens is—with what we’re talking about today—it’s this consistent needle moving progress, that you show up every day, or you show up every week for years, and that’s the thing that most people have the hardest time doing. I think it was helpful for me. I hope it was helpful for you to know you as a listener. Thanks so much, Matt, for agreeing to come on the show.
Matt: Thanks a lot, Rob.
Rob: Again, if you want to catch up with what Matt is doing, you can head to simsaas.co. If you have a question for the podcast, call our voice mail number at 888-880-19690, or email us at email@example.com. We’re in iTunes, and all the other places you would imagine, just search for startups. We’ll have a full transcript of this episode on our website startupsfortherestofus.com. Thank you for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob along with co-host Tracy Osborn answer a number of listener questions on topics including two side marketplaces, automated testing, building like-minded relationships and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in order to provide yourself with a better life. These are not the typical Silicon Valley startups where fundraising can be a goal on itself, where people sometimes overwork themselves, 90-hour weeks, and where building slide decks are often valued more than building real business.
On this show, we’ll talk about building software companies and that can be Software as a Service, WordPress plugins, Shopify add-ons, Photoshop add-ons, even downloadable software, mobile apps, whatever. There are many, many ways just there to step your way to a business that can provide you with a better life and better existence.
A common thread over the past nine years in the show is that your product or your company is built around being a human being and having goals around on what you want to accomplish as a human rather than the business being me and be all of all your achievement.
There are three main things that we’ve espoused for the past 449 episodes of the show. It’s things like freedom. It’s the freedom to work on what you want, when you want, without a boss breathing down your neck, or the freedom to go to your kid’s baseball game on a Thursday afternoon without asking permission.
Its purpose is the ability to work on something that fascinates you and it drives you every day to make it better. The purpose of building something that tens of thousands of people get value out of, that makes you feel great and proud of what you built, and it’s about relationships; deep, meaningful relationships with your family, your significant other, your kids, maybe even have time for friends.
That’s Startups for the Rest of Us is all about. That’s what it’s always been about. It’s the lens through which we view startups and that’s why we say, it’s for the rest of us.
We have a few formats for the show. Sometimes, we talk through a topic in detail, we work through an outline of how to do a particular tactic, sometimes it’s purely for inspiration, sometimes it’s to help you grow your business over the next week or two, something you can implement.
Sometimes more rarely, we do interviews with folks who can offer advice or inspiration. In other times like this week, we answer your questions. What I like about answering questions live on the show is not only can I directly help a founder who has an issue, not only can I directly help a founder who has a question or challenge or something they’re trying to overcome, but you as a listener, can either learn from that thought process, learn from that answer, and hear how someone thinks through hard decisions. Being a founder is about making decisions when we don’t have enough information. Took me a long time to realize that.
Being a founder is 70% mental and so much of it is about doing things that are hard, that are scary, and that you don’t have enough information to make a 100% correct decision. All of that to learning scale and it’s something that I hope you’ll be able to learn from the show over the years.
I’m here today with my co-host, Tracy Osborn. She was the founder of WeddingLovely and now she’s my colleague, friend, and program manager here at TinySeed. Welcome to the show, Tracy.
Tracy: Thanks for having me.
Rob: Excited to have you on. Beyond being a program manager at TinySeed and as I’ve mentioned having run a startup, a two-sided marketplace for wedding services called WeddingLovely, Tracy is a Python developer, she’s a gifted designer, and an author. She’s written several books that help make tech friendly for designers and design friendly for developers. Is that right? Am I saying that right?
Tracy: Pretty much, yeah. Tech is a scary subject and it’s been a fun topic to write on; what can I do to help people jump into it.
Rob: Absolutely. All of that is available, more on Tracy is available at tracyosborn.com and you’ll be hearing more from Tracy in the coming months. We’re working on a lot of fun stuff together.
Tracy: Yeah. The stuff at TinySeed has been so much fun and I’m really happy to be a part of the team.
Rob: Yeah. Us as well. We love having you. Let’s talk through some listener questions today. I know we have some voicemails and we have some text-writing questions. Typically voicemails go right to the top but today, I think we’ll start with some emails.
Tracy: Funny listening to your previous podcast on this. I was like, “Ooh. We’re going to switch up the formats, jump into one of the […] questions.”
Tracy: Let’s start with this one from Chris Palmer. He got a co-founder that is an experienced software engineer, and his question as a designer/product person, he wonders if there’s too much testing. How much time of the software build should go to things like unit testing, snapshot testing, et cetera, for an early-stage production product. So, he says, “Rob, when you had Drip, what did your engineering team do?”
Rob: This is a good question and what I like about this is, if you’re not technical, if you’re not a developer, it’s easy to discount unit testing. He’s talking about snapshot testing and all the types of automated testing, integration testing. There’s so much you can do and I have seen Software as a Service companies have to rewrite their entire codebase or literally run into major problems scaling because they skipped this in the early days.
Unit testing in particular, I am such a proponent of having 80%, 90%, like really extensive unit test coverage. I think if you’re a non-technical founder working with a technical co-founder who is saying “Hey, it’s going to take longer because I have to write a unit test,” that part, I’m all on board with.
Where it starts to become a gray area for me is when we talk about snapshot testing, which is taking a screenshot and comparing it from one build to the next to make sure that things aren’t going wrong, where we talk about full end-to-end integration testing, actually hitting the UI, hitting a web interface, clicking buttons, and doing all that stuff.
I would love and would have loved to have had all that testing in all of my startups but it’s very, very, time consuming and that has tended to be where I’ve drawn the line, is anything passed unit and some minor integration testing and smoke testing of API endpoints, all that stuff, we would build because it’s code and developers can get in the flow, they can hammer it out, and you get this amazing test coverage.
I used to brag about when we’re going to be acquired and then when we were hiring for new developers, I would say, “We have 2.5 lines of test code for every line of production code.” Some developers realize that’s not actually that outrageous. That’s probably where around where you should be if you really have good test coverage. But it sounds crazy to a non-developer like, “Woah. Haven’t you wasted a bunch of time?” but you haven’t. So, for me, that’s where I draw the line in the startup, where I am trying to move quickly, trying to go for end-to-end UI tests that cascade down through everything, I think is overkill. This is where it can be personal opinion.
Now, if I work for a bank, if I work at a Fortune 500 company, I would probably go to that next level because downtime and failures are catastrophic. You work at Amazon, you work at NASA, there are certain places, medical devices, where you do have to take that testing to the 99.999% non-failure rate. You can’t fail.
When you’re building a startup, you’re trying to grow, you’re trying to move fast. You can fail. You don’t want to, but you can fail a couple percent of the time. 1%, 2% of the time, where one of a hundred deployments has a bug in it. One out of even, frankly, 20 deployments will probably have some type of minor bug in it that you’re not going to catch but it’s going to save you dozens, if not hundreds and hundreds of developer hours along the way. That’s my take.
As a developer yourself, do you have a take on it?
Tracy: Yeah. It’s funny because my background is on design and I picked up Python programming. When I was building my first few web apps, I never did any testing at all, because I was like, “Oh. Why should I do this? I can just poke through the website and figure things out.”
But a little bit of time spent on writing those tests in the beginning, will hopefully prevent any kind of horribly stressful terrible moment later on when things go down, when the bug is found and everything. You don’t want to have that happen in the middle of the night. So, a little bit of time is going to save you a ton of time later. It’s just not going to feel like that in the beginning.
Rob: That’s the way to think about it. At a certain point, when we hit scale, and I believe it was post acquisitions, we had thousands of paying customers and I think, if we have the free plan, it was tens of thousands of people using it. This is Drip, of course.
We did talk about implementing end-to-end, front end snapshot testing in that sense, but it was only going to be for one or two flows. It was going to be the sign-up flow and something else critical, like sending a broadcast email because we knew that those two flows people use all the time, and if one of those failed, then we have a real problem.
Tracy: That’s a good point, actually. If you look at what are the critical flows are, when it comes to payments, or registration, or whatnot because when you’re launching new features later on, you want to make sure when you add those features, you can run those tests and make sure you didn’t inadvertently break those flaws.
Rob: Exactly and that’s the thing. For Chris, the original question asker, the thing to think about is how well do you know your co-founder? Does your co-founder tend to be extremely conservative? Does he or she come from a Fortune 500 company, or a bank, or NASA, or Lockheed, or somewhere where they had to have ridiculous test coverage that can never fail? Or have they worked a lot on startup environments? And what’s their personality like? Did they take it fast and lose? Did they hack stuff together? Their PHP hacker used to do it on the weekend and they never do the official stuff. They’re really tight knit unit testing ideas, or are they somewhere in the middle?
I think that almost counts for a lot and to be honest, I trusted my co-founder, Derek, a lot in the early days. I said, “Look, right unit test. Of course, we need them, we’re absolutely doing it,” but I let him go from there. I didn’t come in and say, “Oh, we should have this tested and that not tested.” I trusted his judgement that he’s conservative enough, that he was stressed that things are going to break about the same amount that I was. He wasn’t overly stressed nor too lax […] to cool with it. So that wound up being a pretty good relationship there.
Tracy: Cool. Should we move on to the next question?
Tracy: All right. This question comes from Tom, the founder of Tom’s Planner. He started working on this in 2007 and though the current design of the product itself dates back to that year, though it had a significant update years years ago, but starting to feel outdated again. So, he’s looking at doing another redesign.
He says, “Now, I have four designs to choose from. Each has their own strengths and weaknesses. I really like one of them. I decided to be a good idea to pull my most active users about it as well. That’s where the problem started. The users prefer another design than I do. Even worse, they scored the design I like the lowest. So, now what?”
He says, “Going with the majority would make sense but there’s a couple things to consider.” He really likes the other design. The design that the other users scored best, looks most like the current design that we have now and I’m guessing that’s part of the reason why it’s doing so well. People don’t like change. The design that he likes most has a timeless quality to it, which he believes, which is important to hand but the users probably don’t take that into account and the users are quite divided over it. Even though there’s a winner, no design had a bad finished. “Am I inclined to, despite the results of the poll, choose the design I like best and think this most future proof, but since it is the design users like least, I am still in doubt. Any advice?”
Rob: This is a tough situation you’ve gotten yourself into, Tom. I feel bad for you because I feel like asking users their opinion is pretty much not something that I would recommend overall. Tracy, you run a wedding marketplace, for wedding services. You had consumers like brides and grooms who are buying from service providers. Did you ever ask or poll your users for specific opinions like this?
Tracy: I did not for the site itself but there was an aspect of WeddingLovely where people could have their own wedding websites. I let users have the choice of emailing me and asking me for a custom design and that was a terrible, terrible thing to do. I end up ripping that out because I got overwhelmed to feedback and people were choosing and asking for things that I thought were bad design and didn’t reflect the brand. I end up actually removing that feature entirely.
So, I’m very strongly in the camp that I would prefer not to talk to my users about designs because, as Tom mentions, it can make things really complicated and I also worry about what would happen if you launch a design and it’s not the ones that someone wants. What would happen with the person who voted for the design? What would they feel? It’s a very sticky situation.
Ro: Yeah. People can be really opinionated about things that they’re not experts in. That’s an issue. Design is not something that we all have a training in. I don’t hire the person down the street to correct my back or to do surgery on my knee when I had knee surgery. I hire people with expertise. I don’t go down the street and hire a 15-year-old kid to write code for my website, although, he probably could. I hire people who have experience, and expertise, and training, and knowledge in the space. Design is the same thing.
Everybody has opinions but do they have taste? It’s an interesting thing and I don’t want to make it out like being snooty like, “Oh, I have taste because I only drink refined wines and these very pretentious single source origin coffees,” which my brother does and I say, “We’re going to go to the pretentious coffee place or go to the cheap one?” Of course, the pretentious coffee taste better but it’s $15 a cup.
I think if it’s all designers and you really want to get opinions and feedback, then do that. I think it’s more trouble than it’s worth, and I think it will create problems every time because what’s funny, as Tom said, that his users picked the one that’s most similar to what they already have because people don’t really like change and they don’t like using new software.
If you know that in 2007, 12 years ago, that you designed this thing, that design probably isn’t going to last in another 10 years. You want this one to at least another 5 or 10 years. If I had been in Tom shoes, I would not have done this. We would ask for opinions about, “Hey, we have some features. What do you think about this or what feature doesn’t this software do?” Those are interesting things because those are actual things that they’re doing in day-to-day business and they are experts on their own work flow and on their own needs for a product. But asking what color the button should be, or how a page should look, or showing three designs for a page, aside from just pure use ability things, like “Wow. I’m totally lost. I can navigate this,” that makes sense, but there are opinion on whether there should be a drop shadow or not, or a font. That’s why I hire experts or become an expert yourself, I guess.
Tracy: There is another piece of this puzzle that’s missing, which is that in a redesign, […] the user experience, not just the interface. When you’re asking people, it doesn’t really say about how we ask for feedback on the design and presuming it’s screenshots and that’s leaving out how the interaction actually is.
The users might be choosing something that looks like the old design because they don’t want the placement of buttons and how things work underneath the change. The thing that I struggle with new design is I’m trying to figure out how things are going to work and who might be scared about changing the system.
When one is doing a redesign, I think it’s important to include how things work and try to improve those flows about how someone uses the website, how someone signs up, or ask for payment information, whatnot. You don’t get feedback on those things when you’re sharing screenshots. So, that could be another thing for Tom to do, is do another round of feedback but not by users but go cray away of testing out the interactions about how things are working and see if his new design does better on that aspect. Does that make sense?
Rob: Yeah, it does. He did do screenshots. He included a link way at the bottom that has a link to the screenshots. One of them doesn’t work but the other one says he has all four designs and frankly, they’re all pretty similar. I actually don’t think it matters which one he goes with.
Tom, my advice would be don’t do this again because having trying to do it by democracy. If you have a product, you should have a pretty strong opinion and a vision for your product, I think. If you want to do a fun contest or a competition, that’s fine. But if really, it’s something as fundamental as the design of your product, that’s where you have to be.
You’re the founder, you’re in charge. You can certainly ask some opinions with people that you trust. You can get two or three designers together at your company. You can get people who have expertise to weigh in. When I was designing or having the TinySeed website designed, I asked a couple people that I know that are really good designers, that have a really good eye for fonts, and this and that, and I trust their opinions. But I didn’t go post it somewhere and ask for the opinions of everyone on my email list because I just don’t think that’s that productive.
Tracy: It’s just going to be a lot of noise and a lot of confusion, probably a lot of stress. It’s such a qualitative product. You don’t have any numbers to bring it back on to and that could be something. Also, when you’re choosing in a redesign, if you can do A/B testing of some sort, maybe on smaller elements, you’ll be able to say, “Okay, this one definitely works better.” More people are signing up or doing something that you want them to do because you can tie that to numbers but with just asking someone’s opinion about what looks better is not going to give that much useful feedback.
Rob: I hope that was helpful, Tom.
Tracy: Sorry, Tom.
Rob: Good luck. Our next question is a voicemail about which side to focus on when building a two-sided marketplace.
Chris: Hey, Mike and Rob. This is Chris Bowles from Kentucky. One of the […] for TinySeed, first batch. My question is relating to chicken or the egg with SaaS B2C/B2B. Got a startup concept that I’ll actually be providing free trial on the B2C side with a very small revenue figure to help support the B2B side.
Without going into a bunch of detail, basically I’m in stealth mode right now. How do you know whenever you recruit the majority of your revenue through the B2B side or you provide the trials to the B2B side versus beginning free trials on the B2C side? How do you know who to market to first and to who to set up on the website prior to launch to be sure everybody […] on […] day? Thanks for all you do. I’ve learned a lot. Have a good one.
Rob: Okay. It’s an interesting one. I think you’ve gone a little into the wood with the free trial and that kind of stuff. I just think about this as a two-sided marketplace, and there’s a business and a consumer side. My translation of his question is which side do I need to bring to the site first? You’ve built a two-sided marketplace?
Tracy: Yeah. The chicken and egg problem is tough because you need to have enough on both sides of the equation for your website to be useful for both. With WeddingLovely, it was a marketplace for wedding businesses and that was the primary focus. There was a consumer side where there’s a planning application. My recommendation is to focus on the businesses.
My personal experience with WeddingLovely is I actually the site very early on which is a few businesses because I needed to have something online for these businesses to say, “Okay. This is launched.” I’ve seen other people using it and I even told those businesses like, “Hey, this is something that’s going to be a slow growth thing.”
In the beginning we might not be able to send them a bunch of consumers, but I was live and they’re listing to the site for free. By focusing on the businesses, they actually help my marketing a ton because I was able to work directly with the people that were on the website with WeddingLovely. They had their own network, social media, blogs, and whatnot. So, they helped build up that consumer side of the business while I focus most of my effort and intention on the business side.
It was a […]. Market places take a long time to build up both sides but I’m a fan of working, I mean, businesses are also easier to work with, by far. I think there’s going to be a lot more benefit through focusing on the business side. What do you think?
Rob: I would focus on the business side first, in that case. I would basically have a landing page somewhere, or a social media account, an Instagram account, or something that is posting amazing stuff and trying to forget this consumer side. Some type of traction so that I don’t have to start from zero. Once I have 10, 20, 30 businesses lined up, I at least have an email list of a hundred people, or I have a thousand Instagram followers, or something there.
Typically, what I say when people ask about how to setup a market place is focus on one side first and in almost all cases, it’s pretty obvious which side you need. If you had a bunch of consumers with WeddingLovely, and you’re like, “All right. I have 5000 people who wants services,” and you have zero services, you have zero businesses, there’s no business there. So, you have to bring the businesses first.
The challenge is, of course, you have to bring the businesses to a place where you don’t have any consumer audience. You could then step back and say, “Well, should I start a blog, or a podcast, or an Instagram following, or an email list, or something that gets the brides- and grooms-to-be?” then from there, say, “Well now, I have this email list of 20,000. Now, I go recruit businesses?” That could be one way to do it. That’s another way to think about it. But you’re starting on a cold stop on both ends, right?
Tracy: Yeah. Chris mentioned that he was in stealth mode. I think that’s something that should depend on what he’s working on, but I feel it needs to be something that you have to get out of stealth mode so you can start recruiting people on either side of the audience.
Rob: Yeah, I would agree. Everytime I hear stealth mode, there’s certain yellow flags, red flags are probably stronger, but stealth mode is one here, “I want to raise money from you. Sign an NDA. I’m building a startup that targets every small business in the United States. It’s any business and there’s 60 million of them, that’s my target audience.” There’s just certain things that’s like, “Yeah. You’re making a basic mistake,” in almost every case.
Typically, the people who make stealth mode work are these really experienced founders. Ev Williams can do stealth mode. He’s done Blogger, and Twitter, and Medium, and on and on. He can do what he wants and break the rules. Steve Jobs can do stealth mode. There’s a handful of people that can do it, pull it off, and it works. But honestly, if it’s your first one and trying to figure stuff how, don’t do that. Just get out there. You need to start generating interest on both sides of this. I agree. I would start at looking at getting businesses on board and having conversations.
Here’s the thing I would do. Whatever it is, if I can bring you 500 customers a year or 10 inquiries a month, or whatever that number is, is this of interest to you and is this worth $99 a month for you to subscribe? That’s your customer development. You have to do it in theoretical because you don’t have that other side of it yet. If they say yes, then awesome. Get on the waiting list, there’s no commitment now, let me get your info, and then you go to the other side and you either start running ads, or you start SEO, or you start social, or you start whatever it is that’s going to bring that consumer side, and you start funneling them somewhere.
You don’t need to write a bunch of code to do this. You can funnel them to a blog, funnel them to a landing page, you can funnel them to a hacked together WordPress site that has a couple of listings that you literally put together by hand. I mean, all this stuff can be done with just hustle. You don’t need to go pay $50,000 for developers to go build anything. You’re just trying to test it out. You’re trying to push it forward a piece at a time.
Tracy: This is a great place to things that don’t scale. For those businesses, what can you do by hand for each of those businesses in the beginning just to start getting the ball rolling.
Rob: Indeed. Thanks for the question Chris. Hope that was helpful.
Next question is another voicemail. It’s about connecting with other founders to build relationships and he’s referring back to a comment I made a few episodes ago.
Michael: Hey Rob and Mike. This is Mike Whitbeck, one of the co-founders of UberWriter. We worked in the mortgage space and we built some income calculation software. We’re on our 5th year of business and I’ve listened to hundreds of your episodes. One of the co-founders, David Stamm, and myself have used a lot of your advice of the podcast to help reguide and redirect our business in very successful ways. Our website is www.uber-writer.com.
On episode 444, I believe you mentioned that you and your wife, for about the feelings of isolation, have other entrepreneur couples over maybe once a month or have dinner with somebody just to talk to people that you relate with. Though it’s probably a little bit weird and just trying to figure this out is, I know I’ve run in the past where you introduce yourself to another couple, just basically go out to dinner, a movie, or a common event with them, and maybe you just don’t kind of hit it off. I guess the awkward question is, when you meet up with these people, is it generally an expectation that you’re going to meet again or you just let the friendship go or not go where it goes? How do you handle that? Enjoyed the podcast. Please keep it up. Have a great one guys.
Rob: This is an interesting question. I think there’s a couple of things. One for me, when I was younger, I felt like I had the need to be best friends with people or not friends at all. It’s just a very binary thing. I’m talking like junior high and then high school. That’s how I was raised. That’s how my family did stuff. It wasn’t until probably after college where I realized, “Oh, having other friends who you just hang out with and aren’t necessarily your best friend or it’s not this binary thing, but you can hang out with them now and again, once a month, once every other month, you see them. It’s nice, but that’s it,” is a good thing. I think it’s a good thing for all of us to have larger networks than just one or two people. Not a requirement, but it gives me accessibility to more people to go see Avengers: Endgame when I need to and I’m not just relying on one or two people. That’s the first thing.
The second thing is when we invite people over, we literally just say, “Hey, we’re having a couple of people over that we know. We’re all startup founders and we’d love to have you over.” That’s the expectation. In addition, we tend to invite two couples or three couples over. That helps it not be awkward if, for some reason, there is one person in the group can be whatever. Talk too much, not talk enough, be a train wreck, whatever, and that won’t ruin the thing because you have six or eight people there. Whereas, when it’s just a double date, you really are reliant on the personalities of the folks around you, and that, of course, can be a wildcard.
So, there’s strength and numbers there and there’s really no expectations beyond that. We say, “Hey, we do this a few times a year and we have people over blah, blah, blah,” and that winds up being the situation. It worked out well for us. So far, we haven’t had any of those situations where it’s actually been bad or awkward. We haven’t become best friends with everyone, but that’s okay. That wasn’t the expectation up front anyway, neither from us nor the other side. It’s just a natural conversation about random stuff.
What’s been interesting is some of the funniest conversations have not been about our companies, have not been about our businesses. It’s been topics surrounding fact. Just that startup founders tend to be creative, driven, motivated, smart people, who are perpetually learning, and just being in a room with those kinds of people and asking what shows they’re watching, what kombucha you’re drinking, what’s the best coffee place you go to, what conferences you like right now, what books are you interested in, what podcasts do you listen to.
This stuff is all tangentially related to work but we’re not sitting there analyzing each other’s businesses, giving us advice on pay-per-click ads and positioning. It’s much more this almost social conversation. What I find is that when I’m talking to, again, interesting, driven, smart people who are shipping things, it just tends to be better conversation no matter what we’re talking about.
Tracy: This question really resonates with me. I don’t know if you had the same issue when you moved to Minneapolis. I’ve moved to Toronto about three years ago and I left all my old friends behind. When I moved here, I wanted to jump in and make friends that I think also do the same thing I do so we can have conversations. It’s been a hard slog. It’s really hard to make friends as an adult. Tying it to a business is even harder. So, I really like your suggestions and I think I learned something from this. I’m going to try to do a little bit more social stuff.
One thing I wanted to mention was, one of the best parts about just meeting up with people, not having a lot of expectations, and just hanging out, especially if you’re a founder. You’ll probably going to see them at the networking events in your city or around the world, or wherever you go, and just making those small connections. They’re not going to be best friends, like you said, but then making these small connections can be really fun because you’re going to see them later on. You’re in continually reinforces connections overtime and I think it’s really great to have these people.
For me in Toronto, I have people I see. Probably it’s just simply at events and they’ve been over at my house one or two times. It’s been really fun to start making those relationships and for a few people it has. Eventually, it’s going to move into, “Okay. Cool. Let’s talk business. Maybe I can tell you a problem I’m having. Maybe get some advice.” Just starting out and meeting people for the first time, don’t worry about talking business. Just see if they’re a good fit for you and not that everyone’s going to be.
Rob: I completely second the notion of how hard it is to make friends as adults and I don’t know that anyone ever told me that when I was growing up, but it just seems like you made friends in school, then you made friends in college. Shortly after college, if you’re still around those friends it was easy, but moving to a new place or relocating is hard.
I’m actually thankful because Sherry is pretty deliberate about wanting to find a community in various aspects of our lives. That has caused her to essentially just start making lists of people that we meet anywhere. We go to a meet-up, I did a little talk here locally a few weeks ago or any of the mirative startup events. Anybody we find that’s interesting, she’s like, “Get their names, get their email, and we’ll put them on this list.” We have this Google Doc of people now that is literally just a grab bag of some people we know relatively well and others we don’t, but we’re interested in getting together with them. We introduce them to one another often, which is cool. It’s not like our goal is to get everybody to network, but that at least there’s some value to everybody.
Tracy: Yeah. Think about talking to your 15-year-old self, being like, “When you’re an adult, you’re going to have spreadsheet of potential friends.”
Rob: And you’re going to have to invite them over for dinner. That’s just how it goes.
Tracy: I just have one more thing. Another thing when I moved to Toronto is that I insisted on working from a coworking space. That was also to get more business friends by working together and being around these people. There’s a lot of people at this coworking space after the last year, so have I grown into friends, we’re talking of business ethics because we’re there working together. I used to work at home in an office and this has been really great for me socially. It’s been really great for me careerwise, just to be around people while I’m working and then you have that little back-and-forth chit-chat. Then it grows into who am I going to invite over for dinner and doing dinner party or whatnot.
Another option that I usually recommend to a lot of people who are working solely from home is if there is a place so they can also try to make friends through coworking spaces, you might be able to build those relationships.
Rob: Literally, once a month, once every two months, it’s not that big of a burden. Frankly, you can couch it as, “Do you want to come over? We will literally order take out.” You really don’t have to cook for them. There isn’t an excuse. I’m talking to the listeners more than you Tracy.
There’s literally no excuse not to do this because when we brought this up before, I’ve had people say, “Wow. That sounds like a lot of work. I don’t think I have time for that.” We have three kids who go to three different schools. We homeschool one of them. Talk about not having time, my wife and I both work full time and do that. And yet we do this. It’s because we prioritize it. It’s not because it’s easy. Sometimes, we’ll do take out or we did potluck last time, where we provided the main thing that I grilled and people brought a salad, and this and that. It’s very little work for us.
The other thing is everybody brought their kids and they all played in our basement. Nobody needed to get sitters because that’s another hassle and expense. Frankly, it is finding sitters who are reliable and all that. There are ways to do this if it’s something that you’re motivated to do and that you think is valuable.
Tracy: Just like setting up a whole dinner party. Even just being proactive about inviting people to lunch. Maybe you said it personal goal of that twice a week, you invite a person to go on a lunch with you. Maybe you’re already at work, you don’t need to get a sitter for that, it’s a very low stress situation. That’s something my husband does and he does it way better than me. Every week, he has a different person he goes to lunch with. That’s how he creates and also build those connections.
Rob: Yep. So, thanks for the question. I hope that was some helpful food for that.
Thanks for listening to this week’s episode. Hope that was helpful to hear. Tracy and I talking through listener questions. If you have a question for us, you can call it into our voicemail number. It’s 888-801-9690. You can always email us at firstname.lastname@example.org. We’ll talk to you soon. Thanks for listening.