Josh

Rob Walling: The third most important metric in SaaS is churn. Churn can be the death of SaaS. Net negative churn is also the cheat code of SaaS. It’s a power up. It’s a cheat code. However we want to classify it, having net negative churn is an incredible, incredible business hack when you have a subscription business.

Welcome back to another episode of Startups With the Rest of Us. I’m Rob Walling, and I’m going to dive into listener questions today. We’re going to cover SaaS business metrics. Talk about customer pain, choosing that and ways to handle it well. And talk about how to find a good SaaS idea. And then we might even get to the question about transitioning a task level thinker to a project level thinker. Before we dive into that, MicroConf Europe tickets are still on sale. We just have a few left. It looks like we are going to sell out. We have a limited capacity this year. It’s in Malta at the Intercontinental Malta, November 15th through the 17th. Head to microconf.com/europe if you want to join me and other bootstrap, then mostly bootstrap founders. The co-founder of Lemlist, who has bootstrapped his company to eight figures in ARR is one of our speakers, as well as myself and a few others. Head to microconf.com/europe for all the info and to pick up your ticket.

If you want to ask a question to have myself or a guest answer it on this podcast, head to startupsfortherestofus.com, click ask a question in the top nav, or just email it to questions@startupsfortherestofus.com. I love audio questions and video questions, but we’ll answer text questions as well. So let’s dive into my first one. First one is what are the SaaS business metrics that matter the most and why? And so if you were to force me to pick, let’s say two or three metrics, the first one has to be MRR. MRR shows where you are. On the journey from here to there, 5K MRR, 50K MRR, 500K MRR, it shows where you are on your path to growing a company. Second one is month over month growth rate. And you can look at it as a percentage or as an absolute dollar amount.

I like to look at it both ways. I like to look at the absolute dollar amount, because that’s something that I can directly control. And it’s something that if you have a repeatable funnel with the same amount of traffic coming to your website and the same conversion rate, the same conversion to trial, to paid and churn, you can have a pretty predictable month over month growth rate of an absolute dollar amount of 1,000 MRR, 5,000 MRR. And frankly, if you look at the percentage of that as you grow, your percentage month over month growth rate will decrease over time. Because if you’re doing 5,000 a month, a $1,000 growth rate is 20% growth. But by the time you’ve grown to $20,000 a month in MRR, 1% growth rate is 5% growth. So your growth looks like it is declining, and on a percentage basis it is.

But to me, if I’m a mostly bootstrapped founder, growing at 1K or 5K every month predictably, repeatedly, say it’s 5K a month and I’m at 45, then I’m at 50, 55, 60, 65 70, all during that time, my percentage is going down, but that’s still an amazing business. It’s an incredible business. So I look to look at the absolute dollar growth rate because it’s a realistic picture. Dollars are what I can spend to hire. Dollars are what cause me to grow. The percentage is almost, it’s a second order thing. It’s then comparing it to where my monthly recurring revenue is. That’s really what it is. And it’s fine, you can look at that too. And do I want to keep a constant rate of growth or an accelerating percentage of growth? Of course. Of course you do. It’s very, very hard to do. And I think seeing both month over month dollar amount and percentage and looking at both of them, I think can be helpful.

So those two metrics for a SaaS company are what I would call North star metrics. Now I’m going to go through my three high, three low framework, which is where I have six metrics, and you want three of them to be high and three of them to be as low as possible in essence. And really the third most important metric in SaaS is churn. Churn can be the death of SaaS. Net negative churn is also the cheat code of SaaS. You’ve heard me talk about net negative churn here. It’s a power up. It’s a cheat code. However we want to classify it, having net negative churn is an incredible, incredible business hack when you have a subscription business. It just means that as your customers use your product and get value, they add more subscribers, they add more seats, because your pricing has been structured intelligently that as they get more value from the product, they pay you more. That negative turn.

That’s actually called expansion revenue, and we’ll look at that in a minute. But that’s net negative turn. So churn is both the death, but also an amazing cheat code for SaaS. And it’s the first of the three low. Churn, you want to keep as low as possible. If you have 2% churn for a bootstrap SaaS company that’s 2% per month, you’re doing amazing. That’s great churn. 3% is good, and 4% is fine and 5% is not great. It’s okay. But look, once you start looking at 5 or 6% churn, you’re churning half to three quarters of your entire customer base every year. That means you need to be replacing them just to keep your head above water. So 5% a month doesn’t sound that high, but it’s not great. It’s not great churn like 2% is. And then once you’re up at the, you get 7, 8 and above, it’s kind of business on fire. This is where in the span of six months, nine months, your entire business is turning over.

And unless you have a massive, wide funnel and just a huge number of incoming leads, you’re going to plateau pretty early. Usually high churn is due to low price point, customers being more consumerist, or VSMBs, very small businesses where they’re extremely price sensitive, and they cancel, or they go out of business, or they just decide they don’t need your software and they replace you with a Google sheet because it can save $20 a month or whatever. So churn, we could do entire podcast episodes. I have an entire section of my next book. My next book is a spiritual successor to Start Small, Stay Small, which is my first book. And it really is the path of once you have some type of product market fit, getting to seven figures in recurring revenue, building a seven figure, a million dollar, multimillion dollar SaaS company. And I have an entire section on churn and how to think about it. And it’s so important.

When I say it can be the death of SaaS companies, it is the death of many SaaS companies. It’s true. And churn is also an indication of how much product market fit, or it can be an indication of how much product market fit you have. So that was the first of the three low. Cost to acquire a customer, something you want keep low. But it’s a bit paradoxical. You don’t want high cost to acquire a customer it’s C-A-C, or CAC, as we’ll say. You don’t want a high CAC. But at the same time, if you can spend more to acquire, if you have the budget, if you have basically the annual contract value to support high CAX, then you probably should spend more if it can allow you to grow faster, if it can allow you to find better customers and it allows you to do more marketing approaches. I have looked at all the B2B SaaS marketing approaches that exist, and give or take there are about 20. There are not hundreds. There’s about 20.

Some of that is high level grouping, like SEO or organic search is one. And you could think of organic search in Google, in YouTube, WordPress plugin repository on Amazon. So there’s more approaches. But in terms of generalized B2B SaaS marketing approaches, almost exactly 20 in my experience that I have listed out and I talk about. And when you can only spend $100 to acquire a customer because your monthly fee or your annual contract value are so low that that’s all you can afford, then you can do two or three, maybe four marketing approaches, and the rest are too expensive for you. And then when you have kind of a mid-level annual contract value, let’s say you’re at 5,000 to 10,000, you can do about, I think it’s 9 or 10 depending. And then when you have a cost acquire of 20,000 or more, and maybe even 15 or whatever, you can do almost all of them. You can do in-person events. You can do cold outrage. These are things that are really time intensive and inexpensive.

And so your cost to acquire, while you want to drive it low, the higher you can push it, the faster you will grow. And realize that if you are in a position where you want to sell your company at some point, whether it’s this year, three years from now, any acquirer who’s going to buy a SaaS company is going to value, most likely value growth over profitability. This is if you’re in seven or eight figures. If you’re selling to a value buyer who pays based on your net profit or your seller discretionary earnings, then of course maximize profit, keep your CAA low, do all that. But if you are building the more the ambitious bootstrapper and you’re looking to get to 2, 3, 4 million, maybe 10 million ARR before you sell, the buyers at that level, they’re not buying it for financial in almost all cases.

If you’re growing fast, they know that they can figure out profitability. SaaS is incredibly profitable. It’s an amazing business model. But growth is hard to come by. Profit in SaaS can be engineered. So that was a cost to acquire. And sales effort, you might think of this as sales cost, cost per sale, you want this to be low. And this is the difference between a low touch, mostly zero touch software funnel, like snappa.com has Chris Gimmer was on the show a couple years back talking about how, yeah, it’s just self serve. And the price points, I forget what they are, it’s 20 bucks a month or 30 bucks a month, so that you’re not going to spend a bunch of time doing demos and doing a multi demo close, versus sometimes your sales effort is months long, and maybe it’s a six call close, where you’re convincing a number of people at a Fortune 500 company to buy.

If you’re doing that much sales effort, obviously your cost to acquire goes up, your timelines for closing sales go up, you have to have a price point that justifies that. You cannot be doing five call closes over the course of several months and charging $100 a month. It’s just the economics don’t work out. The two. Businesses are different. You have to raise that price to 500 a month, 1,000 a month, 5,000 a month in order to justify a lot of the sales effort. And then the three high in this framework, remember three high, three low, so the three high are annual contract value, I’ve already talked a little bit about this, but this is how much you charge. And this dictates a lot of things. Usually the higher your annual contract value, the lower your churn. The higher your annual contract value, the more you can spend to acquire customers, which then gives you not just the ability to have more money and hire more people, but you can try a lot more marketing approaches because you can afford to experiment with them.

The second of the high metrics is expansion revenue. Touched on this earlier with net negative churn. But expansion revenue is when people get more value out of your product and so they pay you more. It’s something I talk about a lot. But expansion revenue is amazing. If I were to ever start a SaaS again, I would want expansion revenue. That doesn’t mean every SaaS can or should have expansion revenue. And there are plenty of great SaaS businesses built with minimal expansion revenue, but it makes it just a little harder. And lastly, referrals. You might think of this as virality. If you can build it in, that’s perfect. That’s the ideal way to do it. Referrals is when people are word of mouth referring you, and you can ask for those referrals. This is a hard one to engineer. This is not something that you can go out, and like you do SEO, you do cold outreach and you can kind of build that up in scale.

Word of mouth and referrals doesn’t scale per se. It isn’t usually something you as a founder can control, but it’s certainly something you want to encourage and you want to ask for, because having a lot of referrals is an amazing way, very low cost to acquire on referrals. My next question is from Devon. This was in MicroConf Connect. If you haven’t checked out MicroConf Connect, we have more than 3000 bootstrapped and mostly bootstrapped SaaS founders in a Slack channel, in a Slack workspace, I guess is the technical term. And head to microconfconnect.com if you want to be part of that. It’s a free community that we heavily moderate, and it’s a great conversation happening in there. So Devon’s question was, “I’m actively picking customer pain for my company’s segment, as opposed to competitor pain. Do you have any general observations about SaaS for non-technical customers?”

You probably heard me talk about this before, customer pain is when you have customers that are going to be maybe more difficult to sell to, more difficult to support. Competitor pain is when you have a lot of competition, but usually the customers are going to be more tech savvy. The worst is when you have both competitor pain and customer pain. I would personally probably not enter a market like that. But some amazing businesses are built with customer pain. You think any business that serves, realtors, probably a lot of legal software, serving construction firms. And it’s not just about being less technical, but I think that is a big piece of it. When I watch my mom use a computer, she uses it in a very different way than you or I do. And it’s almost a tentativeness that she’s going to break something by clicking a link, or just very uncertain and really can’t figure out what you and I would consider obvious UX paradigms, obvious things that happen in software.

And so picking customer pain, realize that. One is your going, no matter how good your UX is, you’re always going to have folks who don’t understand it. And you just need to admit that there’s a problem is the first step, and realizing that I can’t imagine you’re ever going to conquer that. The second thing is you need to be priced accordingly. When I think through the companies in TinySeed or in MicroConf who have customer pain, they usually have a lowest price plan around 150 ish to $200 a month. And frankly, their average revenue per account of the ones that I’m invested in, I’m invested in over 100 SaaS companies, they’re higher than that. The average revenue per account is 3, 4 or 500, because you need to justify all the time that you are going to spend to close a deal, that you’re going to spend to onboard and that you’re going to spend to support. Customer pain folks often want to be able to talk to you on the phone, and that’s something you’re going to have to figure out if that’s something you’re willing to do.

Not saying you have to, but I’m saying you’re going to get more requests for it than you will than if you were serving developers, for example. Live chat may work, but even again, if you were supporting my mom or my dad, they don’t type very well, for example, and so being on the phone is an easier thing. So consider that. Price point, as I’ve already said to support. I think you should have some type of concierge onboarding essentially that people can pay for, because if let’s say a realtor has a bunch of contacts in MailChimp or in some old system, they don’t know what a CSV is. They don’t know how to export that and then import it. And if there’s any problems with the import. You’re going to build an amazing import tool for CSVs, and someone’s going to figure out how to screw it up because it’s just what happens. When you don’t understand a paradigm, it feels overwhelming and complicated.

And so that’s the type of thing where if you build an internal tool, where even if the tool’s available in their account and it takes you 10 minutes to export, reorder some columns, upload, that can save them an hour of frustration. And so charging for onboarding, I almost think of it like almost product walkthroughs. Live documentation, I guess I would say of, hey, your setup and this is how you’re going to use this, I think is probably going to be worth your while. One more thing I would say, if you’re going to tackle customer pain, realize that a lot of these folks are not going to want to dig through a knowledge base. They’re not going to search and try to find a solution to the problem. They’re going to want one-on-one proactive help. And so I would consider having a weekly office hour, and whether that office hour, maybe that starts with a 10 minute demo, one feature in the app or one section just to get everyone on the same page, hey, this is how you send an email. This is how you prune your list, whatever.

And then it’s open Q&A and you do it as a group. There’s no one-on-one, unless you want to maybe you charge extra for a one-on-one support package where people can reach out to you, but you are then able to scale that in a way that can be difficult. It can be challenging if you have 10 people all wanting to do one-on-one calls with you. It’s possible. If you want to have a dedicated account manager, either that’s an add-on or you’re just expensive enough, you build that into your pricing. But I think thinking about doing group office hours or doing office hours in some way that allows you to help people in a scalable fashion is something that I would be thinking about. So it’s a great question, Devon. Thanks for asking and I hope that was helpful. My next question is from Paseedu on YouTube, and it’s how to find a good SaaS idea. This is a big question and it’s one that a lot of people ask.

I think the answer is there isn’t one way. There’s no blueprint to doing this. Everybody comes about ideas in different ways. What I would say is don’t think that this brilliant idea is going to jump out at you if you think about it long enough. I do have an idea notebook where I’m constantly writing things down that I’m thinking about, and sometimes I’ll go back through and be like, that was a genius idea. When I wrote, why C for bootstraps back in 2011, 2012, that’s what TinySeed became 7, 6, 7 years later. So that was definitely a winner for me, but a lot of ideas you’re going to have just aren’t going to be that good. So I think having a lot of ideas is one way to think about it. So many people get stuck at this phase, and I think analysis paralysis is just, it ties in, and I think you should probably move towards validating rather than getting stuck on this stuff.

One expression people throw around is scratching your own itch. And that just means solving your own problem or solving a problem you have. I don’t think that’s a bad way to go, but it’s not the only way to go. And in fact, I’m going to take a little tangent here, scratching your own itch is not guarantee for success. And in fact, people, I think ascribe a little too much importance to that, because I see just as many companies failing with a developer is scratching their own itch, founders scratching their own itch as when they’re not. I see no difference. And when I hear someone say that their success was because they scratched their own itch, but when you look at the company, it’s like, no, the success happened because you had an amazing network in this space and an audience, and you had $100,000 of your own money, and you hit a market that was expanding in just the right way with hated competitors, and you were able to piggyback on the success of another bootstrapper.

There was all these reasons. And you executed well, and you built a great product, and you marketed it, and you used your network and et cetera, et cetera. Those are the reasons why you were successful. Scratching your own itch was one decision that you made five years ago, and if you hadn’t done that, I still think you would’ve been successful if you had picked an idea that didn’t scratch your own itch, but that still had all those attributes. It had your unfair advantages that you could take advantage of, in essence. So I’m not saying don’t scratch your own itch. I’m saying don’t think that’s the only way to do it, and don’t think that is somehow some key to success, because the world is littered with indie hacker projects from people who scratched their own itch. And they were the one of one, they were the one customer that needed that. Did no validation.

And even if other people need it, are they willing to pay for it? Can you reach them at scale? There’s so many questions that you needing a product doesn’t prove, it doesn’t answer. The world only needs so many project management, bug tracking and to-do list applications. And so just before you scratch your own itch, I would consider really validating the idea. Drip was actually scratching my own itch, but I went out and validated it and figured out other people would pay for the initial version before we went and built it. So beyond that, one thing that I start with is what are my unfair advantages? Do I have an amazing network in a space? Do I have an audience in a space? Am I early to a space that I believe is growing? Then I would take advantage of those and I would limit the idea to take advantage of that.

And in fact, I didn’t do that for many, many years. Drip was the first one that took any type of advantage of my audience or my network. And it was the fastest growing and most successful software company I ever launched. And I think that was part of it. I also think that it was because I entered a fast growing space with hated competitors. I executed well. I had a couple hundred thousand dollars from HitTail being thrown off. And there’s a bunch of reasons why that was successful. So with MicroConf, we have the State of Independent SaaS Report where we survey between 500 and 1500 bootstrapped and mostly bootstrapped SaaS founders each year, and we ask them how they came up with their ideas. And we start with the assumption that you’re selling B2B SaaS, and so you’re solving a problem. Start with a problem.

And scratching your own itch is a problem that you had. But you can also find problems at your day job. Maybe it’s not a problem that you have, maybe it’s a problem the company has. You have to be careful with intellectual property here, but let’s put that aside for now. Problem at your day job. Problem of a spouse, a relative or a colleague. Poor customer experience that you yourself had. And this is how CodeSubmit was founded. You heard the founders here maybe six months ago, but they launched CodeSubmit out of the founder’s desire to never solve a contrived programming exercise during a job interview again. They didn’t want contrived, so they built these real coding challenges. It’s codesubmit.io. It was a poor customer experience, poor candidate experience. And those four things that I just listed, scratch your own edge, day job, spouse, relative, or colleague or customer experience make up, it’s like 85%, 90% of the respondents of how they came up with their idea.

So those are the ones that I’d be looking at. There are a few, one is I acquired the product, which is 2 or 3% of respondents. Then there was one, I copied a competitor, which I thought that was kind of interesting. And then there’s another one that’s very low single digits, 3%, 4% is finding a problem online. So it’s like Facebook groups, Cora threads, private Slack groups. It’s an approach you can take, it’s just not one that a lot of the indie SaaS founders take or have had success with, at least according to the data we have in the State of Independent SaaS Report. So those are some ways I’d be thinking about it, Paseedu, in terms of finding SaaS ideas. Last thing I’ll say is I talk about the stair step approach. If you haven’t Googled this, go to Stair Step Approach to Bootstrapping and read the article.

In it, I link to an article on rocket gems, where there are 60 plus SaaS app stores or marketplaces. So these are the Shopify app store, the WordPress plugin repository, the Chrome app store, Heroku, Salesforce. I’m sure Oracle has one. There’s this big list of app stores. And these are things that if you’re in a step one or step two and you probably shouldn’t build a full-blown SaaS, I would be looking at ways that I could take apps in one app store that didn’t exist in another and figure out ways to adapt them. This is Rip, Pivot and Jam from Dan and Ian on Tropical MBA. It’s not trying to be too clever, because I think people get really clever with their ideas and they want to build something just incredibly novel and solve just a problem that no one has a solution in search of a problem is the term for this.

And it’s the worst when you’re a developer. I did this 15, 20 years ago where a new technology would come out, and suddenly in the browser you could drag things in a web browser. Can you imagine? Oh my gosh. Ajax, Dynamic and DHTML, that’s a solution, so I’m going to go find a problem to try to solve with this. That’s not a terrible way to go, but I never found any problems with it because it was the wrong way to go about it. It didn’t start with a problem and then say, what’s the best tool to solve this? And coming back to this sentiment of being a little too clever, I think product people, and makers and engineers often do want to build something a little too novel. If you look at some of the incredible successful, whether they’re bootstrapped or not, SaaS products, a lot of them, what was Drip? Drip was an ESP that added automation.

There were already email service providers out there. They added automation a year after, two years after Drip did. There were already marketing automation providers. All the automations that Drip did, not all of them, but like 80% of them were accomplished by these larger enterprise tools. We were not being this massively innovative, I’m going to build something brand, brand new. But we did it in a way that was easy to use, we made it super approachable and we made it cheaper. So when everyone else was charging 300 to $3,000 a month, our lowest price was $50. So the entry level to get into email automation is what made Drip incredibly successful, is it just lowered that bar to entry. You didn’t need a $2,000 custom onboarding like a lot of our competitors did. You did not need a consultant to run it, which a lot of our customers did. You could use it yourself and you could pay that 50, or 100, or $200 and get a tremendous amount of value.

So the innovation was perhaps in the business model or in just bringing it to a new space and making it more approachable. There are tons of apps like that. Even the idea of taking a piece of software that’s generalized and making it more specific to a niche, like CRM software exists, where I’m kind of managing my list of customers and I’m doing sales. What about what the founder of Builder Prime did, where he said, “I’m going to make CRM software for home improvement contractors?” And that’s what he did. Builderprime.com. It’s a TinySeed company. It’s not some incredible innovation. I would call Drip a relatively boring business. I would call Builder Prime a boring business. And I don’t mean that as an insult. I actually mean it as a compliment when I say it. Boring businesses are great.

It’s not this constant sprint to stay ahead of the bleeding edge. You’re building a software that solves a desperate pain point for customers who pay you real money on a recurring basis. It doesn’t have to be any more complicated than that. So thanks for the question, Paseedu. I hope that was helpful. Last question of the day. I really liked this one, actually. It’s from Twitter. It’s from Noah Tucker. And they ask, “how can I assist an employee in transitioning from a task level to a project level thinker? I’d be super interested in any insights you have.” I had not thought of this question, but it’s an obvious and a really good one, actually. If you’ve heard me talk about task level, project level and owner level thinkers, it’s just a progression you’ll probably make during your career.

When I was young, I was a task level thinker. You could give me a task, I would do it really well. But I didn’t think at that next higher level where I could actually run projects, manage freelancers, get things done by a deadline, do a lot of complicated things. And then eventually you might transition, everyone doesn’t, you might transition up to become an owner level thinker, where you’re not just thinking about projects, but you’re actually thinking 6 months, 12 months out. You have vision and you’re executing at maybe an even higher level. So transitioning someone from a task level to a project level thinker, I think it’s something that in your career, if you’re a good boss, if you’re a good mentor, good manager, good leader, think you’re going to have to do this. And the way I would do it is I would look at my process for managing projects.

So if I do it in Google Sheets, or I do it in Notion, or Trello, I would then take my task level thinker and I would say, you’re going to manage your first project. And it’s going to be a super simple project. I’m managing projects with 50 or 100 steps. You’re going to have five. Here’s my Notion template. Here’s my Google Sheet. Here’s whatever tool I’m using to manage it and the thought process that I put behind it, so that I know who’s doing what, what the status is of everyone. Here’s how I get updates. Here’s how I track deadlines and report back. Here’s the system that I have so that I can function as a project level thinker. Because I’m going to be honest, most people, including myself, we don’t have it innately in us to do these things well, and so we need systems to help us do these things well.

And so I would show a task level thinker, here’s how I manage projects. Here’s the tool. Here’s the thought process. And now we are going to touch base together two times a week, five times a week, maybe it’s a daily standup where you report on the status. And we look at your task board, your Notion board, Trello board, and you show me where things are and who’s doing what. And that is to teach that person the discipline of they have to revisit and come back to these tasks over and over and over. Because if you’re managing freelancers on a project, oftentimes you’ll ask them to do something and then they just never report back. And so you need some way to close that loop and to get back to them two days, three days later, hey, pinging you again. Haven’t heard back. You’re trying to teach the good habits that you’ve learned as a project level thinker to this task level thinker.

And I would simply do it as almost an apprenticeship. Let me shadow you while you manage this relatively simple project. And something with five tasks or five steps is a great size. If you don’t have any small projects, I might look at grabbing a lower priority project, not making a project up, because that feels contrived, but looking at some lower priority ones that are just simpler and they can get on board. And then the next one has 10. The next one has 20. The next one has 50. And you’re mentoring them and teaching them along the way. And what you might find is some people, funny, I’ve talked about my mom twice on this podcast, but she used to say, “I’m great at doing tasks, but I just, anything complicated, and big processes and projects, that’s just not my thing.” And you may find that some people either don’t want to or just aren’t naturally good at it. Can’t follow the systems, whether you call it, they aren’t type A enough, whatever, whatever the term is, some people, that’s going to happen.

And you’re going to find that maybe they are amazing individual contributor, but they shouldn’t be a task level contributor. And that’s okay, as long as you have that role for them and as long as you know that and they understand it. But I think a lot of people that you hire will probably have a lot of not only aspiration, but talent if you’re hiring well. And you’ll see that you can, in fact, with a growth mindset in mind, teach someone to go from a task level to project level thinker. So that’s all we have time for today. Thanks so much for joining me. I’m at Rob Walling on Twitter. If we are not linked up, let’s do it. And this is at Startups Pod as well, if you want to see the weekly video that we tweet, which is usually a 90 second snippet from every episode. And a reminder, there still are a few MicroConf Europe tickets available. It’s in Malta, November 15th through 17th. And it’s microconf.com/europe. This is Rob Walling signing off from episode 619. I’ll be back in your ears again next Tuesday morning.

Rob: We have a time and a place for MicroConf Europe 2022. It’s going to be from November 15th through the 17th at the Intercontinental in Malta. This will be a limited capacity event. It’s going to be smaller than previous MicroConf Europes due to a number of factors. It’s definitely something that if you want to go to Malta, to MicroConf Europe in November, you’re going to want to head to microconf.com/europe for more details and to buy your ticket. 

In terms of speakers. I, of course, will be speaking per usual and we have Guillaume Moubeche, he’s the founder and CEO of Lemlist, which is a company that has bootstrapped to eight figures in ARR. Hope to see you in Malta from November 15 through the 17th, that’s micrococonf.com/europe. 

Welcome back once again to Startups for the Rest of Us. I’m Rob Walling. This week, I speak with Sam Dogen. He’s the founder of the Financial Samurai, which is one of the longest-running and most popular personal finance blogs or news websites. He writes all the content himself. You’ll actually hear about that in the interview. 

He’s written, I believe, 2500 essays/blog posts in the past 13 years. Just an incredible example of relentless execution. He’s also written a book called Buy This, Not That that we dig into. We talked quite a bit about achieving financial freedom personally, about how to think about money, and a lot of really great mindset stuff in this episode from Sam. 

Before we dive into that, we get a new review in the Apple podcast from Adarcus. Five stars and they say, “Practical and relatable advice for all entrepreneurs. Startups for the Rest of Us truly educates and inspires with each topic and guest. The show is a must listen for anyone considering stepping into the entrepreneurial space. Please keep up the incredible work.” Thank you so much, Adarcus for that review.

If you haven’t left us a rating, you don’t even need to leave a review. You can go click the five stars and wherever you consume this podcast, we’d really appreciate it, or log in to the Apple podcast. I believe we’re at about 940-something worldwide ratings. You don’t even have to write anything. You can just click the five stars and I would love to get to that 1000-rating mark. With that, let’s dive into my conversation with Sam Dogen.

Sam Dogen, thanks for joining me on the show. 

Sam: Hey, Rob, thanks for having me. 

Rob: I was mentioned to you offline. I came about your book because of the Tropical NBA podcast. A long-time fan of Dan and Ian. I heard Dan interview you and I was intrigued, so I went and bought the audiobook, as I’m apt to do. People know I’m an audiobook addict. I have almost 900 audiobooks, I think it is in my Audible account. 

Buy This, Not That is not one of them. If folks want to jump to the end. Your book is called Buy This, Not That. You’re the Financial Samurai. What I like about your book is that it isn’t a lot of typical advice. I’ve read all the personal finance books, both from the old guard from the 1990s and early 2000s, and then there’s this new wave of bloggers and podcasters talking about it. And you start to hear the same advice over and over, which I think is good, but you have a lot of stuff in your book that I hadn’t heard elsewhere. 

I want to kick us off by looking a little bit at the 4% rule. The 4% rule for folks who don’t know, do you want to define it really quickly, like where it came about and what it means? Then I want to talk about your sentiments and mine around it. 

Sam: The 4% rule was devised in the 1990s by Bill Bengen, a retirement researcher, who said that if you withdraw at a 4% rate, you will unlikely run out of money for the next 30 years in retirement and that has been a great rule. 

The inverse of 4% is 25X. If you can accumulate a net worth equal to 25 times your expenses, you’re financially independent. I don’t agree with the 4% rule at all, not at all, but it’s because I left in 2012 from my day job, so I’m a practicing retiree. I’m not a researcher retiree who has a nice paycheck and a pension. I’m actually living through this. 

Then two, since the 1990s, the risk-free rate of return, which is the ten-year bond yield, has come down from 5% to 6% to now 2.8%. Back in the 1990s, when he came up with a 4% rule, of course you wouldn’t run out of money if you could invest your money at a risk-free rate of return of 5%–6%. Over the past 30 years, many things have changed, including the Internet or more globalization, and the rates have come down. I disagree with the rule and I can tell you what a better rule is. 

Rob: Let’s stick into that. 

Sam: If you want to achieve financial independence, you need to have, I believe, enough investment income to cover your basic living expenses. You don’t have to work if you don’t want to, you can do whatever you want. Instead of using the 4% rule or the inverse 25X expenses, use a multiple off of your income. If you use a multiple off of your income, you cannot cheat your way to financial independence, which is what I see a lot of people do. 

It’s up to everyone to decide what it is they want to do, but you can’t suddenly say, I’m going to slash all expenses down to $20,000 a year, eat ramen noodles, and just drink water, that’s it. Boom, I’m financially independent. If you use a multiple based on income, it always forces you to continuously save and invest as your income grows, which is hopefully for most of us. 

Rob: I have similar sentiments around the 4% rule, but I think for different reasons. It’s based on the Trinity study. What they did is they looked back at returns, I think from the 1920s to the 1930s until essentially present day. It was like 80–90 years of returns. They did a Monte Carlo simulation and they said—we’re getting deep in the weeds here. I like this, though—it was like 80% or 90% of the years between those two if you retired that year, then you would last 30 years. 

There was a good chunk of years where the sequence of returns would have screwed you. Meaning, if you retired right before 2008–2009, your investments get cut in half or more, you don’t have enough for 30 years. Even then, the percentage they were using was pretty high. It was like 8% or 9%. That’s the average over that long term which sounds great until you look at what expected returns were like. 

In 2016, I sold a company. I had a ton of cash come into my personal bank account. Expected returns for stock at that point, the expected ten year returns were 4% because valuations were higher. When I looked at 4% returns of equities, that’s not risk-free, that’s equities. That’s if I was 100% of equities. I was like, there’s no chance the 4% rule makes sense I would say in this day and age, but in this economic climate, that was 2016 or that was 15 or 20 years ago.

When I started looking at what it would take for me to have enough money in the bank to never have to work again? I was like what about the 2.5% rule or the 3% rule? I just started jacking that number down, meaning I needed more cash in the bank. It’s just a mental cushion that I had. 

Sam: Instead of 25X expenses, my recommended target is 20 times your average annual gross income. So $100,000 gross income, $2 million and so forth.

Rob: You touched on this earlier, but you said, that way you can’t cheat your way to it. Let’s talk about FIRE real quick and define it. Financial independence, retire early. What is the FIRE movement? 

Sam: It’s a movement that I think I helped Kickstart in 2009 during the bottom of the financial crisis. I literally started financialsamurai.com in July 2009 because I thought I was going to get blown out. I lost 35% of my net worth in 6 months that took 10 years to build. 

FIRE is basically an idea where you save and invest aggressively so you have enough passive income to cover your basic living expenses. The more your living expenses can be covered, in other words, the better your lifestyle that it can provide. Then there’s just different degrees of FIRE when you go up to a fat FIRE. 

I’ve noticed that since 2009, the definition has changed a lot, where there are all these different types of subfires because everybody’s on a different path to financial independence and it’s actually really hard and takes a long time to save and invest your way to generate enough passive income. 

You have these new terms that come up to fit someone’s stage which is totally fine because you need the motivation. At the end of the day, you can’t lie to yourself about your own financial situation. I hope people just focus on the basics of enough passive investment income to cover your living expenses. 

Rob: That’s an issue I’ve had with FIRE. I don’t know if listeners of the show know this, but if I was not like a startup bootstrapper blogger type podcaster, I would be personal finance. That is my second love—personal finance or investing. I sneak a personal finance or investing episode under the show about every six months. That’s about what the audience will allow.

I’ve struggled with FIRE and you know what? To each their own. If it works for people, that’s great. I struggled with it a lot because when I started hearing about it, I was 35. I had two kids, a mortgage, and frankly, the people who I heard talking about FIRE are like a 24-year-old with really low expenses. This comes back to cheating. It’s like I can live on $15,000 a year because I have two roommates and I don’t run my air conditioner and I only eat Top Ramen. 

I’m always like, yeah, I guess that’s not a life I want to live. I’d rather work at that point and not live like that. I kept hearing those stories and I was like this isn’t appealing at all. The idea of retiring early was appealing, but the idea of doing it almost like I’m in prison, I’m living on bread and water. This is dumb. That was always my issue with it. 

Now I’m hearing, like you said, there’s regular FIRE which is where people “cheat” their expenses down to $20,000 a year or $30,000 a year, which, look, of course that’s possible, but it’s not a life I think a lot of us want to live. Then there’s fat FIRE, which is where it’s like $100,000 or $150,000 a year. Whatever I need to live. I just need a lot more money saved. Then Barista FIRE, I saw in your book, I’d never heard that term, but it’s basically where you keep some type of side hustle. Is that the idea? Or do you still have income coming in from a day job type thing? 

Sam: Well, the idea is that you work, let’s say at Starbucks, you’ll get healthcare insurance. Right now, my family pays $2200 a month in unsubsidized health care insurance because we don’t have a job. That’s the idea, to get some income going, and to have that healthcare benefit. 

Rob: That is a crying shame and it’s something that, if you’re not in the US, you don’t realize how catastrophic our health insurance system is for entrepreneurs. I run TinySeed. We funded 80 entrepreneurs, 80 companies, I’ve invested in 20 others. I’ve over 100 companies invested and one of the biggest issues with these early stage bootstrap founders is I don’t want to lose my health insurance because it’s $2000 a month to get it. How are we going to fix that? That’s not the topic for today, but do you have any thoughts on that? You’ve obviously been impacted by our health system. 

Sam: Strategically, understand that if you have an income that is 400% or less of the federal poverty level limit, you can get subsidized healthcare insurance. What actually happens is a lot of the FIRE folks will actually not have a lot of income. That’s only four times at most from the federal poverty limit. The federal poverty limit per person is something like $13,000–$14,000 per person. Again, that’s the lean lifestyle you would be living if you wanted subsidized health care. 

The other solution is, as an entrepreneur, you start your business, you get a group health care plan, and then you deduct that as an expense. If your effective tax rate is 25%, then it’s 25% off let’s say $2000 a month for a family. That’s the way you can use it. It’s an expense, but it’s still a lot of money. 

Rob: That’s interesting. I didn’t know any of that. You’re bringing that in. You are obviously someone who’s been doing it. With Financial Samurai, because it started as a blog, are you still actively blogging or do you now have staff that blog on the site? 

Sam: No, starting 2009, I’ve written 99% of the content, published three times a week, every single week, without fail, since July 2009. My wife edits my content as well as my father, and she does the backend, the taxes and all that. We try to keep as lean as possible, which is just my wife and me. In that way we don’t have staff, we don’t have to manage anybody. There’s no turnover.

We decided a long time ago to go the lifestyle route versus the big payout route because at the end of the day, why are we doing a business? I wanted to do a business because I wanted the freedom to do what I wanted. I didn’t want to have schedules. I didn’t want to manage people, or get told what to do at all, or count out any shareholders who wanted a meeting or an update. That was our plan. 

Rob: That makes sense. Folks who listen to this podcast know that my definition of success or my definition of personal happiness, is having freedom, purpose, and relationships. At any given time in my career, there was a time when I had freedom and I had sold a company and I was working on an autopilot cash flow business, bringing in $30,000 a month. I was totally free to do whatever I wanted and I was incredibly bored. 

I didn’t have a purpose. I lost my professional purpose, which is something that I need. I need to be learning. It’s a personality thing. Then relationships, I think, are self explanatory of healthy friends and family relationships. 

It sounds like you have had freedom for quite some time. Has it ever gotten boring for you? The reason I ask this is because this podcast has run for 615 episodes over 12 years. I started a blog in 2005 that I did for about six years and I stopped because I got tired of it. There are certain things over the years, like I get tired of businesses and I sell them and move on, but that’s a personality thing that’s not everyone. 

I’m curious if you’ve had moments where you’ve thought, I’d love to work on something new or I want to do something else. Or is it like three posts a week not a grind, and it’s just something you love doing. 

Sam: First, I made a promise to publish three times a week for 10 years to see how things would turn out because I generally feel that if you can stick with things long enough, good things will happen. After the 10th year of doing it, I said oh, I can sell the site or just chill out now. And I developed a muscle, just like breathing, where if I can breathe forever, I can write forever. 

Three times a week is perfect cadence because it’s about 15 hours a week of writing, so that gives me 2 hours a day of writing purpose. I believe the ultimate amount of time to work a week is about 20 hours. 

Once I had my son in 2017, I got more motivated again. I don’t know if it’s like DNA evolution where once you have children, you just get pumped up to want to grind harder and provide more. I decided, you know what? Maybe I’ll make another 15 year commitment to publishing three times a week, because I think that the world is a really competitive and really brutal and beautiful place and I worry about my children. 

What if they can’t get into a good school? What if they can’t get a good job? I always thought, well, let me run Financial Samurai until they’re in their teens, teach them everything I know about communication skills—written and oral—marketing, finance, investing, real estate, and give them those tools. 

If they are spit out by society, they’re rejected from everywhere, they can’t get a job, at the very least, they can come back to work for dad and maybe take over the business one day. I’m starting to think about the future. 

Rob: You don’t just think about the future. You planned a decade ahead and now you’re looking 15 years out. Man, hats off to you because when I plan for the future, I look at next year, maybe two years, definitely, but you committed to three posts a week so let’s just say 150 posts a year for 10 years.

Right from the start, you’re like I’m calling a shot. I’m going to write 1500 posts. I’m committed. That’s crazy. Is that a personality thing? Is that just how you think? 

Sam: It’s just commitment. I feel like I’ve seen everybody who has actually succeeded at anything, they just stick with it. I’m not very smart. I didn’t get great SAT scores, they were quite mediocre. I didn’t go to elite private school, but I saw the people who succeeded. I was like wow, you just have to stick with it. You can’t forecast what’s going to happen, but sooner or later, something good will happen if you stick with things. 

I plan to live for another 15–20 years. I just want to live until my kids find someone that loves them as much as I love them and then maybe I can die and then be peaceful. During that time, I might as well work on Financial Samurai and teach them what I know because I think that’s our duty as parents. 

Robb: That’s crazy. How old are your kids? You have a five year old and a? 

Sam: Five-and-a-half and two-and-a-half. That’s why I think 15 or 20 years, hopefully they’ll understand the waste of life by then. 

Rob: That’s cool. I have two kids as well, 16 and 12. When they were 5–7, I started showing them—I don’t know if you’ve heard of them—these videos on YouTube are called Cha-Ching. There are a whole series of cartoon videos that animated to music. Check it out. 

It’s great. They’re 2–3 minute videos and there are 10 or 15 of them. Each one covers entrepreneurship and one covers just money, earn, save, spend, and donate. There are just all these fun things. 

Anyway, I’m saying it for you, but you already know all this stuff. For folks who are listening who have kids, it was a fun thing at once or twice a day, and I love the idea. I didn’t have money education as a kid. Certainly, they didn’t teach anything in school, and my parents were busy working and just trying to pay the bills. All the money education I got was on my own. I sought out some magazines. This is before the Internet existed, but realistically, it was like Money Magazine and whatever personal finance books I could scrape from the library. 

What was your path? Did you have a mentor, someone like a parent who taught you or did you go out and just self educate? 

Sam: My father was my mentor. I remember I think it was my sophomore year in high school, he sat me down at the breakfast table, showed me the back of a newspaper, and educated me on what these tickers were and what the movements were. That was really the start of it. 

I always wanted to be wealthy because I had friends—poor friends and rich friends—but the rich friends always were the entrepreneurs with the mansion in the hills, with the nice cars, and the chauffeur. I was like, wow. Then my poor friends were just minimum wage laborers, so the dichotomy was really eye-opening when I was growing up in Malaysia as a middle school student. 

I always wanted to be an entrepreneur, but I didn’t have the courage, I guess, and then the lack of options because once I graduated from college, I was able to get the job at Goldman Sachs in New York City, which was a top investment bank at the time, and it still is. It was too risky for me to say no, especially after 55 interviews. 

I was like, okay, I’m going to go the tried and true route. Try to go for it for 10, or 15, or maybe 18 years. My original plan was to grind it out until age 40 and then have enough capital and have enough courage to try to be an entrepreneur and do something on my own. 

In the end, I ended up leaving several months before my 35th birthday because I was able to negotiate a severance that paid for 5–6 years of living expenses, which was something like in other words, being able to work until age 40. 

Rob: Tell me more about that because you mentioned that a few times, I think, in the interview and maybe in your book. When you quit, you don’t get a severance. How did this happen? What was the story? 

Sam: Fundamentally, please understand that if you quit, yeah, you don’t get a severance and you’re probably not eligible for unemployment benefits for 26 weeks. What I saw during the global financial crisis was rounds after rounds of layoffs and then some of my friends were laid off and I said, how are you? Is everything okay? Can I try to get you a job where I work? They said, I’m okay and they talked to me about their severances. 

I was like, oh, you got two to three weeks a year in severance. Two to three weeks per year you worked as severance. I was like oh, that’s pretty good, that’s not bad. You can actually take it easy for six months or eight months, you’re good. 

I finally developed an idea in my head in October 2011 because I was sick of work by that time. I said, if I could negotiate a severance, in other words, just get laid off and get that severance check and all my deferred compensation of stock and cash and this private investment we were forced to make at the bottom of the market, I’m out of here. 

That severance was a lot of money and it could pay for at least five years of normal living expenses, so I negotiated with my manager. I said look, I’ve been here for eleven years. I found my replacement. I’m going to provide a seamless transition for me to leave and to train my employee over the next three months so the clients are good, you won’t see a drop off in revenue. I was selling myself on the way out. 

Most people sell themselves to try to get the job. I was trying to sell myself on the way out and I said, look, you can save on my base salary, compensation, and my bonus because you’re going to pay the junior guy and the business will rebound and do well. 

At the end of the day, they said, okay, let’s do it. If you don’t want to be here, we understand, thank you for your service. Let’s do it. 

Rob: Wow, that’s crazy. I’ve never heard of anyone doing that. 

Sam: Here’s the thing. If you plan to quit your job or retire early or start a business, there’s no downside in trying to negotiate a severance and try to raise your hand for the next layoff. I think most people don’t do that because most people don’t actually think about the company. If you leave your company with a two weeks notice, you’re leaving your colleagues and your boss in a lurch. It takes a while to find someone, to train someone. It’s actually not being thoughtful by just quitting. 

Then two, I think people are afraid of confrontation and maybe it’s why people break up over text messages or they ghost people. They ignore it because they feel bad trying to come up with a win-win scenario. Please always think there’s a better solution to any problem that you have. 

Rob: On the entrepreneur side, because obviously you run Financial Samurai, you’re a solopreneur, it sounds like with your wife and she’s helping out and you don’t have employees, you said that you made the choice deliberately to be a lifestyle entrepreneur versus on this show, I often talk about ambitious bootstrappers and lifestyle bootstrappers. Both are great paths depending on what you want to do. 

In fact, I was a lifestyle entrepreneur for several years and then I got a little bored and I decided to get ambitious and then that was really stressful, actually. I’ll tell you, a lot of people who I see make the lifestyle choice, they get bored with it and they switch later after three, four or five years, but you haven’t done that. 

I’m curious what made you decide to go this route? I think you touched on some of it earlier, but why do you think that you’ve been able to stick with it all these years and been happy with that path? 

Sam: Well, I think the first reason was when I joined Goldman Sachs in 1999 at the age of 22, Goldman went public that year, so the partners ended up making tens of millions of dollars and the VPs were making maybe $5 million or $10 million of windfall, and they didn’t seem happier to me. 

I knew that if I worked for 10, 15, or 20 years, I might have a chance to get to that level of wealth one day. I saw right away that, okay, maybe a lot of money doesn’t buy a lot more happiness. I saw divorces, I saw stress, I saw people working until 8:00 AM to 9:00 PM and I was getting in at 5:30 AM and leaving after 7:00 PM already, and I was feeling crushed. It gave me that perspective right after college that okay, maybe money, greater money doesn’t buy me more happiness. 

When I left in 2012 at age 34½ I achieved my enough number, which was $3 million and I was able to generate about $80,000 a year in passive income, which provides for a normal lifestyle for one person, maybe two people in San Francisco, which is a very expensive city. The drop in active income by about 80% was tough for the first couple of months, but the freedom that I was able to achieve afterwards, to be able to go for a walk in the park, no more stress, no more commuting. 

I started getting gray hairs at 33 and all those gray hairs went away by age 35 because my stress went away and my chronic pain went away, my lower back pain, my sciatica, all this stuff. I was like, wow, the health benefits alone of living a more peaceful and less stressful life was worth it. 

I really enjoy writing and connecting with people. If you think about it, Financial Samurai since it’s been around since 2009. A lot of people have grown up with Financial Samurai now. The readers that started in 2009 or 2010 have told me about the families they started, the wealth they have built, and the things they’ve been able to do. It’s been such a great and rewarding journey that I just don’t want to quit. 

Rob: It’s really impressive. The term that I use on this podcast is relentless execution. It’s someone who shows up and ships every day, every week, for years and years, and you have obviously done that. The fact that you are still coming up with topics, you literally must have written thousands of blog posts. 

Sam: Yeah, 2500, probably over. 

Rob: Yeah, it’s really impressive.

Sam: Life is life every day, if you think about it. If you just look at your, let’s say, Twitter feed or your newsfeed, there’s something crazy going on every single day. I don’t know. I think there’s always something interesting to write about and to analyze and it’s just a fun journey. 

I have friends who are worth a lot, hundreds of millions of dollars. I know a couple of billionaires and I don’t see their lifestyle being that much better, except for private jets and mansions. If you’re friends with them, you just say, okay invite me on the jet next time you go to Hawaii. Why not? I’ll mansion sit for you. 

Rob: Realistically, then someone comes to you and says, I want to give you $20 million or $30 million for Financial Samurai. Would you do it? 

Sam: I wouldn’t do it because let’s say it’s 20 million so after taxes, that’s like $12 million, maybe it’s $10 million. That sucks. I mean, having to sell something you love and then create economic waste through taxes is the worst. I studied economics and taxes are the worst. It’s such a drag. 

I’ve done it for so long that I just feel like, man, I sold it just for money? It’s part of who I am. If you love your baby, you never sell your baby. If you do sell your baby, maybe it’s because you really didn’t love your baby or you stopped loving it. 

Let’s be brutally honest. I’ve had many people in the personal finance space sell their sites and why did they do that? Because they wanted the money more than they wanted to do what they wanted to do. That’s just the way it is. That’s capitalism. 

I feel like Financial Samurai is like my second or third child. My first child, actually. I just want to see it grow up. If it can help people. I’m not writing stuff to SEO optimized to make affiliate rep, that is soul sucking to me which is why you don’t see that. 

What you see on Financial Samurai are real stories that pertain to real people in every aspect of their life over the course of their lives. That’s a key point of Buy This, Not That as well, is to tackle some of life’s biggest dilemmas so you can move forward with confidence and less regret. 

Rob: Yeah, the book title, Buy This, Not That, what is that referencing? 

Sam: It’s referencing that we can’t make every single choice possible. Every choice we make is an opportunity cost of not making the other choice. The longer you live, the more joy you will have, but the more regret you will have for making suboptimal decisions. 

As I’ve grown older—I’m 45 now—I’ve seen a lot of these things where, man, I wish someone could have told me why you should make this decision over that. I provide a lot of examples, such as whether you should join a startup or an established firm in your 20s or 30s, whether you should live in an expensive city or a lower cost city to save money, or whether you should marry for love or marry for money, or have children sooner rather than later. These are big life events that I wanted to address because money is just a means to an end. 

Once you have enough money to cover your basics, life is about living those decisions. I want to help people stop saying, if I knew then what I know now, my life would be better. The simple solution to do that is to read and learn and listen from someone who’s been there before. 

Rob: I want to circle back to something you said earlier. You said you had assets of I think it was $3.5 million, and you were making $80,000 a year in passive income off those. Do you want to walk us briefly through? If there’s a listener out there who has a few million saved, like your mental model of how you allocated assets and how you were able to pull passive income to that extent? 

Sam: It was $3 million and about $80,000. I worked in equities and investment banking. What I did was I tried to save 50% of my after tax income every single year and diversify into real estate because I was already tied to the equities market with my stock and career. 

I try to invest as much as possible into real estate, because real estate is a real asset that just doesn’t go poof in valuation overnight, loses 30% of its value because it missed some earnings estimate by 5%, whatever. I wanted a real asset that generated a higher yield, that was less volatile. 

About 50% of my current passive income, which is greater than $80,000 now, comes from physical real estate, over four rental properties, and online real estate in terms of real estate crowdfunding private real estate deals. About 25% comes from dividend stocks, and then about 7% comes from bonds like tax-free municipal bonds. The rest comes from savings, CDs, and private equity distributions. 

You’ve got to understand where you are in your business and how you want to diversify. The key is, once you achieve a wealth that you’re comfortable with, that you’re happy with, where you can just kick back or leave completely, you don’t want to lose it. You want to invest in a risk-adjusted manner and a risk-appropriate manner based on your goals and your lifestyle. 

I’m relatively risk-averse because I have two kids. My wife doesn’t work, I don’t have a job, but of course, I have Financial Samurai and my investments. Unlike perhaps most entrepreneurs who plow back their retained earnings into their company, I plowed back my retained earnings into investments so I can have more money soldiers, so that one day, if Google says Financial Samurai, you stink. I’m okay. I’ll be okay. 

Rob: Very cool. Sir, congrats on the Wall Street Journal Bestseller. I know that this happened. That’s awesome. 

Sam: Thank you so much. 

Rob: Again for folks listening, the book is Buy This, Not That. It’s available in Amazon, Barnes & Noble’s, all the bookstores you would go to. Obviously it’s financialsamurai.com and then on Twitter, a lot of our folks are there, it’s @financialsamura. 

Sam: You can go to financialsamurai.com and then if you want to get the book, it’s financialsamurai/btnt and you can get all the details. On Twitter, it’s @financialsamura without the I, because I started it in 2009 and it didn’t have enough space for the I, so I just was like, all right, whatever. I just stuck with it. I guess I could change it, but whatever. 

Rob: That’s so funny. I’ve had a few friends who changed their Twitter handles over the years. Well, sir, thanks so much for joining me on the show. 

Sam: Thanks for having me. It’s been fun. 

Rob: Thanks again to Sam and for you for coming back every week for another dose of tasty goodness from Startup for the Rest of Us. If you have not checked out our YouTube channel, I’m releasing a weekly video at this point, it’s microconf.com/youtube. 

In the past few weeks, I’ve covered topics like SaaS sales funnels, micro-SaaS products, are they actually profitable? Winning go-to market strategy, two things investors look for in a SaaS business, and many other topics that are related to building, launching, and growing SaaS companies. Check it out, microconf/youtube if you haven’t already. This is Rob Walling signing off from episode 618. See you next week.

Rob: Welcome to another exciting episode of Startups for the Rest of Us. This is a news roundup episode where I pull Tracy Osborn and Einar Vollset on the show. We talk about ProfitWell’s $200 million exit. We talk about spreadsheet mentality, watching an acquirer ruin your company, and cover other news stories related to bootstrap, and mostly bootstrap founders. 

If you are into this show and haven’t checked out our YouTube channel—you really should—I am releasing what essentially are Rob solo adventures but are videos and pretty tightly edited. They’re about 7–15 minutes covering topics ranging from the top 10 avoidable mistakes SaaS startups make, SaaS pricing models explained in five minutes, whether micro SaaS products are profitable, ideal customer acquisition funnels, how to come up with a go-to market strategy for SaaS, and on and on. It’s just free educational content. It’s microconf.com/youtube. I hope you check it out. With that, let’s dive into today’s news round-up. 

First up, we have Tracy Osborn. She is @tracymakes at Twitter, the program director for TinySeed. Welcome back to the show. 

Tracy: Happy to be here. 

Rob: Excited to dive into some fun bootstrapper news here today. And Einar Vollset, you’re joining us again as well. 

Einar: Thanks for having me. 

Rob: Absolutely. To kick us off, I have two fun questions that I’m going to dive into, but before I do that, do you know how I send an outline in advance so that you can prepare? These questions are not in the outline. Do you know the outline I slacked you this morning? 

Einar: Okay. 

Tracy: I was waiting for him to say that.

Rob: This is going to be a wild ride, people, so buckle up. Tracy Osborne, we at TinySeed, are opening applications for the next couple of batches. When is that happening? 

Tracy: That’s going to happen on September 12th. We’re opening applications for both of our accelerator programs, that is TinySeed America serving everything on this side of the timezone, Canada, the US, and all the way down to South America. Then we have TinySeed Europe which serves Europe, the Middle East, and then Africa. 

Applications will be opening for two weeks on September 12th for both accelerators. It’s one application. You can choose which to apply for or if you’re not sure if you are in a different location, say Australia, and you’re not sure which is the right one for you, you can also choose that option as well. We’re very excited to get this rolling. This is going to be for our Fall 2022 batch that is starting in November. 

Rob: Excellent. With that, I need to find out, Einar Vollset, is it GIF or GIF?

Einar: It’s a GIF, of course, it is. 

Rob: Ah, hard G. 

Tracy: We’re not talking peanut butter here. 

Rob: We all agree. This is not good radio. One of us has to hold on to the GIF. 

Tracy: Everyone has to agree because that’s the way it goes. 

Rob: Send your hate mail to questions@startupsfortherestofus. ProfitWell sold for north of $200 million actually. We remember the number as $200 million, but if you look at all the articles, it says more than $200 million and some more than that. A bootstrap company, some services, a lot of SaaS, $200 million exit/merger. I know when I interviewed Patrick on the show a few weeks ago, he interchanged it because they got quite a bit of stock and everything. Einar, what’s your read on this acquisition? 

Einar: I’m stoked, not just stocked for Patrick. Patrick is a good dude. I’m super happy for him. Whether a merger or acquisition or however you want to call it. It just once again puts down this notion that somehow bootstrap businesses or mostly bootstrap businesses can only be small, tiny inconsequential things. If you look at income, I still don’t know how much cash he got versus how much stock is in the joint entity, which is probably where the merger/acquisition bifurcation comes from. 

Rob: Approximately 50-50. I asked him on the show. 

Einar: Okay, he’ll probably get a great outcome if they do an IPO on top of that, but if it was all cash, if it had been, it wouldn’t surprise me if that outcome for someone like Patrick would have been better than your standard VC success IPO billion dollar exit because there’s just no dilution. 

As an early-stage investor like we are, you know that if people start raising a lot of money and going that path, as you keep pilling money in, you’re going to get diluted, and obviously that’s what happens to the founders themselves because they don’t have a way to put more money in. They’re just getting diluted for every round. 

I’m super stoked. It’s so nice to see more of these types of successes because every time I talk about this, I talk about MailChimp, and sometimes that’s almost such an outlier outcome that people think it’s just a once-in-a-lifetime you can’t draw any inferences from it. The fact that you’re seeing outcomes like Patrick had just opens people’s eyes to it and it’s a great thing all around. 

I actually think it happens much more than people know. We did the article on the depth of the software iceberg a year or two ago, and again, that speaks to I guess someone with less social media reach than Patrick, this thing could happen without anyone noticing. He wouldn’t have made any news, he wouldn’t have done anything. It’s just a great outcome for Patrick and the team, so I’m stoked for him. 

Rob: Me as well because it’s a big piece of the TinySeed thesis. The thesis of TinySeed doesn’t work unless some bootstrappers can grow their companies and be ambitious with it. Awesome. 

Let’s dig into our next story, which is watching an acquirer ruin your company. We will link all these up in the show notes. This is on the Kelsus blog. Yes, it’s an interesting story because it’s essentially an acquisition. It’s a development firm that helped out with software piece and then they did a hardware component that they essentially kick-started. Then someone acquired it and ran into the ground, basically. 

You can read the whole piece if you’re interested. There’s a section called the rug pull at the end where they talk about the new acquirer basically shutting it down. With that, Tracy, I’m curious to hear your thoughts. 

Tracy: I want to be sympathetic to the founder because this is a common story, something I’ve heard from a lot of folks who’ve been acquired, who then watch their baby that they grew from infancy to a place where it can be acquired. Going off to a new parent. The new parent making decisions that they didn’t plan, didn’t expect, or don’t think are the right decisions. The product suffers and then the parent company shuts it down. 

I feel like that’s a very common story that I’ve heard in a lot of places. I have empathy for the founders going through that situation, but when you make the choice to be acquired as a founder, you are giving away the ability to make decisions afterward. 

Again, empathy. It sucks to watch people make decisions that you don’t think are the right decisions, but you made that choice in exchange for either some acquisition money or maybe just to have that little check mark on your resume saying that you have taken a company to acquire, you sold it, and then you can have (theoretically) an easier time doing your next startup or at least having that win on your resume. 

You do that in exchange for not being able to make the decisions anymore and therefore what happens afterward, you want to see things succeed as a parent company, but it’s up to the parent company, the acquirer, to do with what they bought, and it sucks to see that. 

Rob: How about you, Einar? 

Einar: I wanted to be sympathetic to this and I’ve seen both sides of the coin here in terms of post-acquisition things going really well and post-acquisition things going terribly badly. It’s actually not uncommon in acquisitions that people assume that a lot of the time you do an acquisition, you get a bunch of cash, you walk away and bada-boom. But a lot of the time, you end up with some equity in the acquiring company, or the new entity, or whatever, and your success from there is dependent upon how that goes. 

I’ve seen people have an exit and then three or five years later have another exit that’s five times larger. It can definitely go both ways. 

I actually think with this thing, I’m a little bit more sympathetic to the acquirer than perhaps the writer of this piece just because it’s one of those things, like the parable with the elephant where it’s like five blind dudes touch an elephant, trying to describe what it is. 

In this particular case, they raised a reasonable size kickstarter, but not like tens and tens of millions. It was like $188,000, which for an advanced native iOS and Android app, almost isn’t enough money just to build the apps out, let alone do the hardware production. There is still a fair amount of risk for the acquiring company. 

A lot of the time there’s this notion with founders at least—and I know this wasn’t the founder writing the piece—that if they get to the level of success where they can get acquired, then it’s really just an operational thing after that. It’s just priorities and they […] it up somehow because of some internal malign big company issues. It definitely would have succeeded if it just kept going. I’m so sad I sold it. 

A lot of the time there’s a fair amount of risk that the acquirer is taking that the founders of the sellers just don’t see. In this case, after the acquisition, they end up getting a distribution deal through Apple, which is a huge thing. Do I think that this company could have done that by themselves? Probably not. 

The alternate universe is one where this company just fizzled out six months later, and that was the end of it. It’s often portrayed like it was guaranteed success. They just had to do the right thing and because of incompetence or because they’re a big company, they screwed it up. I just don’t buy that a lot of the time. It just doesn’t make any sense. 

Even if they did, in some cases, there’s an allusion to another acquisition that became a higher priority. Well, that’s the nature of business. In some cases, you have to make hard calls. It’s like, okay, if this one acquisition turned out to be something that they didn’t quite go as quickly as they hoped or they found another thing that was a much higher leverage thing, it was the right thing to shut down the smaller thing and focus on the bigger opportunity. That’s the difficult decision you do need to make in business. I guess I’m not particularly sympathetic to this story, although I know it’s frustrating to see it for sure. 

Tracy: You can have your cake and eat it too. 

Rob: Sell it and then keep control. There’s a good quote from Tim Cook, paraphrasing, but he says, there will always be more really good ideas than we can ever pursue and that’s piggyback on what you said, Einar. 

I used to love to use that at Drip, both before acquisition and after the acquisition, because people would suggest feature requests. Especially after the acquisition. We’re a 125-person team. Salespeople would come, marketing, like hey, you should build this, you should build that. I’m like we’re not going to build that. People would almost be insulted, like what? But it’s a great idea. There will always be more great ideas than we can possibly implement. That’s what you’re saying. It’s prioritization. 

As someone who has sold several companies and had most of them, frankly, shut down or run into the ground afterward. Drip is the exception, but HitTail doesn’t exist anymore. There were three or four smaller deals that I sold, and those are floundering around. There are certain ones that people tried to autopilot and got nuked, but then having sold Drip and seeing things like, hey, the whole color palette is redesigned, the entire UI is now different and has a side nav, and I don’t like that at all, and there was the pricing changed three years ago. 

There’s just all this stuff they’ve done that I would not have done or would have done very differently. You know what? I still use Drip. I still like the tool. I let it go the day that I sold it. I still worked on it for a while after that, but I was under no delusion that somehow I still had control of it after I let it go. 

You signed the docs. The money needs to be worth it, is what I’ll say. The money needs to be worth it such that you walk away. Or if you don’t walk away, that it’s worth just writing it off mentally. 

Einar: I think the money is going to be worth it. A lot of the time also, what else are you going to be working on if not this? Is the money good enough? In some cases, people sell too early because they’re like oh, I’m just so bored of this successful thing and I can just easily start another successful thing. 

I see a lot of the time people selling, particularly if they sell pretty early so they can’t retire on the money really, end up thinking oh, I was successful. I’ll just be successful again. Then they try again and luck does play in and things that are outside of your control. I do think that happens a fair amount of time. 

Rob: On a recent episode, I was talking with Ruben Gamez and talking about how the second time, third time, fourth time, it’s a little easier, but it’s not as easy as it should be, as you think it’s going to be. There’s still that massive uphill getting to the MVP, spending 6 to 12 to 18 months finding product/market fit where it’s like, wait a minute, I should know how to do this. Shouldn’t I be able to just have product/market fit right from day one? And you won’t. 

We watched David Cancel. We watched Heathen Shaw. We watched all the founders who are four-, five-, and six-time founders still take years, pivot, and grind it in order to get to a place where they have another successful business. I definitely think you have a leg up, but it’s not nearly as much as one would think. 

Einar: It happens even on pretty high profile folks with lots, almost what I would call unlimited resources. Just thinking about the Twitter co-founders. Several of them have tried things that just should work, but it just doesn’t. They shut it down. It was just like this is not going to work. 

Rob: Our next story is called the spreadsheet mentality sucks and kills the efficacy of jobs. This is posted on Medium and the hypothesis is. 

Einar: Boo. 

Rob: Hold your comments. 

Einar: Okay, good. Is it Google? Is it Google Spreadsheet? 

Rob: That’s true. It’s only the Google Sheets mentality. He basically defines spreadsheet mentality, which is just an interesting term. I’m not quite sure why that term is used, but whatever, it’s that what gets measured, gets managed.

Tracy: Qualified stuff versus quantified. 

Rob: Yes, Quantity versus quality. 

Tracy: It’s the stuff that you’re going to measure versus stuff you can’t measure. 

Rob: Basically saying that if you lean too far into that, that there are these soft skills and soft interactions and all types of stuff that you can’t measure in a spreadsheet that is important, which, I agree with. In software development, you can’t rank developers. If I had ten developers working on a project, I’m not going to say, oh, this one fixed more bugs. This person wrote more lines of code today. It’s not quantifiable.

It’s only quantifiable in a softer way of, I know who’s shipping a lot of stuff and I know who doesn’t have very many bugs. There are many roles where this applies. I guess I haven’t worked at a company that went so far overboard in this direction that I feel like this article is necessary. Is it a straw man? Is this a straw man argument where it’s just, hey, look, there are MBAs doing things. I’ll throw it to you first, Tracy, what’s your take on this piece? 

Tracy: I’ll have to admit that I’ve never worked at a company larger than, I guess technically larger than TinySeed for about three months, that one does not count. I’ve always been a small company person, but I can see this mentality where people at small companies look at people at large companies and are like, oh man, look at all those middle managers that are just trying to be like, was it OKRs? Just trying to create something they can track from quarter to quarter so that they have hard data on whether things are working or not and then it doesn’t work because you’re talking about people processes and hiring and “soft skills” and whatnot. 

I can see where the struggle is because I know as a manager, I think about this at TinySeed where I’m working with Alex and there’s a part of me that’s like wow, I really wish there was a way that I can know definitively every quarter if I’m doing a good job. I can see the temptation to be like, all right, I’m going to figure out something I can track, and I can take that thing that I track and I’m going to track it over time, and then I will definitely know. 

That’s the thing, this spreadsheet mentality is that there are a lot of parts that come into that process. I guess they’re warning against that, but I also think that’s logical that you know that’s not the way to go, I guess. 

What I’m trying to say is I can see the larger picture of what this person is talking about, but I agree with you that at larger companies. I don’t think it’s like everyone is working off the spreadsheets. Like your Facebook, you’re not going to have a certain manager just working off spreadsheets, and that’s the only way to manage the entire company. There are going to be a lot of inefficiencies and a lot of people process, but it makes for a good article. It makes for a very strong argument, makes for something that’s clickable, so could be a straw man. 

Rob: The title is clickable. Yes. I do like that there’s one bullet towards the end of the article as he’s concluding and he says, whenever we encounter something we can’t track immediately within Excel, we need to think to ourselves, could this still be important? I like that sentiment, but I guess intuitively, that’s just how I run businesses, anyway. 

I use Excel for budgeting and I use Excel for tracking our subscriber list growth and our YouTube follower growth. There are a bunch of other crap that’s not in that Excel spreadsheet. I guess since I maybe do the opposite of this, naturally, I’m having trouble understanding the point of it. What do you think, Einar? 

Einar: I agreed, despite being a big fan of Excel. 

Tracy: Big fan of spreadsheets over here. 

Einar: Except Google Sheets. Yeah, Excel specifically. Again, it’s one of those things where it’s similar to the other story. It’s easy to criticize when you haven’t been on the inside. It’s easy to say oh, these big companies are doing it wrong.

My one objection to the whole article was it’s not really what is the alternative here. Just pay attention to the things that aren’t trackable? Sure, but a lot of people do that or at least try to do it. It would have been a stronger story if it was with something novel or something structured or something that allowed you to actually track the things that he’s claiming aren’t being tracked or at least put it to the forefront. 

Rob: It is interesting the way you say that because these types of articles is actually well-written and well-reasoned. We’re critiquing it, but it’s a good piece, and people should read it. But this type of stuff has been coming out for what, 15-plus years, since Dig, Hacker News, Reddit and all these things started back in the day. I do find that the more of these pieces I read about anything that’s critiquing something, is I’m always like, okay, so what’s your solution then?

You can critique all you want but, (a) have you been in their shoes or are you just criticizing from the stands? Are you back seat driving? And (b) so what’s the solution? He does offer some stuff at the end that’s a little vague, but it’s not like a whole new idea and thought process. 

Tracy: There are things that are coming out or things that have been around for a while that help quantify qualitative processes. For employee engagement, there are quite a few tools out there that paying your employees, asking them how things are going, allows you to track moods over time or how folks are doing in general. You can have a way of tracking how happy your employees are. 

For the hiring process, surely there are ways that you can quantify that by spreadsheet it. Quantify the hiring process in terms of how we’re coming through the door and then how fast things are being moved from stage to stage and the success rate of employees that are hired. 

All these things are qualitative processes, but they can have a quantitative element to them. There are tools out there that do those things. Maybe it’s not just assigning a number on a spreadsheet and forgetting about it, but there are ways to make sure you have something to track the success of these processes. 

Einar: And there’s even a TinySeed portfolio company, Suggestion Ox, that allows you to do anonymous feedback.

Tracy: I know, I was leaning towards that. Anonymous feedback from, is it just employees, or is it everyone? I can’t remember. 

Einar: It could be anyone, but it’s mostly set up for employees. 

Tracy: That’s what I thought. 

Rob: Yeah, and as I’m thinking about it, I guess I did work for one manager who was definitely way further in the track everything KPI, OKR camp. Very MBA. I was just like, woof. But he also cared about people. Maybe a fun 50-50 on those, he’s like 80-20 where he wanted more metrics.

Tracy: Does it show a lack of confidence? I wonder if they can’t effectively promote what they’re doing so it’s easier to go to their own managers by having definitive numbers. It’s easier to tell a story of numbers than just being like, yeah, everything I’m doing is great. 

Rob: I could see that. That an inexperienced manager or someone who maybe doesn’t fully understand their role. If I come in as a general manager, let’s say I’m a GM, which is someone who doesn’t understand the details of something. I could get hired to be a GM of a tabletop gaming company without ever having played a tabletop game or written one. I could become a GM of a SaaS company without really knowing SAAS metrics. That happens. 

In that case, what else do you have to manage? It’s numbers. That’s probably where it’s either lack of experience or just a lack of intimate knowledge of the business, the business type, how it works, and how it should work that could lead you to rely too much on numbers and wanting to quantify everything. Spreadsheet mentality, people. It’s out there. Beware. Don’t fall into that trap. 

Tracy: I like this article. I talk about design a lot and a lot of people struggle with design because it’s so qualitative. I actually do recommend folks to find something quantitative to track when they’re making design changes. Rather than just changing in color and thinking, oh, that looks better, to tie it to something like click-through rates on a certain button and whether there’s a benefit. I guess I’m like a pro-spreadsheet. 

Rob: You are part of the problem. Yeah, it’s interesting. I don’t want to keep going on this for too long, but I do think that you can also go in the other direction where you do everything by gut. 

There have been times in my life, especially early on, where I was trying to issue all of that because I was a developer at a credit card company, and, yes, there were too many numbers around, so when I went solo, I was like, I’m not doing any of that stuff. You can make the mistake in the other direction, too. 

Tracy: Oh, my God. You just gave me a flashback from my previous startup, in which I didn’t track anything, and that’s one of the biggest mistakes I had because I just went off the gut feeling that everything was going okay and that the conference talks about how everything was doing okay, like at MicroConf. 

Rob: Until Google decided it wasn’t. 

Einar: That’s the nice thing about if you’re starting a bootstrapped startup. There is a number every month that tells you roughly how you’re doing, and it’s MRR. We did a lot of investor updates and in some cases, I keep reading this is the most amazing thing ever. That’s great and it’s great, but you didn’t add any MRR. Why not? You clearly need to focus a little bit on that because otherwise you’re screwed. 

Rob: Yes, that’s the North Star metric. All right, the next piece is from entrepreneurshandbook.co, and the title is If You Can’t Buy It Twice, Don’t Buy It, And other practical money business advice. Basically, he talks about a $4000 TV. If you’ve saved up $4000, don’t buy the TV. If you can’t buy the TV twice, you probably can’t afford it in the first place, and he sucks. 

Einar: First of all, where are you getting $4000 TVs from? Is this 1995? $4000 for a TV? They’re like $200 at Costco. Come on. At $4000, you can get 50 of them. 

Rob: Yeah, you can get a 60-something inch TV for $1000. 

Tracy: Isn’t that the point of the article? If there’s a $4000 TV that’s out there and if you can’t buy two of them, you might as well go to Costco and get the $1000 TV.

Rob: Today’s role of Hacker News commenter is played by Einar Vollset because he’s picking apart something completely irrelevant to the point. Every time one of these makes it to the front, there’s always someone quoting a sentence that’s so not relevant to anything. What are you doing?

Anyway, yeah, he says can’t buy it twice. Treat yourself, don’t trick yourself. Do you actually need top-of-the-line? Which, yes, of course, I do. Tracy, what’s your take on this whole piece? I thought it was neat food for thought, just a different mental model. What do you think? 

Tracy: You’re laughing because I was nodding vigorously. Of course, I need top-of-the-line. That is absolutely the trap I fall into all the time. Why can’t I get the best thing ever for this new hobby? I’m just going to get all the top things for my hobby. 

Rob: The $2000 espresso machine rather than the $200 one. 

Tracy: Oh, talk to me about my copper jamming pot. I’m trying to jump into jamming and I bought a fancy pot from France, so I can do jamming. I could just use my own pots. 

Einar: Jamming? 

Tracy: Jamming, yes. 

Einar: Oh, you make jam? 

Tracy: Yes. 

Einar: I see. Okay. 

Tracy: She’s going to become a fish cover band. 

Einar: I was like, jamming like this? I was like why do you need a pot from France? It doesn’t make any sense. 

Tracy: On top of things. When it comes to things that are money matters, I guess rules of thumb are really easy. Rules of thumb are a good way to keep people on a budget if you don’t have other ways of tracking how your budget is going per month. 

It’s a nice easy to remember thing where you can look at your bank account and you can look at what you want to buy and you can just think to yourself, can I buy two of these? Then if it’s a yes or no, you can go forward with it. It’s definitely a good rule of thumb. 

It’s one of those things, like in every article, where it’s like it’s going very strongly in one direction. Then, of course, we can think of a thousand exceptions to the rule that things that do make sense to pay a high budget for something you might not necessarily buy twice, but maybe it lasts longer than the other thing. Therefore, it makes more sense. 

There are a lot of exceptions to that rule. It’s something you can keep in mind without holding strongly to it, which does make it a good piece of advice for budgeting. 

Rob: Einar, you strike me as someone who has a very tight budget and counts every penny each month as you send it. Tell us what you think about a rule of thumb for this stuff. 

Einar: A rule of thumb is fine. I’d actually rather make more of a point. Tracey is right. You can make a point either way here. Is it worth spending more money on a higher-quality item if it’s something that you’re going to do? 

I particularly like this notion of, is it an asset or is it a liability. Somebody early in my life, I forgot exactly who it was, told me basically don’t borrow money for something that depreciates, a liability, like a car versus it’s fine to borrow money for something that appreciates, like a house. all these are fine and if you need this advice, you need this advice. 

I’m more interested in the meta-commentary around this like it’s such of its time. Everyone is convinced there’s a recession coming. Almost as a society, we’re talking ourselves into a recession because everyone is reading articles like this and thinking, how do I cut spending? Fire early? All that stuff. 

That’s the more interesting point. I don’t think we would have seen an article like this time last year or at least it wouldn’t have surfaced or been something that resonated enough to be discussed. 

That’s the most interesting thing actually around. I see a lot more of these now like how do you cut spending on this? Maybe do that, do the cheaper thing, don’t spend, extend your runway. I give that advice to a lot of our founders. I think it’s right. I do think it’s easy for us to talk ourselves into a recession that way because it becomes a self-fulfilling prophecy. 

Tracy: The article would have been out beforehand because I also feel there’s an element of being judgmental because folks looking at people buying a $4000 TV, and they’re like why would you do that? Just buy the $1000 one from Costco. 

Putting out these rules of thumb, I feel like it works for business, too, where you can see a business spending a lot of money on certain so and so and it’s easy to be like, man, there’s this rule of thumb why don’t you follow this? But you don’t actually see what’s going into that thought process. What is the decision-making behind it? Maybe there’s a larger decision-making process behind the purchase. It could be popular right now because of the recession but I feel like this mentality has been around for a long time. 

Rob: I like the way he breaks it down, too, is it thinking about each of these as an individual and as a business? That’s kind of cool. I don’t see a lot of articles doing that. Normally it’s either personal finance. 

Tracy: I did like the business side of things because it’s easy when maybe you got a chunk of money, maybe you did raise some VC. All of a sudden you have some money burning your pocket and you want to spend it on a bunch of things. I guess, in that case, you can buy a bunch of things because you have that ability to pay for something twice. Maybe that’s a good point.

Rob: That’s the thing. There has to be an additional rule because let’s say you have $100,000 in your personal bank account. You can buy a lot of things twice. Should you? Probably not. There has to be more. He gets into it a little bit, and I don’t expect that’s a personal finance book at that point. It’s like decision-making of what you should and shouldn’t buy. 

What I find that’s interesting is I grew up with not a lot of money, so I have always been super penny-pinching. I had to undo that, especially after selling Drip. Sherry kept saying you may need to fly something more than a coach at some point and you may need to just not sit and debate whether you should get the guacamole on your burrito at Chipotle. It’s $2. You need to just get this. So I do, I get the guacamole every time now. 

Then there was this point where if something is under $50 or $100 on Amazon and I’m like,oh, I might need this XYZ adapter, I might need this thing. I just bought it now because sitting there for ten minutes and thinking about it is not worth the time. 

The problem that I found is I now have a bunch of crap sitting around. When you’re buying physical things, about every 6–12 months I have to give away, or sell, or donate stuff that I bought impulsively that monetarily doesn’t make a difference in our lives. 

Tracy: Can we talk about my jamming pot again? I am starting a new hobby. 

Einar: How much was this jamming pot exactly? 

Tracy: It was like $150 from France that was shipped to Canada. That’s exactly what you just said. I start a new hobby and then I look at what I can do to support this hobby. I also have a ukulele I’ve played about ten times. I liked the nice ukulele instead of the not-so-nice ukulele. 

This is funny. Rob, you mentioned that you grew up poor because I also grew up poor, but I had a different reaction than you, which is fine. Everyone’s different. For me, there’s this habit where I want to go for the more expensive things. I remember not having those expensive things.

I remember not being able to afford occasionally treating myself to premium economy or business class, so I crave it. I lean towards it, even though I’m not as high income to support that all the time, but I’m just constantly clawing towards it because I feel like I never want to go back to where I was before. 

That’s an interesting point and that shows up when hobbies happen, where I’m just like I’m just going to buy all the really good things, and then I have to get rid of the good things when it turns out the hobby didn’t stick. 

Rob: That comes into personality. It’s like the nature and nurture. There’s a money mindset quiz or this test. I don’t remember if that’s exactly what it’s called, but I remember my kids and I read a book because I’ve been teaching them since they were little about money, how it works, and how to basically be mature with it and we all took this test. 

Sherry and I took it as well. It was interesting to see across the kids that some of them are flippant with their money. They get an allowance and they spend it. That totally showed up in this quiz. It was based on a book. I’m going to have to look it up and see if I can link it up because I have no memory of what it was called. It was like a kid’s guide to money and finance or personal finance, and then there was a quiz attached to it. 

Sure enough, Sherry and I both were savers. I was entrepreneurial and a saver, which totally makes sense. Cheap, but I want to start my own company. It’s like, hey, that describes me to the T. She was like a saver plus conservative almost. There was some additional thing because she grew up also without a lot of money, even more so than me. It really did translate well. 

Tracy: it’s interesting to know those things about yourself just to introspect a little bit in terms of how you’re spending habits can compare to someone else’s spending habits, and then you can use that awareness in both your personal life and in your business life because that’s also something that probably bled through into my previous startup the the way that I don’t want to be cheap. I probably had more of a tendency to pay for things that I shouldn’t have paid for because of that mentality and just having awareness is like the first step to combating it. 

Rob: I agree. There’s the Kolbe A, there’s the Enneagram, there is StrengthFinder, there is Myers-Briggs, and some true research psychologists thumb their nose at some of these because they’re pop. But I like them. I read them and sometimes I’m like, that really is exactly who I am. You’ve done a great job of describing me and then it’ll be like here’s your blind spots and here’s what you should do. 

A lot of being a successful founder is knowing yourself, knowing your tendencies, and then fighting against them. Some people want to launch a product and they just want it to work and they’re never actually going to push forward, pivot, and make the hard decisions to get there. 

Einar: Maybe we should have this Enneagram or one of these tests that you’ve been taking as the TinySeed filter. 

Tracy: For a part of the application process?

Einar: Yeah, please do a personality test here. 

Tracy: I feel like there will be maybe a difference between the folks that are accepted versus the ones that are, or maybe the folks who are good fits versus people who are not good fits. It’d be funny to see if there was a distinct line between the enneagram or something like that. 

Rob: Personality? I think it depends. That’s the thing. I was recording a YouTube video for the MicroConf channel the other day, and it was like things investors look for in founders and companies. Part of it is, of course, the founders. There’s something about the personality, but I’ve invested in successful founders who are totally driven, like a Jordan Gal who’s just hungry and will succeed at all costs. Not at all costs, but he’s just very driven to do it. 

Then there are folks who are super pretty chill, but they still get it done and they’re not in a big hurry and are more patient, but they do. The commonality are things that we’ve talked about before, which is like, but are they shipping things relatively quickly? Are they working on generally the right things? Are they making some mistakes? 

Most of what they do works, 60%–70% of what they try works versus the opposite where it’s like there could be like the victim mentality of like, oh, all these outside things are making it so I can’t succeed.

Tracy: It was interesting because I’m reading a survival book. It’s for wilderness survival so people are on shipwrecks and on top of mountains. 

Einar: How bad are things getting in Toronto? 

Tracy: You know me, I do backpacking. This stuff is right up my interest. One of the things it talked about for survival in these situations is to, one of the most important things, somehow have a good attitude. It’s impossible because there’s a case of people on a boat that are shipwrecked and slowly people are dying on this boat. There are two people left and they have to deal with this trauma going on. That’s the only way to keep your brain healthy in those kinds of super traumatic is to try to take joy in little things. That’s the only way you can protect your brain from just giving up.

It applies for business as well. You’re going to go through some really tough points in business and to have that survival mentality of rolling at the punches, noticing the good things, and celebrating the little wins, can lead to at least better mental health as the company is growing. That better mental health also is going to hopefully lead to a stronger company. 

Rob: It’s the idea of having a grip on reality, or not even a grip, but it’s having a realistic view of what’s happening. Have you heard of the Stockdale paradox? it was mentioned in Good to Gray. James Stockdale was a former vice presidential candidate, but he was a prisoner of war in Vietnam. 

He said, essentially, you need to balance realism with optimism, which is exactly what you said, Tracy. He said we were POWs and people who are like, we’re going to be out by Christmas, we’re going to be out by Christmas, we’re going to be out by Christmas have not enough realism, too much optimism, and they would inevitably die. 

He said he lost a bunch of people who thought they were going to be out in three months. And then the people who said, we’re never going to get out, they didn’t have enough optimism, a little too much realism. He said you had to balance this thing about. This is our present situation, but let’s figure out how to make it better, and let’s figure out how to live with this long term until essentially we get rescued or whatever. We can break out of here. 

Tracy: Or at least be able to look at your current situation and still have the mental fortitude to find something amusing or find some piece of joy. Maybe you tripped on a red rock and you find that funny, and you start laughing a little bit. That help protects your brain if you can try to find those little moments in the hard parts rather than going straight into despair. 

Rob: Yes, and as a founder, what is it? Some realism and some optimism. We’re not just talking about TinySeed founders here, founders in MicroConf, founders wherever that we met. The ones that are just a lot too optimistic and don’t have that reality check are usually the ones that are working on the wrong things. Someone who is a little too realistic and is pessimistic about it, although some of those succeed, sure don’t enjoy it along the way. That’s the difference, too. 

Einar: I think people who are too optimistic are more likely to succeed than people who are too pessimistic. I feel like some founders, and I don’t think this applies to any TinySeed founders that come to mind, they would starve to death on the beach around the bend from a world-class resort because it’s too risky to walk around. That’s probably the case. 

Rob: And on that cheery note…

Tracy: It’s a good final conclusion. 

Rob: Beach resort is a picture in my head, not the person starving to death around the corner. With that amazing picture in mind, Tracy Osborn, you are @tracymakes on Twitter, and you will be going through applications for TinySeed batches and the next batches. 

Tracy: My DMs are open. DMs on the TinySeed funds, Twitter account, as well as my personal account are open. If you have any questions, call or email us at hello@tinyseed.com. We love any and all questions whether you think you’re a good fit or have a question about the application process, feel free to reach out. We’ll get back to you.

Rob: And Einar, you are @einarvollset on Twitter.

Einar: Indeed I am, and most of the time it’s me complaining about how bad the Giants are this year. 

Tracy: Following in Einar is a fun process. 

Rob: It’s an experience. If you’re listening and we’re not connected on Twitter, I’m at @robwalling. Thanks to you two for joining me this week. 

Einar: Thank you. 

Tracy: Happy to be here. It was fun.

Rob: Thanks again so much for joining me this week. I hope you enjoyed that episode. We’ll have another news roundup coming at you here in the next couple of months. It’s Rob Walling signing off from episode 617.

 
Rob: Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. Today, I talk with Liam Martin, the author of Running Remote: Master the Lessons from the World’s Most Successful Remote Work Pioneers.
In this episode, we don’t dig into the basics of remote work or try to convince you about the benefits of it. This is not a podcast for Fortune 500 managers. It’s a podcast for bootstrapped and mostly bootstrapped SaaS founders who want to build amazing companies.
If you’re listening to this, you probably already know the value of remote work. You’ve likely been doing it yourself for years, or at least, if you have a company that has set it up that way because as bootstrapped and mostly bootstrapped founders, that’s just something we have to do.
Oftentimes, we can’t afford an office or we can’t afford to hire in our local cities, because we don’t have the money to do it. Liam and I really dig in to not the fundamentals of remote work, we talk about asynchronous communication, we talked about how to do remote work better, some surprises that we saw during Covid. It’s a good conversation.
Before we dive in, I want to let you know, we have 930 worldwide ratings, and I want to get to 1000. This is in Apple Podcasts, specifically. Most recently, dwill3x left a review that says, “Wish I had found this podcast earlier. It’s so practical and relatable as a bootstrapped entrepreneur. I find it not only helpful tactically, but it’s also great to feel part of a community of people going through the same things that you are.”
Join dwill3x and leave a review. In fact, you don’t even have to type all that. You can just go in, hit the five-star rating. I would love to put 70 more on the docket in Apple Podcasts for Startups For the Rest of Us and hit 1000 ratings. There are so few shows with the reach that we have that are at 1000 ratings, and I would love to get there.
What else is incredible is these ratings are across 50 countries, I was surprised when I saw that. Thank you so much if you can deal with a crappy Apple interface and hit five stars. With that, let’s dive into my conversation with Liam Martin.
Liam Martin, thanks so much for joining me on the show.
Liam: Thanks for having me. I am so excited to be able to actually go deep on async for once, because I’ve done about 450 of these things as I think I’ve seen based off of my assistant telling me. You’re one of the first people that in those pre-questions that you had for me, they’re exciting questions. I’m ready to get into it.
Rob: We don’t need to convince our audience that remote work is a thing. We don’t need to convince them that it can be done, that it can be done successfully, because frankly, most of the audience are either already doing it or they want to be doing it. That’s why I wanted to dive into your book. It’s called Running Remote. It came out today and it’s available on Amazon, Audible, and runningremotebook.com if folks want to check it out.
Before we dive into that, you have a ton of experience running your own remote company. You’ve been running Time Doctor (timedoctor.com) for 12 years with a co-founder. It’s a SaaS app, time tracking. Do you want to give folks an idea of where that business is at in terms of whatever metrics you’re willing to share?
Liam: We have team members in about 43 different countries. We’re at a nice, reliable, eight-figure run rate, growing pretty reliably. I think we should be floating around 25% growth this year, which is not bad for an eight-figure run rate. Covid-accelerated time-tracking industry in general, so that was also a really nice push back in 2020.
I think we did 195% growth and/or change, which was crazy. It was literally like those big tubes, where they put $20 bills, and it’s like a hurricane that floats around, and you just grab those $20 bills and try to stuff it down your bra. That was the first couple of months of Covid for us, because we just saw such a huge increase of people that were saying, hey, we want to be able to apply to the remote technology stack.
Looking back on that decision, actually, I made a lot of wrong moves at that moment. One of the companies that I respect so much that has absolutely crushed it is Loom, because they very quickly went freemium and they did have a paid product. They recognized the opportunity. They said, we’re going to do something completely free, just use the app as much as you want. Really, the goal at that point was attention for the remote technology stack, not necessarily monetization. Now they’re doing very, very well as a company.
Rob: I didn’t know they didn’t have a free plan before Covid.
Liam: They made a very, very quick pivot. There’s a bunch of other companies that have done a really good job. MURAL is another one that did very well. They implemented a freemium plan very quickly because they realized they needed to be able to communicate that value as quickly as humanly possible to the companies that had no clue how to actually go remote. I call it emergency remote work, and it really was. I was getting phone calls.
I got a phone call from a G20 country that said, hey, we have 540,000 employees, we took them remote yesterday. What should we do next? What’s the plan? And I said, I have no idea. We have like 200 people in our organization. Why don’t you talk to somebody else? And they said, you’re the first guy that picked up the phone. These companies just had no understanding of what to do and I think they still don’t, unfortunately.
Rob: That’s the thing with big orgs. I don’t know that we’ll get into it today because it’s just not super relevant to the audience. Definitely, I have seen remote companies. I personally managed my own companies into the low 10–12 employees. We were mostly remote and that worked fine.
I got acquired and the acquirer was 170. They had an office, but they were remote part of the time. I remember seeing things start to break down at the edges at that size. I was trying to imagine what it’d be like to be Apple or some company with 10,000–20,000 people and trying to still run remotely and have things work.
I think that kicks off my first question. Basecamp is often used… they were early proponents of being remote, but they’re often an exception to a lot of the rules just because they are, because they’ve been around for 18 years. They were early, they grew very slowly and organically.
Frankly, I’ve heard that the employees are a bunch of introverts. The argument against that is that you can’t build a 10,000-, 20,000-, 30,000-person remote company, because can you find that many introverts? What is your take on that? Do you think that extroverts can thrive long-term, even in a 10-person or a 20-person company? Extroverted people who need that face-to-face social interaction, do you think that they can thrive long-term in a remote company?
Liam: It’s a bit of a complicated answer that I want to give you, unfortunately. I’m an ambivert myself. When we look at the psychometric testing as it applies to remote work, introversion is one of the best success factors that leads to longer retention rates through an organization.
Our VP of product lives four blocks away from me. I meet him in person twice a year. He doesn’t want to actually interact with me, and that’s totally fine. He would just happen to be the right person for the job, and he just happened to live four blocks away from me completely as a fluke. But when you look at the way that these organizations are set up, there’s a really interesting moment. You talked about 170 people, that’s past the Dunbar number, which is about the maximum of that is about 150 people.
The Dunbar number is basically just a sociological concept that you can only have 150 people that you know in a deep way. The test is, if you saw them at a restaurant, would you actually go down and sit down with them, or would you just kind of like shyishly wave at them?
Once you get past that number, the metrics really change where unfortunately, regardless of how much you want to have those intimate relationships with your team members, they effectively become numbers. It really boils down to quantitative data as opposed to more qualitative data, which is good or bad.
To me, when you look at these extroverts that are having varying levels of difficulty as it applies to remote work, the answer that I have for them is work from home is not remote work. Work from home is, I’m stuck in my office, there’s a virus outside that may or may not kill me. I’m stuck here with my wife, my husband, my dog, my cat, my kids, and I can’t get out of here.
Remote work means I can be at my home office, I can be in a coworking space, I can even be in a corporate office one or two days a week if I really want to, I can be at a coffee shop, I can work on the beach. I highly suggest you work on the beach. However, I did it once just to say that I can do it, and it cost me $500 to get my keyboard fixed. I got some sand in there.
Outside of that, it’s really allowing these extroverts to be able to get that energy out. I think the biggest misunderstanding of that is that people that work in these organizations that are extroverts have to necessarily interact with co-workers to actually get that energy out. The vast majority of the time, I go to a co-working space because I need to get that energy out, but I actually just interact with people that don’t necessarily connect to my job or don’t work in my organization.
That’s how I get that energy out of me, so I can continue to be productive instead of the organization. It’s just this miscorrelation. I think there’s just all of these assumptions that have been built up in the 20th century on-premise model of work that we need to unfortunately undo for the future of remote work.
Rob: As an introvert myself, I always struggled with working in an office. Of course, that was the standard. I started working as an electrician for a few years, so I was in an office. Then 22 years ago, I guess I started my career as a developer. Man, that makes me feel old. But the office was super distracting, and I started working from home within a year or two after that because there was a dot-com crash, and suddenly, nobody wanted to pay for an office.
That was my dream, it was to work remotely, and it totally made me personally way more productive. I didn’t need to collaborate that much with people because I was often solo running a project. I had a little bit of collaboration, but for the most part, I was writing a lot of code and then once every week or two, I would do an architecture session with somebody. We would just meet up. It’s pre-Zoom and all that, so it wasn’t easy to do.
Something that you talked about in terms of companies being able to track—you said quantitative versus qualitative—you talked about detailed metrics and crystal clear KPIs, which people listening to this know what KPIs are and know what metrics and all that stuff is. If you’re managing a customer support person, email response, so it’s time per response and satisfaction are usually the two metrics you would look at. Usually, it’s not always.
If you’re looking at a customer success person, you’d look at retention rates and churn. If you’re looking at a salesperson, it’s really easy to measure, close rates, retention rates. I’m a developer, so I always found it easy and natural to manage developers and figure out who’s good and who’s not.
Whenever I’ve had more of an integrator or an MBA type ask me about each of these roles, I say, numbers, numbers, numbers, and then we get to developers. They say, how do you measure developers? And I will say, there’s no numbers. You don’t track who fixes the most bugs. You don’t track who committed the most lines of code. These are bull[…] metrics, right?
Liam: In some ways, that’s actually counterintuitive to productivity.
Rob: Yes. I’m curious because you run a software company yourself and you’re remote. How do you guys think about crystal clear metrics and KPIs with the dev teams in particular?
Liam: This is going to be an unfortunate answer. The best indicator that we’ve seen for success as an engineer is flow state focus or what my friend Cal Newport called deep work. Really, Running Remote, the book, is an infusion of deep work at an organizational scale. 
Deep work, basically, is having everything at your disposal to be able to solve a very difficult, hard problem, which is essentially what engineers are doing 24/7. The more that you can keep them in that state of deep work, the more they will be able to solve those difficult problems.
The worst thing you can do as an engineer is say, okay, I have everything in front of me, I’m going to get all the information that I need, and I’m going to read through the last four or five pages of code, I know what I’m doing, I’m going to start to write, and then all of a sudden, boom, it’s meeting time. We’ve all got to go into a meeting with 12 other people that don’t want to be there, you’ve got the one MBI guy at the front. I secretly call him Captain America, like the six foot five white guy that looks like Captain America, and he tells you what you’re supposed to do next.
That, generally, is the worst thing that you could possibly do to an engineer. They actually work much more like creative writers. I’ve seen a lot of inspiration, at least, personally for us instead of our organization, looking towards how creative writers write. The first thing that they do is they find themselves a writing nook, a writing nest or a hole that they just kind of go into. They might disappear for 3–4 days and then emerge later.
This concept of a nine to five for an engineer doesn’t really work. What you need to do is say, okay, you’re really excited about solving this particular problem, you have everything at your disposal to be able to do it. Go ahead, let us know when it’s done, and then we can talk about it. That’s how we handle it.
Again, it’s not a perfect science. I think that this is an experiment for us. We’ve been doing it for about a year-and-a-half, but there are a lot of other ways. There are a lot of other organizations that will give you much more quantitative metrics. Up until this point, I haven’t necessarily found one that works. And it sounds like you haven’t either.
Rob: No. I ran my companies very similar to what you’re saying, where I viewed it like a deep work craft where you have to get in the mindset. Frankly, for developers, it was like one recurring meeting a week. That was when we were 20 engineers. When we’re less than eight, we had zero standing meetings, except for one lunch once a week that everybody looks forward to anyway because we got to hang out.
I ran it the same way, where I was a developer and I remember interruptions. I would start work at 9:00 and I have a meeting at 10:00. It meant that in the next hour, I got very little actual coding done because…
Liam: You’re not even psychologically ready to get in, because you’re thinking to yourself, oh, why should I spend the hour preparing to actually think, because you need all of that prep time before you can start to really think and execute on something. 
We have something in the company called silent meetings, which is basically we use Asana. You can use any other type of project management system you want, but we write down the issues for our meeting, and then we will respond to those issues in the comments.
If we’ve come to a conclusion, we take the conclusion, we put it at the top of the ticket, and we clear the ticket. If we have less than three tickets before the meeting starts within 24 hours, we automatically cancel the meeting on all our Google Calendars. 
Sometimes, people aren’t, honestly. You can see the day before, they’re trying to clear as many tickets as humanly possible to not get the meeting happen, to not have it happen. That’s even a reason right there. They don’t want to sit in the meeting because they want to actually get more work done. 
One of the most interesting factors that I found in my research for this book on asynchronous organizations is that the managerial level inside of asynchronous organizations is 50% thinner than their on-premise counterparts. There are more people doing work in async orgs than there are people managing people solving problems inside of asynchronous orgs. That is a massive strategic advantage when you’re thinking about growing your company.
Rob: It’s counterintuitive, because you would imagine, well, if we’re all sitting here in this office, don’t we need less supervision? That’s what the kind of pro being in the office person would say, but you’re saying it’s the opposite than when you’re remote.
Liam: You’re also assuming that work is something that you don’t want to do. If an engineer’s happy place is solving these difficult problems because they truly believe in the company and they’re aligned towards the vision of the organization, our mission statement is we’re trying to empower the world’s transition towards remote work. That’s what heeds into everything that we do as an organization.We try to really reinforce that with every single team member inside of the company. If they’re not interested in doing that, then don’t work here, go work somewhere else. 
If you’re not super excited about solving this problem, you’re not aligned towards it, then, yeah, it’s definitely one of those things that I’ve got to have you in the office or I’ve got to make sure that you do your work, but people want to do the work. It kind of just happens on its own.
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In your book, Running Remote, I was reading it yesterday and today. The first section of it, first maybe 25%, is stating the case for remote work. That for me, I kind of skimmed that, because frankly, I already know the case for remote work.
But there were a few interesting things that you did include. One thing was about introverts and then you have counterintuitive async bombs. For folks who haven’t read the book yet—obviously it just came out today so probably most people—you talk a lot about remote work as async. It’s a whole different mindset than being in an office. You can’t just move being in an office work to remote and expect it to work.
One of the counterintuitive async bombs that you mentioned is companies move faster when they collaborate less. I’m sure there are some folks hearing that statement who will bristle at the idea of it. Do you want to flesh that out?
Liam: We specifically wrote that line that way to make people react to that type of statement. It’s not that we don’t collaborate, but we’d collaborate differently. We collaborate asynchronously. Everyone kind of knows what async versus sync is, but the ability to be able to consume information when it is most advantageous to you.
Let’s go back to the engineering example. I really want to sit down and figure out a hard engineering problem. Maybe I’m working on it for six or seven hours. Now I’m exhausted and now I can take that extra surplus time that I have, jump on to Asana, Trello, or JIRA, and start to look at some of these other issues.
Maybe we’re thinking about coming up with a new feature as an example, which we actually use in Basecamp. It’s still the most efficient way to be able to discuss deep product issues over the long-term, because then we can document that process, go back three years and say, why did we choose that feature? Oh, well, it was because of this. It was because Justin was the VP of product. Oh, well, he’s an idiot. We let him go, why are we still doing that?
The reality is that getting into the ability to consume that information when you choose to an on-premise org that wouldn’t necessarily seem like collaboration, but that is collaboration to asynchronous organizations, that’s the real magic power, because I don’t have to necessarily be in a physical meeting room or on a Zoom call in order to be an active participant inside of that conversation.
That’s really the key piece there. There’s an assumption that if you’re not physically there, if you’re not physically synchronous at the time, then you’re not participating. I’m trying to break those down to be able to say, you can participate, you can just participate asynchronously.
Rob: Where does that end? I’m going to ask a question and then I’m going to talk about some of my experiences. You can’t just have zero collaboration. There has to be some. The example I bring up is, with my last SaaS app, Drip, we would do a lot of stuff async.
We had a couple days a week in an office, and that was great. We’d hang out, and water cooler, and go to lunch and everything. Then a ton of remote, async, everybody’s at home just cranking away. But there were times, where we’d have a new feature that was kind of big, kind of hefty, kind of complex.
This is maybe, I would say, once every other week is about when it would come up, where it would be so helpful if the two or three of us could sit in front of a whiteboard, and just hash this out, and draw the diagram. What do you guys think about this? And we would sit there for like an hour. It wasn’t even meetings. It was like, hey, everybody, you guys ready to do this? Yeah, let’s jump in.
We would just sit there, we’re a very engineering-driven org. We’d hash it out, and we would get so much done in such a small amount of time, and architect what would be a pretty complex feature. I believe we’re trying to do that async and others wouldn’t have been as good or would have taken a lot longer.
That, in my experience, is something where collaboration, I think, and real time synchronous collaboration is helpful. Now, in your experience or in your examples that you’ve seen, how far can you take async? Where does collaboration sometimes need to be synchronous?
Liam: It’s interesting because the companies that I interviewed, some of them are fundamentalist, asynchronous organizations. Thou shalt not interact synchronously under any circumstances, whatsoever. I don’t take that stance. I am more on your side of the spectrum. You are much more async than the vast, vast majority of companies that operate today.
A lot of companies that sit down and look at your workflow would think that you’re from Mars. This is one of the other things that I discovered during the book, which was, this is the first time that I ever really interacted with corporate America, because I’ve always been in the tech startup world, and it just blew me away, like, okay, we were sitting here for three hours to talk about whether or not we’re going to get sued by this other person. I’m not a lawyer, why should I be in this call? That type of a thing, which was so confusing to me.
What I would suggest that people do is, effectively just what you did, do as much preparation as humanly possible asynchronously. Can you actually discuss things and get to a point in which asynchronous communication breaks down? Generally, this floats around disagreements. More importantly, this actually breaks down around the more emotional side of disagreements.
Going back to the silent meetings example, the only tickets that stick up in our issues list, unfortunately, week after week, is Rob has got a problem with Liam, because Rob thinks that Liam is encroaching on his authority for this particular department, and we need to be able to hash it out.
I talk a lot about how managers should really be reserving all of their energy, not for just communicating metrics from one person to the next, which asynchronous organizations do automatically, because the platform is really the manager. Instead, focus on the EQ issues. Okay, well, why do you have a problem with Liam, Rob? How can we break that down? How can we discuss it? By the way, that sounded super weird, because my business partner is named Rob.
Rob: That’s what I was going to point out to people. Not me, Rob, yeah.
Liam: Yeah, you get what I mean. The concept is to make sure that you’re using your synchronous energy as efficiently as possible. Because asynchronous organizations, they have a sunk cost inside asynchronous work. Everyone takes 90 minutes, they drive into one particular place, and then it’s a synchronous collaboration buffet. They can collaborate as much as they want because they’ve already paid that cost.
Asynchronous organizations or people that work remotely, pay that cost every single time that they meet, because it doesn’t cost you that much time to be able to flip on your Zoom call and do a collaboration on MURAL or something like that. We recognize that we can keep those times as short as humanly possible to really figure out what’s the minimum effective dose that we need to be able to move forward and build that feature.
Rob: Switching it up briefly, I guess I touched on this a little earlier talking about extraversion, but even introverts can feel isolated. I’ve worked from home for 20 years, give or take, or a couple years in an office, blah, blah, blah. There have been times where I felt isolated, not many, I’m going to be honest. I’m a strong eye on this and you get used to it over time.
I’m not talking about work from home, but talking about remote work where people can go to a coffee shop and they can sometimes meet up with coworkers every six months or every quarter at a retreat or something. Is isolation still a big deal in the conversations you have and in your experience? If it is, as a manager or as a founder, how can you combat this in your own team?
Liam: It is a big deal still, but I think that this was accelerated by the pandemic. I love that the media is using the word work from home, because they can very clearly divide that from remote work. Before the pandemic was remote work, what we had in March of 2020 was work from home, which is, I must stay at home, I cannot interact with anyone else.
I don’t know your experience, Rob. But for me, we stayed in complete lockdown for eight months before we’re able to be led out by our government. That’s psychologically scarring for any individual. I actually think that we’re going to see a massive amount of damage, psychological or otherwise, that’s going to present itself over the next 5 to 10 years from this experience.
You have to kind of divide that from just remote work in itself. But when you’re talking about just trying to be able to get out and interact with people, you brought up some great points. Do a company retreat every year. I would do one major company retreat, and then I would do one departmental retreat per year.
It’s going to not necessarily cost you that much. It’s definitely going to cost you less than an office and people love these. In our organization, we boil it down to three separate cities. We usually try to choose a city that’s a little bit more difficult to be able to get into.
Before the pandemic, we were going to do Bangkok, I believe, which is a very, very difficult place to be able to get into. But people love it, we are all aligned towards it, and more importantly, it’s kind of our end of year, so that we collect everything that we need to be able to finish off that one year and then look towards the future. That’s where a lot of people can get that extroverted energy out of their systems.
Departmental meetings, exactly the same thing. I would parse them out about six months in between each other. Interacting with co-working spaces, really important process for everybody. They’re not that expensive. People can use them now relatively easily. There are coffee shops/coworking spaces that I’ve used recently, where actually, it costs a lot less. They charge you a little bit more for a coffee, but you get to sit in a nicer room, that type of a thing.
There are also just community groups that you can interact with. Find your tribe outside of the office environment. I think this, again, 20th century on premise mindset, which is in North America, arranged marriages are taboo, but we have arranged friendships, which is the people that work inside of these offices were just automatically supposed to be their friends.
I think what we need to be able to look at is social networks dropped off precipitously after university, and they only bounced back up into your 60s. Why? Because that’s when you retire and you’re forced to be able to get out into the social circle again and interact with people. I think a lot of people have honestly just been lazy on their social game. Get out there, talk to your neighbors, talk to your friends, and build that network that’s not necessarily work-focused and you’re going to be much happier.
Rob: You know the interesting thing, I run a startup accelerator for bootstrap SaaS. It’s fully remote. We were the folks. We looked like geniuses when Covid happened, because we were the first ever remote accelerator that we knew existed. I guess we launched in 2018, we raised a fund in 2019, so it’s all pre-Covid.
I would say it’s a little bit of luck, but it’s a little bit of that’s just the way I’ve always run things. There are no cities in the world that have so many bootstrapped SaaS companies that it makes sense to put an accelerator somewhere. I actually said, we’re going to do it in Minnesota, Minneapolis, because I live here. There’s no reason to do that. We said, we’re worldwide anyways.
When we do our MicroConf State of Independent SaaS survey, it’s like 50, 60, 70 different cities are mentioned, versus when you go VC, in the US, there are four cities with 80% or 90% of the venture race. That’s dissipating now. It used to be two cities.
Anyway, when we started this remote accelerator, a big thing we talked about is we need to get these folks together, the companies, the founders. I was like, well, let’s do a quarterly retreat every three months. What we found with our first batch is we got to the third one, people were like, this is too often. It was actually it was literally too often, and I had no idea that that would be the case.
It is about this cadence of about every six months seems to feel right, at least, to our founders. We survey them every time. That has, to date, been kind of the sentiment. Even though, intuitively, I’m an introvert and so I was maybe over indexing and being like, well, people are going to want to get together a lot.
Really, it should be every few months. But people were like, nah, I actually want to be heads down working on my company as much as I liked my fellow batchmates. There’s a very strong community, there are mastermind groups, and there’s all this stuff. It was too frequent, which I found pretty fascinating. That does line up with what you said, like, once or twice a year is not not too bad.
Liam: It’s also cost effective too. I think you have to look at the dollars and cents. One of the things that I haven’t analyzed yet, and I really do think about these things from a quantitative perspective, is team retreats and research for the book, again, I sit down and do these types of nerdy things, looking towards where team retreats really started, it started with Joel Gascoigne with Buffer. That’s really the core of where this trend started.
His blog was an incredibly popular, very popular, remote first organization. That was the concept, which was, we all need to do company retreats every single year. There’s yet to be a good data set that comes out of that saying, here are the quantitative outputs from that investment of half a million dollars, a million dollars as an example, which is what it costs us to be able to run one of these events. We still do it, because we actually see a little bit of a boost in ENPS. That is one of the quantitative data points that we do pull out of it.
Rob: What’s ENPS for folks who don’t know?
Liam: That’s Employee Net Promoter Score, which effectively just measures engagement inside of how much you would refer your company to one of your friends, as an example. That’s really effective because there are so many other data points just like ENPS, so you can compare and contrast yourself.
The other interesting statistic when I ask these companies, what’s your ENPS, the average was 72 and the industry average is 36. They’re almost double what the average ENPS is. The two major reasons why they gave for having such a high ENPS score was autonomy and then also radical transparency inside of the organization.
A lot of asynchronous organizations give everyone as much information internally as they possibly can. There was one company that stated we want to give everyone as much informational advantage as the CEO, so that everyone in the organization has the same information. When difficult decisions need to be made, the vast majority of the company actually agrees with that difficult situation, saying, hey, if we’re not cutting debt back our sales team by 25%, we know that they’re not ROI positive. If we don’t do this now, we could be in real serious trouble in six months, as an example.
These are difficult things to adjust to if you live inside of a synchronous kind of mindset with regards to work. But I’m not suggesting that everyone go completely asynchronous tomorrow. I think if people can just go a little bit more asynchronous next month, next quarter, next year, you’re going to see massive dividends inside of your organization.
Rob: You are @liamremote on Twitter. Your book is runningremotebook.com if folks want to check it out, and of course, available on Amazon, Audible and all the places that they would be looking out for it. Thank you so much for joining me today.
Liam: Thanks for having me.
Rob: Thanks again to Liam for coming on the show. If you haven’t checked out the MicroConf YouTube channel, I’m putting out a new video every week that is brand new content. It’s like Rob solo adventure every week, where I’m digging into topics like 16 lessons I learned building a million dollar startup, seed funding for startups, top ten mistakes I see startup founders making.
Fun stuff to record and it’s getting incredible reception. Head to microconf.com/youtube if you want to check out the channel and subscribe. Again, we have one to two videos coming out every week. I think you’re really going to enjoy them if you like this podcast. I’m Rob Walling, signing off from episode 616.

and he recently stepped back from that after doing it for five or six years. He and I kick off our conversation by talking about that thought process. Then, we dive into listener questions, deciding when to quit your day job, anxiety from a second-time founder, and some really good questions on the show today. 

But before we dive into that, I wanted to ask—if you have Spotify—if you could go to the search, type in Startups For the Rest of Us, and leave us a thumbs up or a five-star. I don’t even know what the rating system is. We’ve been getting traction in Spotify, more listeners, starts and listens, engaged listeners, and all the metrics. If you’ve gotten some value from the show over the last months or years, it would take you 30 seconds to do that. I would really appreciate it. With that, let’s dive into my conversation with Derrick Reimer.

You’re back on the show. Derrick Reimer, thanks for joining me.

Derrick: Thanks for having me back.

Rob: This has got to be your sixth or seventh appearance, and you are quite the podcasting veteran now. You have done something that not many people do. You started a successful podcast, ran it for several years, and then made a graceful exit.

Derrick: Retired.

Rob: Yeah, you retired from your own podcast. You had The Art of Product co-hosted with Ben Orenstein. I just want to hear a little more about that before we answer these awesome listener questions we have in the queue. 

Was it a hard decision? You guys had several hundred episodes and five-ish, six-ish years of doing it mostly weekly. I know you don’t shoot every week, but I’m sure that was tough because you had a streak going and you have that feedback and comments of listeners saying, this is great. 

I know the value, rush, dopamine, or whatever that I get from having a podcast. At times when I was at my lowest with it, I definitely considered shutting it down, leaving it, selling it, lighting it on fire, or whatever I was going to do, and I never did. At this point, I don’t regret it because I still enjoy the podcast, but I’m curious what that thought process was for you.

Derrick: I guess I should say I’m technically on a podcast sabbatical, not a retirement because the agreement we made at this point is that I’m taking a break and we’re going to let this be the time away to see if this is something I want to add back in. We’re going to reevaluate in the fall.

It was a tough decision, I would say, but it was one that built up gradually, so it wasn’t a snap decision. As I reflect on what the podcasting journey has been, we started in either late 2016 or early 2017. Ben convinced me to start doing some podcasting with him. At the time, we were at Drip post-acquisition, so I had a little bit more headspace. I wasn’t in the fight-or-flight startup founder mode anymore. We landed the plane, I had a little bit more headspace to do some talking, and I felt like I had some things to say from an aspiring bootstrapper phase to the phase that I had gotten to that point. I felt like this is the right time to try this. 

I always loved podcasts like Bootstrapped Web. I liked the Startups For the Rest of Us intros where you and Mike would give us just a few minutes of updates about what’s going on in your businesses. That was often my favorite part. If it was a tactical episode about something that I didn’t particularly need, I would always show up for at least the updates to see if there’s going to be anything from your journey. 

I was like, what if we just do a podcast of all of that, just try that, and see how that feels? It was good for a long time. I really enjoyed it. It was not always easy going through the level journey where it was a low point in the journey for me but still felt fulfilling to let that be a case study out in public, but at this point, I find myself growing SavvyCal. We’re out of the earliest stages where I feel like you have a lot of good radio whether it’s a lot of vision casting and early stage figuring stuff out. You can pretty much talk about everything because it’s so early. You’re not worried about competition or keeping things secret. You just want to be out there as much as possible. 

Now, I’m in a little bit of a different stage where some of the things that I would want to talk about that’s the best radio, I’m wanting to keep off-air because there’s not much value to sharing it. It’s really mostly valuable to other people in the calendar space. Why would I want to potentially give a shortcut or some learning to potential competitors? I’m not super concerned about that, but it doesn’t feel like there’s much to gain and there’s potentially a little bit to lose from doing that. 

I felt a little bit more constrained in the things I can say on the podcasts and that has definitely made it a little bit less fulfilling for me. I just feel like I’ve stagnated with it. I didn’t get to the place of feeling total burnout, I don’t think, but I felt like I was heading in that direction, so this to me felt like the healthy way to handle it. I’m just saying I’ve been doing this for a long time. Part of me, of course, wants to stay in the seat because I helped start this thing and I don’t want someone else to take the seat, but at the same time, I just have to recognize that I got to look after my own well-being and make sure I don’t start to do something that feels like a treadmill and get burned out on it.

Rob: It’s good to go out while you’re still on top, so to speak, or still liking it, and not go into that burnout phase because I definitely did. I hear you on that. The transparency is cool and helpful to a point, and then pretty much without exception, there’s just a very, very few doing a lot of money—seven or eight figures—who are actually transparent with the real stuff. Some folks give the appearance of transparency, oh, here’s my revenue or whatever, but really what’s going on? You’ll hear someone talk with an employee who left and it’s like, oh, no, it’s so much different than they presented. They’re not actually transparent. They’re kind of market-y transparent. 

I think at a certain point, that can feel disingenuous. I know I felt the same way. I used to talk a lot about Drip and what we were doing inside, do talks, and then some folks stole stuff that I would say from the stage, used it against us, and competed with us. I remember being like, that’s really […], man. That was when I started changing and started talking less about that. There’s that danger.

Also, I hear you on just getting tired. It is hard to have something truly interesting to say week to week because sometimes, in some weeks, interesting stuff doesn’t happen, and then you’re constrained to be like, oh, I guess I’ll talk about some random thing with my espresso machine, or I got this new monitor. That’s fine too, but definitely, I think the truly incredible material that is really engaging is at the start of a lot of these stories and then at that pivot point of, oh, I just sold, we merged, or some big event happens. But that’s the thing about business, there is just a lot of boring stuff in the middle and having something to talk about all the time can be a stretch.

Derrick: Yeah. Especially being a founder who’s like, I’m deep in the trenches right now, so I spend so much of my time just either building products or working on business things. It’s almost like I’ve narrowed my focus to the point where I don’t necessarily have a lot of interesting industry insights. I’m not spending a ton of time on Twitter just thinking about cryptocurrency or the latest trends where I can just opine about that stuff. It’s just not in my nature to be someone who can just flap my lips and talk about whatever for a long time. I don’t think it necessarily makes great radio anyway, so I felt like it would be a stretch for me to try to just fill in the gaps with other things and still be interesting. I don’t think that’s me, so I had to recognize that.

Rob: That’s cool. So it is a sabbatical. I didn’t realize that. That’s a nice test. To be honest, I remember when Ben approached you about starting The Art of Product. You guys had already been co-hosting his prior podcast before then. I thought it was a great idea—it was outside your comfort zone—but it was something you and I talked about. As we were talking about selling Drip, you said, okay, so we work there for a year or two, and then what do I do? Because I’m going to do another one. 

I said, well, we need to work on making you have a more public brand. You need a personal brand to launch something from because you have the chops, experience, and blah, blah, blah. That to me was just right in that plan. It happened to just sink right in with, oh, Derrick’s going to have some more time. 

I loved the idea. I remember that it was a test. It was a trial period where I think he said, well, let’s do it for two months or three months. This is the reverse of that. Let’s try this for two or three months. I’m not going to replace you for now until you decide it’s more permanent.

Derrick: Yeah, exactly. It was super worth it. Definitely the biggest main launching pad for SavvyCal outside of Product Hunt and Twitter was the podcast audience, so it was definitely worth it. At the time, I think I was also toying around with regular blogging. That would have been just way harder to keep up than getting on the mic and talking about whatever we’re doing. I think it was a great, great thing for the time.

Rob: Great. Thanks for diving into that. Now, let’s dive into some listener questions. Our first question is from Vance Lucas, and it is a video question about how to know when you should go full-time on your startup.

We are starting to run low on questions, so if you want to appear on the show as well, head to startupsfortherestofus.com. There’s an Ask a Question link in the top nav. You can ask through audio or video which go to the top of the stack, or you can just send a text question in to questions@startupsfortherestofus.com. Now, Vance.

Vance: Hey, Rob. This is Vance, a longtime listener from Oklahoma City. My question is how do you know when it’s time to go full-time on your business or side project? I’m in a situation where I have a full-time job. I’m the sole provider for my family and kids, and I’ve finally managed to launch a side project which has been pretty successful. 

I’m at about $1600 MRR now, and it’s growing consistently. I’m still not quite at the point where I can go full-time on this. I think that’s a little ways away given tech salaries right now that I’m depending on for my family, so I’m wondering how you would go about making the decision to go full-time, what that would look like for you, and how you guide other people to do that. Appreciate your thoughts. Thanks.

Rob: It’s a good question. It’s a question every one of us who builds on the side has to face eventually. Derrick, what’s your take on this?

Derrick: I’m assuming he’s not asking about whether he should go full-time right now because $1600 MRR is probably not enough for sole income for a family. I’m assuming he’s looking out a little way if (say) this continues to grow a bit, when’s the right time to pull the trigger? I think the answer to that question is really about risk tolerance and your resources.

Rob: Startups For the Rest of Us drinking game in effect. What’s your risk tolerance?

Derrick: Is that one of them? Nice.

Rob: It depends, risk tolerance, or both.

Derrick: There’s going to be a lot of drinks, I think. 

Assuming that he has some amount of runway, whether it’s just money in a personal savings account, an investment account, or whatever, the main question to answer is can you reasonably expect to cross into default alive without depleting that resource too far? 

I’ve been a big fan of Summit, my friend, Matt Wensing. He’s a TinySeed fellow batchmate as well. He’s building a tool that helps you do financial modeling and really any kind of modeling in a way that’s less grueling than an Excel spreadsheet. He has some templates for SaaS in particular. You can just gauge I have this much money in the bank, I have MRR, here’s my churn, and here’s my growth rate. You can visualize your plateaus in there, which is pretty cool.

I would play around in Summit, honestly, and basically do napkin math on different scenarios on how long do you think you can make this savings account last? Is that within your risk tolerance? Is it going to dip low enough where you’re like, okay, if in the worst-case scenario we get below this certain threshold where I’m not comfortable, then you can wait it out a little longer. 

I think putting modeling around it will alleviate a lot of concerns as opposed to saying, well, maybe you’ve got $100,000 in a bank account and that feels like a lot of money, so you’re just going to take the leap. If you do that without doing the napkin math, then you’re always going to have that anxiety in the back of your mind like are we going to make it? Are we going to catch up? That’s probably what I would do.

I can say this because I’m not directly affiliated, but I would consider something like a TinySeed when you have a little bit more traction to also help alleviate the financial concerns in the early stage.

Rob: What’s funny is I should have thought of that myself, but I wasn’t going to say it. It occurred to me, but of course, yeah, if you get to even $1000 MMR, we funded companies that small. Vance, if that’s something of interest, one of the original hypotheses of TinySeed was we see these people in the $2000–$5000 or $2000–$10,000 MRR and they can’t quite get the job, but they can have enough money to where they have more runway and don’t have to worry about it. What we found is that’s actually a minority. Maybe 20%–25% of folks who come in to sign a seat aren’t already working full-time on the company but still, it’s not nothing given that we’ve funded 80-something companies today. That is one option. 

I love your idea. I was going to say model it out too just in a simple spreadsheet, but I always think of Summit as a forecasting SaaS, and in this case, that’s what it would be. It would be a really solid tool to be able to give you an idea of your comfort level. 

If you don’t have any money in the bank—you said if you have $100,000 in the bank, you could map that out—or if you only have $5000 in the bank, then you have to pretty much match your burn right now and match your expenses. You don’t have to make as much as you make from your day job. You just have to make as much as you burn in a month and feel okay that it’s predictable. 

It gets more complicated when you have a spouse or a significant other involved for sure, but I think that’s got to be a conversation of what is her comfort level and what is your comfort level with looking out three months and saying I project growth will be this versus looking out a year. There’s more uncertainty. In a year, I’ll be at $15,000 versus in three months, I’ll be at $5000. It’s just more likely the nearer it is. That’s how I’d be thinking about it.

The other thing I say all the time—I still think this is good advice—is if you go full-time on it and it doesn’t work out, what is the backup plan? What is the worst case? The worst case is you go back and get a job. Under normal circumstances when the economy is booming, that’s a fruit for you as a developer with entrepreneurial experience. That’s a two-week process. You’re going to have your pick of anybody.

Now, I will say there’s a bit of a slowdown, there are layoffs happening, and it’s not terrible yet, but if it gets there, the worst case right now could be worse than it was a year ago. You could be out of work for a bit. I still don’t think the worst case is that bad. That’s how I’d be thinking about it. 

I definitely took a huge pay cut, so to speak, when I left my full-time consulting job because I was making a ton of money, but I didn’t enjoy it. I think I took a 50%+ pay cut when I just said, oh, no, I’m just going to do products. I had some cushion in the bank of $20,000 or $30,000. It wasn’t a huge amount, but I was making enough from recurring revenue that it covered all of our expenses and it was growing each month. 

That’s the other thing that I actually left. It was $8000 a month, the number I needed to hit. When I was at $6500 but I was growing at $500 a month, I was like, that’s three months. I’m out of here. I think I can do it. I think I hit $8000 the next month or something because there was some fortuitous serendipity going on.

It’s a good question, Vance. Risk tolerance and it depends are part of that, but I think as an engineer, if you can map it out somehow and feel some confidence in it, that’ll probably help with the decision. Thanks for that. Hope it’s helpful.

The next question is from Patrick. He says, I’ve spent 15 years consulting in the healthcare software space as a nontechnical implementation manager. As a SaaS founder, I will be able to lead development efforts and can prioritize features if partnered with the right dev firm. 

My question is before shopping for firms, should I know the best front-end and back-end architecture for my SaaS MVP? Meaning should I be shopping for firms who specialize in X, whether that be Python, React, Java, or what have you? 

What do you think about that, Reimer?

Derrick: I would probably think of it this way. When evaluating tech stacks, I would narrow the choices down a bit to a handful of the most popular ones with the most energy behind them. I wouldn’t necessarily pick one especially if you’re not an engineer. You’re not going to be participating in the writing code part of things. I wouldn’t necessarily be super concerned about picking the one best. I don’t think there necessarily is a best one, but I would be looking for a stack that has that momentum, a really thriving ecosystem, and engineers that are working in the stack so you can just find and hire them and not have to train them on something bespoke or something really niche.

Right now in the backend, it’s Ruby on Rails and Laravel. I think there’s still a lot of Python Django out there. I’ll throw Elixir Phoenix out there just because I will say Elixir was voted the number four most loved language on last year’s Stack Overflow Developer Survey. It’s gaining some steam especially from former Rubyists like me. Probably the big three are Rails, Laravel, and Django. There are a ton of shops out there doing any of those, so I would be comparing those against each other.

On the frontend, you’ve got React and Vue as the two dominant front-end frameworks.

Rob: What if I don’t want a front-end framework, Derrick? So many TinySeed companies come to me and say, well, we have a bunch of bugs. I’m always like, well, where is it? It’s this untestable, single-page front-end app. I’m like, why did you do that? Tell me to get off my lawn. Tell me, okay boomer. Go ahead and send an email to questions@startupsfortherestofus.com.

When we built Drip, this was all a big thing. People were doing React and they were doing all the noun.js. I specifically said, all right, do you want to use one of these front-end frameworks? You’re like, it’s going to be Ruby to HTML. What are even the libraries now that we used?

Derrick: We had jQuery in there for sure. We were an app of a certain age, so we had jQuery. There were other lightweight front-end things that we added in that weren’t fully taking over the page. Honestly, this is the structure that I advocate and this is what I use for SavvyCal actually. I have React in the places where I need a lot of reactivity, and then on pages where there’s not a lot, it’s just server-rendered HTML.

I see this pattern actually emerging more and more. Trends are swinging back towards the monolith as what I’m seeing. There are some new libraries and frameworks out there. There’s Hotwire in the Rails world. Phoenix has a thing called Live View. That’s basically replacing a lot of what you would use a heavy JavaScript frontend for and moving it back to the backend, so you’re just sending HTML down over the wire to the frontend, but it’s still super snappy and feels like a single-page app.

One of my big recommendations for anyone starting something new is to stick to a monolithic architecture. I probably wouldn’t start by architecting a fully separated frontend from a backend even though there are a lot of shiny frontend-only frameworks. 

Next.js is a very nice thing, but I have experience in trying to marry it up with a separate backend and putting everything over an API to communicate between the two. That architecture can be good for large teams where you have a whole entire separate dedicated team working on the frontend and the backend and then you have the API layer that’s the contract between the two, but when you’re just starting out trying to build an MVP and iterate fast, that’s a lot to take on, a lot of maintenance. I don’t recommend that. You can always move to that if you need to, but to start out, monoliths are really the way to go.

My two overarching recommendations are stick with popular frameworks on the backend and the front end if you’re going to need any and stick to the monolithic architecture.

Rob: Wise advice. I was going to say Django or Rails because I’m pretty simple and old-school that way. Laravel, I think, is a perfectly viable option as well. We can name 10 other service-add languages, but in startups, we know that those are sellable assets. If it’s written in one of those, we know that those are maintainable. We know you can find developers that are not ridiculously expensive. We know that there are amazing ecosystems around them. 

There are the Ruby gems and the Django packages or whatever they’re called, and there are things like Bullet Trains. It’s starting a SaaS app infrastructure scaffolding. It’s just all this stuff that you get. I’m assuming it’s user auth, billing, login, password reset, and just all that crap you don’t want to write over and over. 

People have done that now in these starter packages. You pay a trivial amount of money, frankly, for them based on how much it would cost you to write them or have someone write them. You start with Rails, you buy a bullet train, and you find an agency who’s willing to work with that, or you start with Django. I forget what it’s called, but there’s something similar like that. That might even be open source. It is a SaaS foundation and some scaffolding. 

I think what both of us would do, Patrick, in your shoes is pick one of those three, or just say, hey, these are the three options so find an agency that does one of those. Thanks for the question, Patrick. I hope that was helpful.

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Our next question is actually one that came through MicroConf Connect which is MicroConf’s online community and Slack channel. This came through probably a month or two ago. I think I was doing a live stream Q&A, and I either didn’t have a chance to answer this question or I remember not having as much time as I wanted to, so I wanted to address it here on the show.

It’s from Carlos in MicroConf Connect. By the way, microconfconnect.com is free. If you want to join, we have more than 3000 mostly bootstrap founders in that channel. It’s a thriving community.

Carlos’ question is, “I’m starting a new SaaS business and despite a successful previous experience, I can’t stop feeling extremely anxious about it. Is this something you’re familiar with? How did you deal with it?”

Derrick, have you ever found yourself exactly in Carlos’ shoes?

Derrick: Never.

Rob: Why don’t you enlighten us with your experience?

Derrick: One, I think it just comes with the territory. There are resources out there. Dr. Sherry Walling’s book, The Entrepreneur’s Guide to Keeping Your Sh*t Together, has a lot of tools in there that you can use to try to balance the mental health aspect because it is quite grueling. I can attest to the fact that even having success under your belt doesn’t make the next rounds really any easier. Things do get easier once you gain that little bit of traction and once you start to feel product-market fit. The anxiety does ease up a bit, generally speaking, but those early days can be really, really tough. I would try to identify the primary sources of that anxiety, name them, and then work towards resolving them.

If you’re concerned, for example, if anyone will buy this, there are things you can do to feel less worried. You can go out there, start trying to drum up conversations with people who are in the market you’ve identified, and have conversations with them. Read The Mom Test so you can learn how to have conversations that are hopefully free of most biases. Test your hypotheses, see whether you are on the right track or not, start to get a picture of what the ideal customer looks like, and keep doing that until you feel reasonably confident that, okay, there are some people who want this thing. I’m not totally on an island here thinking that there’s a problem when there’s really not one.

To the question of building the right features, you can definitely mock things up and show early mock-ups to those people who have expressed interest and get a sense of is this on the right track or not?

A lot of these anxieties you can combat by getting outside of the cave and interfacing with customers or potential customers. That’s not often our first inclination as engineers, I know that for sure, but that stuff can go a really, really long way towards making you feel confident that you’re on the right track.

The other piece is just a mindset. I would try to look at the early phase as truly an experimental phase and try to stay as loosely committed to your existing assumptions as possible so that it becomes less about like, oh, no, am I completely off-base and going to fail, and instead as more like, let me learn as much as possible and try to form the proper assumptions from this. If I’m wrong about something, I’m going to take that as a win because I’ve just learned how to adjust my assumptions. I think that can also help if you break out of the rigid mindset of this is what I think I want to do, this is what I want to build, and if I’m not right out of the gate, then I failed. You’re probably setting yourself up to be really anxious.

Rob: That was great, the last point. Especially what I want to drive home and what I was going to start with is that your second, third, and fourth are still way harder than you remember. They’re way harder than they should be. I remember coming off of HitTail and starting Drip like, I know this. I was not anxious at all because I’m like, I got this dialed, I have the experience, I have the knowledge, I have the money, and I have whatever else you need to make this, the hard work, the luck, and the scale. It’s just going to work.

My reckoning was we built up the launch list, it’s all working, and we launched. Then, it just plateaued, people are bleeding out, and we don’t have product-market fit. I would shout, I should know how to do this. I’m pretty good at this right by now. Shouldn’t I be? Why am I floundering for months and months? 

For me, it wasn’t apparent anxiety, but it was a memory lapse of forgetting how hard this is every time. I’ve talked to Hiten Shah about this. What is he, on his fourth or fifth? He’s had venture and not venture-backed. He’s had things to throw off tens of million a year in profit. He’s one of the most accomplished SaaS founders I know with his most recent effort. We met at a Starbucks when I was in town and we were chatting. He’s like, it’s still so much work. You forget that even when you know what you’re doing and you have “infinity money”—I’m putting words in his mouth at this point—it’s still just a grind to figure it out.

David Cancel, same. I’m not trying to name-drop here. These are (again) some of the most accomplished founders. I believe he’s out there on his fifth or his sixth startup. He’s exited all of them, and they’ve been real exits, not acquirers and stuff. The dude was set for five startups ago. He and I were speaking at an event, and I was talking to him. I was like, David, you raised $10 million out of the gate with no product. He said, yeah. I said, did it make it easier? He said, nope, not at all. He was 1 ½ years or 2 years into Drift, and they were still just grinding and trying to figure out how to make it work.

With David, Hiten, and folks like yourself, we know you’re going to make it work eventually. We know that. But you tend to underestimate how long it’s going to take because if it’s your second, third, or fourth, it’s like, well, certainly, it will be shorter this time. Of course, you have a better network, you have a better audience, you have better people giving you advice to sanity check stuff, you have a better founder gut, you have more resources, and you have all this stuff. I would say it’s definitely not starting over, but it doesn’t put you as far ahead as I think one might think given all those factors.

Carlos, you’re feeling anxiety. I hope Derrick made you feel better, and then I hope I didn’t make you feel worse by basically saying it’s still going to be hard, but I love what you called out, which is to figure out and truly write down the sentences and the reasons that you are feeling worried about, and then figure out how can I address each of them head on? It’s a great question. Thanks for that, Carlos.

The next question is super tactical from Andres. It’s about TLD or top-level domain name choice. 

He says, “Hello, Rob, love the podcast. So many stories, words of advice, Q&As, guests, and founders with the most diverse experience. I’m currently in the pre-launch phase of a SaaS product, and one thing that’s been on my mind a lot is the choice of the product name and the domain name. The latter is much more of a challenge since most of the best .com domains are taken. Many founders go for .io, which is perfectly fine. As the company grows and makes enough revenue, they can afford to purchase .com but have to pay a lot of money, sometimes even in six figures. The URL of my company is very important to me, so I would like to avoid that expense beforehand by choosing a .com domain. What would you suggest: go with a meaningful and expressive name but a less serious tld.io—”his words, not mine”—or with a somewhat fictional name combined with the best tld.com?”

Derrick Reimer, what’s your take?

Derrick: I have split opinions on this because on the one hand, I’m of the mind that the domain does not make or break the business in most cases. Unless you’re being hey.com and you want those three letters, then maybe it’s a big deal. But in most cases, it doesn’t make or break. 

We had getdrip.com. We were called Get Drip forever and it was super annoying, but we made it. 

That being said, I am personally committed to .com for life. I think that’s all to do in the future and that’s definitely what I chose for SavvyCal. 

There’s just a ton of evidence out there—a lot of it anecdotal, some of it more scientific—that suggests that .coms perform better in organic search. It’s just simply the cold standard of TLDs. It’s what people expect. People kind of expect you to be on a .com, especially if you’re interfacing with customers outside of the tech space. That’s where alternative TLDs are still somewhat confusing and hard to remember. I’m a big proponent of just going .com.

Laura Roeder has a really good article about this and it’s effectively how I chose the SavvyCal domain name, although I don’t think I had read this article at that time and then came across it later. It’s called How I Nabbed The .Com for My Bootstrapped Startup, talking about how she got paperbell.com. 

The gist of that article is to set your budget and figure out how much you’re willing to spend in probably hundreds to thousands of dollars. We’re not talking huge amounts of money especially if it’s an available domain name. It may be billed as a premium domain or something, but you shouldn’t have to pay exorbitant amounts of money. 

Then, brainstorm branded words that you would want to include in the name and then run it through a domain name generator. 

I’m a big fan of Lean Domain Search. That’s what I used for SavvyCal. I knew that adding the Cal modifier on the end is something that’s been done before. It’s an established pattern for calendar-based tools, so I just put a search through there and said, give me domains that end with Cal. Then, it gave me hundreds and hundreds and hundreds.

Rob: I remember going through those lists. We’re texting back and forth. I was like, there are some really bad domain names in here.

Derrick: Yeah. Really, really bad ones and then a couple of good ones so you can weed through. I’m a big fan of tools like that because I have the domain or app on my phone. Anytime I think of a domain while I’m out at dinner, I can just pop that open and check to see if it’s available. I used to just try to come up with ideas out of thin air, type them in, and then I always get sad when they’re taken because they probably are.

Use these services that surface domains. I think Lean Domain Search is for only ones that are completely unregistered, but there are other services—I think Laura lists some of them in her article—that are maybe taken but not used, so you can potentially buy it for some negotiated fee from the owner. That’s where the budget comes into play. 

A lot of times, these domains that are just squatted on that are not a single word whatever. You can grab them for $1000–$2000. They’re usually not exorbitant.

I think at this stage in your company, it’s a great opportunity to reverse engineer a name for your brand where you can get the .com, go that route, and just not have to worry about trying to acquire it later or adding on get, use, or whatever on the front if you don’t have to. Again, that’s not the worst case and not the worst thing in the world. Plenty of successful companies have made it with that, but if you can avoid it at all possible, I would recommend it.

Rob: Yeah. I don’t mind the .io, the .co, and the .apps. It used to be .ly although that’s been phased out. I do wonder if .io and .app will eventually be that way or if they’ll stick around, but when I see a startup today with a cool domain name .io, .co, or .app, I think, yeah, I just know that there aren’t that many domain names. There are not that many .coms left. 

Is it as prestigious as .com? No, but if I had the choice of trying to get a crappier .com versus mycompanyname.io or .co, these days, I think I would do my company name. 

You brought up the Get Drip and how people would say yeah, Get Drip is this crazy product. I was like, that’s not what our product is called. 

In fact, one of the big mistakes I made—I have probably told you this—is as we were negotiating the sale, it was after the letter of intent and there was 60-day due diligence or whatever it is we were closing. Clay Collins, the CEO of the acquirer, told me, I want to let you know that I’ve bought drip.co and drip.io, and I paid $2500 for one of them and $3000 for the other. It’s a very low amount. It was a low single-digit thousand.

He says, if the sale doesn’t go through, I will sell them to you for what I paid. I’m not trying to squat your domains, but I want to get them now because I don’t like Get Drip.

I smacked myself in the forehead. I was like, why the […] did I not do that a year or two years ago? It was a few thousand dollars. It wasn’t a costly thing. It hadn’t occurred to me. I remember seeing that drip.com was super expensive. It was six figures. I was like, well, I’m never going to get that. I just didn’t think creatively about getting an almost domain.

Now, what I would say is with that said, I don’t like seeing getyourappname.io or .co because then it’s too many. The .co is not quite the .com, and then you have a get, a let’s, or whatever other prefix or suffix of that. If you’re going to go with a slightly less prestigious TLD, then I would only do it for the exact thing like Paperbell when she got the .com. But if she was paperbell.io, to me, that’s still a domain name. It’s really solid.

Think about it, man, customer.io and close.io now have the .com, but they didn’t need it. Certainly, Customer has been public, and they’re doing tens of millions in ARR. Close, I think, haven’t been public. Let’s just assume it’s tens of millions in ARR. There’s no chance it’s not given their team size and how long they’ve been around in this space they’re in. I do not think the .com would have made that much of a difference to them in their trajectory.

That’s where I am now. Ten years ago, it was different. There were still more .coms available, but these were taken. 

I do love your idea. I think that’s where I would start. If I had an idea today, here’s what we did. The most recent domain name I purchased for a company was TinySeed. Back in late—I guess it was four years ago now—2018, we were trying to figure out names, and eventually, I was like, TinySeed because it’s small and micro and it’s seed funding. The tinyseed.com was taken and tinyseedfund.com was $9, so I registered tinyseedfund.com. That was our original domain name for two months while I tried to buy tinyseed.com. That worked out and I got it for a very small amount. It was a trivial amount of money.

That’s something along the lines of what I would do today. First, I would try to use Lean Domain Search, try to find just a .com, and arrange the company name around it. Then, if I couldn’t, I’d buy a […], whether it’s .co or .io until I could work on maybe hitting the .com

Derrick: I definitely agree with the rules around if you’re going to have an alternative TLD, then make an exact match on the brand. If you have the .com and an established brand that you’re settled on, you may need to add the modifier. Maybe you use it forever, wait until you can afford the .com, or whatever, but that seems like the right move for sure.

Rob: Yeah. I remember basecamphq.com That’s how they started. Teamwork has teamwork.com now, but it was something like getteamwork.com or teamworkhq.com. They got the .com user list recently because I think they were a .io for a while. They paid a few thousand. They were public about this.

Derrick: Yeah, it’s interesting. This is just one data point, but I think Pieter Levels, the Nomad List guy, remarked that he’s gradually buying the .coms for all of his brands, and he’s probably ponying up a bunch of money for it. He was sharing traffic charts for a lot of those properties. When he flipped them over to .com, there was just a noticeable uptick across the board. He has 10 different sites or something.

For me, if I went with the .io, I would always be pining after that .com probably because it’s just the gold standard. If you have that kind of affliction like I do, you might be better served by just reverse engineering the name to get the .com out the gate, but that’s not always a luxury that we can always afford. Start with stalling your business out over.

Rob: Totally. The thing is I think people get analysis paralysis over this. I’ll admit, I have bought five domains in the past two years aftermarket because I wanted the .com and paid in the thousands for all of them. 

One of them was robwalling.com. I didn’t own that before. Another stylish and distinguished gentleman with an amazing name happened to own it, and he was willing to sell it to me. 

I bought startsmall.com because I changed the name of my LLC to that anyway. I talked to some guy who had retired and paid a decent chunk for it, but that to me was a prestige thing. 

As you’re saying, it’s a gold standard. It’s a personal thing. It makes me feel good every time I go to startsmall.com and I see the book. I had startupbook.net. That was the domain for that, which was fine. It was an SEO play.

I get it. I see it both ways. I’m doing this because I’m not super cash-strapped. It’s a little bit of vanity play, not that I want to brag to people, but it actually makes me feel good. 

That’s like having a T-shirt. We have MicroConf and TinySeed T-shirts. Do I think those drive our bottom line and get us more companies and more conference attendees? No, but I really like having T-shirts for my companies.

Derrick: I don’t know man. When I see you walking down the first avenue here in the North Loop, I think you’re a walking billboard for TinySeed.

Rob: Walking billboard, yeah.

All right. Well, sir, if folks want to follow you on Twitter, you are @derrickreimer. We’ll link that up in the show notes, and of course, savvycal.com if they want to see what you’re working on. It’s the calendaring tool that you, me, and all of our cool friends use.

Derrick: Exactly. You can be in my group.

Rob: If you want to be as cool as us, go to savvycal.com. Sign up today.

Thanks again, man. Thanks for coming to the show.

Derrick: Thanks for having me. It’s fun.

Rob: Thanks for showing up for this show every week. I’m doing some traveling over the next couple of months. We have MicroConfs and MicroConf Locals happening. If you head to microconf.com, you can look at our in-person events. It would be amazing to meet up with you. 

We’re heading to cities like Seattle, Atlanta, Austin, Texas, and a few other spots. It’s likely that we’ll be within driving distance of many of you listening, so it’d be amazing to meet up in person.

With that, I’ll sign off from this week’s episode and look forward to being back in your ears again next Tuesday morning.

Sherry: It’s not a sexy topic. It’s not going to help them 10x their business. It’s not going to help them scale. I think reading a good book about grief and being very proficient in the language of difficult things can save your business.

It’s a difficult message, because people don’t want to acknowledge that they’ve been in grief or that they’re going to be in grief. I think most entrepreneurs in particular prefer to live in the reality of what they can accomplish, and what they can push through, and to kind of push these soft or more vulnerable realities to the side.

Rob: In today’s episode of Startups For the Rest of Us, I welcome Dr. Sherry Walling back on the show. We discussed several things including the release of her new book that comes out today. It’s called Touching Two Worlds. You can get it at touchingtwoworlds.com or wherever greater books are sold, Amazon, Barnes & Noble, all the places.

We talked about the hustle of launching something like this, the behind the scenes of how Sherry has hacked her own psychology a bit to ask for favors, and ask for endorsements, and ask for people to help promote the book, even though that’s not something that comes naturally to her.

We talk about the grief of entrepreneurship, the grief of sometimes having to sell your company, fire someone, or having to leave a company that you love and how grief, which is the topic of the book, ties into entrepreneurship. Per usual, there is the witty banter and the verbal sparring that you would come to expect from Sherry and I getting on the microphone together. I hope you enjoy this episode with Dr. Sherry Walling.

Rob: As of a few hours ago, you are now a published author. Congrats.

Sherry: I’ve been a published author for a long time.

Rob: That’s true, let’s talk about that. You self-published your first book, the first book that you and I co-wrote. Now you’re through a publisher. Is there that big of a difference?

Sherry: It’s a different gauntlet to run through. You said, now I’m a published author. One of the most difficult acts of publishing I’ve done is to publish in academic journals. That’s really hard. Compared to that, writing a book is actually not that difficult. Because in academia, there’s this level of scrutiny about every word, every citation, every premise. You have to defend everything.

Self-publishing your own book, of course, like hey, you can say whatever you want. It’s just up to you to do the work to get it in front of people’s eyes. It feels like publishing with a traditional publisher is a little bit of a hybrid of that. There’s more scrutiny, there are different phases of convincing someone that your idea is good, valid, and sellable. Each of them have their own kind of world to navigate.

Rob: Right, and we covered you finding a publisher in the last episode you appeared on. We’ll link that up in the show notes. It was quite the hustle, quite the grind for you to do that. I think you cold emailed, I don’t remember what the number was, 30, 40, 50 publishers. Eventually, you got a connection and got an intro to somebody. The story went from there.

I want to start off by saying if folks are interested in buying your new book that literally came out today, it’s called Touching Two Worlds: A Guide for Finding Hope in the Landscape of Loss. They can head to touchingtwoworlds.com. or they can go to Amazon.

It’s a book about grief. It’s a story of your grief losing your dad and your brother six months apart. But it also, I think, transcends that. We’ll get into it later in this episode about how there’s grief and entrepreneurship in a lot of ways, in selling your company, having to fire someone, and having someone quit in imploding. It’s all around us in this space. We’ll touch on that in a bit.

I think I want to find out. You finally made it to this day after writing the book for 6 plus months, 12 months in editing, then you found a publisher, and then it was like another 18-24. It’s literally years in the making. What does this feel like today? You’re at the starting line of promoting the book, but you’re kind of at the finish line of the hero’s journey in terms of getting it out into the world.

Sherry: I think it will feel really good to hold it in my hands. Like in entrepreneurship, there are lots of starting lines and lots of finishing lines. The publication date is the finish line of all of the process that’s gone into making the book, selling the book, pitching the book, and talking about the book, so that all the people would know about the book the day that it comes out. That feels like a version of a finish line.

Of course, it’s also a starting line. It’s the starting line of this book having a life outside of me, a life out in the world. Hopefully, it’s the starting line to more conversations, more podcast interviews, and this other path of now supporting the book in its next phase.

I think the tricky thing for me, as for many entrepreneurs, is to also acknowledge the finish line on the same day that I’m acknowledging the starting line, to sort of take the win to celebrate that this particular part of the process is complete, while also gearing up and being ready for the next phase.

Rob: Yeah, and I think that’s a really astute way to say it. It’s not uncommon that I will say, building your product and launching, now you’re 20% of the way there or now you are at the starting line of this whole new phase which developers and product people don’t think about, which is, now I have to essentially find people who want it, although really even that is backwards, because as we know you start marketing the day you start coding. You’ve done the same thing.

You started connecting with people promoting the book, setting up podcast interviews, and basically trying to get the word out what was it, six months ago?

Sherry: Oh, at least. Yeah.

Rob: Six to nine months ago for a launch date. Again, folks who haven’t launched something, whether it is a book, a product, a course, or software, they often think that the marketing starts the day you launch. But what have you been doing? We’ve been calling it the hustle. You’ve been hustling on this more than anything since you were an intern at Yale, since you had your postdoc.

Sherry: Not the last book. Anyway, we can debate that another time, but yeah.

Rob: Yeah. You hustled on the last book, but you had other stuff going on. This one in addition to your circus show, in addition to you pulling in all the stops with your entire network to basically get on podcasts and get the word out, it’s something I haven’t seen you do prior.

Sherry: The hustle began last November when I needed to do the first round of hustle, which is to get early endorsers for the book. That was me reaching out to all of the high profile people that I know, people who have an audience, people who have some authority in the world, and asking them if they would review the book. That was quite a hustle.

It’s hard to get the attention of really busy, accomplished people, people who are more accomplished than I am, even then you are, and to get their attention long enough to say, hey, look at this thing, will you give me a quote, can I put your quote in the back of the book, et cetera. That was really the beginning.

From that hustle, all of that reaching out, all of that navigating the process of getting quotes, and talking with people about it, came this sort of beginning of the book launch, which is, what’s the best way to introduce this book to the world? I decided to do a very unusual thing, which is to host a launch event that was based around an original circus show, which used circus artists to tell a piece of the story of the book, but became a thing to invite everyone I know too.

Instead of, hey, here’s my book, will you talk about it, it’s, come to the show, you’ll get a copy of the book, it’s me introducing you to the content of the book in this really unusual way. That was a risky decision, because it was a huge investment of time, of resources, and of attention. I’m really glad that I did it that way, but certainly it was a risky decision.

Following the show, which happened in May, now it’s time to do all of the podcasts, interviews, article pitches, and all the other things that go along with a more traditional book launch. It’s been a pretty long hustle, I would say, beginning last November to now. We’re here in July.

Rob: If folks want to see pictures of that show, it’s transcendent. It was absolutely magical. It’s touchingtwoworlds.com. There’s a circus show link or circus event link in the header. You have pictures of it, and a video, soon, will come out at some point. When you said you reached out to prominent, important people for endorsements, did my email get lost? You think it went to spam?

Sherry: I think I figured you would endorse it. If you weren’t going to endorse it, I didn’t want to have the marital complications.

Rob: Unfortunately, I endorsed this other grief book and it would be a conflict of interest.

Sherry: This other grief book is better.

Rob: Yeah. Cold outreach or even warm, lukewarm outreach is not my favorite thing, not a lot of people’s favorite thing. Does it come naturally for you?

Sherry: It’s terrible for me. I am the least marketing-oriented person who’s this successful entrepreneur that I know, because my work and my way of being in the world is so relational. To have a transactional conversation, I’m terrible at it. I can do it, but I’m not good at it.

The cold outreach was really difficult. I think the thing that helped, if anything helped, was really believing in the story and in the value of the work. If I could take myself out of the equation and feel like, oh, hey, will you do this thing for me? That was really uncomfortable. But I could say to people really with integrity and with good energy to say I wrote this book, and I think it’s actually really helpful. I think it has something important to say, will you take a look at it?

It felt easier to ask on behalf of the book than on behalf of myself, which in parallel, I’ve talked with entrepreneurs about all the time. Whenever they feel like they have to do something difficult, we’d reframe it as doing it in service of their business, not necessarily in service of themselves.

Rob: I think it’s a really good reframe. I know that when I am proud of something I’ve done or that I know, it will actually help people. I’m not a salesperson. I’m not good at sales. I used to do sales demos, they’re awkward. It’s just not a natural mode for me.

When I know that I have the best solution, like, no, I know that Drip is better than XYZ, I know that TinySeed is a better model than XYZ, I know that MicroConf is the best community for bloggers. I’m not selling, I’m just telling my truth, but I’m just telling the truth as I see it. This is truly something that will help people. That’s a really good way to think about it.

Sherry: I think one of the challenges with this book in particular is that I’m selling something that people don’t necessarily know that they need and they don’t want to need. It’s sort of like a hemorrhoid cream or something. It’s like, hey, if you need this, you really need it.

It’s not a sexy topic. It’s not going to help them 10x their business. It’s not going to help them scale. I think reading a good book about grief and being very proficient in the language of difficult things, can save your business. It’s a difficult message, because people don’t want to acknowledge that they’ve been in grief or that they’re going to be in grief.

Both are true. But without it being this stated need, I think most entrepreneurs in particular prefer to live in the reality of what they can accomplish, and what they can push through, and to kind of push these soft or more vulnerable realities to the side.

Rob: I would agree, because that’s kind of my natural reaction to it. It’s like, well, I’m not in grief or I have not lost a loved one in the past six months, so I’m not in grief. But I think you’re thinking about it in the right way of you’ve either been in grief or you will be.

Have you approached that objection, head on, in some of the conversations or some of the outreach you’ve had of like, well, this is why all entrepreneurs need this or all humans it. It’s just focused on entrepreneurial grief, it’s focused on everyone?

Sherry: Right, but of course, the challenge is that so many of the people that I know and are connected to are entrepreneurs. Those are the strings I have to pull. I actually had this really long email correspondence with Andrew Warner, which was really thoughtful about this. No matter what you think of Mixergy, Andrew has been a supporter of mine in a variety of ways for this book and for the last book.

He just kept trying to figure out how to make the topic fit with Mixergy. He was like, I just can’t make it fit, I know it’s important and I value your work. I had kind of a similar conversation with Channing from Indie Hackers, just the sense of like when people come to our site or listen to our podcast, this is not what they’re listening for. This is not what they want as customers.

That’s been discouraging to have people who have a lot of following and have been supporters in the past, say, we believe in you, we believe in this project, but it just doesn’t quite fit with the conversation we’re having. I haven’t found a great marketing workaround to that. I just take people at their word and say, hey, I honor and respect that you are the keeper of your audience, and you have a job to do for them.

No one needs to impose a message that people aren’t looking for. It does make it a little bit more difficult to pitch this book than the other work that I’ve done.

Rob: Right, given the reach you have in this particular space. I do appreciate that’s a very thoughtful response from Andrew to say I support your work, I believe in it, but I just can’t make it fit. It’s an honest response. I get the feeling that Channing at Indie Hackers was the same thing.

Sherry: Absolutely, super thoughtful. Again, it’s such a gift for people to even consider bringing you into their podcasts or into their audience. I don’t take that for granted for a moment as a podcaster myself. I feel very much like the mother bear of people who come on my podcast. If their work doesn’t really fit, then I accept that, for sure.

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You’ve kind of been hacking your own psychology. I’m sure you hate that term, because you’ve been getting up at butt crack of dawn, which may be the normal time you get up anyways. Have you been doing almost Pomodoro sprints, where you’re setting a timer and you’re like, I have to get 20 outreach emails out in this amount of time? You know the terms of BDR and SDR?

Sherry: Yeah.

Rob: You’ve kind of been that for endorsements or like I want to get on a podcast or I want to somehow promote this book and let the world know about it. You want to tell us more about your process?

Again, you said it’s not natural, it’s uncomfortable. There’s a lot of folks listening to this who are going to have to do sales calls, going to have to do cold outreach, or going to have to do marketing that is not natural, not comfortable, but they’re going to have to push through it. I’d love to hear how you figured that out.

Sherry: Yeah, there’s a spreadsheet. There’s a big spreadsheet. Spreadsheets are a little painful for me, I’m just going to be honest. I’m a lot more of an artist, creator, psychologist feeling oriented person. I’m a trained statistician, mind you, but spreadsheets are not my favorite.

I have a big spreadsheet. On the spreadsheet are kind of like every podcast in the world that I think I might potentially want to be on. Every person, not maybe in the world, but all of the professional contacts, personal contacts that I have, they’ve got a line in the spreadsheet. A lot of you listening to this podcast might have a line in my spreadsheet.

In this spreadsheet, I’ve gone through and sort of thought about, what’s the connection with this work? What might I want to ask for? Is it an introduction to someone else? Is it for them to simply buy the book? Is it for them to endorse the book, leave a review, or buy the book for their book group or for their company, or whatever?

I have a wonderful friend named Elizabeth Marshall, who’s really good at helping authors execute on a launch. She has helped me go through the spreadsheet and sort of prioritize in a world of finite time, which folks are most accessible, have the strongest connection to, and might be sort of most responsive to the message.

I’m not trying to do it for everyone. I’m trying to be strategic and manage my sanity and my time. It’s been really helpful to have a third-party conversation with someone who can help me think through how to do the messaging and how to manage the prioritization of who to reach out to. It definitely is a system. Every day, I spend at least an hour simply doing outreach for those lines in the spreadsheet. 

The other challenge, though, is I have the hour where I do the outreach, but then thankfully, sometimes people respond. Carving out the time to then manage those responses thoughtfully and intentionally, it’s definitely like a part time job to launch a book well.

Rob: Yeah, and you are doing essentially a what might be a SaaS sales process, where you have the, I forget if it’s SDR that does the outbound web. The SDR and BDR does outbound, and the other one is inbound. You are essentially doing that outbound. Some of it is warm, some of it is less warm, in terms of cold outreach.

You are essentially fielding and qualifying those folks, or in essence, trying to set up appointments and that kind of stuff. I think if you were doing this constantly ongoing, you would hire pieces of this out. You could have someone email on your behalf because you would have a process. But at this point, you’re kind of custom drafting a lot of these emails based on who they are and what they do.

When I say kind of, I think you’re doing quite a lot of customization, which is probably why this whole podcast tour—this is what I call it,  a podcast tour. It’s like a band going on tour. You want to tour through all of these various podcasts.

Sherry: Yeah, and it is a very interpersonal endeavor. These are personal relationships. Certainly, my mailing list will get an email. Certainly, there are one to many forms of communication that are involved in this process. But a lot of it is one to one, especially to people who are gatekeepers of the many, if that makes sense. They’re connectors, their podcast hosts, they have a big newsletter, or things like that. Nurturing those relationships. 

We’ve talked about before, on this podcast, that there’s so much relationality in all that we do as entrepreneurs. I think I’m just immersed in the relationship management of doing that well.

Rob: Yeah, it comes back to that again and again. The Startups for The Rest of Us drinking game is when everyone has to do a shot when I tell the story about how I didn’t like my co-workers, so then I went to start a company, or I wanted to just be on my own with no attachments, no employees, no co-workers and this and that. Then I realized, oh, it’s not actually that I don’t want to work with people, it’s that I don’t want to work with people I can’t handpick and choose to be in a relationship with. These relationships are super valuable, whether it’s for…

Sherry: Control issues?

Rob: Oh, please. Every entrepreneur has control issues, am I right?

Sherry: Some more than others.

Rob: I am the most easygoing, patient, chill entrepreneur to work with.

Sherry: It’s what your t-shirt says.

Rob: My t-shirt says, I with stupid, is what it says.

Sherry: Wait, that seems like it’s insulting to me. Am I beside you in that story? What?

Rob: Moving on. We really haven’t talked much about what’s in the actual book. I gave kind of a broad overview of it, but how would you describe it to someone who’s thinking like, well, I may want to buy this book and have it, I may want to gift it to someone that I know who has gone through grief or is going through grief? What’s in those 200, 300 pages?

Sherry: The broad framing of the story of the book is that my dad was diagnosed with esophageal cancer right at the same time that my brother took a very significant deep dive into mental illness and addiction. Essentially, there was a two-year period of watching them both implode, and they both died. My dad died of cancer, my brother died by suicide. It’s the story of all of these moments of watching this process unfold.

Some of the moments are really funny. There’s this moment of me standing in Target trying to figure out which sheets to buy for the bed that my dad is going to die in and just the surreal nature of that process. I tell it in a way that is quite light-hearted. Then there are much more serious moments, like calling my mother after my brother’s suicide attempt and trying to navigate that.

The book is framed as a bunch of very short stories or small essays that all have an analysis portion, where I’m thinking as a psychologist around what worked about my experience, what didn’t, and what I would recommend to others. More than a memoir, it’s also a very tactical book, as much as you can be tactical with grief.

There are journaling practices, there are breathing exercises, there are letter writing practices, there are things to do with these big feelings. Then I’m sort of representing how I engage those practices in my own life. It’s a little bit of a show and tell kind of process.

Rob: Yeah. When I read an early draft of it, you had sent me a Google Doc, literally, probably a couple years ago now. I was struck by how well-written it is. I know you’re a good writer, but it flows so well, and it’s so engaging. I remember thinking, we’ve just lived through this. Do I want to read about it again?

You told it in stories and anecdotes that some of which I was present for and knew about it more than others. I didn’t know about you going to Target or whatever to try to buy those sheets. Dare I say it’s entertaining in the way that it’s heart wrenching but it’s also entertaining. It’s funny, but it’s also sad. It’s real, but it’s also jovial. There is a lot to it.

I guess, I don’t know that I’ve ever read a book about grief. I don’t know that I’ve ever bought one or that I would have had a need to, but this was so helpful for me to hear from you, even though we’re married. But to hear from you as a psychologist trying to deal with your own grief, it was a nice framing of it for me of A, this is how it feels and B, these are ways to to deal with it. Not even just the tactical things, but the humor. You put humor in there and that’s it, and we forget that.

I remember when my grandmother passed away and you and I went to Las Vegas to her funeral, Finn was our oldest, and our oldest son who’s now 16, I’m guessing, was he 2 or 3?

Sherry: He was 2. Yeah.

Rob: Yeah, super precocious, huge vocabulary. I remember, everyone was kind of somber and he would make these jokes. He’s been like, well, intuitively, I will have that snack or something. I was just like, oh, my gosh, this is so stressful because he’s going against the mood, but everyone there loved it.

It was this light, this humor, and this new life because he’s a young kid. He brought a level of sunshine on this dark moment. I feel like there are many points in your book where I felt that way too of like, okay, this is how I want to view grief as I’m going through it in the future.

Sherry: The book is called Touching Two Worlds to speak to that duality. On one hand, against my will, against my choosing, we both entered this phase of life of lots of darkness, of pain and suffering, and people getting really sick and just sort of falling apart in front of us.

On the other hand, you and I, since you were in this story, too, were both also experiencing flourishing careers, beautiful children, and a tremendous amount of joy. I think the message of my book, if anything, is the ability to navigate back and forth between both, because both are real and both happened to us.

I think a lot of people fear going toward the grief, because they feel like they’re going to get stuck there. They feel like it will be too uncomfortable or they don’t know how to navigate it. But I think it’s only in entering that phase of sort of the shadow that you could really experience the fullness of the other side of the lightness, of the joy, of the playfulness, of the delight.

I think introducing that duality, there’s humor, there’s growth, there’s flourishing, there’s joy, all at the same time. To be present to both worlds, to be able to be comfortable in both, is what’s, I think, essential for us to become the fullness of who we are.

I guess I do feel like the book is particularly relevant to entrepreneurs. It’s not written for entrepreneurs, but entrepreneurs, as a group, get the high highs and the low lows. We kind of live there anyway. I think my experience of grief has been very much informed by my life as an entrepreneur, and the fact that I spend all of my time with entrepreneurs, and the need for them to be able to navigate back and forth between the good and the bad that happens sometimes in really quick succession. I think that has been helpful for me to meditate on. 

The book, I will say, I will echo you, it’s really well-written. I’ve not really had the opportunity and all of the writing that I’ve done to bring my full self to the story. It’s a very personal book. It’s very poetic. There’s a lot of my heart in it. There’s also a lot of my mind, wisdom, and learning. To be able to be part of a project that feels fully me, like drawing on all the resources that I’ve accumulated over my almost 44 years on the planet, that feels so satisfying.

Rob: You should be super proud of it, because it’s one of the best books I’ve read in years in terms of keeping me interested and not because I was part of the story. I’m a very peripheral part, I think I mentioned a couple times, but that’s not why. It’s not why I know this story. It’s just something that’s so compelling and well-told, even though it was off the beaten path for me.

There are times when I stumbled upon an Audible book or a Kindle book for that matter. But I just do a lot of audio, where someone really recommends it to me, and I’m like, this doesn’t seem like something that is going to resonate with me. Then I start listening and I couldn’t stop. That’s how this book was for me. Although I was reading it as a Google Doc, you have it as a paperback, Kindle, Audible.

Sherry: Audiobook.

Rob: Audiobook that you read.

Sherry: Into the big studio.

Rob: Yeah. Folks can really consume it in any way they want to. I hope that folks listening to this, whether they feel like they want to read a book about grief or not, I…

Sherry: It’s like the grief book you don’t know that you need. But honestly, this is the psychologist in me, this is not the marketer. It’s nice to just have one on hand if you need it or if there’s a loss and you need to give a gift that feels thoughtful. I think I also sort of wrote it for the intention of having that go-to resource to give to someone when they’re in the midst of grief, and you don’t know what to say. You can sort of, oh, hey, here’s some thoughts that might be helpful to you.

Rob: Yeah, I would agree with that. So touchingtwoworlds.com. If folks want to find out more, obviously, they can buy on Amazon, Barnes & Noble, Audible, wherever greater books are sold.

You are @sherrywalling on Twitter, if folks want to keep up with you. Of course, the Zen Founder Podcast, where you have several hundred episodes of stuff talking about entrepreneurship, mental health, startups, family, and life. Thanks for joining me on the show.

Sherry: Amazing. Thanks for having me.

Rob: Thanks again to Sherry for coming on the show. If you feel like she’s given you some value over the years, whether through this podcast or her podcast, Zen Founder, it’d be amazing if you could head to touchingtwoworlds.com or amazon.com, barnesandnoble.com, audible.com, wherever you go to buy books, and pick up a copy of Touching Two Worlds. Thanks for listening to this and every week. This is Rob Walling signing off from Episode 613.

Rob: Welcome back to Startups For the Rest of Us. I’m Rob Walling. Today, I talked with longtime friend and friend of the show, Dave Rodenbaugh. We talked about both of our experiences, balancing a side project with our day jobs. We talked about that feeling of finally being independent.

Dave has been independent from consulting for about a year. We talked through what was surprising for him and not, and I share the same thing. This is a very much more collaborative conversation than an interview.

Since Dave and I have known each other for more than a decade now, he actually attended MicroConf 2011, the very first one. He’s one of the handful of folks that are still around in this community who’ve been going to MicroConfs for more than 11 years now. Since he and I know each other so well, the conversation flows.

I feel like it’s candid. We give some authentic thoughts on what it takes, or at least in our experience, what it took working nights and weekends balancing that side project with a day job, and eventually struggling with the decision in our own different ways of when to quit that consulting work or when to quit that day job when you may have a significant other and or a mortgage and kids. With that, let’s dive right into my conversation with Dave Rodenbaugh.

Dave, thanks for joining me on the show.

Dave: Thank you so much for having me. Always an honor and a pleasure to be on the pod here and chat with you, my friend.

Rob: It has been a while. We were actually looking through the archives trying to figure out how long that while has been. It’s just an indeterminate amount of years—six, seven, eight. Folks might know you as a co-host of the Rogue Startups Podcast with Craig Hewitt, founder of Castos. He’s been on the pod many times.

You run Recapture.io, which is ecommerce, email marketing software. It started as cart abandonment, but you have expanded into email marketing. What was the thought process behind making that move?

Dave: It was very much a land and expand strategy, both horizontally and vertically. When I saw Recapture for sale back in 2016, it was Magento only, abandoned carts, and one other feature at that point. I think it was review reminders and it had pop-ups too, so three things.

As soon as I saw that, I looked at the competitive landscape, I looked at the possibilities for places you could go, and it was pretty obvious. You can expand in both directions based on customer interests, customer demand.

As we started acquiring more customers, as we started going to different platforms, the drumbeat got louder and louder. Hey, do you do this? Hey, can you do this too? Hey, I bought this other thing that I expect on other email marketing platforms and ecommerce. I’m like, okay, great. Yes, I can do that, and I’ll charge you more for it. It works well to grow the business, it works well to make the customers happy.

Rob: Right. That’s kind of moving from micro-SaaS, which I typically define as almost a single feature with a single traffic channel, usually. Expanding from there is where you build the rest of the features, because just doing cart abandonment, you are a feature that Klaviyo has, that Drip has, or that MailChimp, any number of other tools have in addition to all this other stuff. You have dove headfirst into competitive waters for sure.

Dave: Yes, shark-infested, if you will.

Rob: Indeed, but it’s going well. Can you update folks on whatever metric you’d like to throw out, team size, progress, number of customers, revenue? Just give us some idea of where you’re at with it.

Dave: Sure. Since I bought Recapture six years ago, we’ve more than 10X the business at this point. The team was originally just me. Now it’s tripled, so there are three of us that are working on it in a dedicated more or less full-time way. We all have kind of an employee relationship at this point, so I would say we’re a real company, I guess.

Rob: You’re a team, yeah. Not just a group of contractors.

Dave: Right. In terms of customers, we’re on our way to 7000 installed customers across all different platforms out there. A significant number of those are paid. It’s grown in all the right directions. It’s come with a lot of growing pains too, like trying to figure out you’re in this competitive landscape. What does that mean? How do you carve out something that says, if you are in this part of the Venn diagram, you are perfect for our tool.

It took me a long time to really define that, articulate it, and then really start to promote it. But it’s gone well, so I’m quite happy with having been on Recapture. I went full-time a little over a year ago at this point. That was one of the milestones that I had been dying to hit for 11 years. To finally get there is huge.

Rob: I feel like I busted your chops at least once every year or two, usually at MicroConf. I would be like, Dave, you have all these products, because you had other products in addition to Recapture. You kind of had the portfolio approach, the bootstrapper portfolio.

I know what your total revenue was. Your day job was consulting and I was like, you can quit consulting, you need to quit consulting. This was me in 2015, probably 2016. You just kept doing it. You’re like, it’s just so lucrative, though. I have this day job. I’m like, yeah, but you’re grinding. Don’t do all this, just go full in.

You did finally basically go independent and worked for yourself. Your focus on Recapture is about a year ago. That’s our first topic. Just so folks know, this is more of a conversation than an interview. I’ll ask you a few questions, but I also will weigh in with my own experience on some of these questions.

You especially waited a longer time than most bootstrappers to go all in on your products. What was that decision like? What finally made it click where you were like, I’m doing this after all that time?

Dave: Oh, gosh. That’s a decade worth. Let’s see if I can condense that down into something that is less than War and Peace. You talked about those WordPress products. The problem I had with those WordPress products was the whole portfolio approach ended up with me kind of scattered in three different areas—two of which were kind of related and one of which was not.

The two WordPress plugins that I had were a directory plugin and a classified plugin. I had built those a long time ago. They were lucrative, but they had plateaued. That’s problem number one. I got them to a point where I was having trouble pushing them forward more than where they were at. They had definitely kind of hit a place where I was like, I’m stuck.

I let them kind of just sit there stuck for a while, because I was also freelancing at the time. None of those were actually a SaaS, so the recurring component of those was not nearly as strong as it needed to be. I think my renewal rates were somewhere between 26% and 33%, depending on the year and depending on what experiments I was running, things I tried, and so on and so forth, which is not great.

If you’re churning out 66% of your customers in a year’s time, that’s a pretty hefty churn rate, and definitely it’s difficult to make it a sustainable business. In the back of my mind, I was like, I got to do something with these because I built them up and I should get some kind of reward for that work, but it was clearly not the end game. That’s why I was looking at Recapture. I was trying to find a SaaS, and eventually, I found Recapture. That one was like, oh.

Rob: You wanted that recurring revenue to feel safe?

Dave: Yeah, it was the safety thing. That’s why it took so long. I never felt like I had the safety to say it’s okay to quit and that everything will be okay. It never felt like that until I got to Recapture, and then I had to get Recapture to a certain level.

That certain level was about 80% of my freelancer income, which you and I had conversations about that. I know you had talked about a similar kind of level when you were doing HitTail and even before when you had bought all those little microsites and AdSense stuff, et cetera.

They never quite made it all to that level. It was only when you got to HitTail and then later Drip that you were like, all right, all in now, I’m totally in it to win it. That’s kind of where it ended up with Recapture.

Rob: I went full time on products before I had a ton of recurring revenue. But the revenue, it was one time sale and I had a couple ebook sites, as you said, some AdSense stuff, and there were software. There was one SaaS, but it was wedding websites. It’s basically B2C, in essence, because it’s consumers buying.

I had my book and I had other stuff, but none of it was as recurring as SaaS or as predictable. Even if it was recurring revenue, the Micropreneur Academy, which is kind of the online training course, the turn of that was also quite high, because it’s going after the freelancers, indie hackers, who are trying to move into entrepreneurship.

I was so desperate. I so despised working for other people that I was willing to take a bit of a risk. For me, it was December 2008, maybe January 2009. I always forget. Right around that time was when I took the plunge. Similar to you, I was making boatloads of money consulting. It’s 2008 money and it was $20,000–$25,000 a month.

I remember quitting my day job or quitting that, basically winding down a project once my products had hit about $8000 or $9000 a month. It was a lot less, but we didn’t need any more than that to live on. It was just Sherry and I, one child at the time we were in—were we in New Haven, Connecticut or Boston? Yeah, we had an apartment or a townhouse but not… One’s lifestyle tends to expand as they get older, have more kids, and do more things.

Certainly, I couldn’t live on that now given our lifestyle. But for me, there was such a motivation to get that freedom that I was willing (I think) to take a bit more risk than other entrepreneurs do. 

I remember Dave, you talked on Rogue Startups at one point, that when you were younger, was it your dad who started a business and it failed, or at some point you were really low on money or something, and entrepreneurship within that. I think there was a scarring almost.

Dave: The exact event was that my father got laid off when he was pretty close to my age now. I think he was 57, and I’m 52. When that happened, the timing was really terrible. It was my junior year in high school. We’re preparing for college.

There were house expenses and some other things that were going on. Previously, there had been some investments that went way south, like a CPA basically absconded with money from a bunch of different people, not just my father. The timing was scarring. It was a little scar, some financial trauma.

He couldn’t get another job after that. That was the hard part. That was the hardest thing to see. He sank into depression. He put all this effort into it and just was getting nothing back. It was straight up ageism.

I saw that, and it was always sticking in the back of my mind as I was working for the first 10 years. I’m like, what happens when I’m 50? What happens when I’m in my 40s?

Of course, tech is famous for ageism. I was in my late 30s and I’m like, I need an exit plan here and it needs to be something that I control, not somebody else. The main motivator was to really find something, make it mine, make it big enough, and make it something that I felt I could be proud of, sustain, and carry on when it was ready.

Rob: And that’s where entrepreneurship at the point where you’re at, I would say, is less risky than a day job because you are more in control. You are more in control of not directly in everything but how much money you make, how hard you work, whether you are fired for some random reason, whether you’re laid off because some CEO made a bad decision about XYZ and has to weigh the money when they hit a downturn. I think there’s just a lot more control.

I would say entrepreneurship in the early days is more risky because it’s super uncertain. Dave in 2010 as an entrepreneur, much riskier, but now you have the experience. You have a business that’s generating revenue. 

I bring up that story about your dad or really it’s your childhood, because I want people listening to realize I was willing to take some risk, but it was calculated risk. I knew I could go back and start consulting or get a job if things tanked. Even though it’s 2008–2009, I knew that I had clients, I had people who wanted to pay me to write code. The risk to me was that I had to go back and get a day job, in essence. 

I was so not liking it. I was so burned out on all that stuff. I’m just working for the people that I was willing to take the risk. But you, you listened to your own psychology. You listened to your own experience. It took you longer to get there, but that’s okay, too. We bootstrapped so we can be in control of these decisions.

Dave: Yeah. Like you said, you kept badgering me all the time. Psychologically, it wasn’t until things got so bad at my freelancing that I finally was able to take a look and say, can I actually do this now? Prior to that, I was doing some dumb things. I wasn’t monitoring my P&L as closely as I should have with Recapture. I was doing it once or twice a year. That’s bad. Don’t ever do that.

If you have a business, please, for the love of God, get your books in order every month. Have that showing up on your email or something. Do them yourself, hire somebody else to do it. I don’t care. It’s so important that you know that information all the time.

I didn’t, and I was making bad decisions because of it. But as a result of the anxiety attack, I basically suffered at my freelance client because things got so bad. I had to put the P&L together under duress to find out, can I get out of here because I need an exit plan right now? That’s what ultimately motivated it. It took me longer to get there. Similar path, maybe a bit longer.

Rob: This week’s sponsor is Kelsus. Kelsus provides engineering teams for startup success. They stick with their clients for the long term. Kelsus has worked with clients through nine acquisitions. Every time, their work has passed due diligence and security audits by big audit firms and public companies.

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You’ve been on your own, in essence, for a year. I’d love to hear from you. What’s been surprising about that and what hasn’t been? Or if there have been things that are not surprising.

Dave: I would say the most surprising thing to me is how long it took me to kind of unlearn all of the ingrained habits that I had from working from somebody else. About the feeling of, oh, my God, it’s 8:00. I need to be sitting at my desk. Oh, my God, it’s 5:00. I should get the hell out of here. During that day, like, oh, I have to be here for all of these things. None of that is true anymore.

For me to suddenly be able to say, oh, my wife, Tracy and I now take Friday mornings off and we spend time together. It took me probably about four months to feel okay about that. It stressed me out when she would ask me that. Then we sat down and had a conversation, and I’m like, why am I stressed about this? She’s like, I don’t know, why are you stressed about this?

I kind of unpacked it like, I’m treating this in the same way I was treating my freelance client. I own my time. I own my flexibility here. If I’m not taking advantage of it, why did I do this? That was an eye-opening moment for me, a very surprising thing to say, my schedule is my own.

If I want to work till 4:00, great. If I want to start at 10:00, great. If I want to work at 7:00 at night, great. As long as it works for the family, as long as it works for me, as long as we’re getting stuff done and we’re moving the business forward, it’s all okay. Getting to that okay took me longer than I thought.

There might be a little PTSD from my freelance client, where it turned really toxic there in the last 12 months. Yeah, it was kind of an unlearning experience, and letting that tension go, and feeling okay with where I was suddenly at. That was the most surprising part.

Rob: I felt that 100%. That might be my most surprising as well, so I’m glad you said it. I remember that I was so hung up, because I was billing hourly. When you’re a contractor consultant, I would bill hourly. If I wasn’t working, I wasn’t getting paid. I didn’t have vacation days, didn’t have sick days. But it was fine, because I didn’t take a lot of vacation and didn’t get sick very often. And that you can make a lot of money. 

But I got it so in my head that one hour equals money, that once I didn’t have that, I remember telling Sherry, we’re taking a week vacation, so I need to figure out how to work 40 hours out of the week before. In addition to the normal week, I need to work an additional 40 hours out of the week before or the week after.

She was like, why? I was like, well, because that’s what you do, because you work 40 hours every week. She’s like, no, not anymore. I couldn’t do it. It took me several months to do what you did, which was to kind of unwind it. It probably took me a couple of years to not still feel guilty when I did it, when I would wake up, get the kids to whatever daycare preschool.

I would go to Starbucks or I would go to Barnes and Noble. I would look through books, I’d drink some coffee at the cafe, and I would just not work even though (of course) I’m looking at business books and I’m thinking about marketing. I pretty much am working all the time, but I wasn’t actually sitting there pounding the keyboard. I would have this amazing sense of guilt that I was letting the family down or that I wasn’t growing the business as quickly as I should be.

It’s not a good thing. I talked about relentless execution, which we might have time to touch on a little later on. I think that’s such a strength, but that’s the dark side of it. That’s the other side of that coin, is the need to relentlessly execute, the inability to unwind, chill the […] out, and enjoy your life, instead of constantly feeling this guilt and pressure to sit in front of your computer.

Dave: That is super unhealthy. I find myself still doing that today. Here we are 13 months in, and there are days that it’s been a terrible afternoon, I’m […] productivity, and I still feel somewhat compelled to keep going. But now, I will actually realize that I’m at that point where the productivity is not where it should be. I’m like, all right, I’m done. I’m just going to go do something else.

If I still feel like I have to do something, I will try to do family productive stuff. Maybe it’ll be like catch up on the finances to do the bills, or go do some chores around the house, or something so I don’t feel like I’ve wasted the time, but at the same time, I’m not sitting here wasting time in front of the keyboard not doing anything that should move the business forward.

Now I realized that there are windows of productivity. Those are what I need to protect, enjoy, and take advantage of. When it goes—and it always goes, it never stays, your flow state is not infinite—then it’s okay. Let it go. Plan for that somehow. That’s the hard part. I’m still struggling with that today.

Rob: I think a big surprise for me, separate from that one that we just talked about, was that I felt an immense sense of relief and happiness to be finally be working truly for myself, not having clients, not having a boss. That stayed with me. 

But what started creeping in was the arrival fallacy. It’s that I became gradually unhappy over the next 6–12 months, because (I think) as humans, that’s what we do. We figure out how to be unhappy with whatever mountain we climb. It’s like, oh, there’s another one over there and it’s higher.

For me, it was a boredom. I have all these autopilot. Basically, I didn’t have the four-hour–workweek. I had about the 10-, 12-hour–workweek, and I was making a full time living—$100,000–$150,000 at the time—but I got super bored. Is this it for me? I’m going to do this for 20 years? I’m more ambitious and this is what I started realizing.

I was surprised, and I stopped being surprised. This happened to me several times when I left full time employment to become a consultant, freelancer. When I started working from home, each of these things were things I’ve always wanted to do. I did them and I was happy with them for a few months until I wasn’t. This was another step.

This was one of the later ones where I was still surprised by it. Because then the next step after that, I’m like, oh, I want a recurring revenue SaaS app that does $30,000 a month, then I’ll be happy. I remember being that, which is what HitTail became. I remember being like, dude, you’re going to be happy for about six months.

At least I learned from it as I got older. But at that time, it was still surprising to me that it didn’t just solve all my problems, make my worries go away, and make me happy for the rest of my life.

Dave: Those things that you just talked about there, I’m constantly haunted by Dan Pink’s Drive—autonomy, mastery, and purpose. I’ve never gotten to a point where I’m like, okay, I’m happy, and none of those three things are present. The problem is that when you get happy with those three things, you will eventually also get bored because you’re no longer doing those three things.

Your purpose will change, wanes over time, or you’ve achieved mastery. Now, what? You may have autonomy already, great. But when you aren’t changing that mastery and finding something new to learn, or your purpose just isn’t there anymore, you’ve automated the crap out of it, what’s your purpose? Those things make me bored, too.

I worry about that a lot. In fact, with all the frothiness that’s going on in the M&A market and PE firms just getting stupid with throwing money around left and right, buying companies up willy-nilly, I’ve entertained, could I sell Recapture? Oh, yes. I could do that, but what would I do then?

I know that that’s an important question. If I don’t answer that question before I do the other question, then I’m going to be in huge, huge trouble. Because the times that I have sold things, it’s been when I had something else to jump to like, oh, I’m selling the plugins, but I’ve got Recapture to focus on. Oh, I’ve sold these other tiny businesses well, but I’ve got the plugins to focus on or something like that.

I don’t have something else. That lack of purpose says, then I’m not done with this yet. Until I find another purpose, then I can say, all right, maybe I’m done with this. It’s the same set of motivations.

I recognize that in everybody. When they don’t have that purpose and they get bored, they’re not happy. It doesn’t matter what level of success you achieve. You could have tens of millions of dollars and lack purpose, and you’re going to be miserable.

Rob: That’s why retirement is hard for a lot of people. I think our generation and younger is probably, now that we have the internet, we have podcasts, YouTube channels, and social media, the ability to kind of make a living in these ways, I don’t know if I will ever retire. I don’t know that I will.

My dad stopped working one day because he had to go into an office and manage construction projects. You don’t want to do that when you’re 75. I don’t know that I’ll be still doing a podcast and YouTube channel when I’m 75, but will I still be thinking, and writing books, and advising startups? I think so. I don’t know why I would stop doing that as long as I was able to, physically and mentally. It’s different these days.

One thing I want to call out, you said, what would I do if I sold? You hear that from Basecamp. David and Jason Fried would say, what would I do if I sold? For them, I struggle with it a bit more. I find bootstrappers repeating that, and mimicking it, and saying like, what would I do if they sold?

I think if you can sell for $10, $20, $30 million, or enough money to where you never have to work again is probably how I should phrase it, I actually think that you’ll find something to do, because you have infinite time and there’s no pressure. If you, Dave, could sell Recapture—I know that it’s not at that point yet—for $20 million and you know that you’re set for life, then I would say, the what I do next is whatever the hell you want and you’ll figure it out.

You can be a philanthropist. Maybe you write a book. Maybe you start another startup, maybe you buy a startup. Maybe you explore hobbies, because you literally have no time clock. You can not work on anything that you don’t want to for the rest of your life. That is different than I’m going to sell my bootstrap startup for a million dollars, which in the US is just—

Dave: That’s not life-changing money anymore.

Rob: No, it isn’t.

Dave: It can change your life, but it’s not an infinite change. Like $20–$30 million, you’re safe.

Rob: Right. That’s where I would say, listener, if you could sell for a million or two and you don’t know what to do next, fine. Keep growing that business, it’s great. Get it to that point if that’s your desire to where you can sell for $20 or $30 million.

But I do struggle sometimes with entrepreneurs who have changed their life, who have built an incredible business, and they’re just like, what would I do next? But also, they don’t like their job. If you love your company and you’re working on it, then fine. Keep doing it. I have nothing against that. It’s this fear mindset of I’m not creative enough to be able to replace what I do with this day job that I’m tethered to.

I want to mix it up a little bit, Dave, and go on to the second topic we’re going to talk about, which is balancing a side project with a day job. I get this question fairly frequently. Someone asked me in an in-person event a few weeks ago. It sparked again in my mind. Really, how do you work a day job? I’ll include full time, I’ll include contracting, freelancing, whatever you want to call it. How do you balance that with a “side project” that you want to become?

Your goal is for it to become your full-time income. You and I both have stories of how we’ve done this. I want to just toss it to you first and then I’ll weigh in. What was your process as you were doing?

You had three products at the time, and you were traveling. You had a client that you were traveling to. You hop on an airplane one week, a month, or something? And a family, right? Wife and kids?

Dave: Yeah. I could tell you how to do it badly in some cases here. It’s a juggling act. I’ll tell you right now, you can easily deceive yourself into thinking, I can totally do this and master all parts of that. The reality of it is, you will not.

If you’re trying to do three different things, let’s say you’re trying to do the family, you’re trying to do the side hustle, and you’re trying to do the contracting job, the full-time job, or something like that, I guarantee you, at least one of those will suffer and suffer badly. For most of us, especially men, it’s not going to be the full-time job, because that’s the one you’re going to make sure that one still brings in the paycheck. That means either the family or the side project are going to suffer.

I’ve seen people that have done both of those. I have done both of those as well. Neglecting your family and neglecting your relationship with your partner, your SO, that is not sustainable. That will resolve itself in one of two ways. Either you’re going to say, no, we’re not doing this anymore, or something more serious is going to happen, like into a divorce or other kinds of conflict there. That one is going to be really rough.

What ends up happening? Your side project ultimately ends up suffering. If you are lucky enough to get enough revenue, which I was for the plugins, then you can start to hire people to deal with some of those things and take some of that stuff off your plate. What that ultimately means is that you’re still not spending a ton of time on those, and your focus is on the other two, so at best, you can keep it to maybe sustenance mode.

You’re never going to be into hyper growth, hyper building, hyper expansion, hyper improvement mode. There’s a limit to your time. There are strategies you can do. You could say, all right, for this period of time, if you’re a contractor, you can say, I’m not going to contract and work on the side project. That way, you got two areas of focus.

That’s great. That’s one way to manage it. But then you have to make sure you’ve got a buffer built up, and that your family is on board with that, and you can handle your finances, et cetera. Then there’s another one of saying, all right, well, the full-time job is just not that demanding. I know several people that have had very undemanding full-time jobs.

They get their work done in 15 hours in a 40-hour week. They got these 25 hours just sitting around. They can do their side project during that time. I had that for a while. That was part of what helped me build that up. But ultimately, that is not going to last forever, not going to be sustainable.

Something will change at some point. That won’t work, but your focus is key to growing any business. Since I have tossed aside full time consulting, I have been able to focus on so many more things and drive Recapture forward and try a bunch of stuff, even stuff that didn’t work more quickly, more easily now that it’s my full-time thing.

I can do it more sustainably, because ultimately, if you’re trying to put your focus on all three of those things, you will hit burnout. It is not a question of if, it is always a question of when. There’s my tidbits of advice on that having tried that for close to a decade.

Rob: Man, you paint a dark picture. We can hear it, it’s something upbeat.

Dave: Don’t do it, man.

Rob: No, but it’s true. It’s true. I get questions on this podcast of people writing in and being like, I just can’t swing it, I’m too tired. It’s like, then you shouldn’t do it. Or you should take an alternate path to where maybe you work your number two at a startup, or you work for a startup, or save up enough money.

I’ve had some friends. I couldn’t do this with our expenses, having the family and Sherry was in grad school, but I had a friend who saved 18 months of living expenses in the bank in cash, and then quit the job and built something. That also scares me, of course, because SaaS can take a long time to find product-market fit.

Dave: Eighteen is not enough these days. No. Yeah, that’s tough.

Rob: I know, it doesn’t feel that way. But all that said, it is tough. I think people need to hear that. I think that there are alternatives. Some folks, they sell fund through (as you said) consulting on the side or consulting during the day, working at night. That’s what I did.

I always had either a day job or some type of 9–5 consulting five days a week, and then it was all nights and weekends. Part of it, we didn’t have kids, and then when we had kids, it was like, well, then we put the kids to bed and then I would work. I don’t do well on little sleep, but I just forced myself too for a while, where the kid would go to bed at 7:00, and then I’d go 7:00 to midnight, and then get up and do that. I got five hours a day.

It was tough on the marriage. But to your point, you’re not going to be great at all for any of these things all at once. There’s family and there’s your side project. You’re going to neglect one of them.

I remember really grinding on it for a while. I remember there was a moment where my contract said, you know what, we have you 40 hours. We’re running into some financial issues. Could we drop you to 20 hours? I was like, yes, this is the best idea ever.

In retrospect, I wished I had thought to propose to them, like, could I go to 32? Because I had done that with a day job where I’d actually dropped down to 80% time at a full-time job before I left a few months later to freelance and consult. 

That was really nice, because then it truly was less of a grind. It wasn’t 60 hours weeks anymore. It dropped it down to about 50. It was like 20 consulting, 30 doing the other thing, and a lot of it was during the day.

I just remember the huge weight off my shoulders. Like I said earlier when I did finally quit that, I felt like I had so much time, infinite time. Let me get this straight. All that crap I’ve been doing from 7:00 PM to midnight most nights, I get to do during the day now, and then I have my evenings. That was actually a reset.

Another surprising one is I was like, okay, now I need to figure out how to do stuff in the evenings and not think about work, to back to our original point of letting it turn off. It’s like, I guess we do have friends. Maybe we should hang out with them sometimes.

Dave: Right. Ultimately, how many times have you said this on the pod over the years? It’s a marathon, not a sprint. If you try to sprint, you can try to sprint for short distances, but it’s not sustainable. You must rest after each sprint, literally and figuratively both. You have to have that time to rest, recoup, and find that sustainable strategy.

If you have the burn rate, you can work part time in consulting and do your side thing, great, do that. That is more sustainable. If you are single and don’t have the demands of the family that you would, if you had kids and an SO, great. That’s an excellent time that you can build a startup. But still, you have to take care of yourself.

You will burn out if you just try to burn the candle at both ends, 40 at the job, 20 at the side hustle, and just do that seven days a week. You think, oh, the weekends, hey man, I can totally do this 16 hours on the weekends. No, you can’t. Not indefinitely. Sure, you can for a while. It won’t feel great. When you hit the wall, you’re going to hit it hard.

Like you said, I don’t want to paint an unrealistic picture of this, because you and I have both tried various strategies on this with varying degrees of success. On the other end, we both realized, focus wins and you have to find a way to get that, protect that, and your health. Those two things. If you don’t have those, you’re not going to have a business that works.

Rob: This is one of the reasons that I started acquiring products early on. 2006 was my first and I realized, oh, this is a way that I don’t have to do nearly as much of that upfront grind with no return of just months, and months, and months of coding at night to finally launch and then realize, oh my God, now I’m at the starting line.

Now I got to figure out product-market fit and all that other stuff, whereas I could buy a product. My original one, it wasn’t SaaS. It was 2006, so that wasn’t really a thing. I was freelancing on the side, working a day job, and I put all the freelancing money into an account. I had $12,000–$15,000, and I spent most of that on DotNetInvoice. I dropped an $11,000 check.

It was very scary. I actually kind of got screwed in a way. I didn’t know what I was doing. It was freaking wild. It was 16 years ago. It might even have been 17, whatever. The revenue wasn’t what they said it was, but that let me skip twelve months of building that thing. It probably would have taken me twelve months of nights and weekends to do it. It already had a marketing set up. It had a little bit of SEO. They were doing a little bit of Adwords. It had just a skeleton of things. I think that’s another path.

Most entrepreneurs don’t want to do that because they want to build their own thing. A lot of them are developers and they want it to be their code. I get it. But one way to avoid some of the pain that we’re talking about is to acquire things, and that’s what you had done. Think all of your stuff, Recapture and the WordPress plugins. You’d acquired stuff before that as well.

Dave: All my successful stuff was acquired. The things that I tried to build from scratch like Support Line, yeah. I’m not saying you can’t do that. I screwed up on so many levels with that one not figuring out what the customers wanted, not trying to get people on board in advance. I made so many of those.

In the last episode, ten classic SaaS mistakes. Your number one was, make sure people want the product. I didn’t make sure that they wanted the product. I just started building it based on some faulty assumptions, and it blew up in my face $50,000 later.

Dumb things like that will kill you every time. You get a level up advantage if you can find something that has product-market fit that you think you can grow, that you can see the flaws in, and acquire it for a reasonable price that already has some revenue, some traction, and build on that. That’s still to me, a massive advantage today.

Rob: Indeed it is, sir. If folks want to keep up with you, you are @daverodenbaugh on Twitter and we will spell that out in the show notes of this episode. Of course, recapture.io if folks want to see what you’re up to. And you’re co-host of the Rogue Startups Podcast with Craig Hewitt. Thanks for joining me, Dave.

Dave: Thank you for having me Rob. Always a pleasure.

Rob: Thanks for joining me this week. If we’re not connected on Twitter, hit me up @robwalling and of course, @startupspod if you want to see our fun 90-second video clip that we kick out each week. Hope to connect with you there. Thanks so much for listening every week. Signing off from episode 612. Talk to you next week.