Josh

Rob Walling :
If you’re listening to startups, For the Rest Of Us, I’m your host, Rob Walling. In this episode, I talk once again with Kevin Wagstaff, the co-founder of Spector. And if you recall, he was on the show just a month or two ago talking about how he and his brother bootstrapped their SaaS to a $90 million exit. In that episode, I made a call for questions if you had any questions about how Kevin got where he is trying to go. And I received an email filled with an entire episode’s worth of questions. Turned out to be a really great conversation. I think you enjoy it. Before I dive into my conversation with Kevin, if you ever wished that you had an outsider’s advice from someone who’s been in the trenches of trying to grow your SaaS past 1 million, 2 million, 3 million a RR, then you should check out Tiny Seeds SaaS Institute. 

That’s at SaaS institute.com, and it is our premium coaching and mastermind community where you’re going to get all the advice, the comradery, the mastermind interactions, and one-on-one coaching that you want. It’s exclusively for founders doing 1 million a RR end up and it’s only SaaS founders. We’re currently forming our next mastermind group and we have one or two slots left. We’re still in the early stages of institute, and so if you want to get in on the ground floor as a founding member while the community is still small and you’ll get a ton of one-on-one attention, should check out SaaS institute.com. And with that, let’s dive into my conversation with Kevin. 

Kevin Wagstaff, thanks for coming back on the show. Oh, of course, man, you make it easy. It is a pleasure to have you back for the second time in just a couple of months. For those who don’t know, your last episode was episode 776, how bootstrapping led to a life changing $90 million SaaS exit. And if the title was even longer, it would then say, and a subsequent exit at 110 million that he co-founded with his brother. There’s whole thing folks should go listen to that 45 minute conversation we had. But in that episode I asked for questions because your story was so compelling and there’s so much more to it, and we probably could have done three hours and still only touched on elements of it. And so I asked folks, send an email, hit us up on X Twitter if you have questions for Kevin, and we got this amazing email from Tom at Garage tool app and he gave us a full episode’s worth of questions. So that’s what we’re going to be diving into today.  

Kevin Wagstaff:
Appreciate the specificity on ’em too. Your listeners, I think are so dialed on this stuff. It makes the content easy when they ask such great deep bootstrappy SaaS questions.  

Rob Walling :
That’s what I liked about him too. There’s no question here of Kevin, what are your top three advices for nude? You know what I mean? Or what’s your number one piece of advice for new entrepreneurs? It’s like, I mean, to keep going, persevere, work hard, but this is detailed and let’s dive right into the first one. The cool part too is several of these are multi-part questions, so I think we’re going to get in here pretty good. So first question, Kevin mentions that he approached Facebook groups to do some of his early marketing. So Kevin, did you have to offer anything in return for that? And if so, what did you offer?  

Kevin Wagstaff:
Initially we did offer a discount on the software because we just, no one knew who we were brand new. Got to get someone to join this group. So I believe we offered a godfather type grandfather deal of six months free and grandfathered price for life, the cardinal sin. But after we got 10 or 20 or 30, the main pitch was access to the founders. So it’s like, hey, if you have ever been with a software where you didn’t change or didn’t like how little change was happening, guess what? You can talk to me directly in this group and we’ll dialogue back and forth and then follow through on that. So really it was like you’re going to hear directly from the people that make the decisions here.  

Rob Walling :
And were you going into existing Facebook groups or did you start your own Facebook group and try to pull home inspectors into it?  

Kevin Wagstaff:
Yes, both. So we spent so much time on there that it was like half the time we spent in our own group fostering those relationships and creating rich content, asking good questions, being in so many threads to make our group good, but then we would also go into other groups and answer questions half the day basically.  

Rob Walling :
Did you do both of those things, meaning your own group and posting in other groups? Did you do both of those kind of from day one?  

Kevin Wagstaff:
Yeah. Yeah. Got it. It was basically the first and last place every day for I’d say for sure the first two years we visited, which was exhausting and taxing and don’t recommend it for most people. Do you want to be happy or do you want to spend that much time on Facebook?  

Rob Walling :
Well, do you want to be happy in long term because you build an incredible business but unhappy in the short term? Dude, I tell you, I dunno if you listened to, it was last week’s episode, but I, I think it was my 12 biggest mistakes that I made as an entrepreneur in my 10 best decisions or something like that. Why I succeeded in spite of those 12 mistakes is what I was trying to pull out. One of them that I said was a boon for me was willing to just grind to grind and do stuff that I didn’t want to do and nobody wants to do. And I was thinking of, there’s several founders that I think of who do this, Jordan gals one and Ruben. There’s these folks who come on the show that I know that I know their grind stuff, but you were another person in my mind when I was writing that of thinking about our conversation and specifically around Facebook groups like do any of us want to do Facebook groups? No, but you did it because you do.  

Kevin Wagstaff:
That’s where the customers were and I was getting good positive engagement and interaction, and if I’m getting one to a hundred people in any given month closer to being a customer, it’s like, I’m going to keep you talking to me. I’m going to get you to like me, and then you’re going to want to do business with people you like. So that was just the mentality. I kept asking questions and they kept responding. So I’m like, cool, let’s keep this going.  

Rob Walling :
You did it because it worked well enough and it didn’t really matter if you wanted to because it worked well enough and you wanted to build a great business more than you wanted to be happy at the beginning and ending of your every day. Is that accurate assessment?  

Kevin Wagstaff:
Pretty much. And I didn’t really care about work-life balance. I think COVID and kind of the current culture and climate, I think people do believe, and some of ’em are right, where you can kind of have your cake and eat it too, but it was an all out kind of burn the boats. We’re going to do this for years and we’re going to show up every day and show people that we’re ready to elbow a way in to be a competitor in this space, not we’re going to show up, see if it works, give it that half committal. That just wasn’t the mentality and it’s not right for everyone, but we knew we had to go fully into this to show people that we’re trustworthy.  

Rob Walling :
And as a reminder, you co-founded Spector your SaaS that we were talking about with your brother. So when you say we, that’s who you’re talking about 

Going off script here because Tom didn’t ask this question, but something you said brings something up for me, which is you said I didn’t think about work-life balance. So someone hearing this might think A, that’s not healthy. How long can you do that? They might also think, is that what it takes? Is that what I need to do to be successful? So for you, I mean I’m curious about both of those questions, but it’s like for you, because had times of no work-life balance, but my goal was I only want to do that for X amount of months or in terms of drip, it wound up being a few year, few more years that I would’ve liked, but again, in the end it worked out, right? So how did you think about that? Were you just like, no work-life balance and I’m just going to do it until it’s done? Or were you kind of like, eh, I can do this for a year or two before I really need to back off?  

Kevin Wagstaff:
Yeah, I want to hear your experience on this too. Yeah, ours was similar, whereas we knew it’d be this undetermined amount of time from a few months to maybe a year or even two, ended up being longer than that ended up being two, three years of burning the candle both ends, but it was intoxicating seeing growth and results. And so anyone that’s competitive or kind of a junkie in that way of seeing the numbers go up, we watch the fricking MRR chart every day and it’s like if you like video games, we grew up playing video games every little boop, boop, boop, and we were just like, okay, we’re total addicts for this, so let’s just keep it going. And yeah, we still on the weekends would play volleyball or workout once or twice a week. It’s not like the sleeping under your desk kind of lore of you’re literally withering away. 

And at times we felt like that, but yeah, I don’t want to over glamorize it either. Yeah, everyone always has the quick response of like, well, that’s not good for your health and relationships. Well, it’s like, yeah, no shit. We wanted to do what most people wouldn’t so we could get a result that most people don’t get because everyone wants work-life balance. We all want to be happy all the time, but that’s why so few companies probably succeed. And so it’s like, I don’t know, I found the endurance from sports and me and you had our athlete talk of doing hard things for a long time trains you mentally for that. And I really felt equipped and there was times I was like, yeah, give me more. I can go another hour. And it was like 11 or 12 at night. And so I think everyone can generate that within them. I don’t think you have to be special to be an effort guy.  

Rob Walling :
I agree. One thing that you said in there that really resonated with me is it wasn’t just that you two were grinding hard is that the MRR kept going up and that’s the feedback loop because if you had done what you were doing and there were no results and you’d plateaued at three grand or four grand, you know what I mean? And you can only do that for honestly months. I couldn’t grind for a year with a plateau like grind the way you’re talking about, which I have done periodically. I try not to do it, but if the feedback loop is that we’re adding a thousand a month to three 4,000 a month, then how do you not do that?  

Kevin Wagstaff:
Even if it’s top of funnel or if it’s like, Hey, we’re seeing incremental growth 1%. Hopefully that’s all you need to see, but everyone’s bars are different for what keeps them fueled and going what your TAM is and all that. But yeah, to your point, was it hard those couple months where you’re like, gosh, we keep pivoting. Things are plateauing. Those are demoralized. We had stints of that too where it’s like our chart doesn’t show a lot of that, but there were months when the interest rates stuck and it was like, oh crap, this is more exhausting now.  

Rob Walling :
That was my memory of my times of grinding were as long as the results came, I kind of forgot about how hard it was, but it was the months where, yeah, we grew 200. It was often Decembers and Aprils for something and for some reason, and April I always assumed it was tax season for the US or whatever, and people were distracted. And December was obviously because holidays and those months if we, you’d grow nothing or you’d go 300 MRR when I’m used to growing 5K MRR and I would just be like, oh my gosh, now I’m exhausted and burning out. It was interesting how the burnout only hit me when there was no feedback loop  

Kevin Wagstaff:
And maybe those are the months if we were to do it again where we do cut out an hour earlier and go work out hard or make sure we’re eating healthier and kind of managing that. That’s probably what I would do differently is know the seasonality of our business and take care of myself a little more.  

Rob Walling :
Yeah, I agree. And also, again, I know I say this a lot, but it’s like every time that I was doing more work than I want it to be, it was always like, this is a season. This is not permanent. And I don’t know if this season is a month or if it’s five months or six months. I never did it for a year straight like that. I did feel stressed for a couple years, but I didn’t work more 40 hours a week for more than a couple, two, three months at a time. It sounds like you guys were doing more than that.  

Kevin Wagstaff:
Again, I don’t want to undersell or under characterize here that the point in time we felt this huge momentum shift and like you said, the feedback loop was there. And so I definitely am grateful for that and I know it’s a lot easier when the scoreboard keeps going up, but we wanted to capitalize on it. We didn’t want to take it for granted. So in a way I thought we were being grateful for the opportunity given by saying, let’s just quadruple down here every day.  

Rob Walling :
Yep. Go with what works. And so to get back to Tom’s questions still relating to Facebook groups, Tom asks, were you worried about some of the admins of these Facebook groups being allied with some of your competitors? The biggest Facebook group in our industry is Allied with one of our competitors, and this competitor is actually building a pretty sizable audience. Was that a risk for you?  

Kevin Wagstaff:
Yeah, I was terrified of that. I hated those. Those guys were the hardest to even, it’s being the new kid on the playground and you see all the cool kids hanging out in big groups of them and you walk out there and they just point and laugh at you. That’s how I felt. My wife got so protective over me, she thought she felt like I was just getting bullied online for a whole year. So she’d be wanting to get on Facebook and curse these guys out, and I’m like, sweetie, that won’t be a good look for us, so I’ll be okay. I’m a grown man, but I’m not going to lie. These other Facebook groups were really hard to get into and the ones affiliated with competitors. I had to really go in hat in hand and just say, Hey, I’m here for the good of the industry. 

I don’t care if you guys use Spector. I want to help you guys market your businesses better. I want to help home inspector save time and just repeat that mission, vision, values statement over and over and showing up. You have to do the work and show up every day and show them like, Hey, I’m not here for a quick sales pitch. And then I also showed vulnerability. That always helps in life, I think of going in there and saying, Hey, look, I know we don’t have the features of Home Gauge because at the time we didn’t. I was like, look, they’re the big elephant in the room. I get it. Most of you use them and love them, you’ll never leave ’em, and that’s fine. But I’m here for people that maybe want something different or a change and I’m here to help. And that whole takes the edge off of I’m here to help. 

And then I became a part of the community and I had relationships and talked with guys on Facebook for five years before they did a trial. I saw a trial pop up three years ago and I’m like, oh my God, I talked to that guy on Facebook eight years ago and I never sold them once. I just hung out. I just kept hanging out on the playground. That was kind of the play. I can’t say that was all intentional. That’s what ended up happening. I can’t say I didn’t have a crystal ball, but there was guys. I was just like, dude, you’re going to bite my head off every time I say anything, and that’s cool. I still love you kind of deal with it.  

Rob Walling :
Yeah. Yeah. And soles, people think your only marketing approach was Facebook groups. That’s what we’ve talked about for the first 10, 15 minutes of this show. Let’s bounce to SE because Tom had a question about that and he said, I did some quick SEMrush research on home inspection software, and it seems like the search volume is pretty low. So what keywords did you concentrate on to do your SEO and how did you find those keywords?  

Kevin Wagstaff:
It’s a great question. Good job, Tom. Doing your homework on SEMrush. We’ve all used it and love it. Yeah, small volume. So it’s a small industry just like imagined garage app, your wrap and sign addressable market is, and so I said we have to rank first for home inspection software. That’s the only game in town. We only had one or two keywords, and so it was a big hill getting in the industry saying, oh my gosh, home gauge and home inspector pro rank first and second. Everyone loves ’em. Everyone goes there. How are we ever going to supplant them? Turns out just content every day for years can bust through that when your competitors aren’t doing it. So YouTube is owned by Google second biggest search engine on the planet. So keep in mind good YouTube presence, I just believe has something to do with the main algorithm. 

I don’t have any proof of that, but I have to believe clicks and signals into YouTube help. So I made YouTube webinars, videos, any blog article turned into a YouTube video. Rob, you’re no stranger to creating content, so you know this. But then I looked at adjacent keywords. So I think s CMR is great if you use the magic keyword tool, it’ll give you adjacent keywords in kind of the next bubble out from the main keyword. And for me it was if someone’s looking for what association do I belong to? If I want to be a home inspector, what tools do I need as a home inspector? Hey, what are licensing requirements in Oregon for a home inspector? So I literally spent hours writing a master article on the requirements of every state to become a home inspector, and I got them from the state licensing websites, spent a whole day copying and pasting, and then I created that master article. That article ended up ranking first or second for home inspector requirements. So then I was getting them when they were thinking about being a home inspector, they were clicking on Spectra and I was like, you’re going to see our name when you’re just thinking about it. So hopefully six months down the road you’re like, oh yeah, for some reason I want to use Spector. So every industry I think has bigger and bigger circles of keywords  

Rob Walling :
As you talk. It strikes me that you had short-term results. And what I mean by short-term results is being in the Facebook groups, you were bootstrap and two founders, so you had to have some type of revenue coming in. You couldn’t just say, well, we’ll have revenue in a year. Let’s have a free plan. So you needed some type of, Hey, we need a couple hundred MRR or whatever it is, a thousand MRR each month to kind of grow. But everything you’re saying is, but then it took a year or two or three to work, and over time that snowball it paid off for you. Was that intentional or is it a hindsight thing of Well, it took longer than we thought, but we just kept grinding because we figured it would work. Or at the start, were you like, this is going to take a while?  

Kevin Wagstaff:
Yeah, so at the start we were like, Hey, it might take a year to get to the point where we can pay ourselves even a couple grand a month. And so in our episode, I briefly mentioned it, but I offered kind of marketing agency type plans to customers for the first year. So we were charging three to 500 a month for me to personally manage their SEO because that was my specialty and kind my background. So I had at any time between 10 and 20 home inspectors who would pay me three to 500 a month to write two blog articles a month to go to their website, optimize keywords, title tags, kind of the basics of SEO to signal to Google what your site’s about. And that floated us for the first six months a year where we had 10 20 k, let’s see. So it was like 500 a month, 10 to 20 customers, so whatever that maths out to a couple grand a month to at least cover our bills, float us a little bit. 

And then I kind of phased those out and told them, Hey, can’t do this anymore. Here’s a good recommendation to kind of pick up your SEO, like a local agency. I’d find them one to link up with as the software MRR started to ramp up. So it was kind of like, Hey, this is what I’m good at. I can contribute in this way, and then phased into the software piece. And then we ended up hosting websites as part of our offerings. So we have about 2000 websites that we host now, and it’s a great profit margin segment.  

Rob Walling :
Tom’s next question is about product-market fit. So he says, I ended up listening to some other interviews that Kevin took part in one of the interviews. Kevin said, you knew we had product-market fit when they had 10 customers. Was this the metric that you used to decide you had product-market fit or was it something else? And having 10 customers was just a side effect.  

Kevin Wagstaff:
Keen observation, definitely not the number of customers, but more about solving the critical pain point. Once I heard it from 10 customers and then they signed up, they believed we addressed that pain point. So it was more like, Hey, you want to save time on your inspections? I get it. Okay, what’s the main choke point here? Okay, it’s in the app. You’re spending too much time in the app tapping around that pisses you off. You want to spend more time with your family. Once I felt like we were on the path to solving that and people started signing up, that felt like maybe pain point market fit or a product pain point fit, however you want to word it, but I asked every one of them, if you had a magic wand and you could wave it and solve something about your software, what would it be? A couple guys said, I think I found that with you. I was like, okay, we’re onto something here. I took that. That was our marketing headline from there on out, their words, not mine, where I’m like you said you’re spending, you could spend more time with your family if we save you an hour. Oh, that’s marketing gold. I’m using that everywhere. Who doesn’t want more time to grow your business or to spend with your family?  

Rob Walling :
I believe that phase you talked about is problem, solution fit. It’s where you’ve identified a problem and the solution, it can be software, it can be anything. It doesn’t have to actually be code, but if you find that, then you can now say, all right, let’s pile more on or let’s write the code to do it. Sometimes it’s kind of human automation or you’re doing a productized service, for example, as the solution, but it sounds like you already were there where the code was actually was nailing it. Another marketing approach that worked really well for you was word of mouth and Tom asks, when doing word of mouth marketing, were you worried that you might upset your market and the criticism that would come when you started doing it, or were you just ready to roll up your sleeves and roll with the punches when you picked that marketing  

Kevin Wagstaff:
Channel? Tom will probably understand this well, but we did not understand the constant criticism we would get in this industry basically from everything we did at any time.  

Rob Walling :
Why is that? Tell me more about that. I’m not sure I understand why  

Kevin Wagstaff:
You’re going to laugh. So home inspectors point out what’s wrong for a living. They go into a home and look for up to 300 things that are wrong with it.  

Rob Walling :
Of course,  

Kevin Wagstaff:
They don’t point out what’s right. Every email, every decision product we’ve made, there’s been at least one person that tells us this is the worst decision of all time and we’re going to crash and burn and we should have listened to them. So you kind of get used to upsetting 10% or less of your user base or the broader market at any given time. I don’t know if that exists in other places and spaces. I know B2C can be more forgiven  

Rob Walling :
B2C when you serve software engineers or QA people because they’re the same thing. But software developers are the good ones who QA their own code or whatever. They’re super fricking detail and nitpicky I bet. Serving lawyers, right? They like detail. So yeah, there’s  

Kevin Wagstaff:
Doctors, lawyers.  

Rob Walling :
Yeah, there’s a few of these. So anyways, yeah, keep going with that.  

Kevin Wagstaff:
So yes, once we kind of started getting out there and just showing up kind of unapologetically, all kinds of criticism, all kinds of bullseye from people saying, your types come around every year. You’re not going to last get out of this Facebook group. You’re a vendor. Oh, you guys are just a cheap version of this, or you’re an expensive version of this. So I think the mission was always connecting with people and each time we talked to a customer, they saw a little bit of who we were. We lost money on so many customers that we spent an hour or two with talking, just learning about them and their industry and shocker, a lot of customer, a lot of companies neglect their longtime customers that aren’t profitable to them. So we talked to solo home inspectors that got no attention from their software. They didn’t talk to the founder of their company anymore. 

We were like, Hey, we got on calls, me and Mike. So I’m like, Hey, you’re on with the lead engineer and the lead marketer. Tell us your problems. Tell us what you want. But yeah, that creates word of mouth when they’re just like, Hey, Kevin and Mike are the real deal. They’ll listen to you. Oh, they’re chiming in on this thread right now. We answered so many fricking pointless threads, a hundred deep nested, no one’s going to see this. Someone’s always going to see it. So that’s the nitty gritty work where I’m like, that’s the grinder in us. That was like, that creates word of mouth.  

Rob Walling :
And did you try to get to a certain churn rate or a level of confidence in Spectra before you went that route? Before you started doing the real viral or word of mouth stuff?  

Kevin Wagstaff:
No, we did that from the beginning just because we witnessed another founder in the space that just lived in the forums and threads. So he was on the main association forum and Facebook answering everyone. He was everyone’s friend. Everyone knew him and respected him, and we were like, okay, we’re going to do that. So in a way, we just were like, that clearly works and resonates to connect with people one-to-one on social media where they are meeting them, where they are not trying to get them to go into TikTok or Facebook or somewhere else. So we saw him doing that and we were like, that’s the playbook. Just go do that. And churn was a slap in the face for our industry. We did not know it’d be like 3% a month. It was brutal. So once we started to see that survival rate, we baked that into our numbers and said, Hey, at any given point, a quarter of our user base or a third of our user base could go down. That’s scary. So we need to always be marketing and growing. And that was kind of my side of the house was like, that’s why I lived on Facebook, because I’m like, I have to get every new inspector that comes in the industry or at least win share, I got to get half of ’em.  

Rob Walling :
Is the churn high because they’re kind of people to do it on the side or the retirees and they just decide to stop doing it? They decide to stop being a home inspector or is there some other reason?  

Kevin Wagstaff:
Yeah, you’re onto it. It’s like there’s a seasonality and then there’s about half the states in the US It’s not regulated at the state level. So in Colorado you could roll out of bed and be a home inspector. So then you get guys that jump in, they do a couple, and then they’re like, I don’t want to work hard to grow a business, so I’ll cancel. So the cancellation and resign up rate was we couldn’t make sense of our numbers for the first six years.  

Rob Walling :
Yeah, totally. That’s hard, right? It’s like, well, they turned three months ago and now they’re a new, but they’re not new out of you. That’s always clunky. I’m going off script because we’ve talked a lot about things that worked for you. It seems like you generally had success with the stuff you tried, the Facebook groups, the word of mouth, SEO. Were there things that you and Mike spent time doing marketing wise? I’m thinking that didn’t work. Were there approaches that didn’t work and if so, how did you, I get this question all the time. How did you know they weren’t working? How long did you give them until you made the decision to stop doing them?  

Kevin Wagstaff:
Paid ads never seemed to hit for us, and it might’ve been the lack of expertise and sophistication with targeting and kind of the full stack setup, but running campaigns out of Google and Facebook paid tended to result in tons of clicks, tons of wasted spend. So it was kind of like we looked at that channel for a few months. We gave, I think we did a three month pilot and we were getting clicks from bad keywords. We didn’t dial in the right negative keywords in Google ads. It was like we were getting car inspection guys and things like that. But then even once we dialed it in, we felt it was a lot of people just clicking around late night, maybe not as serious. And so we just kind of tracked that to conversion and said, man, we’re batting one for 40 here, one for 50 not to, it doesn’t justify the spend. So we cut that. That was never a good route, was paid acquisition. It seemed like a product where people would kick the tires on multiple softwares, not necessarily be ready to buy right away. I need an email marketing tool today.  

Rob Walling :
And also we talked about in the interview that your annual contract value just isn’t that high paid ads, especially Google, you just need a lot of money and I believe yours was, there’s a thousand and then there’s a 2000 and a 3000 a CV depending on if you stack things or something, but it’s just not that much if you’re going to try to buy AdWord.  

Kevin Wagstaff:
Yeah, lifetime value’s got to be up there and the tens submit hundreds of thousands to really spend that, and we knew we could go meet these same people at conferences and they’re in the field working too, so a lot of times our demographic was not online all the time, and so it kind of made sense. Affiliate marketing, we also failed at where it was working with some of the biggest associations and partners in the space. It was like, here’s our affiliate link. We’ll share 10 or 20 bucks with you. It was kind of peanuts at the end of the day compared to just going to another conference making relationships or writing, making 10 more YouTube videos. And to me, we watched the numbers over months and then we tried to boil everything down to math, which I think most founders can appreciates. What does the math say?  

Rob Walling :
Last question from Tom. You mentioned that the home inspection industry is really slow to catch up on technology. Are you ever worried about someone being offended by hearing this? I feel the same way about my industry and sometimes I catch myself about to say it in a demo, but I stop myself.  

Kevin Wagstaff:
I want to ask you after this, Rob, if you’ve said things that have offended people throughout your journeys, you said a few times I knew they’d probably be offended, but at the same time, I also knew if it was the truth and it was something I observed and was undeniably true, that it would be okay to say because many of them admitted that to me. They’d be like, Kevin, I’m not a techie. I don’t know this stuff. I rely on you guys for that. You guys are the nerds. We were like, yeah, we’ll be your nerds. We were just like, cool. We kind of branded ourself on let us be Your technology stack was kind of how we talked to them of like, dude, you build garages, you inspect homes, you do whatever. These trades guys, they want to outsource all that to us, so let them and be upfront about it. 

And yeah, the competitors probably did not like me out there saying that of like, Hey, there’s not a single good tech solution in the space. I’m marketing my business, man. They can go out and say their message, but if we are getting our ass kicked by a ServiceTitan, I’d probably say that too. I’d be like, man, ServiceTitan does everything. We’re going to try and compete, but they’re crushing it. And yeah, occasionally you put a little spin on things to help your company, but I was okay with that and I got slandered for it. I took my licks.  

Rob Walling :
Yeah, the thought of, well, specifically I guess the phrasing that Tom used is you mentioned that the home inspection industry is slow to catch up on technology. To me, that’s not an offensive statement. That’s an industry as a whole. I will hear here I am on the podcast. Do you want to hear me offend people? The legal industry tends to be more laggards than not certainly any type of trade. I mean, my dad was an electrician for 42 years. I was an electrician on and off for years, and my brother runs an electrical contractor. All of the trades, all construction mechanics, they focus on what they do well, which is fixing with their hands and building things and do they really want, and it’s a generalization, but it’s like if you look at a bell curve maybe, or distribution across folks who are electricians versus folks who are web designers or something, it’s like how many of those folks really want to get into software and are interested in it and just have a high acumen for it and mess around on their computer on the weekends? The numbers are different. It just is, right? So I don’t think it’s not that you’re saying one individual now, it’d be offensive if I said, Kevin, you yourself are really not technically adept or whatever. Unless you were like, yeah, no, I totally am not, then it wouldn’t be offensive. But  

Kevin Wagstaff:
If it’s true,  

Rob Walling :
Yeah. So I don’t know. I wouldn’t be too concerned about this, especially if you’re talking about an industry as a whole, my guess is most people probably would agree with that. I guess the thing though that you then touched on, which was almost a separate thing, was saying our solution is the best and there really isn’t that much. Really isn’t any good tech here now that could be offensive to competitors? And I mean lightweight marketing automation that doesn’t suck was the H one of Drip for years. So what does that imply? That implies, and then  

Kevin Wagstaff:
I remember that.  

Rob Walling :
Yeah, and then I named, because I wrote the whole copy for that long form landing page, I named Crap, who was it? It was Infusionsoft. It was Marketo. It was part up by name on that page. Now, I did not name MailChimp. I always thought they were good tech, and I did not name HubSpot because I thought they were good tech and I’ve always respected as founders, but any of the other marketing automation I would throw under the bus, did I offend them? I don’t know. Did they even pay attention? Was I just too much of a gnat for them to even bother with? Who knows? Did somebody probably read it and say, that guy’s kind of a dick? Maybe it maybe happened, but did I believe it? Did I ever say anything on that homepage that I didn’t wholeheartedly agree? I was so passionate that why are you screwing your customers? This pisses me off that your software sucks and you overcharge for it, and you force ’em into annual contracts. You don’t let them see the software touch it until they’ve paid you for the whole year. So anyways, yeah, you can tell I’m getting off on a rant here, but  

Kevin Wagstaff:
Yes, but you spoke what you knew to be true, and then you could back it up. And as long as you’re saying what you believe to be true, if someone calls you on it, if you just show up and say, am I wrong here? Let’s look at it together. I’m happy to be wrong, but does this suck? Does Infusionsoft suck? Is it hard to use? Yeah, I don’t think they’re bad people,  

Rob Walling :
But I don’t think the tool is good and I don’t like their sales model.  

Kevin Wagstaff:
Yeah, yeah, yeah. Depersonalize it. And I just love that you stood kind of on what you knew to be true and you weren’t afraid to say it. And I think it takes a little bit of irrational confidence maybe before we were big boys, but you got to be okay taking that risk because it forces us to step up then right? Then you were like, I better make sure Drip doesn’t suck. I got to make sure that’s the thing.  

Rob Walling :
I’m calling my shot. I’m opening myself to attack now. Right? It better be amazing and it better without a doubt be better than these things I’m calling out by name. Yeah, there’s a certain amount, and I’m not a conflict person. I don’t enjoy it. I can do it, obviously I have to sometimes, but it’s not my wheelhouse. It’s not like a strength of mine. I know friends of mine who are really good at it, they love debating love, getting an argument or even just conflict just ignites, ha, I can be right about something. Me, I’m always like, I don’t really want to get in a fight that feels like a waste of time. But I was always willing to risk that and to do it and defend myself and my company if I knew I was right about it. And I knew much like saying lightweight marketing augmentation, that doesn’t suck. It’s not just marketing, but it truly was a stance that we were taking. That’s what Drip, when we came on the scene, we were like, all the other platforms are kind of mediocre guys. And our whole thing, our USP, our positioning, our whole positioning was based on that. And so that’s where I was willing to go to the mat for it because it was important to differentiate ourselves in the sea of competitors.  

Kevin Wagstaff:
I love that you said that because for you guys watching and listening, I’m the same way. It’s not like we are just like cocky, brash, and we came out that way. I’m very conflict avoidant and was even more so at the beginning of this spector journey. I grew up a people pleaser. I was that kid in my family, and so it hurt me. It made my heartbeat fast. Every time someone would trash me on social media and people would say things about the software and me personally, and it always hurt every time. And there was times I quit going on Facebook for five, 10 days at a time to regather myself and get my confidence again. I hated it. I hated conflict. But I also realized I had to find my voice the way you just said you did of maybe not finding it, but you spoke what you knew to be true. My self-growth journey throughout spec Torah was like, do your homework and then unapologetically say what you want without being a dick, and that’s possible that you can do that. And so I thought about my wording a lot. I got reps on camera the way we’ve both done over the years on YouTube. So it’s like I got used to saying things in a certain way where I was like, Hey, I’m not being a here, but I just objectively think we are better and here’s why. But I’m happy to debate it. Happy to talk about it.  

Rob Walling :
Kevin Wagstaff, thanks for joining me on the show again, man. It’s great to have you.  

Kevin Wagstaff:
This is so fun, man.  

Rob Walling :
It’s cool. It’s neat to be on the other side of the AirPods, huh? Because you were a long-term listener and is it weird to be on the show now? Did you listen back to your first episode?  

Kevin Wagstaff:
Not yet. I’m scared to, but I was around listening. I remember I went back and listened to the first, yeah, I went back and listened from one, I think years ago when I first started listening first episode. So I’ve been in an OG for a while, but I get energy out of just talking about in retrospect now to our past selves, if that makes sense of us 10 years ago. It’s so fun and humbling, and I just want people to all crack their industries and win such a fun journey.  

Rob Walling :
Well, it’s great having you on the show, man. If folks want to keep up with you on X Twitter, you’re Kevin Wagstaff three. That’s the number, Kevin Wagstaff and the number three. And I think that’s it, right? You’re not on LinkedIn, you don’t do, don’t have a main website you want to send people to.  

Kevin Wagstaff:
Nope. Just there. And then if people have more questions, they can find us or they found us for this one, find us on the Twitters.  

Rob Walling :
Awesome, man. Thanks again for joining me.  

Kevin Wagstaff:
Awesome. Thanks brother.  

Rob Walling :
Thanks again to Kevin for coming back on the show so soon. I really enjoyed our conversation. I hope you did as well. And if you keep listening, I’ll keep recording. This is Rob Walling, signing off from episode 786. You found the hidden track. Kevin and I are going to talk a little bit about his experience as an athlete, a college athlete, and then you played pro ball. Tell us a little about your experience, but the reason I want to get into it is I was also a high school and college athlete and it had a huge impact on my ability to be an entrepreneur and succeed at it. And so I want to hear a little bit about your experience around that too.  

Kevin Wagstaff:
Yeah, I’m such a believer in it. It doesn’t just have to be athletics, but it’s what we share in common and what we’ve drawn from. But it was just something I was so solely focused on basketball from age eight basically to 28 to basically when we started Spector something, I lived, breathed. I always was a repetition person. I wanted to be really good, and my parents just said, Hey, if you want to be really good practice. And then somewhere along the way I got really inspired and motivated to hone the craft and spend time at it. And so when you spend so many thankless mornings and nights lifting with the team, working out, shooting, staying after practice, you just kind of get used to refining something until it’s good and sticking with it. And I read a very pivotal, I’ll get into this in a second, but played college basketball and then had a chance to play on a semi-pro team in the Philippines afterwards. 

Did that for a very short stint, came back home because I had a young daughter and realized I’d make more money with my brain than playing basketball. So said goodbye to that dream, had to disassociate from the athlete in me and was kind of had a few years of being lost in a way of that athlete identity until I came across a Mark Cuban blog post that talked about business being his new sport. He liked basketball and he only played in high school, but he said, business is 24 7. And the way he talked about it, I was like, oh my God, I could channel the sports mentality into business and get rich doing it. This sounds incredible. So then it was more just finding the what and kind of had to abide my time until we found the thing that I could really be a psycho about the way I was a psycho about basketball.  

Rob Walling :
Yeah, obsessive.  

Kevin Wagstaff:
Obsessive. What about  

Rob Walling :
You? Well, when you say the sports mentality, I’m going to tell you what that translates to me, and you can tell me if you feel the same way to me. Academics were always easy. I read from the time I was like three years old doing math in my head, whatever. All that stuff kind of came easy. Sports were really hard for me. I’m not physically naturally gifted, and so I was slower than the other kids. I was skinnier, I was weaker. I couldn’t push as much weights as anybody. And I played football and ran track and all this. The big thing with sports for me is I would work day in, day out with basically no positive feedback loop for weeks and then months. And then I’d have that first meet if I was running track and I’d get the first feedback loop of, oh, I’m doing okay or I’m not. 

And then the next week, then I’d have another feedback loop of, oh, I’m doing better. And whether it was just pure time-based or whether it was placing in the races. But the thing there is this ability to have delayed gratification and to work towards a goal that is months and months out now, I never thought, I mean, I ran track from the time I was, what, 14 until I was 23 through college. So I wasn’t old enough to, I never thought in terms of years, who in three, four years I’m going to be better. I just didn’t think that far out. But I definitely thought out, Ooh, in six months I’m going to be faster. In nine months, I’m going to be faster. And I didn’t play instruments growing up. I didn’t do anything else in my life. I think that had such delayed gratification till I became a founder, till I became a, well, at first it was a blogger where it’s like I got to build an audience over a year or five or 15 podcaster. But being an entrepreneur was where it hit me. So that’s when you say sports mentality to me it’s like, no, I’m going to put in the reps even though I kind of have nothing to show for an extended period of time.  

Kevin Wagstaff:
Does that resonate with you? 100%. And to build on that, some of those reps, I imagine you pushed your body to a point of near failure and exhaustion to be great.  

Rob Walling :
Yeah, I to throw up every week or two in the early parts of the season.  

Kevin Wagstaff:
So once you push your body in a way that’s physical pain, you feel it. Whereas emotional pain is different and it’s sometimes harder, sometimes not as hard as physical pain. And so that’s why by even working out, working out, pushing your body, once it’s pushing your mind, then you’re like, oh, I could do this. I got energy left in the tank. I got renewable energy here. I can keep going. You find levels within yourself to just say like, oh no, I can push harder and not let it ruin my day or impact me because you’ve done it physically. So part of it was, oh, we’ve pushed ourselves way harder. We got this.  

Rob Walling :
Yeah, that was something I thought of often. The other place where I think this holds up is learning an instrument over the course of many years, which I am not. I play the guitar, but I’m not that good at it. And so I never did the hardcore practice, but my kids when they were younger, Sherry, and I said, you will do something hard every day. You will either do a martial art, you will play an instrument, or you will play a sport and you will do that six days a week. And I mean, that’s pretty brutal. We’re just like, no, no, no, no. And it’s not because I want you to be a concert jealous and violin, which is what they play, or that I want you to be a black belt martial artist, or that I want you to be a track athlete. It’s that I want you to know what it’s like to build something over time and to do hard you don’t want to do to have a payoff years from now,  

Kevin Wagstaff:
Man, life lessons in a world that just keeps moving quicker. They are going to be well equipped. What would you say, Rob, to someone who didn’t play sports? Because I’m always curious when I’m like, man, it’s so natural to us. What would you say to someone who had other things?  

Rob Walling :
Well, and that’s the thing, there’s a bunch of TinySeed founders who, a bunch of founders I know who are super successful that I don’t think played sports as a kid. Anybody that I’ve had on this show, I don’t think most of them did. And so I think there are other ways to do this. I don’t think you and I should frame this as, oh, this is how you’re successful is if you played sports. I don’t think that’s it either. I think each of us has our motive. One, you need some motivation. I think there has to be a goal. My goal was to make enough money that I had some type of freedom and I wasn’t worried constantly about money and then, hey, I can quit the day job and then hey, I don’t have to work again. That was a strong goal. So that’s the first thing. 

But the second thing is I think you need some type of intrinsic motivation. And I think if you played sports, you know what that is. But I think some people are also just intrinsically motivated to do stuff. And I don’t know if that comes from upbringing. There are some folks I know who kind had to get a job from the time they were 12 or were working from the time they were 10. And to them, work was just a part of life. Doing work that you didn’t want to do was just it. So I think that could easily be it. So I think there are many paths. I just think sports is perhaps an ease. It’s really easy to see the comparison in the through line.  

Kevin Wagstaff:
Yeah.  

Rob Walling:
Then it becomes a personal choice of are you willing to sacrifice a bit of a chance of success or a large amount chance of success? Because it’s interesting to you and because you want it to exist in the world, that becomes the calculus. You are listening to another episode of Startups. For the Rest Of Us, I’m your host, Rob Walling, and in this episode I fly solo and I answer listener questions on topics ranging from choosing between two side projects in the AI space, whether early niche marketing pigeonholes you for later bundling features versus splitting into multiple apps and more. There’s some great listener questions in the hopper and of course, audio and video questions go to the top of the stack. If you have a question for this show that you’d like to hear me or me and a guest answer, head to startups For the Rest Of Us dot com. 

Click ask a question in the top nav and even if you’re on a mobile device, you can record a quick video, quick audio question. Of course, those go to the top of the stack or you can send in a text question and those do get answered eventually. In addition, I also prioritize medium to later stage questions. The beginner questions get answered. Ultimately, you’ll see that I mingled one or two into this episode, but in general I like to answer more advanced questions because otherwise every about how to validate, how to find ideas, how to do the things that kind of gets tiring talking about over and over the course of 15 years. And so if you have those types of questions, you can go back and listen to the last 784 episodes and you can perhaps get some advice on that. And of course, you can still send in early stage questions. 

As I said, I will answer them eventually. Before I dive in to these questions, I want to invite you to MicroConf Europe. This year we’re heading further east than ever before. We’re going to Istanbul Turkey from September 28th through the 30th of 2025. It’s the closest we’ve ever been to Asia, right at the crossroads of Europe and Asia, making it easier than ever for founders from around the world to connect. I’ve never been to Istanbul. I’m super stoked to go we’ll have incredible speakers, our world class hallway track and some fun excursions to help you connect with other founders in a deeper way than just sitting in a stuffy conference room. Istanbul’s massive international airport offers direct flights from over 300 destinations in more than 120 countries, making it easier than ever to attend. Whether you’re coming from Barcelona, Berlin, Bangalore, or Boston. If you’re ready to join us, you can get all the details and grab your ticket before they sell out at MicroConf dot com slash Europe. This event will sell out. We’ve been selling our events out for the past few years and this will be no exception. So I hope to see you there. And with that, let’s dive into first listener question from Pablo.  

Speaker 2:
Hello, Rob. I’m Pablo from Spain. I have a full-time consulting job that I love, but also an entrepreneurial edge that I need to scratch. I’m developing two side projects on nights and weekends. The first one is an AI seizure detection app. The second one is an AI tool for automating market research reports. The seizure detection app faces a lot of regulatory hurdles and has limited revenue prospects to be honest, but it’s a passion project inspired by my daughter who has Dravet syndrome and suffers from seizures at night. The second one has more revenue potential, but it faces some strong well-funded incumbents. So doing both is a lot. I don’t really have the time, so I want to pick a path. Shall I focus on the healthcare app potentially pivoting to a B2B model or shall I fight the well-funded incumbents in the market research space? Or maybe I should just start over and get a better idea. Thank you so much for everything you do.  

Rob Walling:
It’s an interesting question here and one thing that I never do is tell founders to pursue an idea or not pursue it or if they’re picking between two or three. My honest answer is I don’t know. People have built ideas that I thought would never succeed. We in fact get TinySeed applicants that are growing super fast and are doing 10, 15, 20,000 MRR and I will tell them in the interview, if you had pitched me this idea, I would’ve said this will never work. And yet here you are. It’s really hard to know from the start what’s going to work. And so I’ve tried very hard not to give advice and feedback on ideas unless I’m the target customer, in which case I can say I would use that. That’s super interesting. I would pay a little bit, a medium bit, a lot bit of money for that or I will say I would not use that. 

I’m able to weigh in as a customer, but to act like just because I’ve started my own companies and I know a lot about SaaS and I’ve done a bunch of investments to act like I know what’s going to work and what’s not is a lot of hubris, especially in a space that I don’t know really well. So there are some spaces that we invest in through TinySeed where we have a lot of companies operating in that space and sometimes I can weigh in like, Ooh, that’s a very tough space, it’s very seasonal, it’s very price sensitive. I wouldn’t do that. And if you came to me and said, Hey, I have a B2C app, obviously two-sided marketplace that takes a percentage of GMV, what are my other don’ts? Obviously I can tell you things that I wouldn’t do or I can tell you about a space that I have knowledge in, but these, I don’t know, you don’t. 

Honestly, I have a gut feel that I can lend you and take my opinion with as much of a grain of salt as you would take anyone else on the internet except maybe on the internet, someone’s being a and trying to troll you. And I’m not doing that. I can give you my honest feedback, but I really would prefer as an entrepreneur that you go with your gut and that you weigh the factors. You go to the 5:00 PM framework, which is a hundred, 200 episodes ago, and you kind of go down that list and you think to yourself, which of these do I think will work? And then maybe ask yourself, if I think of the seizure detection app, it has a higher chance of failure, lower chance of success, then it becomes a personal choice of are you willing to sacrifice a bit of a chance of success or a large amount chance of success because it’s interesting to you and because you want it to exist in the world, that becomes the calculus. 

With all that said, if I were to weigh in on this, I think that regulatory hurdles as a single bootstrap founder doing stuff on the side, probably not something I would personally want to attack. And so what I might do is do the second idea, build that out, trying to market it. And when I get tired, when I need a break, if I kind of want to keep hacking on something but I’m tired of what I’m doing, I might hack on the seizure app a bit or just mothball it, put it on the side, hope someone else builds it if it’s something that you really want to see in the world. I’m not scared of a space with a lot of competition, especially if you can find those competitors Achilles heels, what are their weaknesses? Are they overpriced? Do they have a crappy sales model? 

Are they not building features that customers are requesting? You go to Capterra and G two and any place else that they’re rated and you look at the one star reviews and you think to yourself, oh, they’re not building this feature. This is the feature that I can build to potentially compete with them. I’m not scared by a competitive space, so if you’re giving me the either or, I would pick the second one based on that logic. Not saying it’s the right answer, I’m saying it’s the answer that I would personally go forward with based on 70 seconds of information that you gave me about it. And that’s the other thing to keep in mind is I’m operating with very limited information as they give you this advice. I don’t really know these spaces. I know the latter one a bit more, right? The kind of marketing analytics space, but I’m operating with a full three minutes of thought given to this. 

So it really is a gut reaction, a blink reaction based on patterns that I’ve seen. Your last question was like, should I do one of these or just pick a third? And that’s impossible for me to answer. I don’t know. It depends on if you can come up with a better idea than either of these first two, and this is just always that time that no one can scribe, right? So in the SaaS playbook I can tell you, Hey, if you have early week product-market fit, I can kind of tell you the steps that if you implement ’em and do ’em well and you put in the hard work, you build the skill and you have a little bit of luck, you’ll get to seven, maybe even eight figures in revenue. It is repeatable. I can be pretty prescriptive about which marketing approaches and how to test ’em and this and that, but in this early stage, you’re at more of the SaaS launchpad stage, right? 

I have this course, SaaS launchpad.co, and it talks about idea generation idea validation, idea evaluation walks through. I think when I have 26 videos, it’s almost 10 hours of video content. It really focuses on this stage and that’s maybe something you want to consider getting that course, but if not, you’ve heard me talk about 5:00 PM framework and 2 2200 validation on this show and that’s the kind of criteria that I would be thinking about as I looked at ideas. So thanks for that question, Pablo. I hope it was helpful. My next question is about early stage niche marketing and does it pigeonhole you for later from Sean Matthews who has asked several questions on the show in the past?  

Speaker 3:
Hey, Rob, Sean Matthews from Left Hook here. We are currently a services agency that builds integrations for B2B software companies and we’ve taken that expertise that we’ve gained over the past number of years and built a open source framework that helps deliver those integrations. As we built the framework out, we wanted to make it super extensible and basically very flexible to cover all sorts of integration types, but as we focus our marketing and as we think about our target market and our product that we’re trying to build on top of or in the ecosystem, we are entirely focused on B2B software and not on any of the other integration use cases. So that would be people that are trying to automate their own back office systems, people that are trying to automate the automation layer for your product, so integrating Twilio and srid and Google Maps and whatever else the framework could be used to go do those integrations and there’s no reason that documentation could have state it. 

So the question is, as we think about our go-to-market, do we accidentally pigeonhole ourselves into this, Hey, that framework and left hook are only useful for B2B software and therefore when the time comes for expansion or someone wants to use the framework for those other use cases, they just think not built for me, how do we avoid that? Is that a problem and is that something that you can get over later on with a different unique marketing push? Basically, I’m just worried about our brand getting pigeonholed and our brand and our framework getting pigeonholed into only does B2B software integration as opposed to the much broader expansion market that we could get into that the technology is just no reason it couldn’t be used for it. So it’s really just a marketing push in the beginning. Do we pigeonhole ourselves in and how do we avoid that for potential future expansion?  

Rob Walling:
Thanks. I like this question. I think it’s a good one. I would not at all be concerned about niching into B2B with the thought that if things go well and we get traction that next year or two, three years from now that we expand the use cases, do I think you can get pigeonholed? Not really. I mean I think especially if you come out with this whole, hey, we’re a 2.0 now you do a big promotion around, we’ve now expanded. You let all the customers know you bang all the social media drums, however you can reach people, you rearchitect the marketing site to where it really calls out we are now this plus that we’re not just B2B anymore now. Or I take it it’s not B2C, but it’s more you were saying like back office and line of business. I don’t understand quite how that’s not B2B, but whatever. 

I mean the specifics of it don’t matter. I would not be scared at all to start with a niche as large as B2B, and that is in fact, I love that idea. I mean I would start with that positioning. I like the space. People are willing to pay for it for all the reasons you hear on the show, I would start with B2B and then at a later time you just have to bang the drum. You’ve watched this with ConvertKit, which is now Kit, and they started as landing page and basic email newsletter for authors and then it was for bloggers and then it was for makers slash creators and I don’t know what their homepage says now, but they just kept getting broad as more people started using them. We’ve seen this with bid sketch, which was originally proposal software for designers, and then it just became proposal software for anybody who needs to create a proposal on the internet. 

And there are other examples too, maybe not of niching down. Well, there’s a ton of other niche down examples that just expanded over time, land and expand. You either add niches one at a time or you just go really broad and kind of go horizontal at a certain point. But there are other use cases of this. Think about Intercom and when they first started all they were, my memory at least was that chat widget. That was it. And it was an in-app chat widget and I’m trying to even think, I don’t think they handled email at the time. They were just a very limited functionality. What you can do well in the early days and now the offerings are extensive and they just keep adding stuff and adding stuff. HubSpot’s another one, right? Originally it was just inbound marketing, so it was kind of like Google analytics plus landing pages or maybe even a website builder like Squarespace. 

I think the early one was just some kind of marketing landing pages plus Google analytics plus some email or something and that just got bigger and bigger and then they got into CRM and then they got into whatever else HubSpot is these days they just kept expanding. Now again, those are not niche land and expand where you’re adding verticals or going horizontal, but you get the idea HubSpot’s not pigeonhole, they probably were for a while of oh, aren’t they the inbound marketing people. But you don’t think that these days, now you think the CRM because their CRM is so damn big and you can do this too. So I would not at all be concerned about niching down, especially if that’s what’s going to get traction and that’s what’s going to get you attention in the early days. So thanks for that question, Sean. Hope was helpful. My next question is from Dylan about when it’s warranted to lower prices.  

Speaker 4:
Hey there, Rob, this is Dylan Pierce from Cleveland, Ohio. Thanks for taking the time to answer my last question. It’s been a few months and your answer was really helpful. So my new question for you is have you ever had a scenario where you realized that you had to lower your pricing? I know the mantra is to always find ways to increase your price and that makes sense. Differentiation, your bootstrapped, you can’t necessarily compete in the race to the bottom, but what are some signals where you found that your market you just absolutely need to lower prices to be competitive? So some background for me, I’ve built a product that integrates with e-commerce platforms and this product uses computer vision and it’s typically reserved for banks in FinTech or startups that have a developer team that they can integrate over APIs and have that complexity to onboard. 

Whereas my solution is a simple plug and play app and it adds this functionality with the e-commerce use case in mind, I’ve been noticing recently there’s been churn due to competitors that have much lower pricing but take a different approach than I do less quality. But at the same time I also rank number one for the key terms I care about. So I am considering lowering pricing just because of the pushback I’m getting from new leads as well as retaining existing customers due to a lower priced, in my opinion, a lower quality approach. But in the end it seems like the sensitivity to quality isn’t so high. At what point would you consider lowering prices? What are your thoughts on that? Thanks.  

Rob Walling:
There are absolutely times when it is warranted to lower prices. Absolutely. So let’s say for example, I know you’re not asking this. Let’s say for example you raised 10 or $20 million and you wanted to just grab a huge chunk of the market really fast. I would 100% drop my prices and I would undercut all my competitors in a land grab type of situation. And you see this with big venture funded companies and as long as they can stay ahead of the burn and stay alive, it’s a very interesting strategy. Now you didn’t talk about doing that, that’s a very calculated way of doing it with a bunch of money in the bank. You’re saying, I’m losing deals. Customers don’t care about the quality of the results like I do and I thought they would and sometimes looks, sometimes you build a feature because quality is just a feature, right? 

Quality of the results. Sometimes you build a feature and no one else cares. And we did that plenty at Drip. I’ve done that plenty with every app that I’ve had and sometimes that happens. And so if you’re having trouble convincing people, no, no, no, ours is twice as good, three times as good and no one cares and they’re undercutting you, I would 100% consider lowering prices. There are times when product-market fit drifts. There are times when new competitors come into a space or competitors that are existing, either they raise the money and drop the prices. There are times when your entire customer base, maybe there is massive layoffs in that sector. If you’re serving say government offices and suddenly there’s a freeze on government spending where it’s really hard to get contracts renewed and you consider loan price, yes, there are external factors where I would consider lower income and obviously there’s a difference between lowering and raising prices and actually charging for the value that people are receiving. 

So a big mistake I see people make is, alright, here’s my SaaS pricing and it’s like 20 bucks a month. Well what’s that for? Well, it’s kind of for the whole app. Well, for how many users just unlimited and for how many emails per month or whatever, the value metric is just unlimited. It’s like, okay, that’s a problem. You probably need three pricing tiers. That’s a whole other conversation about how I’d structure those. But people leave money on the table there. Another way they leave money, money on the table is they say, all right, so now I have my 25, my 50 and my a hundred dollars a month plans. It’s like, okay, well what if Target or Best Buy or Apple Computer or some massive Fortune 500 company came and they need to use your software across their whole huge department or their entire employee base, how much would they pay you? 

Well, I guess they’d pay us a hundred dollars a month. And it’s like, okay, so that’s where you leave ’em. That’s messed up your pricing’s. You need an enterprise plan, you need to charge ’em a hundred grand a year, whatever. You’ve heard me talk about this. In addition, most makers, most developers and most early stage founders undercharge for their product. And so that’s kind of the rule of thumb that we see coming into TinySeed, for example, which is something that I’ve tracked pretty closely. It’s like 75 80% of folks have either the pricing’s too low or the value metrics off or just something else is messed up. It’s just they know it’s off. And so a ton of the early strategy and advising calls that I do with founders are around pricing. And I kind of generally feel like it’s like that across the startups For the Rest Of Us, MicroConf tiny CD ecosystem, whether it’s 75, 80%, 55, 60%, it doesn’t matter. 

It’s a lot. It is the majority. I have no doubt. And so that is why that advice comes out because most of the time your price too low or your value metrics messed up or your pricing isn’t ideal. But with that said, there were a hundred percent times when you should lower them. And I think I gave examples of when that is earlier. I won’t rehash those in all of the times that I’ve seen TinySeed companies raise their pricing, we do encourage them to, and not just blindly, but it’s kind of obvious, you kind of get a feel for what something maybe should be charged or at least the range. And a lot of folks are undercharging when they start with TinySeed. And of all the times that TinySeed companies have decided to raise their pricing, I believe I’ve only seen one maybe two times where that was a mistake where they went, not even upmarket, but they just raised their pricing 20, 30, 40% and it was a mistake and it kind of wrecked their funnel and they realized, oh, we outpaced the market and our customer base or our competitors or whatever the pricing is in this space doesn’t support that. 

And they backed off. And I can think of one off the top of my head that I remember the company name and I’m just going to kind of wiggle and say there’s probably at least another that I’ve forgotten. There’s probably two or three, but I mean we have had certainly more than a hundred companies and maybe it’s approaching 150 of the 224 investments I’ve made, it’s probably in that range that have raised pricing multiple times. And so usually that’s the way to go. But as you said, Dylan, if you’re losing deals consistently and price is a big deal, then it’s either, well, I either need to provide more value or I might need to consider lowering my prices. So I really do appreciate this kind of question because it calls into question blanket advice, right? And blanket advice and rule of thumb advice is good to a point and it’s good for folks to hear, but there are typically some exceptions somewhere. 

Now there’s not as many exceptions as a lot about everybody wants to be a snowflake, but I’m different. And I always hear you give this advice all the time, don’t you? B2C two set in marketplace takes percentage of GMB, but I’m different and my business is different where I shouldn’t raise prices because my customers won’t pay it. And it’s like usually that’s not the case. You’re not as unique of a snowflake as you think you are, but there are, I’ll say always or in almost all cases, some type of exceptions of when that blanket advice just isn’t the right advice for you. So thanks for that question, Dylan. Hope it was helpful. My next question is about one ICP versus many.  

Speaker 5:
Hi Rob, it’s Joe here from Australia. I’ve got two questions today if you can fit them in. Question one is around how to narrow down a focus on one product versus another. I think I’ve got two options as I see it. Option one would be to pursue a SaaS for a specific ICP and then go deep on the features that relate to that ICP. So it’ll be a bit more of a vertical style approach. Or option two would be to still go after a few ICPs, two or three ICPs that would most benefit from the product and then be a little bit more generic in the features and brand positioning. And one, I feel it’s an important question is really how I brand it and how I market it. So that’s got me procrastinating a little bit. If you can help me figure things out a bit and give me a sense for how you’d approach it, that may help.  

Rob Walling:
I want to answer Joe’s first question before we hear the second. This one is tough for me to answer without more context. It feels to me like it does depend in a way that if you’re going to go after say professional services like lawyers and accountants and I don’t know, insert a third ICP that’s similar to those two, maybe bankers or mortgage brokers, I dunno, there’s something akin to that. You get the idea if they’re all pretty similar and they need to be a little more generic to serve those three markets, I don’t know that that’s the end of the world. The thing I think that I disagree with you on is you say this will affect how I brand it and how I market it. Now it will affect how you market it because you need to get the right people to the app and if you have three ICPs and you can market it to all three of those ICPs or to those verticals and ICPs for those that don’t know are your ideal customer profile. 

So if you are proposal software made for designers to call back to my earlier example, designers are your ICP and even more than that, maybe it’s like one person freelance design, micro agencies, or maybe it’s five to 10 person design firms that kind of gets more and it’s the manager or the owner or the CEO or the founder or there’s some role often at a particular company that can be your ICP. And this is where it comes back to, I have this phrase called orthogonal SaaS. There’s vertical SaaS which serves a specific niche, usually an industry can be other things. And then there’s horizontal that can be used by any company type not just in a specific niche. And then orthogonal is where you target a particular role at any type of company. So it’s a combination of the two. It’s more a horizontal app that can be used anywhere, but you do target that particular job title like the head of HR or the VP of engineering. 

So for me, the branding, unless you’re going to pick your name, it’s going to be like legal blah versus professional services, blah, that’s kind of your branding. I wouldn’t do that because if you want to expand later, you don’t want legal in the name and the design and the colors and all the other stuff. I don’t think your branding changes, but it depends on the specifics. I think this is a tough one for me to answer. I would tend to think about how many resources do I have in terms of time and money. Having one ICP makes things simpler, but you’re making a bigger bet. How certain are you that that ICP is correct? You can hedge your bet and hedging your bet is an expression that can be positive or negative, right? Oftentimes we use it as a negative, like don’t hedge your bet, but sometimes you do want to hedge your bet and you do want to have two or three scps to learn more. 

If you roll it out with three and one of them takes off, then you go with that one and you kill the other ones for now. The problem with that is it spreads you a little thin. If you truly are trying to do these three parallel or adjacent niches, are you doing cold outreach campaigns to all three of them? And if you are not specifically your H one doesn’t specifically say we are software for lawyers, but it says we’re software for these three ICPs where you try to just say professional services. I dunno, is that a little weaker? Yeah, probably. So there are trade-offs here. I think the big question I’d be asking myself is how confident am I that this single ICP that I’m thinking of is going to work and can I gather more data to confirm or deny that assumption before I go all in on any of this before I make this decision? 

I don’t think it’s the end of the world to have two or three ICPs. It does make it harder. And so you really are going to want to have the time and energy and attention to be able to focus on all three and not focus, but to be able to handle all three. As I said, it’s easier to have one a CP and generally if I’m just starting out, I probably want to try to pick one, but you don’t just want to pick one at random. That’s the problem is do you have data? I think it comes back to be my big thought. Again, branding. I would try to make the branding work whether I had one or three because if I want to pivot from one, not even pivot, but expand from one to three next month, or I want to go from the three I have down to one that works. I don’t want to have to fuck with my branding. I can change in H one, but I don’t want to change my domain name or my design or my colors or my, you just don’t want it to be there. So I would make it flexible enough that it could support either case. And now let’s hear Joe’s second question.  

Speaker 5:
The second question is just around how do spec things properly with an agency? What have you typically used in the past and how deep would you invest in that? For example, would you get a bootstrap SaaS toolkit for them? Would you develop Figma boards for them and Jira stories and requirements boards? If you could give me a sense for how you’d approach that, that’d be amazing. Thanks Rob.  

Rob Walling:
I think it depends on the agency and I would probably ask them how they typically work with clients and I would be kind of opinionated about it. I think Jira stories, like you said, I think Figma these days, would I use AI to help generate? However, I think if I think in wire frames I would probably build wire frames or I would have AI do it or I would do it in Balsamic or in Figma. If I think more of full blown screens, maybe I do that. If it’s just stories and I want to list out, I kind of think of what is easiest for me and present that to the agency of like, can you work with this? Create a sample flow or a sample page, or you get the idea, create a couple samples and have them look at it. Conversely, you ask them, Hey, how do you typically, what are the top three ways you typically work with clients? 

Because if they’re already worked with clients using specific tools, if you have overlap there, that’s probably the best way to go. So that answer also is it kind of depends, but I would want to get more information on that agency and I would definitely want a recommendation on an agency. I wouldn’t just whatever, go to the internet or be doing research to find somebody because there are a lot of not great dev agencies out there. And then lean towards going with what you know and figuring out if that aligns towards what they’re used to. So thanks for those questions, Joe. Hope my take was helpful. My last question of the day is about the Slack app store.  

Speaker 6:
Hey Rob, Brian from Denver here. I have been building a Slack app for the Slack store for the last couple months, and within that time, slack has changed their submission guidelines from not needing to have your app installed in any workspaces to having your app installed in 10 different Slack workspaces before you are able to submit it to the Slack app store. Should I continue down this path of building the Slack app knowing that I’m going to have to convince 10 people to download it to their workspace before I can submit it to the app store, or should I continue on with another app store and build a whole new app there? Thanks,  

Rob Walling:
Rob. If I were in your shoes, Brian, a hundred percent I would keep building and I would find 10 workspaces that would be willing to install it. This is where I say build your network, not your audience. I would work that network. So if you are a member of MicroConf Connect or of Indie Hackers or any private Slack channels, I would be asking, Hey people, I have built a Slack app. Is anyone willing to help me out? I need to get to 10 in order to get to whatever the status is to, it’s not launched, but it’s like where they will review it. This happens with Zaps too and any Zap that we’ve ever built or tool, because we had to do this with Drip and there’s a bunch of TinySeed companies that have to go through this and they come into the TinySeed Slack and they say, Hey, I built a zapper integration, I need to get 10 folks on it. 

Are you willing to install it? And pretty quickly, out of the 204 companies that are in TinySeed, it fills up pretty quick. Sure, I’m willing to try it out, poke around, test it a little bit for bugs, do that thing, and it gets you above the 10 and then you’re able to soft launch it or whatever. So this to me is actually a good thing because it’s a little bit of a barrier to entry for upcoming apps that could potentially compete with you. Not a huge mode though. I mean, to me this becomes par for the course. If I had an app store myself in my own ecosystem, I would want something like this in place because otherwise you just get a bunch of crappy code and a bunch of stupid apps that make it that no one wants. And until you are installed on 10 workspaces and maybe 10 is an arbitrary number, maybe it’s five, maybe it’s 20. 

I think it’s a good signal to be installed on these things and it’s not as if you have to wait organically for this to happen. I think that’s the big thing is to work your network and social media. I didn’t mention Twitter or LinkedIn or whatever social networks you’re on, those are also good things to be like, Hey, who’s willing to help me out with testing this out on their Slack workspace? So it feels pretty clear to me. I would not be bailing on this idea just because they put what to me is a very minor hurdle that might take you an extra couple weeks max to get 10 people to install this or 10 small companies or whatever. I wouldn’t let that scare me away enough to want to build an entirely different app. So hope that one’s clear. I know a lot of time there’s nuance to these questions. 

For this one, for me, it’s pretty clear what I would do in your shoes. So thanks for the question, Brian. I hope my take was helpful. And there we have it, another episode in the bag. Hope you enjoyed those listener questions. And as a reminder, if you have a question for the show you’d like to hear me answer or a guest answer, head to startups For the Rest Of Us dot com and click that. Ask a question in the top nav audio and video questions. Of course, go to the top of the stack as well as medium and later stage questions. Thanks so much for joining me this week and every week. This is Rob Walling signing off from episode 785.  

Rob Walling:
Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and today I welcome Nick Majuli, the author of a new book called The Wealth Ladder that just came out today actually. And if you decide you want to pick up a copy of that book, it’s of course on amazon.com. We will link to that in the show notes. But Nick is the COO at Ritholtz Wealth Management, and he’s been blogging at of Dollars and Data since 2017, so almost nine years. He’s an expert in data-driven personal finance, and he’s given a lot of thought to the levels of wealth that people achieve. And we’re going to dive into the Wealth Ladder during this call and how level one is being paycheck to paycheck. Level two is having Grocery Freedom. It’s a net worth of 10,000 to a hundred thousand and on up. 

It’s a really interesting conversation. Nick has given a ton of thought to this topic and he backs it up with personal experience, but also with data. And he’s followed and read the studies around money, happiness and all these topics. During our conversation, Nick and I talk about ways to invest and move up the wealth ladder. And if you’re an accredited investor and you’re interested in indexing across hundreds of early stage ambitious B2B SaaS companies, you should consider joining me and investing in TinySeed Fund three. Our investment thesis at TinySeed is starting to prove out. We’ve had some great exits recently with Gym Desk who you’ve heard on this podcast as well as Scraping Bee. And if you’re interested in investing in mostly bootstrap founders who are building something different, head to TinySeed dot com slash invest to check out some of our early results. And if you decide to fill in that form, it goes directly to my co-founder, a R’S inbox, and he will reach out to you TinySeed dot com slash invest if you’re interested. And with that, let’s dive into my conversation with Nick Mc. Julie, welcome to the show.  

Nick Maggiulli:
Thank you having me on, Rob.  

Rob Walling:
Yeah, it’s great to have you here. You are the author of two books, one from 2022 called Just Keep Buying, but the reason you’re on the show today is this episode goes live on July 22nd, which is the day that the Wealth Ladder will be available in Amazon, and I’m guessing in all the places that you can buy books. So excited to have you on.  

Nick Maggiulli:
Yeah, I am excited for the book launch.  

Rob Walling:
Alright, so I’m curious, you’ve written so much, so you blog at of dollars and data.com, you’ve been a very prolific blogger for the past eight years, nine years, eight years, it looks like  

Nick Maggiulli:
It’ll be nine at the end of this year, so that’s correct. Eight and a half, let’s say.  

Rob Walling:
Congrats. A lot of people used to be a blogger, I blogged from 2005 until 20 11, 12 ish, and then I’ve moved to podcasting and YouTube and all that. But you are like, this is a lost art. Is it working for you? Blogging continues to be how you express yourself.  

Nick Maggiulli:
Yeah, I love it. I just love writing. I think it’s more my medium where I can sit and really think through, and I’m not a perfectionist, but I’m closer to a perfectionist than not, so I can really get everything perfect versus when I’m trying to go off the cuff, I might say something not exactly as I’d want to. And so I love writing and it still goes, and web ads are great and people, if you look at per thousand views, what gets paid the most, it’s actually bloggers. It’s not even close. It’s like Forex more than YouTube, it’s much more than TikTok and much more than Twitter. So it’s a lost art, but if you get people to read your stuff, it works well.  

Rob Walling:
And you’ve written a lot and given out so much practical advice about money. What motivated you to write the Wealth Ladder specifically as in, was there a gap in the advice you were seeing that brought you to write the book  

Nick Maggiulli:
And some of the gap I was creating in a way? And so I think a lot of the personal finance advice out there is very one size fits all solution. Like, hey, just do this. And I even did that with just keep buying. And the point when I wrote that first book, it was like, Hey, if I know nothing about you, what piece of advice would I give you? And that advice is the continual purchase of a diverse set of income producing assets, et cetera. And so that’s like, I know nothing about you, no priors, just keep buying. But then I said, what if I could control for something? What if I knew something about you? I knew your starting wealth level and more importantly, if I knew where you wanted to go, like Oh, I want to get to that wealth level, then I could tailor the advice better. 

It’s more of a choose your own adventure story instead of a one size fits all thing. And so it’s not that my one size fits all solution was bad, but there are people that are deeply in debt, just keep buying is not their answer, at least not yet. And then people that are like, Hey, I want to get to a major exit, I want to go 10 million plus, et cetera, just keep buying is not going to get them there either. They’re going to have to become an entrepreneur, et cetera. And so I kind of zoomed out a little bit from the just keep buying framework and I just created a larger framework that says, Hey, depends on where you want to go. That’s the thing you have to focus on. So that’s why I came up with a wealth ladder. I wanted a more complete view of wealth building and not just a single answer. And there’s nothing wrong with the single answers, but a lot of people just say, Hey, just do this and that’s it. That’s all you got to do is just, and I’m like, no, it really depends on where you’re starting. It depends on where you want to go, et cetera.  

Rob Walling:
That’s one reason we wanted to have you on the show is I’m kind of a personal finance nerd. I’ve read a lot of personal finance books and the one size fits all or fits most approach isn’t bad when 80% or 90% of people say in the country are in the same kind of situation. And I used to be in that situation, it’s like level one and level two people probably need the same type of advice, but as I progressed in my journey and built a little more wealth, I did find that personal finance books didn’t apply or didn’t apply as much and I had to kind of go out on my own. So that’s what we really liked about the Wealth Ladder framework that you have. Now that we’ve gotten this far in the episode, let’s define what that is. I’d love to hear so folks can understand, I’ve just used terms like a level one and level two, but talk us through what those six levels of wealth are.  

Nick Maggiulli:
So the six levels of wealth are dependent on your net worth. So as your listeners probably know, that’s all of your assets minus all of your liabilities. So that’s assets, it’s your car, your home, if you have a business, whatever the fair value is, your stocks cash in your bank account, et cetera. Subtract out any mortgage debt, business loan, credit card, et cetera. And that gives you a number. Let’s hope that is a positive number. And then depending on your net worth, you’ll fall in one of the six levels. The first level is less than $10,000 in net worth. That’s level one. Level two is 10,000 to $100,000 in net worth. Level three is 100,000 to $1 million in net worth. Level four is one to 10 million in net worth. Level five is 10 million to $100 million in net worth. And level six is over a hundred million dollars in net worth. 

And the nice thing about this is if you just memorize one of the levels, you can back out the rest. You just divide by 10 or multiply by 10. So I just say, Hey, remember level three is a hundred K to a million. That’s also happens to be where the middle class of the United States is in terms of wealth, around 40% of US households are in level three. So that’s according to the survey of consumer finances data from the Federal Reserve. So 40% are in level three, you have 20% in level one, that’s less than 10,000, 20% in level two, that’s 10 to a hundred thousand. So you have 80% of households in levels one, two, and three. 18% are in level four approximately. That’s one to 10 million. That’s like your upper middle class, I mean depending where you live, et cetera. And then the last 2% is level five and up and level six in particular only has like 10,000, 11,000 households in there of over a hundred million, very, very rare long tail of wealth. But that’s the framework. And the whole idea behind the wealth ladder is depending on which wealth level you’re in, the strategy might need to change to get up to the next level, what to avoid changes, all sorts of things are going to change how you spend money, how you can think about spending money, having more spending freedom as you go up the ladder. And so we can talk about income spending investments within that and touch on any one of those things.  

Rob Walling:
What I like to add onto that is level one you call paycheck to paycheck, which makes sense, less than $10,000 in net worth. Yeah, that makes sense. Level two is grocery freedom. You can buy what you want at the grocery store. Level three is restaurant freedom. And I remember hitting that actually distinctly being like, wow, I don’t look at the prices on menus anymore. Level four is travel freedom. You travel when and where you want. Level five is house freedom. You can likely afford your dream house with little impact. And then level six is impact freedom. You can use money to have a profound impact on others. The focus of this podcast is entrepreneurship and there’s a lot of indie hackers, SaaS founders, and it’s folks that are trying to change their station in life. That’s often the number one goal is freedom, purpose and relationships and freedom, of course, you use the word freedom at every level, impact, freedom. How’s freedom, travel, freedom. And so the majority of our listeners are probably in levels one through three. There’s certainly a chunk in four and five as well. What are the most important levers or the mindset shifts from moving up between levels, especially maybe from three to four?  

Nick Maggiulli:
Yeah, I think the biggest shift when going from three to four, and so the big difference there is income really. I mean income is true, it’s across the wealth ladder. But as you go from level three to four, I think, and that’s once again, I’m defining that as the middle class to the upper middle class, a lot of their life is very similar. They’re probably on the same plane, but maybe they’re sitting in different seats, they’re probably living in adjacent neighborhoods. They probably both own a home, but one’s a slightly nicer house and you go down, one owns a Toyota, one owns a Lexus, maybe they have very similar lifestyles, one’s just slightly upgraded. And that’s kind of what the upper middle class is. It’s not like you’re flying private, you don’t have a bunch of people on staff that are working for you necessarily. 

You might have a company you own, but that’s a different type of thing. I don’t mean personal chefs or drivers or things like that. That’s where you start to get into level five wealth. But I think some of the mindset shifts, because at least how I framed it in the book and when you’re talking to business owners is a little bit different because how I frame it, most people that are in level three, I’m like, yeah, you just got to get a decent job, save money, put it, buy income producing assets, buy a diversified basket of equities, stocks, bonds, et cetera, and just give it time and you will eventually get to level four. And that’s generally true. You look at the data, it’s pretty clear there. But if you’re a business owner, it’s a little bit different. I think as a business owner, you need to create a business that you can eventually sell that doesn’t just require your input. 

And this is not even my idea, this is like E-Myth revisited, a very old book, which is like, do you have a business or do you just have a glorified job where, yeah, you’re making good money, you control your time, but without you, the business would fail completely. And so I think the step you need to make as an entrepreneur is how do you go from creating a business that relies on you to creating a business that you can actually sell to someone else? And that is how you’re going to get that jump into level four or even level five obviously if it gets big enough. Now, once again, I’m not the expert on this. I would defer to you on business stuff and SaaS startups, et cetera. But I think just mentally when I’m thinking about it, the businesses that are sold that get people into level four are probably where the owner is not as necessary for the functioning of the business as I guess the businesses for those in level three are. That’s my guess, just off the top of my head. I haven’t seen a ton of data on that, but that’s just how I’m thinking about it. And I don’t know if you would agree or not.  

Rob Walling:
Yeah, I would say very likely. Most of the wealth that I see built in entrepreneurship is not actually from taking profit out of an operating business. Most of it is from exits, is from selling it. And that’s something that a lot of folks I don’t think are familiar with in your research or experience, and it doesn’t need to be with entrepreneurs, but just in general, what does it take to move from level four to level five? So to remind the listeners, level four is one to 10 million of net worth. And so if someone’s worth, I know a lot of folks actually who are worth 2 million bucks, 3 million bucks, they either had some stock options at a big company or they’ve just saved over time, or maybe they got a little bit of an inheritance from relatives, so they’re two and 3 million bucks, but to get up to 10, 15, 20, 30, I don’t think you save your way to that, right? So what are the ways that you’ve seen or have heard of to make that jump?  

Nick Maggiulli:
So excluding celebrities, athletes, entertainers who have these very huge contracts that will get them into that level five or above. For the most part, it’s going to be entrepreneurship and what you already brought it up exits, and I can just do the math for you. That makes it very simple, right? Let’s say today you just got to a million dollars. Let’s just say you have a portfolio. Let’s ignore home equity and all. Let’s just say you have a million dollars in a portfolio. You got there today, remember already that’s already an accomplishment. It’s not easy to get to a million you got there today, it’s earning 5% a year and you’re adding a hundred K to it every year. So you’re saving a hundred thousand dollars after tax, a considerable amount of money. Do you know how long it would take you to get to 10 million? 

The answer is 28 years. It’s a long time. That’s 28 years of grinding, saving a hundred K after tax, probably having to cut back in areas. Think about even if you’re like, you know what, Nick, I can save even more. I have an even higher income, I’m going to save 300 KA year. You do the math there, guess how long it takes start with 1000005% a year, $300,000 a year. It still takes 17 years. It still takes almost two decades saving. You have to be making almost a million dollars after tax and costs and everything to save 300 K. So it’s like it’s an absurd amount of money and it’s an absurd amount of time to get there. So as you can see, your traditional job is just not going to a nine to five or any of that. Or even a business, Hey, I make a hundred KA year in profit, that’s great, but if that’s all your savings, that’s not going to get you there unfortunately, and you can just do the math as well. 

If you’re saving a hundred KA year on a million dollars, that’s 10%. You’re increasing your wealth by 10% a year. By the time you get to 5 million, it’s 2%. So your job or your income source is not moving the needle that much anymore. So really who are the people that get into level five and above? It’s basically always going to be entrepreneurs. I mean, I don’t know. Another way of getting there. Obviously ignoring trust fund, inheritance, marriage, all those types of things. In terms of actual career paths, it’s going to be people that get into exits of some sort. And there’s two types obviously. There’s like, hey, you own the full business and you sell for a decent amount of money, or you start early at a company at a startup, you get equity and then that becomes a really big company like an early Uber or you got into Nvidia before AI went on, all those people are in level five now just because they were early enough and they got enough stock options. 

And then Nvidia just went through the roof and became the most valuable company in the world. So that’s kind of what the data shows. Not saying there’s no other path or you could wait a long time too. You could have $2 million today and just wait another 40 years and you’ll get to 10, but that’s who wants to have 10 million when they’re 90, right? That’s not the purpose. So when I’m thinking about these types of things, it really is entrepreneurship, business ownership, and you see that in the investment data as well. Like people in level five and six, the vast majority of their wealth is in private business ownership. And I don’t just mean stocks, retirement, I mean actually owning some sort of a business.  

Rob Walling:
Yeah, that makes a lot of sense. Something I was really intrigued by is you emphasize spending based on wealth, not income and income can be lumpy for entrepreneurs or unpredictable. So I guess how do you think about spending based on wealth versus income, and I guess that relates pretty well to the feast or famine cycles that some entrepreneurs might experience?  

Nick Maggiulli:
Yeah, I think this is especially true for entrepreneurs who don’t have that every two weeks they’re getting that same paycheck of the same amount. And when I say this, of course you have to spend based on your income, if you have zero income, your wealth’s not going to throw off enough to live on unless you just have a lot of wealth already. And then why are we even having the conversation? But let’s say, okay, you have your rent, you have whatever your mortgage, you have your fixed costs. My question is on that marginal spend, can I buy that extra thing? Can I go and get that nicer meal at the restaurant? Can I stay at that nicer hotel? I came up with the rule for this, which is based on the wealth flatter, and it’s called the 0.01% rule. And so all you do is you take your net worth and you multiply by 0.01%. 

So that’s 0.0001 or more. Simply divide by 10,000. That’s probably easier for people. So take your net worth divide by 10,000 and that is how much your wealth is conservatively generating each day 0.01%. You do that over 365 days, that’s about 3.7% a year. I think it’s a very conservative return if we assume that’s happening every day. That’s kind of like your, it’s trivial. It’s a trivial amount of money. So when you’re at the grocery store and you’re like, Hey, do I want to get the normal eggs or the cage-free eggs for $2 more? If your net worth’s over $20,000, that $2 is meaningless to you. You can spend that $2. And so that’s just a simple example, but it really maps onto the spending freedoms we talked about earlier. So someone in level two, which is 10,000 to a hundred thousand dollars in net worth, by the time they get to a hundred thousand, they can do kind of what they want at the grocery store. 

And then in level three that I call that restaurant freedom because by the time you’re at the end of level three, by the time you have a million, your world’s throwing off a hundred bucks a day, you can kind of buy what you want at a restaurant besides the super expensive wine basically. So that just maps upward from there. So when you’re thinking about spending, I like to use this rule because it allows your lifestyle to creep. I think the personal finance industry has a problem either, oh, you can’t lifestyle creep at all, right? And that’s usually the most of the advice out there. And I’m saying you can, but only after you’ve built wealth, after you’ve shown some financial discipline, then you can start to spend more. And the data actually shows that as well. In general, people with higher incomes, higher wealth do spend more than those with lower incomes and lower wealth, but it rises more slowly than income. 

So the wedge between income and spending is just on average goes up over time. So people with higher income save more savings rate goes up basically. So it’s shown in the data. People are already naturally doing this, but this is a rule that makes it very easy be like, Hey, hey, maybe if you’re deep in level three, let’s say of $800,000 of your net worth, you’re like, okay, I can go and buy what I want a restaurant, but I still got to fly coach. And so that’s how I think about it. Or you just got into level four, okay, maybe you can get to a slightly nicer seat on the airplane. You can see it a slightly nicer hotel depending on where you are in level four, et cetera. So these are just different ways I like thinking about this and it’s not perfect, but I’m just trying to get new frameworks out there to get people to rethink how they’re spending money.  

Rob Walling:
I heard you mention that on another podcast I was listening to and I was really intrigued by it because I had never heard anyone talk about that divided by 10,000. And I appreciate the specificity of each of these levels because I remember hitting each of them because I grew up at level one and I think by the time I was in high school, late high school, I think my parents got to level two and then that was it. And then I came out and then I was at level one, I graduate, you become a construction worker. And then I remember getting level two and it was entrepreneurship. Well, I had a good job as a developer and I saved my way into level two and I think maybe because what level two is to a hundred K of net worth, I probably crept a little higher than that, but then it was entrepreneurship side hustles started putting money in the bank account at a rate that we weren’t consuming it. 

You kind of spend your salary, or at least that’s the way we did mostly. But once I started side hustling and making a couple grand a month and we just socked that away, I felt like that was a bit of a cheat code at the time. And I do remember suddenly being like, whoa, I don’t really look at the grocery prices anymore versus when I was in college, if it was buy one get one free, I was like, I’m eating that. I don’t even know what that is, but it’s cheap, so I’m going to buy that. I want to switch it up and kind of double click on what I just said, which is side hustles. I saw in the book you do talk about entrepreneurship, you talk about focus versus distractions, and we do see a lot of founders and indie hackers that have a lot of side hustles going all at once. And I’m curious, in your research and experience, how do side hustles help at level three and when do they become maybe a barrier to building real wealth?  

Nick Maggiulli:
I guess that’s a very difficult question because you don’t know what something’s going to become. If I had started my blog of dollars in data that was a side hustle for three years, I didn’t make any money, but I also wasn’t trying to make money. I still, my full income, I still to this day have a full-time job. So I’m technically, all this stuff I do is a side hustle, but once I was in level three, I was like, Hey, I’m doing well, but I want to do this other thing. Who knows what it could lead to? I didn’t know anything about monetization of my content. I didn’t know about books. I had no plan to write a book. Now I have two. It’s like all these things kind of happen, and so I just happened into it in terms of your question of, okay, so how do you know when it’s helping or when it’s not? 

It’s like is it bringing an income? Look at how much time you’re spending too. I know initially when you start a lot of these things, when I did my hourly wage of dollars in data back in 2020, for every hour I worked, I’d earned $12 an hour by the time I turned monetization on. So it wasn’t a lot, but now if I redo that calculation, it’s over a hundred dollars an hour and I’m using the same total hours, it’s just like my average hourly earnings is now shooting up. So I think that’s the thing I would look at is, is your average hourly earnings going up over time in that side hustle and you have to put in some time. You can’t be like, oh, I spent 10 hours one weekend coding this and I didn’t make any money. I’ve been at this for eight and a half years. 

You got to spend at least a year on some of these things and really try at them and say, okay, that’s not working or it is. And then start looking, is your average hourly going up? And if so, focus on the things that are working and you’re going to have to abandon projects that aren’t working. And it’s unfortunate, but I’ve tried a bunch of different stuff that hasn’t worked right, and I’ve just said, Hey, you know what? The thing that does work is writing and I just want to get as good as I can at writing. And that’s it. It’s still a side hustle and it’s doing quite well. I mean, I could in theory go all in on it, but I don’t want to because it only requires five to 10 hours a week. I put in that I just write a blog post. 

I have to write one blog post a week, and that maintains everything I do. I don’t do all this other side stuff. I don’t get distracted. I think when you’re talking about distractions, if you do start finding something to work, just keep doing that. I’ve had so many people, oh, you should start a TikTok. You should start a YouTube, you should do this. And maybe those would’ve worked out, I have no idea, but the amount of time they would take is not even close. It’s exponential. The amount of more time I have to put into this for an uncertain payoff, something that there’s already a lot of competition out there. As I said, YouTube and all that pays one fourth of what web ads pay. And so it’s like, why don’t I just get even better at writing and do the thing, I’m already kind of have some proof of work on this thing or I guess product-market fit is what you would say. 

I have some product-market fit on this, and so it’s like I should just keep doubling down on that. And so if I ever do go, I don’t think I would go all in on this just because I don’t want to be a full-time influencer or anything like that. But for the time being, it really works. I have the security of the job. I like working with those people. They also put out content, so it’s like a nice marriage. We’re all doing content marketing, so we all learn from each other. It’s a win-win for everyone in the ecosystem. So I got very lucky in that sense. But that decision, I think where you really start to think about it is my side hustle paying me more than what I’m making from my full-time job. And I don’t think it has to happen right at that moment, but I think a better way of saying, okay, cumulatively since I’ve started this job and started the side hustle, have I earned more cumulatively with the side hustle than I have with the main job? 

So let’s say you started your job in the side hustle at the same time. Let’s just say that and okay, just now your a RR is higher than it is with your job, but cumulatively you haven’t made enough. So I would say keep going in the horse race until the cumulative number is higher. And so that’s a different way of thinking about it because it’s not just saying, Hey, I just had one good year. It’s like, oh, I’ve been having enough good years that now my side hustle has paid me more than my job has from time adjusted basically. So that’s how I would try and do it, not just like what’s paying me more now, but what has paid me more over the same timeframe? And that is the bigger thing to look through.  

Rob Walling:
That makes a lot of sense. Something we haven’t touched on that I know is a big area of your expertise. As you said, you work in wealth management and a lot of your blogging is around personal finance and investing. If I’m at level two versus level three versus level four and up, I guess, what are the differences between assets I should own? We hear 80 20 equities versus bonds is the old rule that I don’t own any bonds, man. I’m not going to own bonds until I retire. It’s just that thing that I don’t, but it’s like if I’m worth 50,000 versus 500,000 versus 5 million, would you think the mix is similar or is there a different approach at those wealth levels?  

Nick Maggiulli:
I think it really depends on your goals. I mean, if your goal is to, oh, hey, I just need a few million bucks and then I want to be able to coast off that if I need to, then you’re going to see the person with five million’s going to have more fixed income. They’re going to have more bonds because safety and how much of that in bonds, that’s going to vary by person, by risk tolerance. I’m guessing in your case you don’t own bonds. I don’t feel like they’re growth oriented. You’re like a tech person. It makes sense why you’d be more kind of all on more of a high growth, high risk. I mean, if you’re an entrepreneur, you’re probably going to be more risk seeking anyways. I think allocations will change based more on the person and less on their wealth. Their wealth does matter, their wealth level matters, but I think the person’s a little bit more important. 

So I think the person level two or three could have basically the same allocation. By the time you get into level four, you kind of want to be more in preservation mode. Also depends on your liability structure. If you have four kids, you’re going to have probably a different asset allocation than if you’re single or you’re a dink two double income, no children. That’s the same. I think that’s going to be very different. So it’s more about your personal life than your wealth level necessarily. I think wealth level does matter as you go higher up, and we can start getting into how we could break that out. But I think there are a lot of other things that impact asset allocation a bit more. And even if you’re an entrepreneur, you have lumpy monies coming in inconsistently, you might want to own a fixed income allocation just because the income’s coming in, whether it is not as high growth as equities, but it’s also hedged a little bit if you have a tech startup and tech is mostly the US economy now if you own US stocks, you’re kind of doubling down on what you’re already doing, which is your income. 

So I actually could make an argument for why you might need to own some fixed income, but it’s really based on you though at the end of the day you have to feel comfortable with it.  

Rob Walling:
As we move towards wrapping up, I want to ask you the age old question. You have an entire chapter with this title. Does money buy happiness? What’s your sentiment on that? I have my own thoughts that I want to weigh in after you do, but I’d love to hear.  

Nick Maggiulli:
So most people know the research, the first paper, which I mean they may not know the name of the paper, but it’s the Angus Deaton Daniel Kahneman paper, which is like, Hey, after $75,000 in income, we don’t see any more happiness. Well, there’s a guy named Matthew Killingsworth came out with another study that said, Hey, actually after 75 KA year, I’m still seeing happiness. And they said, Hey, what’s going on? Someone asked to be wrong. So they dug into the data, Kahneman got with Killingsworth, they went through all the data and they basically found that the original paper was the measure wasn’t as precise. And so they were actually measuring unhappiness. And so above $75,000 a year, you can’t prevent unhappiness, so you can be miserable at any income level is basically what they’re finding. So it’s a weird double negative. You can’t prevent unhappiness, but that’s what they found. 

And so Killingsworth paper was like, Hey, no, if you’re already happy, more money’s probably going to make you happier. But if you’re not happy and you’re not poor, by the way, if you’re poor, more money’s probably going to make you happy too. But if you’re not happy and you’re not poor, more money’s not going to do a thing. So all the people that are looking up will more money make me happier. If you’re not poor already, and I’m assuming you’re asking that because you’re not happy, then the answer is no more money’s not going to make you happier because you have some unhappiness already. If you’re happy already, more money is likely going to make you happier. It’s a very ironic thing that if you’re happy, more money’s going to do it. And that’s what the data shows. That’s true both with income and even more so with wealth. 

Killingsworth came out with a paper that looked at wealth specifically, and the wealthier people were the happier they tended to be, right? But once again, that’s assuming they’re happy already. So there’s all these weird kind of edge cases. But so to summarize all that, I know there’s a lot of research, but if you’re happy, more money will make you happier. If you’re poor, more money’s likely to make you happier. If you’re not poor or you’re not happy, more money’s not going to do a thing. And so that’s the main takeaway there. It’s in the book, and it’s interesting because it makes you think, okay, well if I’m feeling great, if I’m not asking about happiness and I’m feeling great and stuff more money is probably going to make you even happier. But if you’re like, oh, I’m not feeling good, I think, what is the issue? Oh, it’s my money. No, it’s probably not your money unless you’re really in a financial bind.  

Rob Walling:
And that’s been my experience as well, is I remember the first day of my life that I had $100,000 in the bank that I hit six figures or really of net worth, but it was mostly cash. And I was like, wow, this is amazing. And I remember when that balance was half a million, and I remember when it was a million, and I remember each level up and each time for me, it brought a sense of safety inner almost inner peace of like, well, now I could take one year off from working. Now I could take five years off from working. Now I could take a decade. I remember kind of calculating it that way. For me, it wasn’t about, oh, now I can go buy a Maserati even though I can, but it’s just like, that’s not why I did this. I’ve done entrepreneurship for number one, for freedom, but two for the purpose and the ability to control and work on whatever I want to work on. 

But when I heard that study, the 75,000, and of course the headline that whatever it is, the USA today or CNN pulls out is, oh, you don’t need more than 75 KA year. You don’t get more happy. And I was like, that’s bull. That is bull in my experience and has not. And I heard some other folks like Sam Par on my first Million was talking and he said, no, I got happier with more money. And I was like, yeah, me too. And so that’s why I appreciate about your sentiment is you’re framing it. And it’s not the social media clickbait headline. It’s like now in reality, if you are happy, make more money, you have more freedom, you have more happiness,  

Nick Maggiulli:
But it’s not an antidote to, if you’re unhappy, money is not going to solve that. Right? And once again, unless you’re in, let’s just say level one, if you’re in level one and you’re unhappy, it’s probably money. And if you think about the levels when you’re in level one, most of your problems are probably money problems. They could be solved by money. Oh my gosh, I wish I didn’t have to deal with this. Money would solve it. By the time you get to level five and six, money is the least of your worries most likely, and it’s more likely your relationships, your health, your time. There’s so many other things, and that’s what people don’t focus on. So that’s what I try to talk about. It’s like in the book, because I’m like, okay, obviously most people are never going to make it to level six, but how do I still make it relevant to the typical person, even myself? You have to talk about the non-financial things, and those are the things that people in level five and six can lose sight of.  

Rob Walling:
You’re the author of The Wealth Ladder, and as of today, it’s available@amazon.com or wherever greater books are sold. We’re going to have a link to buy that in the description. And if folks want to keep up with you online, of course you’re blogging at of dollars and data.com and your X Twitter handle is dollars and data. Nick, thanks so much for joining me today.  

Nick Maggiulli:
Yeah, thanks for having me on. Appreciate that.  

Rob Walling:
Thanks so much to Nick for joining me on the show. The Wealth Ladder, again is available on Amazon or wherever greater books are sold. Thanks for listening this week and every week. This is Rob Walling signing off from episode 784.  

Rob Walling:
Welcome to Startups For the Rest Of Us, I’m your host, Rob Walling. In this week’s episode, I talk with Pierre DeWolf, the co-founder of Scraping Bee, about how they mostly bootstrapped to $5 million in a RR and an eight figure all cash exit. It’s an incredible story. We talk about some of their early struggles growing. What changed when they went from growing, I think seven K of MRR in a year and then suddenly grew almost to a million a RR over the next 15 months, and something changed there. We dig into that early in the episode, we find out any trophies that Pierre bought with the proceeds from their exit. We talk about their thought process for deciding when to sell y to sell, as well as some of the inner workings of the exit, and just how hard it can be to sell a company. 

If you know Pierre from X Twitter, you’ve seen his very thoughtful tweets about bootstrapping and indie hacking, and he has what I consider a pretty insightful thought process about what it takes to be successful in this game. Before we dive into the conversation, I am doing a live q and a on Thursday, July 17th. You will only get access to that if you are a member of MicroConf Connect. MicroConf Connect is our amazing online community for bootstrapped and mostly bootstrapped founders. Inside Connect, we have founder to founder discussions about what’s working today in SaaS. We have live workshops and AMAs, including the one with me on July 17th, and we have access to our content vault with recordings from every previous MicroConf event. MicroConf Connect is $50 a month and we charge for it to keep the quality up. It’s a gate that keeps the quality of the founders inside very high, and it allows us to afford to pay a moderator to keep the conversation going and to make sure it’s super high signal to noise. MicroConf connect.com if you’re interested in checking it out. And with that, let’s dive into my conversation with Pierre Pierre de Wolfe. It’s a pleasure to have you on the show.  

Pierre de Wulf:
Hello, Rob Whaling. Thank you for having me.  

Rob Walling:
Yeah, it’s great to have you on, man. I think a lot of folks who listen to this show will know you from X Twitter. You’ve been in the Indie Hacker community pretty prominent for many years now, and you and your co-founder Kevin, started Scraping Bee and you recently sold it for an eight figure all Cash exit. No stock option shenanigans as you put in your tweet, but you’ve even had other folks, I think it was a month or two ago, I went through one of your tweets that was something like, what was it, like 12 or 20 hot takes about indie hacking that you may not agree with or whatever. And I was like, I think I agreed with almost all of ’em. We were in agreement, and your wisdom I think has been helpful for a lot of folks. Last time that you were public about scraping bee’s revenue and Scraping Bee was mostly bootstrapped, effectively bootstrapped. The only money you took was from TinySeed. Last time you were public about it, you were at 5 million a RR, and that’s with two co-founders and a very small team, I dunno, a handful of folks You’re working with  

Pierre de Wulf:
Four. Yeah,  

Rob Walling:
Four. So I mean highly profitable before I get to, how did it feel when the money hit your bank account? And I want to know what you bought the crazy trophies you bought, why sell it all? Why not just run it forever?  

Pierre de Wulf:
Yeah, that’s actually a good question. Definitely something we talked a lot about with Kevin, and I think there’s two things. First, what this phrase, I don’t remember who said it, I think it was Naval, but most startup doesn’t die because of money or stuff, but most startup dies because funders are tired. We’ve been running scraping before five, six years and doing web scraping for 10, 12 years. And we were not to the point where we were sick of it, but we were getting tired of doing web scraping. We wanted something new and that the second point is the only way to know the top is to reach the top. So scraping really was in very good position to be sold in terms of revenue growth and all. And we didn’t want to wait for the growth to slows or to even decrease before selling it. We also had you change between, I mean, you change during all your life, but between 25 and 32, 33, you change your priority change, you start to settle to build a family. And so yeah, all of this combine, we thought it was a good time to sell it and to start the process.  

Rob Walling:
Yeah, that makes sense. You might be quoting me, so I have this quote that I’ve said several times where funded companies fail when they run out of money, and a bootstrap companies fail when the founders run out of motivation.  

Pierre de Wulf:
Yeah,  

Rob Walling:
I think that might be it. I’ve tweeted that and I’ve said it on the show before because that’s usually what happens, especially for bootstrapping. Why would you stop? But if you do plateau or you’ve done it for 10 years, I mean, I started feeling that same thing frankly with Drip and at one point with MicroConf, although I have renewed energy around MicroConf and TinySeed, but yeah, so I think that makes a lot of sense. Now I want to ask you the big question, the end of the hero’s journey, the day the cash hit the bank account, you refreshed the bank balance. I bet you and Kevin were in touch and you’re just waiting for millions of dollars to go in more money than you’ve ever seen or probably ever imagined you would have. What would describe that feeling to me?  

Pierre de Wulf:
So it was very funny. It was a bit anticlimatic in a sense that, so the whole closing day was done remotely. So we had lawyers in the us, investor in the us, so TinySeed, we had the buyer in Litre and us in Sosa, France. So you do all those DocuSign, you have proof of this as a buyer, send the proof of wire transfer, and then you just wait. So it was for three to four hours. And when I actually received the notification refreshing the bank account, I was just relieved I didn’t want to jump. And actually I took a nap. I took I think a two hour, 40 minute nap because I had slept only four hours the night before. And it was very, very stressful those last few hours because you have all those lawyers talking about the last few details of the SPA. 

So the final agreements, it was lot of relief actually. Then you have to start announcing stuff to the team, although they knew we were getting acquired, but you’re making it official. You’re introduced to the acquirer Slack channel. So it was, yeah, a pretty hectic day. A very good one. Yeah, just a lot of relief. I remember afterwards I, after my day was over, I just took a one hour walk. I called my parents and my grandfather to tell them that it’s over, it’s been sold, and this time it worked. Yeah, that was Anticlimatic, but a beautiful day for me.  

Rob Walling:
And did you send Kevin an emoji of you flipping dollar bills or anything? Yeah. Yeah.  

Pierre de Wulf:
So for Kevin actually, so yeah, I can probably share it, but the day we closed, his wife was actually delivering his baby, so it was a very hectic day for him to Wow.  

Rob Walling:
Talk about.  

Pierre de Wulf:
Yeah, so it was a process from afar. Of course, I went to the maternity, I dropped some flowers because it was just a few minutes from home. But yeah, we celebrated  

Rob Walling:
Through Slack. I’m glad. Yeah, exactly. We slack. Okay, so after you sold, we’re going to get into what Scraping Bee is and more of your story, but I know I saw on Twitter at some point that you had bought yourself a bunch of Legos, bunch of Lego sets, but was that after the exit or was that after hitting 5 million  

Pierre de Wulf:
A RR? Yeah, so it was after the 5 million a RR. So Ally just buying big box and just storing them, upping the value goes up. And it was funny because I was able to just buy everything I wanted because Lego are expensive, but it’s not like cars or jewelry or whatever. So at the end of the day, it’s not that big of a deal. So yeah, it was just fun stuff.  

Rob Walling:
People talk about the different levels of wealth where it’s like going to fast food when you’re a teenager or frankly growing up we just didn’t have money, so even fast food, it was like, oh, it was rare we did it right? But at a certain point, maybe you have $50,000 in the bank going to fast food. You don’t look at the menu prices anymore, you just buy which one. And then there’s a point where you go to a restaurant and you don’t look at the menu prices anymore, and then you go to an expensive restaurant and you don’t do, and then your hotel or your Airbnb, you just stop kind of looking at the price very much. And obviously for some people, maybe it’s sports cars or whatever, but getting to the point of Lego being that is, it’s pretty good. Pretty good. Fantastic. This is what Thank you. Thank you.  

Pierre de Wulf:
HTML. Yeah. Is  

Rob Walling:
That what you said?  

Pierre de Wulf:
Exactly? Yeah, this was my thank you. HTML tweet basically.  

Rob Walling:
Yep. Alright, so let’s talk about scraping bee. So your H one, tired of getting blocked while scraping the web, the scraping bee web scraping API handles headless browsers, rotates proxies for you and offers AI powered data extraction. Now you and Kevin started this, what was it, 20 18, 19 20 19, 20 19. But this was not your first idea. You tried B2C, you tried B2B. In fact, you did a really good MicroConf talk on YouTube that will link up in the show notes and you gave it when you guys, you were at about 1.5 million a RR at the time. So if they want to hear about how you found the idea of scraping B, they can go do that. But having done B2C, B2B had failures and then had this outsize success, what are the differences? Why did scraping be work when these previous ideas?  

Pierre de Wulf:
So I think first main reason was I would say funder product fit or funder audience fit in a way that our first reuse SaaS was price monitoring tool for e-commerce owners. It was at the time where drop shipping was very hot. We built a tool allowing to monitor prices and all, but we didn’t know e-commerce and we didn’t know to talk to e-commerce people. We didn’t know where those people end out on the web, what their problem were. So we basically built a product waiting for a solution, waiting for a problem. What changed with Scraping Bee is with Kevin, we were a developer and we did a lot of web scraping, so it was a mix of dark footing because we used a product like Scraping Bee when building pressing bot and product audience fit. Kevin had a book and a blog about web scraping in Java, which was quite popular in that niche afterwards. It sounds very obvious, why haven’t we started with that? But I think what changed the most, the audience and knowing the people you want to sell it to,  

Rob Walling:
Do I remember correctly that you or you and Kevin had authored a book about web scraping?  

Pierre de Wulf:
Yeah, he did. About web scraping Java. Yeah. He had a blog and a book. Yeah,  

Rob Walling:
He did. I remember when we interviewed you for Tiny C, because you were early, you were like one KMRR maybe, which is right on the edge for us, but we really liked you and Kevin and B, this book, it’s like, oh, you wrote a book a bunch about this, and I think you guys had kind of a small audience in the web scraping space because of that. And we’re like, you know what? We’re going to take a bet on these guys. And it was part of it. And it’s again, if you listen to this show at all, people know I don’t put a lot behind having an audience per se to build SaaS. You can only sell to a very small portion of that, and it doesn’t actually get you very far. But we were betting on the audience, we were betting on the two of you being these smart people who had had built this, had launched it, had some kind of wounds under your belt in terms of having some failures and had written a book and had gotten it out there. And then my memory was even after, I have some notes here from Producer Ron that after a year after the TinySeed year, you were only at about eight KMRR, but then 15 months after that you were at a million a RR. So do you remember what changed in that? Yeah, yeah, because a striking difference  

Pierre de Wulf:
Definitely. So what I remember is that for the first few months of scraping B, so we tried to leverage Kevin audience, but as you said, it was not such big audience and here knowledge of the space was more valuable than having an audience, but it was very think that on scale we were hanging out on forums, Reddit and stuff like that. And then what really changed during the year we grew very fast is that we started writing a lot more content. So first eight months, we spent a lot of time writing some very good content, but the output was quite small because it was only Kevin an eye. And then, so thanks to TinySeed money of course, and also to a few advice that made us focus on what works, we just decided to go all in on SEO and that’s what we did and what really fueled that grows. 

Then of course we’re doing tons of product optimization, onboarding and stuff, but at the end of the day, what really mattered the most was the S thanks to Kevin because basically we split roles. So we’re both developers, but at some point we’re like, okay, Kevin, you’re going to do marketing. I’m going to do product and tech. And Kevin wanted to do that. And so I remember it was during COVID, and so he watched the A Hre course blogging for businesses, which they have just made free during COVID. And yeah, from there it was just nonstop finding content writer, publishing good content, listening to Ruben Gamma advices a lot. He helped us a lot. I know he helped Kevin a lot. And yeah, that was the main point.  

Rob Walling:
I remember that now, and I do remember folks who listen to the podcast will know Ruben is my go-to for freemium, for SEO, for content, for Hot Takes on AI and such. And that was a good part of, I think for you guys being part of a TinySeed is that Ruben is in batch two from 2020 I think, and is very generous, especially with TinySeed founders about his detailed knowledge. He knows that you’re not going to go on Twitter and write out everything that he does or share with a random person, but he is willing to kind of give up the real details of how it’s really done.  

Pierre de Wulf:
Yeah, no, it was awesome.  

Rob Walling:
As are you guys now, it’s great. When I have someone who I see a tiny C founder who content SEO is working for, I’m like, all right, talk to Kevin and Pierre, talk to Ruben. There’s a few others. There’s content obviously is a very powerful force for Bootstrappers. It scales so well, and that’s something that you guys did I want to call out is when you and Kevin were writing everything, it was a little slow going. You can only produce so much, but you figured out how to do something that a lot of folks don’t, which is how do I hire writers and or editors who you produce a content machine rather than just the founders doing it. And it’s easy to do that poorly. It’s easy to hire people that turn out articles. I’ve done that myself in the past. So what was that process like to build that engine, that content engine? Because we as founders, especially folks who are like yourself, who are really good on social media, who are really clever and who have a lot of hot takes that are interesting and get people thinking and talking, our standard for this type of stuff is really high. You’re not going to publish an article about web scraping using Node or JavaScript or whatever that doesn’t meet your standard, and that standard is a nine and a half out of 10. So how did you possibly build that engine?  

Pierre de Wulf:
So first thing is that, so our audience, were a developer and we wanted to build skyscraper techniques. So the big possible stuff, you can write educational content. And so first we started looking for developers who wanted to write and not for writers who knew a bit how to code. With that in mind we’re able to have writers who were really, in terms of technology, like technologically very top-notch. They knew everything there is to know about their language framework or whatever. Then, and I think I’m pretty sure it was Kevin’s id, we hired an editor. So basically this one was a writer who knew a bit about Watch Scraping, but doesn’t matter. And his role and I think is still working with us to this day, was to review every single piece of content and making them more enjoyable. Sometimes a writer will not be English speaking, English will not be first language and all. So really focusing on developers who want to write, then have an editor review everything, then have a bit of SEO knowledge to optimize it and you just keep going, keep going, keep going. And so we’re not publishing a lot of content, only three to four blog posts per month, I think, which is way less than what some companies are able to do, but it was sufficient to be, yeah, at some point I think we were the second biggest web sweeping blog on the internet. So that worked.  

Rob Walling:
The articles were long was my memory, is that right? Like 4,000 words? 3000,  

Pierre de Wulf:
Yeah. So I think 20 minutes reading time. So that’s about that. And we did one for once you have something that works for Python, you can do all the language. Once you’ve done the language, you can do the framework and some library. So it’s really easy to duplicate Content ID issues started when everyone started doing the same. So because SEO O is a zero sum game, there is only one Google Page rank zero, so we had to diversify. But for the first two years, that worked very, very well.  

Rob Walling:
What’s interesting is that there’s a good chunk of TinySeed companies that take the money and they say, the money’s great, but I didn’t actually need it. What I really wanted was the community, the mentorship, the advice. But it sounds like the money actually did make a difference for you guys.  

Pierre de Wulf:
It made a mental difference because it was during COVID, we had only, I don’t know, 15 K in the bank. When we received it, we were lucky enough because growth meant we haven’t actually touched it, but if we hadn’t received the money, we wouldn’t have spent it. I dunno if I’m clear, but it’s like it gave us mental safety and reassurance that we can spend a bit more, that we can pay ourselves finally a decent amount of money. So yeah, money helped a bit to give mental clarity and support and mentoring helped the most. Basically we had access. So again, it was COVID lockdown, we were in a countryside, France with Kevin, so not the perfect place and time to talk with people who build SaaS. And in the Slack we had access to expert in everything, SEO, pricing, copywriting. I remember Jan Patch helped a lot there an hour for pricing and many other people who just gave us free 30 minutes, one hour consulting call and it was very, very helpful.  

Rob Walling:
Yeah, that’s what I was going to ask was like obviously you have this great tweet from yesterday and you said getting funded through TinySeed was a game changer for Scraping Bee. We kept the best benefit a bootstrapper can have optionality, we were never forced to raise more, but we always knew we could if we wanted to, and it gave us enough funding to meaningfully accelerate our growth. But the best part, the advisors, the mentors, the experts that make up the TinySeed community we’re here for us when we needed it most. So today, I guess we’re coming full circle as I’m very happy to become an investor in fund three, which makes me, and I love it. It’s such so great to build your own investors, but it sounds like it all made a difference. The money made perhaps less of a difference, I guess, but the advisors, the mentors, the experts, and the advice got you there faster, right? See, I believe you would’ve gotten there eventually, but maybe it would’ve taken you extra years or maybe it would’ve been slow enough that there would’ve been other competitors. You don’t know, right? You don’t know the sliding doors.  

Pierre de Wulf:
Yeah, you don’t know. We talked about it with Kevin and I think last year we said, I think TinySeed made us save two years and at that time the company was four years old, so it made us grow twice as fast, which is huge, especially when time is your most valuable asset.  

Rob Walling:
Yeah, that’s really good to hear. That’s really good to hear. You put a number to it and I dunno, it just makes me happy why we do it. I tell people, get there faster. Now, was this pretty steady growth once you started that trajectory with the content seo? Did you have any  

Pierre de Wulf:
Very steady,  

Rob Walling:
Yeah, you didn’t have any plateaus, right?  

Pierre de Wulf:
Have early sign of plateau. So because in SaaS, if you analyze churn and basically when your growth is not growing, we’re going to get a plateau because of churn. So we had a plateau coming in and at that time we made some meaningful update to the product and to pricing because we were commodity product and we bought the idea that you shouldn’t care about your competitors’ prices and all. But I think it’s just mean for us it was completely wrong. I mean, you cannot just ignore it, especially in our market, we’re commodity products, so you need to have a sexy pricing table if you want people to at least give you a chance.  

Rob Walling:
So let’s talk about the sale process, the exit. You and Kevin got together and decided it was time to sell. I want to ask you how did you decide it was time to sell, I guess is the first thing, and then talk a little bit about how it actually went down.  

Pierre de Wulf:
So actually if we’re talking about the early start of the process, it was 18 months ago when we sat down with Kevin. We saw revenue, growth, churn, margin, business was in good state. We were a bit exhausted. So we started a full process with discretion, capital, our m and a advisor. We went through the process of building a pitch, selling a story to potential acquirer and doing some interviews and then getting some offer. And then we received a big frightening cease disease from one of the five biggest tech companies in the world. Of course, everyone got frightened about it. We had to aboard the sales process. We were like, okay, it’s not going to happen this year. We want to try again in a year. What can we do to make the process smoother next year? So actually it was a year long process. So two big things we did was to hire more to standardize operation, document a bit, everything, and to have all the accounting stuff ready in gap format. 

We’re a French company, so it was a bit of work for us, but very helpful. And so fast forward a year, we’re in August with Kevin and he is like, okay, I want to start again to sell the business number. We’re still good. We talked with a R, was like, okay, let’s do it again. And so obviously that time it was a bit faster because the whole pitch was ready. The accounting staff were all there. So the way it works is like you prepare a pitch, you prepare some name you want your advisor to reach out to, then the advisor. So here, discretion, capital, they were our salesmen. So basically talking to all those people being like, okay, scripting B one, two sell. Are you interested in it? You can sign this NDA, here are all those numbers. They filter out serious buyers. Then you start to book some interviews with them. 

So people want to know the team, ask questions such as Why are you selling? Where do you see what scraping industry coming forward in the next few years? How much do you want for? How much do you thousand the business from? And where NR or Scott who answer every time, we’re not in the valuation business. So we give valuation advice. And so we just let the buyer give the first offer and then you get LOI, you ship around a bit, try to negotiate, and then you sign the first LOI. So between first pitch and signing of LO, I think it took three to four months and then start the due diligence.  

Rob Walling:
Now did you get multiple offers?  

Pierre de Wulf:
Yeah, we got three multiples offer, so two that you could consider strategic ones and one from a private equity fund. What was interesting is that the private equity fund offer was very seducing for a private equity fund. Usually there are multiple RMH flower, but we ended up working with XI Labs group because we really wanted to sell to someone who knew the industry because web scraping is very particular. There’s some legal risk when you’re doing web scraping, lots of company are not happy that you’re doing it. And so we didn’t want to relieve what happened to us one year prior. And so selling to the biggest actor in this industry obviously smoothen out the risk because he knows about everything. He had the same struggles as we used to add, and he wanted to really acquire as a company to make it grow bigger and better. So this was very what seduced us, and it was also a full cash offer, which was the best for us,  

Rob Walling:
Which makes total sense. It’s a r volt. Many folks who listen to this podcast know he comes on for Hot Take Tuesdays and my co-founder with TinySeed discretion capital.com. If folks are between, if you’re between about two and 20 million a RR, they only do the sell side m and a. So they’re always on the founder side and I know you had a great experience with them.  

Pierre de Wulf:
Yeah, definitely.  

Rob Walling:
I don’t want to gloss over the cease and desist that you received because the first time you receive a cease and desist, it feels like it’s going to be the end of the world. And what I tell TinySeed founders, I believe we talked about it, but it’s like across 200 and how many do we have now? 212 investments, 204 investments. I think just through TinySeed, we see a cease and desist at least once a quarter, sometimes every two months, just because it’s a lot of large numbers. Now. We also see co-founders implode about once a quarter and we see a nap get hacked once a year maybe. And again, it’s just large numbers. So for us, while we know it’s scary, it is usually not business ending. Now, that’s not to say it can’t be, but it usually isn’t. Usually there’s something, there’s a way around it, whether you change what you’re doing or whether they just leave you alone or whatever. So I know you can’t go into extreme detail about exactly what happened, but did that just kind of go away? Did you respond to it at all?  

Pierre de Wulf:
Yeah, so we received, it was a big season, like really a business trading one. They were asking for full cut base, full customer base, full revenue may scraping their website. They wanted us to stop scraping their property and it can go very far. The worst case scenario was really us in jail and the company closed. So that was a bit frightening. But what happened is that first we were advised by very good lawyers who drafted very good answer, but the most critical part that they send those kind of ceases and disease to all the web scraping companies in the world. And one of them, one the biggest web scrapping companies won against them and it was very public. So they no longer had a case with us because we would just say, look what you are reporting us  

Rob Walling:
Case law.  

Pierre de Wulf:
Yeah, this is what saved us, not saved us, but what closed the issue we had plan B, we could have always stopped scraping this website. We would’ve lost, I don’t know, 10, 15% revenue. But that was what happened. So it took six months for it to settle completely, but it settled by then no longer answering to us. So it died. It died  

Rob Walling:
As they usually do. They either kind of settle, as you said, you need your plan A, B, C, D, and E plan A is we just tell ’em to go F themselves and then they back off, right? Plan B is we send ’em some documentation and we maybe adjust our approach. And plan C is we just stop scraping the site and we lose 10 to 15%. That’s like the worst case, almost not the worst case. As you said, the worst case you wound up in jail. But that’s just so they don’t actually want that. They don’t actually want  

Pierre de Wulf:
That. No. But it was the worst case, just trusting anti act in the US and California low and  

Rob Walling:
It’s scare tactics. Yeah, it’s scare tactics. Yeah. So then let’s walk through this part because this is the part where you talk due diligence and you had a more painful time of your life. How was due diligence for you? Were you stressed? Was it as awful as I often make it out on the  

Pierre de Wulf:
Show? Yeah, so it was funny because I remember is the day we signed the LOI. So the days the due diligence started, you sent me a PDF or your of your exit book, which I’ve read during my flight back from Phoenix.  

Rob Walling:
This was before it was published. This was several months before.  

Pierre de Wulf:
Yeah. Yeah, it was very helpful. And yeah, I’ve read about this due diligence part, how awful it is. So it was bad, but two things made it easier for us. I think three things. So first I had a co-founder, and so honestly, without Kevin, it would’ve been much harder, especially because Kevin is much calmer than I am. We had lots of accounting issue during due diligence, no big deal, but it was French accounting and also lots of question regarding this. And so Kevin worked on it very well. It really made due diligence lighter. Secondly, we were prepared because we’ve read a lot about it, your book block, past Discretion, capital, we had some documents ready. And third, the acquirer was really not friendly, but cooperative. Not trying to find the slightest default to try to retrade or not trying to nit pick the smallest detail, trying to give a lot of pressure. I mean, it was serious business, it was important stuff, it needed to be done, but we never felt we were working with someone who didn’t want to welcome us very soon. So those three things made it very stressful, but probably not as bad as some funder at it.  

Rob Walling:
And how long was Didi?  

Pierre de Wulf:
It was quite long because of those accounting staff. So the way it worked, basically we had added cabinet just redoing our four years of accounting from the grand up. So it lasted I think three months.  

Rob Walling:
Three. Oh, that’s long.  

Pierre de Wulf:
Yeah,  

Rob Walling:
It’s long and stressful because you just, every day you wake up and A, you don’t sleep well, and B, you then wake up tired and every day I remember I’m thinking, is this the day it all just goes sideways? Is this the day they back out? Is this the day they find something? Is this the day we screw something up? Is this the day that even is this the day that the stock market drops by 30, 40%? Any black swan event can happen, a terrorist attack, God forbid, just anything can happen and suddenly these deals don’t go through and so you’re like, I want this to go as fast as possible. Did you feel that as well? I felt that the entire time. Yeah.  

Pierre de Wulf:
Yeah. I was very afraid of that. So very afraid of receiving another season disease. So although XI Labs was we scrapping company, I remember every letter we received during those three months, I was scared to open it. Is it the IRS asking for an audit? Is it, I don’t know, big tech company sending season disease? So this was very frightening, especially because we had it happen. So we almost sold the business two times. So one time season disease, but the time before, we were two weeks before closing the business and we actually received an email from the acquirer telling us, Hey, we need to talk. And boom, they no longer wanted to raise a business. So yeah, black Swan event was what frightened me the most. I wasn’t scared about everything else because we had no, we were not hiding anything. It was a small team, clean cut base, no big trouble with customers and all and growing stuff. But yeah, black swan, scary.  

Rob Walling:
So then you closed, and we can smash, cut back to the beginning of this episode when I said, how did it feel when money hit the bank account? And so you’d already bought the Lego sets when you hit 5 million, did you buy any crazy or cool things after the exit?  

Pierre de Wulf:
So what we did, we went to Paris with my girlfriend of 10 years and we went to a very nice hotel. So this was, I think our celebration gift to ourselves because it was also stressful for her and she was very helpful during this period. So I think this was the biggest treat we gave to ourselves. I was able to invite my father to MicroConf in New Orleans, so he was with me, so I took, yeah, it was a nice holiday with him and yeah, small gift to family, but no big massive spending  

Rob Walling:
Aside from the three Lamborghinis that now sit out inside outside of  

Pierre de Wulf:
Your cell. Yeah, aside from that,  

Rob Walling:
Obviously, yeah, obviously. Well man, huge congrats to you and Kevin. It’s really well deserved. You guys executed very well. You worked hard and you worked on things that mattered and you shipped a lot quickly, and you were generally right about most of the stuff you were doing. And so I think you’re kind of a shining example of someone who can bootstrap or mostly bootstrap to millions in a RR and I would have every confidence. I guess this leads to my next question is have you ever thought to yourself, and you can say, Rob, too soon, too soon, don’t ask me this, but have you thought to yourself whether you want to do it again at some point? Because I believe you’re still working for the acquirer right now, right?  

Pierre de Wulf:
Yeah.  

Rob Walling:
And so that’ll happen for however long it happens, but when you move on, you have your freedom, you have enough money in the bank that you never have to work again. Have you given any thought to what might be next for you?  

Pierre de Wulf:
A lot. So yeah, for now, I’m still working as scrap PB until at least early 2026. And for what comes after, I think about it a lot. We talked about it a lot with Kevin. We don’t know if it’s going to be together or not, but we have lots of ideas. I dunno if I want to do it again from scratch because those first few years are very, very slow and I’m not in a position where I want to relieve that because grinding for a year and then after a year only reaching six KMRR, it’s rough. Pretty bad. Yeah.  

Rob Walling:
And it’s hard the second time because you want it to be faster and you’re like, you don’t want to put in the pain, the motivation, because the first time it’s like, well, I’m doing it to create an impact and to learn and to get rich so that I never have to work again. The second time, it’s like, how much am I learning this time? I don’t need to get rich. I already, it’s like real calls into question a lot of things.  

Pierre de Wulf:
But what I think I would like to do is to start early on with a small team. It doesn’t have to be big, maybe three, four people to really put up something live real quick to try to fail faster maybe. But so I definitely want to search something again at some point, but it’s probably not going to be the way we did scraping B because we want to save time  

Rob Walling:
And you don’t have to this time. You have resources. You could acquire something. You could.  

Pierre de Wulf:
Exactly.  

Rob Walling:
This  

Pierre de Wulf:
Is something we talk a lot about  

Rob Walling:
Also. Yep. So P de Wolff, there’s so much more to your story, but I’m going to bid you ADU today. Folks want to follow you on X, Twitter U are Pierre de Wolff, it’s D-E-W-U-L-F, where you are a prolific and thought-provoking twitterer. So thanks so much for joining me. Is there anything else you’d like folks to check out? Do you have a personal blog or a YouTube channel? I don’t know about  

Pierre de Wulf:
No personal blog. I’ve started posting on LinkedIn a bit more, which was definitely different audience, but you meet a lot of interesting folks there too. So yeah, for note, that’s it.  

Rob Walling:
LinkedIn and next Twitter. Well, thanks again man. It was great having you on to tell your story.  

Pierre de Wulf:
Thank you, Rob.  

Rob Walling:
Thanks again to Pierre for coming on the show, and thanks to you for listening this week and every week. This is Rob Walling signing off from episode 783.  

Rob Walling:
I never bet the house. I didn’t rack up credit card debt. I didn’t gamble on my mortgage, but as my confidence, my experience and my savings grew. I started making bigger bets with my time, with my money, and with my energy. And when those bets paid off, they created leverage that helped me stair-step my way into the life that I wanted. It’s another episode of Startup For the Rest Of Us. I’m Rob Walling, and in this episode I talk about why I succeeded my 10 best entrepreneurial decisions. This episode is the counter episode, if that’s a term I can coin to last week. It’s a continuation of sorts. In last week’s episode, I talked about my biggest regrets, my biggest mistakes. And as I put that episode together, I realized, and yet I still succeeded. So why is that? And I started thinking, well, it’s because I made these other decisions that even in spite of the regrets and the mistakes, I still made it. 

I still achieved what I wanted to achieve. And of course, I’m still achieving things today. I have new goals, but realistically, most of the goals for my life growing up were to be an entrepreneur and to have enough money that I could work on whatever I wanted to work on when I wanted to work on it. Having achieved that now 10 years ago or so, I enjoyed reflecting on both things I did well and the things I did not do so well. But this episode should be more upbeat than last week’s because it’s about success. It’s about things that I did Right. Before I dive in to these 10 takeaways I want to tell you about MicroConf Connect. It’s our online community for ambitious SaaS founders. If you haven’t checked it out, we have monthly live events. We have an online forum and discussion groups. 

I do a live q and a where you can ask me questions in here, my responses in real time, but once a quarter. And we have hundreds of founders that are in the group, and it is better than any paid community out there. And the reason is because people pay for it. And so there is a minimum bar of the quality of the members of the community. You can add to MicroConf connect.com if you are looking for an online community of support and encouragement and a place to offer insights and help you discuss stuff in a controlled environment. We have a full-time moderator who makes sure everything stays nice and tidy, and the conversations stay amazing. MicroConf connect.com. And with that, let’s dive in to my first best entrepreneurial decision. Number one is I stopped reading and I started shipping. So around thousand one or 2002, maybe 2003, nah, 2002, I think I stopped hiding behind business books and the excuse of learning, and I started writing code and launching products. 

It’s easy to hide behind the excuse of, I just don’t know enough yet. I’m waiting for someone to give me permission. I’m waiting to figure out what the secret is that’s going to guarantee me success. I have that secret. You know what it is? Nothing’s going to guarantee you success. No one can guarantee you success. You have to start shipping at a certain point. For me, I remember it being really scary, shipping things onto the public internet. What if someone got mad? What if someone criticized me? But realistically, I did it anyways, and shipping things publicly helped me push past my analysis paralysis, and it helped me start to build confidence. None of those early projects did much. You can refer back to last episode to hear how I just flailed for years of launching a bunch of stuff to see what sticks, and it was a big waste of time. 

But these were critical first steps to get me over that terror of firsts, the terror of doing something for the first time, launching code onto the public internet, launching a blog post, which I’ll talk about soon, launching a podcast, being on camera, all these things that really terrify you and doing things in public creates opportunity. I say that a lot. Doing things in public can create opportunity for you. And this was my start of doing things in public where I say I stopped reading and started chipping, and that’s not totally accurate. I kept reading. I just reduced the reliance on constantly needing to have the next book and the next book and the next book, and I reduced it dramatically, and I started chipping instead. It was a great first step that without it, I would not have succeeded. Decision number two is I learned from mistakes and I changed course. 

I see founders out there who have the blind spot of they don’t learn from their mistakes or they don’t change course. You can’t just try the same thing over and over and over. I didn’t try the same thing over and over. At first I did because I was like, well, it’ll work eventually. But I started realizing I need to make real adjustments to this. So early on, I had several sites that were ad-based that were like venture backed type startups, but I was bootstrapping. I made B2C software. You wonder why I say don’t do it. I’ve been there. I’ve done the things I tell you not to do. And I realized, well, I can’t just do that again. It didn’t just fail because it was going to fail. It failed because the economics of B2C businesses, especially SaaS, are not good. So I moved from B2C to B2B. 

I had a little super low price products early on, high churn, catastrophic unit economics because you can’t afford to pay anything to acquire customers. So I moved from lower priced to higher priced products. I moved from building everything from scratch to acquiring small apps with some traction. I learned from mistakes that I made and I changed course, and I evolved my strategy based on experience instead of blindly repeating past efforts. So I took the learnings from the last mistake that I made and I fixed it, and I didn’t know if I was going to fix it, but I just changed course and tried it, and that time it worked. So this was definitely one of the good decisions that I made. And this wasn’t just back in the early days. This still happens today as we are launching new marketing efforts or audience building efforts with MicroConf and TinySeed. 

Frankly, anything we do, we often launch it and we are directionally correct, but it is not a hundred percent there. It’s 50% there, and it’s kind of working, and we have to not try the same thing over and over. We have to make real adjustments course correct and learn what we did wrong and make it better. The third decision I made is I worked really hard to build a cushion for myself so that I could take early risks. So while I was working a full-time day job, I started freelancing on the side as a developer, and I slowly raised my rates until at some point I could quit my day job. So by 2005, I was charging around a hundred dollars an hour, maybe 1 25. And this isn’t $2,005. That’s significantly more. I dunno if that’s 1 75 or 200 these days, but I was working remotely before remote work was mainstream, and that allowed me to do it nights and weekends while I had the day job, which really none of the other developers that I was working with, I think there were probably 20 developers at the company, the credit card company when I left, I don’t think any of the other ones were moonlighting that way. 

And I did it so that I could build up that cushion first. I saved 10,000 bucks over the course of several months and nights and weekends. I was tired all the time. It really was kind of all I did was work, but I wanted to build that cushion so that I could afford to at some point, either take time off, quit the day job. Turns out I used it to buy my first software product, but if I hadn’t put in the work and done the savings, I wouldn’t have had that ability. I saved pretty aggressively. So first it was 10 K and then 20 K and eventually had 30 K, which is when I bought tail in 2011. But it gave us Sherry and I, the financial cushion where I could take bigger entrepreneurial risks and have my back a little bit to the wall, but not so much to the wall that we would say lose the house. 

And that cushion was something that in retrospect was a really good decision because it allowed me to take bets that were big enough that they made a difference in our lives if they succeeded. Decision number four is probably a controversial one for me to say, but I’m going to say it and then I’m going to say, this might not be for you. Number four is I started writing about what I was doing. So this is when I started blogging. Originally, I was going to journal for myself. It helped me clarify my thoughts, helped me reflect on decisions, kind of track my progress. It was a form of almost self-guided mentorship where it gave me structure and insights into what otherwise just felt completely chaotic. But I was trying to track progress. But as I watched Joel Spolsky publish essays, Paul Graham publish essays, I thought to myself, doing things in public creates opportunity. 

I don’t think I actually thought that to myself. I didn’t coin that till a decade later, but that’s what I was doing. That instinct was to put my thoughts out into the world. And this might be controversial because don’t I say don’t build an audience. I do. And if you’re going to start a SaaS company, I don’t think you should build an audience. 95 plus percent of the SaaS companies that I’ve invested in had no social media audience, no personal brand audience. When they launch, they still don’t. And they’re still wildly successful. And there’s dozens of seven and eight figure SaaS companies in TinySeed. But why is this on my list then? Well, because for me, my path, while it obviously was to start software companies, then start SaaS, when SaaS became a thing, it then led me to writing books. Being a blogger, podcaster, YouTube, or however you want to describe me, this is my higher calling. 

I really, really enjoy what I’m doing today and what I’m doing today. I don’t want to say it wouldn’t be possible, but it certainly started with this writing that I was doing. It started with the blogging. And so for my personal journey to find what I call living my best life, the best job I’ve ever had, which is being a podcaster, YouTuber, TinySeed writing books, I love it. In order to get here. I believe that this writing and blogging and publishing really kicked that off. Putting my writing online also in the early days, brought me into the orbit of people that I admired. Like Joel Spolsky noticed me, Jason Cohen bought my first book. I was blogging before Jason Cohen and Patrick McKenzie and Pelley from Balsamic. But as they came online and all the bloggers, we all, we knew of each other if we didn’t know each other. 

But I started respecting Jason Cohen’s blog. I think he started blogging maybe oh eight or oh nine. And then when I published Art, small State, small, he bought a copy. Patrick McKenzie started blogging, I think it was oh seven, and I started in oh five. But I was a fan of Patrick. We were kind of doing the same thing. We were kind of doing small software products. I say we were doing small software products, so we had some overlap. And he was in Japan, and I was here, but the first MicroConf 2011, Patrick McKenzie flew over and spoke, and then DY from Balsamic. Same thing. It’s like it put me in this network. If anything, it was like having the audience. I don’t serve me much in the future years of building SaaS specifically. It does serve me well now. But having the network of Jason Cohen, Patrick McKenzie, PEL, and whoever else I rubbed elbows with was more important. 

Build your network, not your audience. Publishing online, it helped me build credibility. I formed good relationships, and it really helped me discover opportunities that I probably couldn’t have predicted. One of those, and kind of a subset of this point is later I wrote a book. I wrote Start Small, stay Small, because I had a bunch of content on the blog. And then I started a membership website in 2009, which is like a precursor to MicroConf actually. And I decided to write the book, start Small, stay small. It was a huge time investment, but the potential upside I thought was significant, right? And it did put me on the map with a lot of people. It got me some speaking gigs. I spoke in the early days, I think it was in 2010 and 2011 alongside Eric Reese as the Lean Startup was coming up. And then years later, Eric was really generous in supporting TinySeed and when we first launched it and helping us meet some LPs and doing some promotion of it. 

And again, all those things. It wasn’t that Eric was in the audience, but it was that he was in my network because of these things that I had done in public. And writing a book, interestingly enough, transformed me from being just another blogger to someone who was seen as more of a leader of the bootstrapper movement. And so for me, for my journey starting to write and publish about what I was doing was definitely a life-changing decision. Decision number five was that I made increasingly larger, but still manageably sized bets. So this is a quote from Dave ett. He is the author and the creator of Sheldon and Drive, which are two of my favorite web comics, and he does Kickstarters and publishes them as books, but he is on a podcast called Comic Lab. You’ve probably heard me refer to him many times over the years. 

And he has this quote of make increasingly larger, but still manageably sized bets. And I had never heard someone put it that way before. But as I look back over my career, I did level up. And when I had a bit of success, I was willing to bet a little bit more and go a little bigger next time. I never bet the house, I didn’t rack up credit card debt. I didn’t gamble on my mortgage. But as my confidence, my experience and my savings grew. I started making bigger bets with my time, with my money, and with my energy. And when those bets paid off, they created leverage that helped me stair-step my way into the life that I wanted. This single decision might be the one that made me the most money in my career. So I bet $11,000 on dotted invoice in oh 5, 0 6, it was a tremendous bet. 

It was money I had just painstakingly worked hard to save nights and weekends. Then I bet 30,000, 35,000 maybe with legal fees on hit tail in 2011, I bet $200,000 building drip. All of those would’ve been brutal had they not worked out. But none would’ve sunk us. We wouldn’t have been bankrupt. And when I made those bets, I put my back to the wall a bit, not at risk of bankruptcy or losing the house. I did put pressure on me to succeed. See, I’m not of the personality that I could burn the boats, that I could quit the day job and watch my runway burn down. I actually don’t think that’s a good decision in most cases, especially if you’re supporting a family, unless you have a significant runway and you’ve already started building something, or you have some type of audience or some type of strong network. 

But for me, making these increasingly larger, but still manageably sized bets over the course of many, many years is really why I am where I am today. Decision number six, this was less of a decision and more of just what I did. And I said earlier that making increasingly larger, but manageably sized bets might be the number one takeaway. I take that back. I think that’s number two. I think this one is number one, I didn’t avoid hard, boring, grindy, scary work. I leaned into it. I never told myself, I’m not going to do this thing, particular marketing approach or write some code or whatever, insert whatever you don’t want to do. I’m not going to do this because I don’t feel like it. I never said that. I knew from really early on that if I was going to be successful with no network, no audience didn’t know any entrepreneurs, didn’t have any money, no investors, no clear path, that if I was going to be successful, it would require a lot of hard unglamorous work. 

And especially as I said, as an outsider with no role models and no wealthy friends. There were all kinds of things that I wasn’t passionate about. SEO kind of seem boring. Running ads kind of seem boring. Learning how to copyright that one seemed interesting. I was a writer fixing bugs, doing support launching products. I wasn’t passionate about fixing other people’s code. Tire code base is not written by me taking it over. You think I wanted to do that? Does any developer? And I didn’t just rewrite it from scratch. I didn’t. I just fixed the bugs and shipped it. It was often tedious, frustrating nights and weekends, hours of grinding. Seriously. I don’t want to overstate it, but I’m not. It was hundreds and hundreds of hours doing that I didn’t want to do, and I did it anyway. I think part of it was out of necessity because I wanted to succeed. 

Part of it was I was an athlete in high school and college, and I did a bunch of stuff that I didn’t want to do. That was really painful because the goal was to be faster than the other people. I was an athlete, a track athlete, and the goal was to run fast and beat my personal best and win. And I knew that I had to put in hard work to do that. And I worked construction after college, and that was hard work, but I needed the money. And so it just never, it did occur to me to question it. And Sherry would ask, and friends would ask, when is this going to pay off? And I was like, I think at some point it will be worth it. It was hard work, it was grinding, but I did it anyway. And I didn’t need every part of the work to be fun. 

I had hobbies for that. I still played the guitar. What I needed though was progress, and I was willing to grind to get it. So honestly, this mindset, as I said, is probably the number one thing and the number one most important reason that I feel like I achieved what I have. Number seven is I deliberately learned about myself so that I could turn my blind spots into weaknesses. So I believe that a blind spot is just a weakness that you don’t know about, and that keeps you from succeeding over and over and over and gets in your way, over and over and over. A weakness that you don’t see as a blind spot. The more you learn about yourself, how you operate, whether from self-reflection, taking personality tests. I mean, I’ve taken a dozen personality tests at this point, the Enneagram and the StrengthsFinder, and there’s a bunch of them, Myers Briggs, as well as feedback from my spouse, from colleagues, mastermind groups, co-founders that helped me turn blind spots into things that I saw. 

I still have several weaknesses, and I have worked on improving those as well. I’m more of a believer in leaning into your strengths. But I put in the work to understand myself such that I could get clarity on my weaknesses, and that allowed me to either power through them to work around them or to hire for them. At this point, I don’t think I have any major blind spots left. Now that may be hubris, but for several years now, probably a decade, I feel like pretty clear on who I am, what I’m great at, and what I’m not. And it’s because I made self-awareness a priority and learned about myself. So one of the things that I’m not sure I would’ve realized in the early days how much it would come into play in my success, but I think it’s had a tremendous impact. Number eight is I figured out what I wanted and I went for it. 

I was pretty focused. I didn’t wander aimlessly or chase trends like a lot of founders were doing and still do. I knew that I wanted to own products. I knew that I wanted to build equity in something, ownership. I wanted to stop working for other people. And it took six or seven years of focus to reach full-time product income. And then I reset my goals, more stability, more freedom, and eventually enough cash and never have to work again. And I believe I hit each of these milestones because I had clarity and referred to number six, I didn’t avoid hard, boring or scary work. I was pretty clear on my goals, and I just relentlessly executed to find them. And if you refer back to last episode, sometimes that relentless execution led to burnout and led to me not feeling super mentally healthy. So there are pros and cons to this, and I wished that I had still figured out what I wanted and went for it, but had a little more of a measured approach as I was pursuing it. 

But definitely kind of knowing what I wanted, and it wasn’t, I knew exactly how I was going to get there. At least I had these goals of like, I want to quit the day job and have product income. All I did was push everything into that bucket and basically say, everything’s going to get me to that. And from 2002 until 2008, that’s what I did. And then I wanted a bit more money in from 2008 to 2012, that’s what I did. And then I wanted to either sell for enough money that I never had to work again or make enough money off of SaaS app that I never had to work again. And that was 2012 to 2016, on and on and on. So I think knowing where you want to head, knowing where you’re going, and then working hard to get there, I think is just such a fundamental piece of that. 

Number nine is I learned when to persist, when to pivot, and when to quit. So early on in the early two thousands, I stuck with bad ideas for way too long, and I would grind for months and months without results. And then over time, I got better at reading earlier signals. So I learned how to pivot without abandoning everything. It’s not just I’m going to launch 20 things to see what works and just abandon, abandon, abandon ’em when it doesn’t work immediately. But I learned how to pivot things, how to take them and adjust, how to experiment with new angles, how to walk away when something wasn’t truly working. But I started getting a better sense of when that was, right. It’s knowing when to keep going, when to adapt, and when to shut things down. It’s a really hard skill in entrepreneurship, and one that I feel like I gained through watching people better at it than I, and through a lot of trial and error. 

But it definitely contributed to me finding the success that I wanted over the years. In fact, one example of that is I was a blogger, hundreds of hours a year. That’s a lot of time, man. I always wonder if that was worth it. But anyways, from 2005 until I think around 2011 is really when I kind of stopped publishing and I realized that blogging was a commodity. People were reading the blog among many others, kind of like a social media feed where no matter how much you try to stand out, you’re just another voice. You flip through TikTok, do you really know who’s there? Or are you just watching that TikTok? Do you know specific individual people? Or are you just kind of flipping through it like it’s content? And blogging started to become that. And so I realized I wanted to start a podcast in 2010, and that’s when I grabbed my friend and fellow blogger, Mike Tabor, and we started this very show. 

So despite having really never put audio live on the internet, not knowing how to podcast, being terrified to do it, buying a headset, microphone, recording over Skype, I don’t even remember. Pamela was the plugin. I mean, this is old school. We did it. We shipped it. And don’t go back and listen to that. It’s really bad. It’s just so funny how you can feel how nervous I am and my voice. It’s like you don’t know how to talk yet. You don’t know how to talk on a microphone. It is slightly different, not projecting, and there’s so much wrong with it. But all that said, we shipped an episode, and then we shipped an episode the week after, and then the week after. And aside from there were a couple months in there where we dropped to twice a month, I think, or every other week. 

It was only for a few months. And then we were like, nah, we’re just going to go every week. But aside from that, I basically shipped 52 episodes a year since 2010. And after a year of the podcast, I think we had about five or 600 listeners, and that was painful. I had 25,000 blog subscribers. And I remember thinking like, oh, this is brutal. But we stuck with it. And frankly, that decision and that ability to pivot, as I said, because remember 0.9, is I learned when to persist, pivot, and when to quit. I kind of pivoted blogging into podcasting, right? Or you could say, I quit blogging and started podcasting. Either way, it definitely reshaped my trajectory as a founder and as someone who ultimately wanted to write books and be on YouTube, and it helped me stand out in a noisy space. And my 10th and final decision that I believe contributed to my success is that I didn’t make impulsive decisions when things got hard. 

There were absolutely times when I wanted to rage quit, whether it was shutting down MicroConf, walking away from the podcast, or honestly leaving startups altogether at one point. There were times when I was burned out, when I was frustrated, when I was over all of it, but I never made those decisions in the heat of the moment. I gave it time. I let emotions settle, especially really fiery emotions like anger, burnout, frustration, being ragged on social media and dragged through the mud and thinking, I just want to escape and leave it all behind. And every single one of those decisions had I acted on impulse, I think I would’ve regretted. But instead, I continued to build on what I had already created from the blog to the book, to the early membership website, to MicroConf, to the podcast, to TinySeed, YouTube channel, everything else. And these days, I’ve learned that when I feel burned out or when I feel low, it’s just not reality, right? 

It’s a temporary state. Waiting six months or two months and reevaluating when I’m in a clear headspace has saved me for making so many irreversible mistakes. It’s definitely an important discipline that I’ve developed to not let temporary emotions throw me for such a loop, which is something they definitely did in my earlier days. So there you have it. Why I succeeded my 10 best entrepreneurial decisions. Some of those are more attributes than decisions or just things I did, but I enjoyed putting this list together. It made me think really deeply, not just about, oh, you could say, well, one of my decisions was starting drip. And it’s like, yeah, obviously, but that’s not helpful. That’s just a moment. It’s a momentary decision. The things I wanted to pull into this episode are around mindset. They’re around deeper thoughts, around longer term thinking, around doing the hard things that get you there. 

These are things that I think any entrepreneur, not just SaaS entrepreneurs, any entrepreneur in any space can and should apply to their own journey. And I think almost without exception, the exception might be like the starting to write about what you’re doing or write a book or whatever. But almost without exception, I think all of these will help you have an easier journey and or help you get there faster. So thanks for hanging out again with me this week on Startups For the Rest Of Us. If you keep coming back and listening, I’ll keep recording. This is Rob Walling signing off from episode 782.

Rob Walling:
A book can help you learn more, can give you the knowledge to be more successful, but you still have to put in the work, develop your skills, and push things forward on your own, and you’re going to have to make a lot of hard decisions with incomplete information and ship, ship. Be right most of the time and get things out the door in order to be successful. At a certain point, you do have to stop reading business books and start shipping. 

Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this very personal episode, I walk through my founder regret list 12 mistakes that I will never make again. I say this is a personal episode because there are several stories that I’m going to share as I walk through this list that I don’t believe I’ve ever shared in public before, and it wasn’t out of any desire to shield these or somehow keep them hidden, just several of them hadn’t given the deep thought required to really dig in to the mistakes that I made. Over the years, over the last 20 plus years of my journey as a founder, I’ve been asked over the years what are the biggest mistakes that I’ve made as a founder, as an investor, as an entrepreneur, probably as a human. That’s a different list I’ll admit, and I always struggled to come up with a list that I felt was meaningful and genuinely things that I regretted, things that I wished I had done differently along the way. 

Sometimes I come up with one or two or three, but I sat down for an extended period of time and really thought this through and I came up with 12 mistakes that I’ll be running through in this episode. Before I dive into those, if you haven’t checked out the SaaS Institute, this is our premium coaching mentorship and mastermind community SaaS institute.com is where you can find the full info, but it’s for founders of SaaS companies doing at least a million in a RR who are looking for private coaching, private masterminding, and looking to find an incredibly ambitious community of other folks who are paying a good chunk of money to be a part of this community. The quality is extremely high, and we just started it a couple months ago, so it’s very small and very hands-on. You’re not joining a group of 50 or a hundred people. 

There are a couple handfuls of folks in the SaaS Institute and we have some amazing coaches including Jordan Gaal, Mark Thomas and Taylor Hendrickson. So if you feel like you could use someone to walk alongside you in your journey as well as be able to do a call or two with me, you should head to SaaS institute.com. In addition, if you’ve ever thought about sponsoring this podcast or any of our MicroConf events, we have in-person events, we have remote slash virtual events, you should email sponsors at MicroConf dot com and we have a rate card both for this podcast, our YouTube channel, and all of our events. We have some availability. Normally we’re booked out a quarter or two, but we do have some availability over the next few months. Sponsors at MicroConf dot com if you’re interested. And with that, let’s dive into my founder Regret List 12 mistakes I’ll never make again. 

I’ll admit I’m not nervous. That’s probably not the right phrase, but I’m a little feeling a little agitated thinking about walking through this list because there are some things in here that I really do regret and revisiting them and reliving them on this podcast is maybe not something I ever thought I would do, and I’ve done my best to keep these in chronological order, at least to the best of my memory. Number one is going to seem obvious in retrospect, I’m going to say it and I’m going to move through it quickly. So number one is believing I had to raise venture capital to start a software company. I know these days if you listen to this show, you’re like, obviously that’s not true. But in the early two thousands, I didn’t know there was another path and I was fully bought into the idea that funding and especially venture funding was a requirement to launch a software business that wasn’t true, and it delayed my path for years and years as I read all the magazines because this was really mostly before tech run, so it was reading the Fast Company and Red Herring, what that one was called. 

That’s an interesting name now that I think about Business 2.0. There were a bunch of.com magazines and it just made it seem like funding was the goal. In fact, funding was the finish line in a lot of these articles. And it’s funny, now that I’m in the know and I talk to founders, and I’m far from an insider for sure with Silicon Valley, no one knows who I am. They didn’t know when I started and they still don’t know who I am. But now that I know how these things work, and I know I’ll say the real stories of a lot of these startups, I realize that funding is far from the goal. And in fact, a lot of folks who take funding do it. They don’t know any better, not because they actually should. So that has become my mission in life, is to multiply the world’s population of independent self-sustaining startups. 

It’s through this podcast, my books, YouTube, MicroConf, TinySeed, and I’m doing that by trying to spread the word that you do not in fact need to raise venture capital, start a software company. But years and years, I wasted probably six or seven years thinking about funding and wondering how I could raise it and reading about how I could raise it and not actually acting, or I’ll say kind of half-ass acting, waiting for someone to give me permission, waiting for someone to anoint me and give me the money such that I could build a startup. And it was a huge mistake I’ll never make again. Mistake number two is launching many products hoping one would succeed Over the course of probably five years, in the early two thousands, I spent literally thousands of developer hours of my own time nights and weekends because I was working a full-time day job. 

Sherry and I were married, she was in grad school during this time, we had our first child, and during this time, I would not go out to happy hours. I mean I did sometimes, but for the most part I would say no and I would stay home and I spent thousands of hours creating products without doing any real validation because that wasn’t a thing. I didn’t even know that existed, didn’t know that you could potentially try to validate things and have conversations with customers, wait, you can do that, put up landing pages, wait, you can do that, right? This wasn’t an approach yet that people did. I didn’t know that it existed, and so I would build these products and launch one after the other hoping that one would magically luckily gain traction. I was basically throwing darts at a dartboard that might as well have been 30 meters away, and almost all those went nowhere. 

It was a huge waste of my time and effort, and it’s certainly something that these days I would do a little more validation. Even if you hear the story of Drip, how I sent out 17 emails and I got 11 yeses. If you hear the story of TinySeed, we didn’t just raise a fund, try to raise a fund and launch. I went to Twitter, went to my email list, said, Hey, we’re going to do this, and waited to see the response. That was a form of validation. I had the luxury at that point of having an audience. But if you go back to 2008 or 2009, I launched a paid membership community and I asked folks in advance of that, I had a survey on my blog, would you pay to be part of a community of bootstrapped founders and gain not only education, but gain some type of community? 

Before I launched my first book, start Small, stay Small, it had a landing page that I put up. This was me developing this approach, and I had heard of this approach from internet marketers, and then it was popularized by the success of the four Hour Workweek, but around 2004 or five six, I started reading several of the, like Dan Kennedys, and I don’t remember who else was in that space, Joe Polish, maybe there’s a bunch of names, and if I said ’em, you may or may not recognize ’em if you’re familiar with that era of internet marketing, but they talked about doing smoke tests. They talked about driving AdWords to landing pages to see how many people opted in. And that was a very interesting concept for me, and that’s why even these days, if I’m going to talk about or launch anything big, I’m going to get a landing page up, and I’m also going to try to have one-on-one conversations. 

I like to do both. Validation is never 100%, it doesn’t work all the time. It can be done poorly, it can be done, you can do validation and still have it not succeed, all these things, but it is so much better, so much better than the approach that we use to use. And I spent years of my nights and weekends, thousands of hours trying to launch a bunch of things hoping I’d get lucky and one would magically gain traction, and it’s a mistake I’ll never make again. Mistake number three is trying to bootstrap ideas that weren’t bootstrap. So at a certain point, I had a young child, my wife and I were living in, well, first it was Los Angeles and then it was New Haven, Connecticut, and then Boston, but I couldn’t move to a center where there was a bunch of venture capital and I ruled out doing Y Combinator. 

It was not the year I was in Boston. By that time, they had relocated to the Bay Area. So I effectively ruled out raising funds, and I realized I didn’t want to raise venture capital, that it wasn’t the choice for me, and I was going to grind it out and I was going to bootstrap. But the problem was is then I didn’t have a model because no one else was doing this again, this is 2004, 5, 6, 7. I mean, realistically, I started building and launching stuff in 2001, but as I really started getting some momentum and getting better at getting things live and even getting some users, there was something I launched, what was it called? It was Flo, it was feed shot.com that actually was making about a hundred, $200 a month and had several hundred users coming to submit their blog to these blog directories. 

It’s an old dated thing now, but it’s not that nothing went live and no one used it. I did use the social media of the day, or it was social news sites. Basically it was like a dig and the other, I don’t even remember what the others were. They’re all defunct now. But I did use those to drive people to check these things out. And what I learned is that all the ideas I came up with really only made sense at a massive scale. They either needed millions and venture funding, or they needed hundreds of thousands or millions of users because I was launching things with ad-based revenue models. I was launching things built for consumers, and I was copying the Silicon Valley model without the resources that they had, which inevitably led to a ton of dead ends. And I launched idea after idea that really didn’t solve a pain point for anyone, but it was, again, it’s like look at all the Silicon Valley, the new startups that come out that you hear about, and I would do a variation of that because I didn’t realize that you just can’t bootstrap that if you’re going to take a small percentage of GMV or you’re going to be ad based or you’re going to need a million users in order to be viable. 

These are just not easily bootstrap. I say in general, they aren’t bootstrap able, but I suppose one in a million, you could get lucky. And if you’re wondering, well, how do I know if an idea is bootstrap able? I could record obviously an entire podcast episode or a book chapter on that, but realistically, these days, I have my guidelines, right? It’s like solve a problem for someone and I recommend you solve a problem for businesses, but you could solve a problem for consumers as well. And that is one way to instantly at least have potential customers that have a desperate pain point that you can solve. That’s where I would start, and I didn’t start with problems with any of my old ideas. It was all about glitz and reach, and I thought to myself, would tech crunch right about that? I used to seriously ask myself that before I launched ideas, and that’s why this mistake of a believing I had to raise a venture to start a startup was not great, but then trying to bootstrap ideas that just weren’t bootstrap able is another thing that I wouldn’t do again. 

Mistake number four was believing that business books would give me the secret to success as an entrepreneur. And it wasn’t just business books, it was believing that one person out there had the answer that would help me succeed. Maybe it was courses, maybe it was info products that were being sold, but business books were certainly a part of this, especially in the early two thousands and the 2010s. Most business books lacked any tactical value. They were either glossy success stories or high level theory or both that were ghost written by someone who wanted their name on a book. So pretty much all the business books I read during this time were useless to someone like me trying to forge an unconventional path. I needed much more tactical approaches. I couldn’t rely on having Kid Rock at my launch party or having Tech Crunch right about my startup. 

I needed to generate actual traffic to a website. So how do you do that? How do you do that? In 2006, there’s no social media. There was SEO, I think AdWords was just coming about. I actually don’t recall. Certainly there’s banner ads, there’s web rings, there were things around, and there were social news sites like Dig Reddit. Again, there were a bunch of others that I don’t remember the names of. And so learning how to use those to market what I was building was a huge step in my career. Problem was there were exactly zero business books that talked about any of that because it was too new. It’s a little better now, but you still have to pick books that focus on what you want to do. So think about the SaaS playbook. There’s a reason that I write books. I’ve told people, have you ever heard the term hate watching, where you start watching a Netflix show and then you kind of hate it, but you keep watching it and you hate watching? 

I kind of hate write books. What I do is I go out looking for a book that has the information that I want, and when I don’t find it, I get mad and I write that book. That was a SaaS playbook. Ruben, founder of Sewell actually really encouraged me to write it, and he said, our space, the ambitious B2B SaaS founders really needs a book that covers not only high level thinking, but that digs in deep into the strategies and the tactics to actually build a SaaS company and not just tell the story, Hey, here’s a SaaS company and here’s all the behind the scenes, and that’s fun too. That’s fun, but that will not give you the secrets to succeeding as an entrepreneur. Zero to Sold by Harvard Call is another good book that you should read, especially if you’re bootstrapping like an indie hacker or lifestyle business. 

It’s great. Versus a book like Shoe Dog or Zero to One, I enjoy those books. I’ve read them both. They’re both entertaining. Neither of those will help you as a bootstrapper. You’ll probably take away almost nothing from them. And again, those books are fun and interesting, and I’ve read them, but they just won’t move you closer. But beyond that, I want to make the point that even with SaaS Playbook or at Traction by Gabriel Weinberg, zero to sold whatever book you’re going to read in our space, believing that that book will give you the answer and the true secret and will guarantee success, that’s a mistake as well. And I think when I was really young, I was naive enough to think that a book would make me successful. A book can help you learn more, can give you the knowledge to be more successful, but you still have to put in the work, develop your skills and push things forward on your own. 

And you’re going to have to make a lot of hard decisions with incomplete information and ship, ship be right most of the time and get things out the door in order to be successful. At a certain point, you do have to stop reading business books and start shipping, and that was something that I definitely struggled with early on in my entrepreneurial journey. Mistake number five was becoming hellbent on being a solopreneur, not just a single founder, but I didn’t want any full-time employees, anyone relying on me. And this came about because I worked at several corporate jobs where I didn’t really like my coworkers. Actually, there were some really cool coworkers that I got along with. They were always the a plus players, the really solid devs, the great managers, the people who cared. It was 60, 70% of the staff that just didn’t give a shit. 

And I was grinding. I was staying late. It was fun because I was writing code to ship and get things into production. I don’t know, I loved it. I wanted to build meaningful things, and I really cared, and I got so burned out on working with people that I just didn’t enjoy working with who kind of didn’t care that I said when I become an entrepreneur. And as I became an entrepreneur and started paying my full-time salary through products, I said, I’m not going to hire anyone ever. I want to do this all on my own. And that mindset worked for me for a time when my ambitions were small, when I wanted to make 120, 150, $200,000 a year, and this was in 2000, let’s say 6, 7, 8 money. So what is it? 40, 50% more than that now. So it’s not a bad living. 

We lived in California, we owned a home, and that mindset worked while my ambition stayed small, but then at a certain point I realized I want to build something meaningful as well. And at that point, it became painfully clear to me that I would want someone to collaborate with that I would want people I could rely on. This is where the idea of task level, project level and owner level thinkers came about, and I had a bunch of task level thinkers. That’s all I had. I didn’t even have project level thinkers in the early days. It was because I couldn’t afford them, but even once I could afford them, I didn’t realize it was a blind spot for me, didn’t realize that I needed to hire project and owner level thinkers or else I became not only a bottleneck, but a project manager and someone who was basically just managing a bunch of task level thinkers. 

And while I’m actually good at doing that, it’s a lot of my background as a developer, and even in construction, I did some project management, but I don’t love it. It’s not what I want to do day to day as an entrepreneur. And it took me years to realize and then to accept that I maybe the first person who did the hire, a bunch of contractors approach. I did this from 2006 until about 2012, and it worked well in the early days, and then there was a lot of turnover. There was no loyalty and there was no cohesion. The contractors didn’t even really know each other, so it was barely a team. And the approach wound up sucking because my entire job was managing contractors, managing projects, assigning things, checking on things, and it’s like it’s not fun. And in the early days, I was grinding because I was like, I want to quit my day job. 

I wound up quitting the day job. Well, by this time, I was actually, it was my first company and I was a consultant. I was a freelancer doing dev work, and then I had other consultants that I was contracting with to help me. So it’s kind of like a micro agency is how I’ve always phrased it. And I was doing that from, I believe it was like oh 5, 0 6 until oh eight. And in oh eight, I got rid of my last client. Basically that contract ended and I had complete product income by mid to late 2008, and I kept doing the solopreneur hire contractor approach after that, and it really wore out. Its welcome if I’m being honest. And it took me too long to see it. And then once I saw it, it took me too long to admit, you know what? I want to do something bigger. 

I don’t want to just be a paper pusher in essence or a project manager. I want to actually get shit done with ambitious people who really want to build something incredible. And that was around the time that this podcast came about, that MicroComp started, that I started Drip and I realized I was going to need to level up my game and just being a solopreneur and trying to be that island off on my own was not going to yield the results and bring me the impact that I wanted to have. Mistake number six was buying into the arrival fallacy. So the arrival fallacy is when you say things like, if I just had a SaaS app on the side that did $2,000 a month, then I’ll be happy. If I just had a product that made enough so I could quit my day job, then I’d be happy. 

If I just had one that did 20 or $30,000 of MRR, then I’ll be happy. And if I just sold a company for millions of dollars, then I’ll be happy. The problem with this is you need to be happy along the way. You are never going to have arrived. It’s a fallacy to believe that, and I know that now. And in fact, by the time I sold Drip in 2016, I knew that, but I had these dramatic ups and downs where I thought, I’ll be happy forever. I mean, even saying it out loud is so naive now, but I hear a lot of people talking about this, and when I say naive, I don’t mean like, oh, you’re dumb. I was there too. It’s easy to believe this, and that’s why I’m talking about this on the podcast. We are ambitious startup founders. We are entrepreneurs. 

We’re always going to seek stuff that is incredibly challenging. We want learning. We want to move things forward. We want to have some type of impact. We want to do interesting things. You’re never going to be happy for very long. This is the curse that we have as entrepreneur. It’s a blessing and a curse. It’s a blessing because it motivates us to do things to ship and to grind and to believe in the growth mindset that we’ll get better and that we’ll figure it out and that we can change our lives and the lives of those around us through entrepreneurship. But it’s a curse because it can mean that you’re never happy. And so the work that I’ve done on myself over the past 15 years, probably definitely more than 10, because it was in between 2010 and 2015 that I really started working on this, and I kind of admitted to myself, you know what? 

Just admit you’re never going to have arrived. How can you be happy along the way? And it wasn’t as simple as logically stating that there was a lot of inner work on my own and with a therapist, and you may not have this, and that’s great, but this was absolutely me chasing a finish line that didn’t exist year in, year out. And every victory I had was inevitably dashed because after 3, 6, 9 months, I became unhappy. I was chasing a finish line that didn’t exist, and I will never do that again. Mistake number seven is going to seem like an interesting left turn after a lot of these higher level or philosophical mistakes. But mistake number seven was not starting an email list sooner. So by the time 2008, nine rolled around, I had been blogging since 2005 and I was putting in several hundred hours a on it, and I would, from my day job as a developer during lunch, instead of going out with the other folks who went out, I packed a lunch and I would drive down the street and I would open up my laptop and I would write blog posts almost every day. 

And then I would do that nights and weekends when I ran out of steam coating stuff or if I was in between coating projects and I was completely disenfranchised and saying, none of this is ever going to work. That was a big thing. This just isn’t going to work. I would tell Sherry, no one’s ever done this, so I just dunno that I can do it. But I blogged a lot. I was writing, and around this time, 2008 or oh nine, I had 25,000 RSS subscribers, but I think I only had an email list of probably maybe a thousand tops. I knew the power of email with my software products and info products and other stuff that I had at the time, but I hadn’t prioritized building that list until about somewhere in that range, like oh nine, maybe 2010. And I feel like I lost quite a bit of time and opportunity because of that. 

Now, in retrospect, maybe what I’m saying is I’m really happy that I did start then because nowadays I don’t know that it matters. I don’t know if my list had been, because my list would not have been 25,000 emails. There’s no chance maybe at most it would’ve been 2,500 or 5,000. And these days, my lists are so much larger than that, that it’d basically be a rounding error. But much like most of these mistakes, I believe it cost me time because not having an email list meant I then had to go build one to launch my next thing. When we launched the podcast, when I launched my book, I didn’t have a big email list, and I had to kind of build those up. So it’s not a, oh, it cost me everything, but it is an, oh, it costs me months and maybe a year or two. 

I don’t know. It’s always hard to guess. But each of these things cost me time on my journey, even though I have obviously experienced quite a bit of success, at least in the way that I’ve defined it. Mistake number eight was taking random internet opinions too seriously. So early on I assumed, again, I say these things and I laugh because it’s like, this is so preposterous, but I assumed that someone with a confident opinion online was qualified to give that advice. Maybe it’s because how I was raised, maybe it’s because of going to school and university and there are always being someone there teaching who knew the stuff, but there were loud voices. And it took me years to realize that these folks, whether they’re on blogs, forums, social media, actually a lot of them knew far less than I did. And frankly, I gave these opinions too much weight. 

I think it sent me off track. And especially when people were negative about something that I was building, I took them way too seriously. So I would get emails about hit tail or emails about my book or emails about Drip once we were building it, and folks would’ve these really strong opinions about ux, like, you should definitely never do this in your user interface. I can’t believe you actually even thought that a button should be square or rectangle or round or just insert whatever shape here. Button should never be round or a top. NAB should never be this way. And it’s like, oh, wow. They must know if they’re this opinionated. This must be a law that we all ascribe to. And it took me way too long to realize a lot of these people don’t know what the fuck they’re talking about. A lot of these people want to hear themselves talk. 

They couch themselves as experts. They just want spout off on an internet form or via email to you or on a blog or social media. These days, it’s social media or via support requests. And so the danger in listening to these folks is, A, they can send you off course, and B, they can really be a detriment to your mental health if they say a lot of negative things and you take them to heart of like, oh, I’m screwing up. I am bad. I am dumb. I don’t know what I’m doing. And these days I know better to brush them off. And I’m glad I learned that at least a decade ago, but it took me at least a decade to learn it, and I wished that I had learned it much sooner. And I want to add a clarification to this. The solution is not to listen to no one. 

It’s to listen to people who you trust to give you honest feedback that comes from a genuine place, but also qualified feedback. So it’s folks in your mastermind if they’re ahead of you or you believe that they’re smart founders who are getting things done, it’s advisors, it’s investors, it’s your network. That’s why these days, I have a pretty tight network of folks that I can go to and say, how am I screwing up? Should I make this decision or this other decision? It’s a really big strategic whatever, and I can talk to people and try to get their input. So I do listen to people. I just don’t listen to randoms on the internet. Mistake number nine was overestimating my abilities after early successes. So after I’d had wins with an e-commerce website, just beach house.com folks, info products, a book, my blog, a SaaS app, downloadable software, another not downloadable software. 

There’s all kinds of stuff. I assumed that anything I started would be a hit. And even though I had done it before, I underestimated how hard it would be to find product-market fit again. And as we launched Drip, I overextended myself financially because I believed that I could find it just right off the bat. I was going to launch right into product-market fit. And the result of this over extension was I had a very hard 2014, and I think a little bit of 2015 too, where I was mentally exhausted. I was emotionally drained, stressed out all the time, and financially I was just wondering where the next five, 10, $20,000 was going to come from, where the next payroll was going to come from. My overconfidence in my ability to just find it magically led to honestly to burnout and strain on my marriage and some other relationships that I had, and definitely a lot of strain on my mental health. 

And it was all because I thought that my execution and my skillset at the time would guarantee success quickly. And that is a lesson that I learned, which was do not overestimate your abilities. Give yourself a little leeway. You are smart, you figured some things out, you have some skills, but you are not infallible just because you’ve had a few successes. Mistake number 10 was ignoring my anxiety and letting it control my outlook on the world and frankly, on my startups and my products. So naturally I run a bit anxious, not catastrophic, but I run a bit anxious. But it’s enough that if unchecked, my inner voice can blow up small issues into mental disasters. So I would let things that in retrospect were not that big of a deal, and I would let them just blow up on me and I’d perseverate on ’em and I would not sleep well, and I would think about them constantly and perseverate during the day and then in the evening, and I just couldn’t get away from them. 

The other thing I did was I rarely asked for help, and I lived in a constant state of stress even though things were actually going quite well, like the story, the story is true. Success was there. It was happening. We were growing two grand of MRR per month and then five grand of MRR per month and then 10 grand of MRR per month. And we hit seven figures and we were doing well, but the success didn’t feel good because I was always bracing for the next crisis. And frankly, I was letting my natural proclivities towards thinking about what could go wrong, which usually is kind of a good mindset or a good skill to have, but I was letting it run rampant. And that mindset of catastrophizing everything, it made the journey miserable, and it took me way too long to recognize and work on it. 

And it wasn’t really until after we sold Drip that I realized and acknowledged and then did the inner work. It took to not feel that way all the time. And I regret living those years in that constant anxiety. People have asked me, do you ever regret selling drip? And I’ve never had a day where I regretted, but I do regret the way that I operated during those years and the way I let my own mental health deteriorate. And this was one of the biggest reasons. Mistake number 11 is an interesting counterpoint to number nine. So nine was overestimating my abilities after early successes. Number 11 was not letting my wins build my confidence. So as the years ticked on and I had more success and more wins and more experience even after all those years of success, and this includes publishing books, building an audience, launching profitable products, growing them, I still struggled with imposter syndrome. 

I doubted myself quite a bit. I questioned at certain points, Hey, was it all just luck? I didn’t give myself enough credit for having built a skillset, a tool belt of skills, and having worked hard and probably getting a little lucky, of course we all do, but I failed to give myself the credit, and I worried that confidence would lead to ego. But the truth is, I could have allowed myself quite a bit more belief in my own abilities, especially as I executed. And over time, I wished that I had let my wins build my confidence because that self-doubt did hold me back at times. It took a toll emotionally and it held me back. I think from moving faster and from making bigger bets, and so much like many of these in the list, it’s not something that caused me to not be successful, but they are things that made the journey take a lot longer than it needed to for me. 

And the 12th and final mistake that I made was clinging to a scarcity mindset. Even after I had built quite a bit of wealth. I grew up solidly working class, a step above being poor, and we were never on food stamps or welfare, but there were certainly times where I was worried as a kid that we were going to be, we were a family of six with one working parent. My dad worked construction and they always made the house payment, but I didn’t know that they were always going to make the house payment. We definitely drank powdered milk. There were some tough times. And so I grew up with a scarcity mindset around money, and it took me way too long to shift my thinking. And even after earning amounts and putting ’em in the bank that I had never imagined I would have, I had a hard time spending rationally or adjusting my reality of financial abundance. 

What’s the harm in that? You might think, well, when you have millions of dollars in the bank, but you’re not willing to pay more than X amount per month in rent when you move to Minneapolis because your company just got acquired. And so you kind of live in a crappier house than you should, or you go to buy a house and you’re really not willing to spend what we could very much afford because you have this old script running, or you don’t want to buy an expensive car, expensive, a 40 or $50,000 car that actually runs really well in the winter, has all wheel drive, has heated seats, has remote start, has a heated steering wheel when it’s 20 or 30 below here in the winter. These are nice to haves, but they are nice to have. And I kept driving a salvage title car that I had paid $9,000 cash for 10, 12 years prior, which was fine. 

I don’t need the luxury. But at a certain point, it becomes miserly to have this money sitting there not giving you things that would help improve your quality of life. And I got in arguments with Sherry about this. I was kind of insufferable when we would go to book a vacation, I would say, oh, the budget’s this, and then wouldn’t want to budge on it, even though realistically there was plenty of room there. So I think any example I bring up, you’re going to think, oh, well, you don’t really need to do that. And you’re right, it’s not about the specifics. Each of us values things differently. Some people really want a fancy car. Some people want to fly first class or private the rest of their lives. Some people want to own really expensive comic books or Beatles gold album, and none of those are wrong. 

None of those are things that you shouldn’t ascribe to. The thing that I did poorly was maintaining this fear, this anxiety, this scarcity mindset around money and continuing not to spend it. Well, when we needed to hire help, because we had several kids who were struggling, and Sherry and I were struggling to do our day jobs and also homeschool a kid, and there’s a whole personal story around this that is, I’ll say, challenging to go into the details of, but I remember thinking, well, we just can’t afford it. And in fact, we could have, but I was clinging to that scarcity mindset even though we did in fact have the money to do it. So as you can tell, these regrets are a lot of them are mindset things, and a lot of them either cost me months or years, or they cost me my mental health. 

And I found that interesting as I walked through this list that mistakes in business bets that I made where it didn’t pan out. Oh, I remember I wrote someone a $2,000 check to buy a website or a product, and they basically scammed me. So would I think that that’s a big mistake? Well, it just wasn’t because I just rolled with it because I had a $2,000 at the time to spend. It was a bummer. But it’s not one of my biggest mistakes I’ll never make again because I was making a calculated risk at the time and it didn’t work out. But these mistakes I’m talking about are the ones that I have vowed that I will try to never make again. These are the ones that truly cost me the most over the last 20 years of being a founder. In my next episode, I’m going to talk about what I got, what I believe are my best entrepreneurial decisions, or really the reasons that I believe that in spite of these mistakes that I made along the way, I think by most measures, and certainly by the way that I personally measure success, I feel like I’ve achieved all the success that I could ever want. 

And everything from here on out is the whipped cream and the cherry on top of the sundae. I think the real reason that I have found this success is because of the list of 12 entrepreneurial decisions, so to speak, that I’m going to be talking about in next week’s episode. So tune in then to hear the upside and the positive. This episode, it feels a little bit like a downer, but I am really happy to have recorded this because I hope for me, this is an episode I will refer people to in the future of what are your biggest mistakes? What are the things you wish you’d done differently? And I think this is now the definitive version. So thanks for joining me today as I walk down memory lane and the pain and some of the decisions that obviously I regret. That’s the whole point of the episode, but I appreciate you being here to hear it. This is Rob Walling signing off from episode 781.

Rob Walling:
Welcome to this episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I sit down with fan favorite Ruben Gamez. He’s the founder of Sewell and an Oracle of SaaS bootstrapping, and he and I talk through a couple of myths or misunderstandings that we see infiltrating the Bootstrapper community. Do I use that clickbait word infiltrating? Realistically, these are things that we hear enough that we realize folks are buying into ideas that could be harmful to their business or their career. One of them the thought that I will never sell my company. I am happy to just run it forever. There is a conversation around being built differently because you don’t like to market, and so you’re just going to not market and expect your business to be successful, as well as some other topics that we dive into. 

It’s a great show. It’s conversational back and forth, and Ruben and I are speaking from our experiences growing our own software companies as well as the SaaS founders that we’ve been surrounded by for 15 to 20 years at this point. Before we dive into our conversation, if you are interested in indexing across hundreds of B2B SaaS companies and you’re an accredited investor, we are raising TinySeed Fund three. There’s only a bit more room in this fund, and so if you’ve been on the fence and you’re interested in investing in early stage B2B SaaS ambitious founders that go through our world class accelerator called TinySeed, you should head to TinySeed dot com slash invest. You can read it more about our thesis there. Our minimum for the remaining portion of this fund is lower than it has been in the past, and we are seeing great results from Fund one, which has been around for about six years. So our thesis is holding so far and we would love for you to be part of it, tiny c.com/invest. And with that, let’s dive into this amazing conversation with Ruben Gomez. Ruben Reuben, ga, welcome back to the show. Hey, good to be here for your 432nd appearance on startups For the Rest Of Us. Dude, I’ve lost count. I just don’t even know.  

Ruben Gamez:
Yeah, I don’t know. Five-ish or something. Somewhere around there.  

Rob Walling:
No, I think five within the last 18 months.  

Ruben Gamez:
No,  

Rob Walling:
Not either. I’m always trolling you with that stuff. Anyways, great to have you back on the show. You’re the founder of Sewell, as many people know, and you are also founder of Bid Sketch and you’ve been doing SaaS for 16 years, I think, man, I think since oh nine. You’re like one of the bootstrap SaaS OGs and you’re also where I steal all of my good ideas.  

Ruben Gamez:
Cool. 15. I always say 15 years, but yeah, I guess it’s 16 now, huh? I  

Rob Walling:
Think it is. It’s time  

Ruben Gamez:
To oh 9 0 8, something like that. Yeah, yeah,  

Rob Walling:
It might be oh eight. Yeah. And this episode I think has come about because you and I often text about things that we see online here on podcasts see on X Twitter, and sometimes it’s like, wow, this is a great idea, Jason Cohen’s tweet on X, Y, Z, so on point. And other times we see a tweet and we’re like, wow, this is catastrophically bad, misguided so bad that we need to rant about it. And then this episode came about because there were a couple of things that are not just I think bad advice or bad ideas, but we’ve seen them kind of spreading or we hear folks saying them a lot, right? 

And so at a certain point I said, this would make a great podcast episode and we just plunked things. So I don’t know if these are quite three myths or maybe just three sentiments that we’ve heard founders say that were like, question mark, this makes no sense. So we wanted to call it out. The first one is kind of a combination. I think there are think quite a few bootstrappers and whether they’re indie hackers or they’re more the ambitious bootstrappers who want to get to a million, 5 million, 10 million a RR. There are folks who believe they will never sell. And I know I always say everyone sells and people nod their head. I mean that when I say it, everyone sells. I mean, they really do. All the examples I always throw out of like, Hey, I never thought MailChimp would sell. I never thought, I didn’t think Baremetrics would sell. 

It was just, I dunno why I never thought that. I was like, Josh is just going to run it forever. I didn’t know I was going to sell Drip. Whatever everyone sells eventually except for Basecamp, that’s probably the one that may never sell. But I guess to throw it to you, what is the danger of a bootstrap founder starting a company and let’s say this is not a little indie hacker project. This is not something, ooh, it’s a step one, step two, business, 5K, 10 K, it’s going to plateau great. I’m never going to sell that. It’s like, fine, whatever. That doesn’t matter. But what if you’re growing when you’re at a half a million or a million or 2 million a RR and you’re growing well, 20 to a hundred percent a year and it’s going well, and you’re like, well, I’m just never going to sell. I like being bootstrapped. I don’t know what I would do next. All the objections. What’s the issue that you see with that?  

Ruben Gamez:
I think there comes a point where growth slows, it either slows so much that it basically is a plateau or it just is a legit plateau, and at that point, founders go for a very long time trying to change it. They don’t feel just that contrast between when they’re growing and that feels great, super easy when things are feeling really good, growth is going well to just be like, oh yeah, we’re just kicking back. I can see this going for, of course I can see it going forever when something is growing. Amazing. Yeah, yeah, life is good. Then it slows down and that feeling just sucks. They don’t like that feeling. They work on it and then we’ve seen this so many times, then they can’t change the growth, they can’t improve that. So then they want out, they start a new thing and they figure they’re going to sell and then they find out that they can’t sell the business for very much. A lot of founders don’t understand that growth multiples on exits have a huge impact. It’s everything. There’s such a big difference between selling when things are good and when you’re like, okay, I tried everything. It’s been flat for a couple of years, I just can’t, it just kind of sucks. I want out. It’s like, okay, well now you’re going to be very disappointed with what you’re going to get. So I think that’s one of the bigger dangers in my opinion.  

Rob Walling:
And to put some ranges to that, and I was throwing these out on Twitter the other day because someone said that they were trying to get a four to five X revenue multiple an A RR multiple on their SaaS, and they didn’t get that, so they weren’t going to sell. And I chimed in just saying, Hey, that is not a default. We throw out ranges. Well, on this show maybe we say four to seven or four to six, five to seven a or multiple, but that is if you are doing, let’s say 2 million bucks a year and you’re growing at 40, 50 or more percent per year, if you do not have that, let’s say you’re flat, let’s see at 2 million and you’ve grown less than 10% say in the last year, which is effectively as flat odds are, you’re going to get a one to two XARR multiple. 

If you get an a RR multiple, they might look, people might say, well, I’m buying on profit, and then we’re talking again that four to six, five to seven, but it’s profit and most of us don’t run our businesses. It depends, right? If you’re growing fast, you don’t run it to for profit. So that’s the difference is we’re talking, let’s just throw a couple numbers at, let’s say you’re doing 2 million and you get five x six x, you get 10 12,000,001 to two x is like 2 million bucks about the revenue you’ll do this year, and two x is obviously 4 million. That is, we get these numbers in our head when they’re growing and I don’t know, I remember being calculating my net worth in my head as the MRR would tick up. Ooh, that’s 5K of MRR this month that we went up. So that’s times 12 is 60 K of a RR. 

And let’s say we sold for five x, that’s $300,000 in net worth or in business enterprise value that we’ve created. But what that leaves out is that’s only if we keep growing five KA month every month or whatever percentages, and that’s we don’t want to be curmudgeons and people who are like, you should sell. Now, I guess that’s the next question is we want to be for people to be aware of the reality of it, but they might say, so then, so should I just sell the moment I hit a million or 2 million? Should I sell then? Is that what we’re saying?  

Ruben Gamez:
I think you just have to stay ahead of it and be mindful. So if you’re going to go for five more years, 10 more years, if that’s what you see, then just be aware that businesses don’t just grow forever in the way that they’re growing, especially at the earlier stages and that plateaus are always coming. And you can calculate that. It’s just math, right? Because the more you grow, even if your churn stays the same, which typically it does, like you have 2% churn, 3%, 5%, whatever it is, that means you have more customers, more revenue coming in and you’re churning basically you need more new fresh revenue and customers to make up for the additional churn as you grow. And that makes it harder and harder to stay at the same growth rate. We’re not even talking about increasing it, just staying growing 50% or that’s hard. The more you make the harder it is.  

Rob Walling:
Absolutely. Yeah. And I did a talk on plateaus that you reviewed for me and helped me improve it from the time I did it in Europe last year until I did it here in New Orleans a couple months ago. And we are going to be pulling that video and putting it on our YouTube channel. The folks want to see it right now. They can go to microcomp.com and you can buy the videos. But I think in two, three months we’re going to have just that video up on YouTube. And one of the things I talk about in that talk was the math for calculating your plateau, which is the new MRR in a given month divided by your churn rate. So if you’re adding $10,000 of MRR each month relatively consistently, look, I know it’s not to the penny, give or take on average over the past, whatever, it’s 10 K and you have a 2% churn rate, then you divide 10,000 by 0.02 and you will plateau at 500,000 of MRR. That’s not too bad. That’s 6 million bucks. Most people aren’t adding 10 K-M-R-R-A month, and most people don’t have a 2% churn rate. That’s the challenge In the talk I gave the example of adding 5K MRR and having a three or 4% turn rate, and in which case you’ll plateau much earlier than that.  

Ruben Gamez:
Yeah. I think part of it is staying ahead knowing when that happens. And what I mean by when I say staying ahead of it is that means that you have to do new things or more of what you’re doing. If there’s a lot to be done there to grow more, you have to stay ahead of it. Both of our friends, Robert Graham, who runs, he’s the CEO of a YC company doing many, many millions of dollars. I like how he put it pretty recently when we were talking about this, he said something like the prize that you get, and it can start to feel this way, the prize that you get for pulling a rabbit out of your hat, and that’s kind of finding new growth, is that you get to pull another rabbit out of the hat,  

Rob Walling:
Which is hard.  

Ruben Gamez:
Yes, it’s  

Rob Walling:
Not, which is hard. Yeah. That’s the thing. If you have an existing marketing approach or two that are working or five like we did with Drip, none of which were these big stellar things, but each one was 10, 15% of our new trials, we had all this integrations and whatever else was going on, each of those will plateau naturally. Some of them will kind of stop working at a certain point. And then you have to think about how big is my market? How much market share can I actually get? So adding new marketing approaches as we finding that first marketing approach is hard enough, adding new ones is just like that. Or like Robert said, rabbit out of a hat. So their headwinds there. And I think what you keep saying, and you’ve said this on the podcast in the past, is getting ahead of it. How do you get ahead of it? How do you think about, well, I’ve calculated that I’m going to, let’s say I’m at a million a RR right now, given what we’re doing right now, I’m going to plateau at about 1.5, 1.6, and that is six or eight months out, so I have some time to think about it. How do you Ruben think about this with your own businesses? Because I know you’ve gone through the process with Sowell.  

Ruben Gamez:
So for me, I am always trying to experiment a little bit of our time and budget on other stuff and maybe some of that hits and shows promise, but a lot of times it just doesn’t. So it really requires a ton of energy and time to find a new channel. Just like when you did it the first time, it requires a ton of activation engine. And in fact, sometimes it’s harder than finding that first channel because the first channel that you find is probably the easier thing, the more obvious thing. And now you have to do something new. So for me, it’s really just similar process of experimenting, thinking through where there is enough. And a lot of it is just kind of being systematic and using math, and it’s not like this complicated thing to where I’m using spreadsheets or anything like that. You’re really just thinking through, I’m doing a little bit of research of how does this market work? Every market works a certain way. Where are the opportunities still in this market? Competitors that are bigger, what’s working for them, what haven’t we done? And then prioritizing those based off of some rough estimates of what we think we can do there.  

Rob Walling:
And I think the key takeaway, if someone’s listening to this, it’s not to be scared all the time and be like, oh my God, I’m going to plateau. I should sell now. I should panic. And that’s not what we’re saying. We are saying be aware that you will naturally plateau if you do not bring more to the game. I don’t know that I can think of a single SaaS app in our ecosystem that is in between let’s say one and 20 million a RR that has just continued to grow and grow and grow and grow based on something they did in the early days. It always requires some type of additional, as you said, activation energy, some zero to one energy of bringing in a new marketing approach or a new expansion or a new product, or there’s something there. And so if you’re listening to this, I mean, I remember thinking about this with Trip and one of the reasons that we sold was I was like, how far can we take this before we plateau? 

I don’t know. I mean, I could do some math on it. And I saw that and then I was like, how are we going to get past that? Plateau is coming. It wasn’t months away, but it was definitely out there. And I didn’t have a strong sense of how to do that, and I didn’t know if I had the activation energy to continue doing that. I was a little burned out and I was getting a little tired of the email space with blacklists, there are certain things that just pull on you and you’re like, how? And I kept asking myself, if I’m going to get the activation energy to bus past that, cool, I’m invested in this for another two to three years, probably should raise some funding. Frankly, at the time we were cash strapped and that was hampering growth in hiring and stuff. Or I could consider taking these offers that are coming in. And for me and Derek, Eric, that was, I’ve never regretted it, so I’ll just say it was the right decision for us. It’s not that everyone has to do that, but I made a calculated decision to take money off the table instead of putting at risk or multiple, because we did get a nice a RR multiple, and if we ran it over the top, which I say more folks do than probably should, 

That would’ve been tough. It would’ve been tough.  

Ruben Gamez:
So this is something that I’ve seen when talking over this topic, people reply, which is I’ll just run it as a profitable business for X number of years. So why didn’t you do that? What was your thinking for exiting Drip instead of just running it for a few more years and just taking the cash out of it,  

Rob Walling:
Right? Get to two, 3 million, whatever. And yeah, no, that’s a great question. So there’s a couple of things. Number one is it is so demoralizing running a flat business or running a slow growing business, it gets so boring. I know several founders, I know a lot of founders that are running or have run flat businesses and it’s so boring. Super. Yeah, it’s rough. It is. As founders, we are naturally designed to see some number go up into the right. How do you get your energy? You don’t get your energy punching a clock and showing up to keep something flat. You have to see, usually it’s MRR. If you’re running a SaaS, that’s the number we could say, well, maybe it’s your YouTube channel followers for your SaaS or your email subscription. No, you don’t care. The scorecard is MRR. So that was a big one of I would just would get bored. And I don’t know that most founders think about that.  

Ruben Gamez:
No, I like the nine to five phrase that you used there because for some reason people have a really easy time thinking about how difficult it would be to just do a nine to five just zone out and just run through the motions day in, day out. But for some reason they have a tough time equating that to, that’s exactly what happens in a flat business.  

Rob Walling:
Yep. You’re responding to support tickets, you’re shipping features, you’re making product decisions, you’re still doing the marketing, you’re doing all the sales calls, you’re doing it all. And it’s kind of for, it’s to tread water. And again, if it’s two or three or four or 5 million, it doesn’t matter. It doesn’t matter. It’s boring. And this is one of the reasons Basecamp, I don’t know if they’re growing or flat or we don’t know. We know they’re super profitable, but there is a reason that they rewrite their entire code base every four or five years because they think DHH gets bored and then they launch other products because they get bored  

Ruben Gamez:
Email products.  

Rob Walling:
Totally. And look power to them. They can do whatever they want, but realize that their business, again, Jason Fried confirmed this on stage at MicroConf, Basecamp throws off tens of millions of dollars a year in net profit. And for all intents, it’s basically Jason Fried and DHH. Those dudes are raking an 8 million, I’m sorry, 8 million, eight figures a year of net profit. So on the outside we all say, well, they’re just living the dream. They’re living the dream. And it’s like, yeah, that is cool, but they are bored with the core product.  

Ruben Gamez:
Even them pulling in all that cash, they’re still looking for other stuff.  

Rob Walling:
So that was one big thing that I think founders should be aware of is flat businesses are not only boring, they’re demoralizing too. Both of those things. The other thing was I looked at the numbers and I thought, no matter how profitable I make this, let’s say I get to 3 million and I’m making, what do we think? I could make a million dollars a year, sure, make a million dollars a year, but if I can sell this thing now for 10 million and I get long-term cap gains on it instead of income tax and I draw 10 years and at 3 million a year, if I’m growing and I am not selling that thing for 10 million at 3 million a year, I’m going to get 15, 20, 20 5 million. Basically you’re going to get a lot of cash upfront in a way that accelerates all that earnings and then allows you to do your next thing or to do whatever you want frankly for the rest of your life rather than, because this is the other thing we hear right, is why would I sell it for two x or three x? Why would I sell it for such a low multiple? I should just run it and pull out the profit. We often hear that, why wouldn’t you do that?  

Ruben Gamez:
Even if it’s three x, which is a lower multiple for business, that means it’s not growing that fast usually, or there’s some risk or whatever. I think people are thinking that they’re going to run it for three years and they get that cash in three years. It’s not three years not even close because we’re talking about profit, whatever’s left over in the business that if you make it super profitable, that probably means you’re the one grinding doing most of the work during that time. So it’s a tougher amount of time, tougher number of years. And then besides that, whatever the profit, even if it’s really high, you’re taxed more on it usually. So it just takes longer. Plus as you go along, it’s harder and harder to keep up with the growth we just talked about. All these things come together into it being a longer period of time than people think and it being a harder sort of slog during that time and just they’re having significant risk versus getting the cash up front, freeing you up to work and do on whatever you want to do next.  

Rob Walling:
And I’ve known a few founders who have said, Hey, I’m going to get this business. It’s growing fast and I think I can get it to 3 million a RR in that range, let’s say two to four. But some specific folks have said, Hey, I want to get to 3 million and then I want to sell and I want to sell for this really good multiple and I want to be growing like crazy. And I remember being like, why not keep running it? Why don’t you keep running, running it? And he said, because at that point I have generational wealth and why would I keep pushing it? And he said, and I see some headwinds. And he had done the analysis and did he know for sure, of course not hard decisions, incomplete information, but he walked away with a really nice eight figure payday. And so if the business five Xs or 10 Xs in the next couple years, do you regret it? I don’t. Drip has more than 10 XD since we sold it. In fact it 10 XD within probably two years, maybe three. And there were a bunch of factors at play there. There’s a bunch of venture capitally invested in it. I mean, we grew the team from 10 to 125 by the time I left. There’s a lot of things, but did I ever think to myself, man, I really wish I hadn’t sold and I still owned it. Not once. Yeah, not once,  

Ruben Gamez:
Right.  

Rob Walling:
Alright, let’s move on to the second topic. It kind of ties in, but it’s crazy how often I’m seeing this quote or this sentiment that people are built differently, we’re wired differently. And it specifically applies to, it’s usually an excuse of you and I are like, do the hard things, do what it takes to succeed. And that usually means launching something, focusing on it, figuring out marketing approaches, whatever the approach that we talk about on this podcast. But there are other schools of thought that it’s like, well, that doesn’t fit with my personality. I don’t know how to do outbound sales or how to do X, Y, Z marketing or sales approach. I don’t know how to do that. Or it’s outside my comfort zone. I’ve seen all these phrases, so I’m not going to do that. I’m going to do what I know. I know content marketing, so I’m going to do that. And specifically with an example like that, it’s like shouldn’t the first question be where are my customers and what’s going to be the most successful rather than my comfort zone? So that’s a little thing there, but this idea that we’re built different and there are just certain people who I don’t know, they’re just wired to build 27 apps or you sent me a tweet the other day, someone’s going to build, said they build 60 apps, 60,  

Ruben Gamez:
60  

Rob Walling:
Apps that each going to make $500 a month. They want 30 K of above the recurring revenue. And I was like, oh my lord, good luck. The logistics of just managing the domains in the payment accounts alone. But if you and I chimed in on that, they’d probably say, well, I’m just bill different and I’m not going to put all my eggs in one basket or whatever. So tell me, am I summarizing it well, and what are your thoughts on this? What am I missing on this topic of being built different?  

Ruben Gamez:
Yeah. I usually just see it as an excuse for people to sort of do things that they’re comfortable with and not the uncomfortable stuff is really mostly what I see it come down to because where’s the growth in that? Right? This is a very static sort of self-identity type of thing. So even things that they say that they’re good at, how did you get good at those things? What if before you got good at those, you just stuck with what you knew and didn’t, right? And you’re like, oh, well, I’m just going to stick with the things that I know and I’m good at. You would never have gotten good at those other things, the things that you, you’re great at now. So we’re always learning new things, always having to figure stuff out and things get difficult and it’s not always easy, but that’s how you get good at stuff or that’s how you learn. That’s how you grow as a person. You find what things you enjoy, what things you’d rather have other people do for you or whatever. However you want to manage all that. It’s like without experimenting, it really is just this mindset that’s the opposite of a sort of experimentation sort of mindset. It’s tough to grow that way.  

Rob Walling:
Yeah, it is. The fixed versus growth mindset is a piece of it. Although that usually is I believe that I can change versus I’m willing to do things that are uncomfortable that make me change. But I’ve equated this to folks and I’ve stopped chiming in on this on X Twitter because I just get tired of saying the same thing over and over. But I’ve equated it to saying, because I would say, Hey, don’t launch 20 things and see what sticks. You’ve heard me rant about them on the podcast that I won’t say again why I believe that, but I’ll chime in with my reasoning of like, Hey, here’s why I think that’s a bad idea. And someone will say, well, I’m just built differently, but this fits my personality. And I chimed in one time and I said, it fits my personality not working out and eating right to lose weight. What fits my personality is eating ice cream. I love eating ice cream. It’s my favorite dessert actually. And so that fits my personality. The fallacy is like, but that doesn’t have anything to do. My personality or my desire doesn’t have anything to do with what gets results.  

Ruben Gamez:
Playing video games is really fun for me. And easy comes easy. It does come easy. It just comes easy to you. It does. I’m built for it, but that’s not going to help me get customers. It really comes down to where the people that I think are going make up our ideal customer, where can I find them and what type of marketing activities will best work to get distribution and get customers for a product? And I could say I like doing podcasts, I like talking, so I’m going to do podcasts to get customers, but that’s probably for most SaaS, that is not an effective channel. That’s usually not good. And I don’t want to say that it doesn’t matter at all what you’re good at because you can look at a market and a customer type and say, well, these two or three things seem to be effective in this market or seem like there would be good ways to reach these customers. And if one of those works best with the things I like, then of course I’m going to prioritize that. So use your strengths and connections and everything else. Doesn’t mean you don’t look at that, but first you work backwards from where do I get customers? And then if there’s some overlap with the things that you’re good at, then great use that.  

Rob Walling:
That’s where it is. And if I was really good at building a personal brand and building audiences and going on podcasts, I wouldn’t start a SaaS. I would start an info product and course business. That’s what you do. And guess what? That’s actually what I do. I don’t run a SaaS anymore because I enjoy what I do. Audience building and putting out podcasts, I like that better. And so I was under no illusion after building a few SaaS companies that I wanted to keep grinding on, that type of stuff. I just didn’t enjoy it as much as writing books and being in a personal brand influencer, whatever it is, someone wants to call me, I enjoy that more. It’s just more fun for me, maybe because I’m wired differently. But here’s the thing, but I was willing to grind and do whatever it took to grow the businesses back in the day. Right? I was willing to,  

Ruben Gamez:
Yeah, I remember, yes. Remember when we were doing Facebook ads? You were doing like hit tail, remember?  

Rob Walling:
Oh my God,  

Ruben Gamez:
The grind.  

Rob Walling:
Yes, I do. I remember.  

Ruben Gamez:
Yeah, man.  

Rob Walling:
Yes. It’s crazy. Multiple days a week in that ad thing, getting images generated.  

Ruben Gamez:
It’s not the most exciting or most fun thing, but no did the work  

Rob Walling:
Exactly. And I did it because I wanted to be a successful entrepreneur. I think that folks who are builders, product people, developers, makers, I don’t think you’re an entrepreneur until you take on the full role, a full scope of running a business. And look, if you have a cajillion dollars in funding, can you hire someone to do sales? I’m like, maybe. But if you don’t and you’re bootstrapping, you have to do it all. And I think if you have kind of a hobby project that maybe you get lucky and takes off if you’re not someone who’s willing to really look at what are the marketing and sales approaches that it takes to grow this thing, and someone asked you, I won’t say their name on X Twitter, but they said to you, they said, earthling works. I’m genuinely intrigued. Do you think you’re wired differently to have the desire or patience to? And they said for that, but basically they were saying, because you were suggesting some marketing approaches, you should do this, this, that, and this. Do what it takes, not what you want to do. So this person was saying, do you think you’re wired differently, Ruben, or that you’re just more disciplined? What do you say to that?  

Ruben Gamez:
I don’t know. I feel like for a lot of this stuff, I don’t think in those terms. I feel like people spend too much time thinking about whether something’s difficult, whether they can do it, whether I spend more time just trying to figure, it’s not really a thing, a way that I’m built or anything like this. It’s just where I put my focus and attention. If my focus and attention is on how difficult something is, how big of an obstacle I see, then yeah, it’s going to feel really hard and that doesn’t feel good. How am I going to bring out the energy in me and get started? If that’s the case, I’m just looking at, okay, what’s the first thing? What’s the first step? What’s the next thing that I need to do? And that’s where I put my time and attention focus on. So it’s almost like just not overthinking it, not spending a lot of time in my head about it.  

Rob Walling:
If I really simplify it, I think that you value success more than you value your constant carefree enjoyment of every minute growing your business. You value success more than wanting to have fun eight hours a day, five, six days a week, whatever it is that you’re working on. And I think some other people think, I mean maybe this is a controversial take, maybe they think, no, this should be fun all the time. I shouldn’t do anything I don’t want to do. Sorry, I laugh because how many things have you done in your professional career as an entrepreneur that you don’t want to do? I’ve done so many things and I believe that is one of the reasons why I’m successful. There’s just no chance that I would be who I am or have the success I’ve had without the willingness to do that.  

Ruben Gamez:
Yes, but there is a fun to a lot of these things, even the grindings to some of it, right? I don’t know. Can you go without finding some enjoyment to this? It’s kind of like, or framing it in a way. I think a lot of it really just comes down to framing and sure, I have some stuff that I have to do with the state of Delaware today. I’m doing that stuff yet I’m not thinking about like, oh, this is super fun, or Oh, this is terrible, whatever. I know it’s not something that I would choose to do or enjoy, but it doesn’t mean business is or that it sucks or that my day sucks. I still really enjoy what I’m doing and this is just part of what I need to do to move forward and make progress. That’s it.  

Rob Walling:
You have to enjoy some of it. You have to enjoy maybe the majority who knows what percentage it is, but you have to enjoy a significant amount or you’ll burn out. You will. So you have to find that balance. But I am under no illusion and I don’t know, do I know a single entrepreneur who didn’t do anything grindy that they didn’t want to do and got success and they got really, really lucky that one time. So if you want to bet your entrepreneurial success on getting lucky that way, you’re the one in a thousand. I mean, of course it happens. It’s just very, very, very rare. It’s way more rare than people, I guess it’s a little bit of the lottery ticket mentality of like, Hey, you can become a hundred million sent a millionaire without working if you get really, really lucky.  

Ruben Gamez:
Yeah, no, it’s a lot like that. I was literally thinking about this with a lot of that goes around with especially the 60 apps type mentality, right? It’s like going to the convenience store and getting a bunch of lottery tickets and scratching them off and hoping that one of them is a big winner  

Rob Walling:
And I like things that are repeatable and that I think give me a higher chance of success than a lottery ticket over many years. The last topic I kind of want to transition this to, but we’ve already started talking a little bit about it, is it’s kind of around getting really lucky. It’s all just luck. No one knows what they’re doing and it ties in with people having excuses of why their app didn’t work, why their business doesn’t work. And frankly, this got sparked into my mind. It’s something we see frequently people talking about, but the excuse to be specifically is I’ve now seen several founders start effectively the same business, the same SaaS serving the same market with same ideas, and one of them was incredibly successful and sold for tens of millions of dollars, completely bootstrapped and walked away with generational wealth and other folks plateau at 10 KA month and we’ve seen this multiple times. 

You and I, again, we’re not going to name names, but we see this in it’s multiple apps across different markets, across things that we see where it’s like someone’s doing two 3 million in a market and someone else is doing five KA month and that five KA month is like, yeah, this market’s just too hard. SaaS stuff doesn’t work anymore. SEO doesn’t work. AdWords don’t work all the market. It’s different in 2025. It’s a list of excuses frankly. And you and I were texting back and forth as we often do, and we were saying, isn’t it stark that these two products starting at relatively the same timeframe, had such different outcomes and people don’t look at that often because they want to blame things and to quote, you said people love excuses. What do you think? I mean aside from that just being very poignant and I was like, yeah, I just screenshotted that and put it in this outline. I was like, we have to talk about this. Expand on your thinking there.  

Ruben Gamez:
It actually happens often where you have the same apps being launched at the same time and even if it’s a completely new category, how often do we see that? All the time. And a lot of times you’ll see most of the people just have really just the amount of success that they have is just very small. They shut down the apps and they never really get anywhere. And there are people who make it work, not just that. But then we also see people who make one thing work after another. Like Jason Cohen, right? He did four, has done four startups in the millions of dollars. The latest won billions, and if it’s all luck, he must be super, the luckiest person ever, right?  

Rob Walling:
Really lucky. Yes. David Cancel has had five exits for cash heat, and Shaw has had, I don’t know, four successful SaaS companies. We could name a lot of people. It’s not luck.  

Ruben Gamez:
No,  

Rob Walling:
It’s not luck. There’s some luck involved in all of it, but it’s  

Ruben Gamez:
Right, not as much as, yeah, I think it makes people, some people feel better about when they don’t have success with what they’re doing because then if it’s luck, it’s not their fault. And I think this is their framing. It doesn’t necessarily mean that it is their fault unless they’re off playing video games or doing something else or avoiding the things that work, a lot of the stuff that we talked about to make progress. But it makes it so that they don’t have to assume responsibility for any of it, and they don’t have to feel bad.  

Rob Walling:
They don’t have to assume responsibility and they don’t have to do anything they don’t want to do because if it’s luck, I should just build it and throw it out there and I shouldn’t grind and I shouldn’t do. Referring back to the past 25 minutes of this show of like, no, you probably have to grind because luck is usually a very small component of the success.  

Ruben Gamez:
Sure, there’s always some element of luck, but even that you can increase, right? You can create more luck by creating more opportunities, more of the right type of opportunities. And it’s not just like any activity. It’s the right type of activity that will help create some additional luck. But if you are building a product and you never show it to anyone, you never talk to anybody in related industry, you’re just going to have less luck than someone who’s out there promoting the product, talking about it, showing it to the right people and doing a lot of work around customers and potential partners. And that person is going to have not just better results just straight up direct from the activities that they’re doing, but also they’re just going to have more luck that’s going to help them along.  

Rob Walling:
Yeah, there’s a quote, I think it’s attributed to Thomas Jefferson. I don’t know if he said it or not, but it’s like the harder I work, the luckier I get. Luck is when preparation meets opportunity. It’s always something there. And even I say on this podcast, doing things in public creates opportunity or creates luck to be honest. Doing things in public publishing, blog posts and launching SaaS, and as you’re saying, you can’t just do any random thing. This is maybe where that my sentence kind of breaks down is you can’t, because I guess someone could then say, well, I launched my SaaS and my doing things in public is posting to Twitter. And it’s like, well, that alright, maybe that doesn’t work. But if you want to see examples, if folks want to hear examples of people who stories of them kind of grinding and doing stuff. 

Number one, you do a lot of marketing that is not social media. In fact, you don’t do any social media marketing for Sewell, right? It’s all these other channels and we can probably dive into ’em someday, but I interviewed Kevin Wag, staff of Spector, I believe it was the home improvement or no, it was SaaS for home inspectors, I’m sorry. And how he and his brother bootstrapped and sold half the company for at a 90 million valuation. Listening to that episode, I was struck actually, it was such a good story and there was so much of the, we just did what it took. We didn’t care, and I don’t mean working 90 hour weeks. Some people will be like, oh, so you just got to grind. You just got to be a Silicon Valley bear. I say, no, no, no, no, no. That’s not what I mean. I mean working on things that are hard or maybe you don’t want to do. Or he did get up at 6:00 AM on a Sunday to do a demo to close a deal, and they did a bunch of Facebook group stuff, which is not the funnest thing,  

Ruben Gamez:
And consistently over a period of time I heard that it’s great if you listen to that and you hear about all of the stuff that he did for as long as he did. Then it’s like, oh, okay. I can see it sort of come together. And it also is probably offput to some people who think about the amount of work required to get to that point.  

Rob Walling:
It’s a lot. That was episode 776 if folks want to check it out, two episodes before that was a Noah Tucker who runs Social Snowball that io, the title of that episode was how a non-technical founder bootstrapped to millions in revenue. His story was very similar. He’s a single non-technical founder. He now runs a team of 24. It’s completely bootstrapped and is wildly successful. And everything you heard him talk about was doing what it took, not what he wanted to do, and he does enjoy it day to day. This is the thing I want to drive home. Again, it’s not that these guys hated their life the whole time. This is not it. This is not delayed gratification, grinding for years to get there, man. I know these guys now they could do it again. Either of ’em could do it again because they don’t rely on luck. 

Luck is just a small piece of the puzzle. Just like you had bid sketch, which you still run Sewell, and if you were like, I’m going to start another SaaS, right? Well, first I’d tell you, you know what? Maybe exit Sewell first so you’re not running three companies. That would be my first. That’s not going to happen, but, but if a few years from now, if you were to be like, I’m going to start another one, it’s like, well, that’s going to be great and it’s going to succeed or have a high likelihood of success because you’ve learned so much and haven’t relied on luck.  

Ruben Gamez:
Yeah, there are no guarantees of course, but there are some people that do the work and if they’re starting something new, it would not be a problem for me to put my money on them. And yeah, I wouldn’t expect guarantee that that’s going to work, but chances are pretty damn good.  

Rob Walling:
Rubin, thanks so much for joining me once again on Startups. For the Rest Of Us, if folks want to use the best electronic signature app on the internet, it’s at sewell.com and if they want to follow you on X Twitter, you are at Earthling Works. Thanks again for coming on.  

Ruben Gamez:
Thanks for the invite.  

Rob Walling:
Thanks again to Ruben for coming on the show. And after we hit stop on the record button, we came up with two or three more myths right at the end, and so I put it into a new outline and maybe I can convince Reuben to come back on the show here in a month or two, and we can keep this type of format going. If you enjoyed the conversation of this episode in particular, because it’s a little different than a lot of startups For the Rest Of Us, right? It’s a conversation between two grizzled, jaded SaaS founders talking through thoughts and ideas that we agree with and don’t agree with. And if you felt this was interesting, you can at mention us on X Twitter. I’m at Rob Walling and Ruben is at Earthling Works. Thank you for listening this week and every week. This is Rob Walling signing off from episode 780.

Rob Walling:
You’re listening to Startup. For the Rest Of Us, I’m Rob Walling and in this week’s episode I talk with Mark Thomas about 10 myths that most seven Figure SaaS founders believe, and this is based on a LinkedIn post he pushed live a couple of weeks ago. If you don’t know of Mark Thomas, he has spoken at MicroConf Europe and he’ll be speaking again this year in Istanbul, Turkey in just a few months. Mark served as head of Growth for both Powered by Search and Podia and he’s now doing growth consulting and he is one of our founding coaches of SaaS Institute, which is our premium coaching program. You can head to SaaS institute.com if you are interested in learning more about that. Before we dive in to this episode, I want to tell you a little more about MicroConf Europe in Istanbul in just a few months.
I’m really excited for it. It’s going to be in late September. You can head to MicroConf europe.com to buy a ticket. As of the time I’m recording this, which is about two weeks before this episode goes live, we are already 65% sold out. All the early bird tickets have sold out and we have sold out all of our events for the past few years. So if you want to come to this event, you really do want to get a ticket. Now we have speakers like Mark Thomas who you’re about to hear from. Michelle Hanson, founder of Geo Coio and author of Deploy Empathy, and James Mooring, founder of Talti who was on the show, I dunno, in the past six months. It’s a great crew that’s forming. We’re going to have another couple speakers as well and I’d love to see there September 28th through the 30th in Istanbul. You can head to MicroConf europe.com if you are interested. And with that, let’s dive into my conversation with Mark. Mark Thomas,

Marc Thomas :
Welcome to Startups For the Rest Of Us. Finally here. Finally here. It’s been a long time.

Rob Walling:
It feels like you’ve already been on the show and I’m kind of surprised you haven’t. So glad you took the time. Finally, after all my phone calls, my emails, my dms, it’s been

Marc Thomas :
Incredible

Rob Walling:
Into the abyss. I can’t even believe I finally had to go through Tracy, it’s SaaS Institute to get you on here.

Marc Thomas :
Yeah, the weight of correspondence has just been too much.

Rob Walling:
It’s a big deal.

Marc Thomas :
Yeah,

Rob Walling:
You have these, what I’m calling 10 myths, that seven figure SaaS founders believe these because I’ll also be 10 traps that pitfalls that seven and eight figure SaaS founders falling to and you did a really good post on LinkedIn about it and we’ll of course link that up in the show notes. Give us some background before we start walking through these of where you came up with ’em. Anything else you want to add before we dive in?

Marc Thomas :
Yeah, so I’ve done a lot of consultancy work but also worked in a number of different contexts in SaaS in general. I’ve been a founder. I actually was not great at marketing as a founder. We could talk about that in a bit. And then I learned marketing and now I do it my job and I’ve been in agency contacts working with big SaaS companies, but pretty much every time I work with a company I hear one of these things that we’re going to talk about and every time I think, I don’t know if that’s true, I disagree or I think there’s a different way and I’ve always try to gently guide people to the other path because ultimately I do this full time, but founders are thinking about a million different things. So yeah, I thought I put these down so that I got something to point people to next time they say one. So yeah,

Rob Walling:
I love lists like this too because listicles, they got a bad rap because of all the buzzfeeds and whatever, really diving into ’em 10, 15 years ago, I actually like listicles or just lists of things as long as they’re accurate and they deliver on the promise and they’re not bullshit, they’re not just made up fluffy really this could have been an email. It’s like this whole thing of no, these 10 I think are actually really interesting. Now, I don’t think you and I are in a hundred percent alignment on all of them, but that’s going to make for interesting radio and

Marc Thomas :
That’s what a rubbish world it would be if we were.

Rob Walling:
Yes, mark everything. I’m a Syco fan. Everything you’ve said in here is 100% my experience and that’s the other beauty is you and I coming onto the show, it’s like what is my experience? Also as a founder, I’m invested in 200 something startups and you’ve done probably more, certainly more in-depth marketing work with more startups than I have. I flit on the outskirts and I have high level conversations and I’m like, this is how I would approach it. And then I step away and for whatever my founders, they think I’m like sipping margaritas on a beach somewhere, but I’m actually recording fun podcasts like this. But you have been in the trenches certainly in knee deep in more startups than I have, so that’s where different perspectives come in.

Marc Thomas :
Yeah, hopefully.

Rob Walling:
Alright, so let’s dive in. So Mark Thomas on LinkedIn, if you are not following him, you should look in the show notes for that link and your post says, stuff I’ve heard from working with founders at SaaS companies between one and 10 million ARR and why they’re wrong. Number one is I’m not good at marketing.

Marc Thomas :
Ding, ding, ding. It’s the one that every founder says at one point I’m not good at marketing. I literally just said it, I wasn’t good at marketing. Right.
And the other version of this is that they say they’re not good at sales or that they find it icky or something like that and every time, I just think, hang on a minute, you have built a company that got to a million dollars at least in revenue, maybe higher. How did that happen? Did it just magic? It didn’t. Just magic. I’ve worked at dozens of teams at this stage and the founders, they’re the best marketers. They know the company, they know the client, they know the customer, they know how everything works, they know what messages land broadly. Maybe it’s not totally dialed in, but they’re incredible marketers who maybe don’t have the technical skillset of a marketer and I think it’s just such a limited belief and it makes founders often make poor choices about team structure and waste a lot of money.

Rob Walling:
I think it’s one thing to be honest with yourself, to assess yourself in certain areas of how good am I at operations versus product versus development, marketing, sales, whatever, and have a realistic, not overly narcissistic view of I’m a 10 10 on all those things, but this is one that I’ve heard probably more than I should specifically for companies that are doing seven figures, there are certainly we back founders that are doing 2,005,000 a month and some of them say, I’m not good at marketing, and we’re like, because you’ve never done it, you really just don’t know how you’ve scratch and clot and that’s legit. But if you’ve made it to seven figures, odds are something’s working. Something’s working.

Marc Thomas :
Yeah, for sure. You might not know how to run a paid ads account like newsflash. A lot of marketers don’t know how to do that either. I had a co-founder at my company who was a salesperson, he’d made his whole career in sales and recruitment and kind of selling that that’s a hard world to be in, and so I told myself, Hey, next to that guy, I’m like, I don’t know how to do sales. Same thing with marketing really. They’re pretty adjacent. And then I left the company and I went into agency world where suddenly months later I was selling effectively a hundred thousand dollars deals. It’s just a switch that you can flick and say, Hey, I’m maybe not technically gifted at this, but I could be really good at it and I’m going to do it because I’m a founder and I’m going to work it out. And that’s the founder mindset.

Rob Walling:
Yeah, that’s what I like about that is as a founder, even if you think, Hey, I’m not good at this, it’s usually, but I can be, but I’ll figure it

Marc Thomas :
Out. Yeah, that’s it. That’s

Rob Walling:
The thing. It’s like what do you need to figure out to grow this business? Sometimes it’s sales, sometimes it’s marketing, sometimes it’s hiring. There’s all these different things. You’ll figure it out even if it’s true that maybe today you aren’t technically as good at marketing as the person next to you probably doing just a fine job. I remember this after we sold Drip, we sold it to lead pages and they had a 40 person marketing team and there were marketers on that team, there were managers reporting to managers, big team, and they were really good because Clay, the CEO was a marketer by training and so he knew how to hire folks and I remember being intimidated and being like, I don’t know, and they’re like, bro, you grew this to, you bootstrapped this thing to millions in a RR. You know something about something. And I was always a little bit, intimidated is not the right word, but it was a little bit like I’m genuinely not as good as you guys, but it wasn’t that I wasn’t good, it’s just that wasn’t my sole focus. It was only something I did 20% of my time
With that. Let’s dive into number two quote. This is a founder saying this, we really need to get top of funnel working if we’re going to scale.

Marc Thomas :
Yeah. Oh my gosh, this really, really might be true sometimes, but here’s the thing, if you get to 1,000,010 million a r, there is a huge amount, I would say 90% of the time of waste in your lifecycle basically monetized usage. Let’s say you’ve got a thousand users and you get to 1 million a r, firstly, good for you. Secondly, you’ve probably got a small portion who are paying you the amount that they should be paying you and within the rest of that there is a captive audience who’ve already said somehow they have the problem that your product solves, but you haven’t yet found a way to get them to pay you. Now, they should be paying you for something if they’re using your product, if they are taking up expense basically on your company, you should find a way to make them profitable or at least pushing towards profitability.
And it’s a huge opportunity if you’ve got those thousand people and those 10% are paying you to actually make that real big amount of revenue. What would happen if instead of thinking about how much you’re going to have to spend to get three, four times that you simply said, I’m going to spend a third of what I might have spent to get to that four times number and I am going to work out how to extract as much value as I can without being an evil capitalist from these people as much as makes sense for your business and their business. It would be significant.

Rob Walling:
And this is one of the reasons why in the TinySeed accelerator we have playbooks, we have seven or eight different playbooks we walk through and our first one is funnels. And the reason we do that is we want to set some rules of thumb about what are the ranges of web visitor to trial or trial to paid or activation percentages, what are good decent churn numbers, what are good outbound conversion rates and calls to close and all this stuff? And it’s not that there is a one size fits all, but there are ranges if yes for credit card upfront versus not. It’s going to be different numbers and the way that I think this one of we really need to get top of funnel working if you’re going to scale is that’s true. That’s the lowest hanging fruit. If you’ve already optimized most of the rest of your funnel and most companies at 1 million have not, now by the time you get to 10 million, still a lot, but if you’ve brought in a knowledgeable marketer or you’ve learned marketing by that point, someone should have been working on your whole trial to paid or first touch to retention and expansion funnel, but it’s kind of boring grindy work and it’s more sexy and interesting to just drive more, you know what I mean?
It’s that vanity of like, but look, unique visitors to the website went up or whatever. But realistically, this is why I’m such a believer in kind of rules of thumb around a funnel. I can look at a SaaS funnel today and if you tell me credit card or not free trial or not freemium or not or it’s high touch or low touch, I’m sure you can do this too, where I just look at all the numbers and I’m, I point to one of them and I’m like, that’s your bottleneck, that’s your bottle. Well, how do I do that? It’s not magic that I’ve seen a bunch of these funnels and it’s just these rules of thumb in my head, right?

Marc Thomas :
Yeah, they’re all different, but I worked at a company once and basically they were at the upper end of this bracket up towards 10 million. I purely worked on lifecycle stuff with them, basically sequences like annual upgrade sequences, trial reactivation sequences, things like that. We added almost a million dollars of revenue in a year just through that right now. That’s wild and that’s possible for most businesses I think. I mean it’s basically what I work on these days is lifecycle stuff and just finding these opportunities.

Rob Walling:
It’s frequently low hanging fruit. The 80 20 of those is not, it’s not months and months of work. It’s like let’s get something in here, let’s get an email or two that does this and we can optimize it later depending on volume, but getting something in, let’s look at number three quote. What if we made our affiliate terms X percent for recurring revenue for the lifetime of a customer? So if I have an affiliate program and I’m a SaaS founder, the kind of myth or pitfall here is we’ve given away 10, 20, 30%, whatever it is for the lifetime of our customer. What’s the problem there?

Marc Thomas :
Well, I’ve got to say I was pretty new to affiliate marketing. It’s not something I’ve ever really thought about before, but I have now worked on a number of affiliate programs for SaaS companies in this stage, and when you download that CSV out of the affiliate platform and you look at the number of new sales that happen over time, what you tend to see, and this isn’t always true obviously, but what you tend to see is that the number of new sales actually drops over time, but the amount that you are paying out does not. In some cases it even grows the amount that you are paying out because if you’ve got expansion revenue working, you’re still paying for the same percentage for somebody who wrote a terrible little blog post in 2018, got you one customer and now they have been taking 30% of the lifetime of that customer even after you worked hard to expand them or grow the whole account.
Now firstly, that feels almost criminal to me, but secondly, stop doing it. It is crushing your profitability every month that you continue to pay out on that. Frankly, pipe dream of a promise to continue paying them forever is a month where you are making your business less profitable. Again, recently I worked on one of these and I found on day one of looking at the affiliate program, really $20,000 of revenue just sat there that was getting paid out, and it blew my mind in the sense that like, oh, this person, what would they do with 20,000 extra dollars right now if they had that today, would that make that runway for a month maybe? Yeah, maybe it might for some people or could they invest that in a channel that really works for them? Well, yeah, maybe and then they wouldn’t have to pay that. Plus it compounds for the life of the customer. It’s not just 20,000 a day, it’s maybe 20, $30,000 a year or whatever, and that’s a huge gain for some people, especially when you’re concerned with runway at the bottom end of this revenue bracket. More than the top probably.

Rob Walling:
Yeah, the least profitable bootstrap SaaS company that I know at scale is heavy, heavy affiliate stuff. And when I think of SaaS companies at scale, their net profit is usually between 30 and 50%. That’s what you can get to, and this company does 10% net profit because the affiliates are taking 30 or 40 or whatever the number is, lifetime. So this is one that I wholeheartedly agree. Now, I think if you are going to go heavily into an affiliate program and there is some keystone affiliate that you want to land, and usually these keystone affiliates have these big audiences and they want advisory shares as well. That’s kind of a dirty little secret. No one ever discloses, but yeah, no, this,

Marc Thomas :
I’ve never come across that.

Rob Walling:
Yeah, it’s big names. They don’t disclose. I don’t know if it’s an FTC violation or not, but whatever. Now maybe they’ll negotiate and you’re just like, I just have to do this. But once that affiliate falls, then you can get a bunch of others and the other ones you cap it 12 months, 18 months, 24 months, somewhere in there, usually 12 to 18 is what I recommend. I’ve had some TinySeed companies do affiliate programs and one of them was negotiating really hard and eventually said, well, we can give you two years. That’s a long time. Even two years is a long time. And the reason you talked about it how over time the number of new customers they send you goes down. That’s because it’s audience. Audience doesn’t grow at the pace. This is the whole reason why I often say don’t grow an audience. If you want to build a SaaS, grow an audience. If you want to do books and courses and sell events and do all the stuff I do, but if you’re going to do a SaaS, there’s so many better ways to spend your time, so many better marketing approaches than audience building.

Marc Thomas :
One thing finally, I’ll say on this one is that one worry that people have about cutting these things, if they’ve already done them, is that the affiliates will get really angry and try and sue them. Maybe I spoke to a person who runs an affiliate platform about this and they said, that’s never happened to anyone that I’ve ever heard of. The second thing is I actually did this. I cut one of these recurring commission things, just like I said, one month notice, that’s it After this, it’s just no more commission on anything older than 12 months. We actually saw an increase in referrals after that because people were like, flip, I haven’t been driving any business. I’m not getting any new commissions. I need that. I’m going to drive some commission. And we actually saw massive growth in the program after that. So it doesn’t have to be doomsday for your affiliate program to cut this stuff.

Rob Walling:
Yeah, I would agree. Number four, quote, we should build a marketing team so we can focus on product ops, finance, whatever. So what’s the issue with this?

Marc Thomas :
1 million feels like a lot of money because it’s a big mental kind of anchor for a lot of people, but even at 10 million, it’s not that big a business. It’s a nice business for sure. You should be proud of that, but the goal should be to grow out of that bracket as quickly as you can. In my experience, people, if they stall, it tends to be really between those numbers, one in 10 million revenue, try and get away from that stall by outpacing it. The reason that I think that you shouldn’t think too much about your marketing team at this point is because you’re going to make the wrong hires. You’re going to lose touch with your customer, you’re going to slow yourself down. You’re going to burn a lot of money. Let’s say you hire a VP of marketing at 1 million. Firstly, there’s no one to manage, so you don’t need a vp, but you need someone who’s senior enough to build a strategy and then junior enough to actually get it done to a high quality. Those people are hard to find and you’re probably hire the wrong person and they’re going to take a long time to ramp up. You’re going to pay ’em, they’re going to not work out, and then you’re going to have to let ’em go and start all over again. Anyway, so my advice, do the marketing yourself for as long as you can, hire consultants to fill in the gaps and help you scale channels that you already know are going to work and basically find the opportunities that maybe you haven’t have to hire them.

Rob Walling:
Alright, so this one I mostly agree with you on, and the thing that I see with TinySeed and beyond TinySeed founders is oftentimes it’s a couple developers and they want to hire marketing by the time they’re doing 20 KA month. And I’m like, no, no, no, we can’t do this. And I have this list of, we have dozens of TinySeed companies that are doing seven or eight figures in a RR and almost everyone, and I think maybe everyone, the founders did the marketing, sales and product into seven figures. That’s it.
And I believe it’s everyone, but maybe there’s one or two that didn’t, but whatever it is, it’s 90 something percent. And this can be challenging for a developer to hear of like, but I don’t want to do the mark. Can’t I just hire someone for that? Right. There’s a whole section of my book that says, can’t I just hire someone for that? It’s in the marketing channel. I hear this so much, but I do think that when you get to about a million or two, it depends on a bunch of stuff, the type of business and all this stuff, I think this is when a founder can think about handing off one of those three marketing, sales or product. Now it’s not delegating, abdicating, handing the complete thing, but it’s bringing someone in who is more senior and can do strategy rather than just piecemealing things out.
And I’m still the bottleneck. Yeah, I think it can, I’ve seen that work. I guess I’ll put it that way. I’ve seen that work enough that I’m like, this is a strategy. Now don’t hire a whole team. I’m not talking about hiring four or five people, but I’m talking about you now. If you’ve been doing marketing, sales or product for this long, you kind of know what’s happening, what’s working, what’s not, probably what you’re going to try next. Probably what’s in not autopilot, but is in maintenance mode of like, oh, we’re just doing more SEO every month. Bringing someone in who’s a little bit higher level and not just a task level thinker but can actually do project or owner level thinking is where I start to think about that between that one and 2 million ish mark.

Marc Thomas :
Totally.

Rob Walling:
I love it. Alright, number five, quote. We’ve done well with one customer type. We need to find a new market to grow into. Yeah, this is one, this one, let’s launch a second product. We talked a lot on this. I was like, Hey, we’re capping out. Yeah, let’s translate it into Spanish and German to expand our, yeah, so this is along those lines. I think the listeners of this podcast are familiar with that, but what do you talk about why this is an issue?

Marc Thomas :
Did you get my investor notes from my company?

Rob Walling:
No, no. I’ve just seen these pitfalls over and over.

Marc Thomas :
At one point we had a platform that basically allowed people to vote do live voting, and for some reason we thought, Hey, let’s really focus on societies where there’s a lot of democracy. And it turned out that if we look at a table of that, Iceland has one of the highest, most democratic societies, and we were like, well, it’s obvious. Let’s just translate the app into Icelandic.

Rob Walling:
It’s just going to be a, there’s no reason not to do this.

Marc Thomas :
Oh my gosh. Fortunately, better sense has prevailed because Iceland’s got, what, 3 million people? I think it’s 300,000 or 300,000.

Rob Walling:
I think the entire country is smaller than my town.

Marc Thomas :
Yeah,

Rob Walling:
It’s a small

Marc Thomas :
Place. There’s not that many users for that. So yeah, finding new markets just isn’t the biggest opportunity at this point. What I love about founders and working with founders is they have this mindset of the 80 20, what is the most impactful action? I’m here to tell you that it’s not finding a different market because you’ve, you’ve probably barely scratched the surface of everybody who could buy from you. And the other thing is, as we said at the top of the episode, there’s probably a lot of people who already tried to buy from you but couldn’t find a way or the timing wasn’t right. Going back to those people, it’s going to be infinitely easier than trying to develop a new market and find a new kind of go to market that works for them and get all of the features that that market needs maybe differently to your existing market. I think you’re going to need to do it at some point, but it’s probably not at this stage and maybe you’ll get out of the 10 million bracket without a second customer type or a second market. It’s entirely possible

Rob Walling:
In most cases, and this is again 95% plus of plateaus that I see or have nothing to do with market size or I’ve tapped out of market, it’s really a one in 50, one in a hundred where it’s like, oh no, we really have tapped out the market and you actually do need to look for an ICP. I did a talk at, well, last couple of micros about plateaus, and I think I sent you a video that I saw that saw that. Yeah, and one of ’em was, that was great. What next? I think one of them was, I’ve tapped out the market. It was the seven reasons that SaaS apps Plateau, and one of them was, I’ve tapped out of market and I pretty much say almost never just, this is here for completion, but don’t you use this as a crutch. I’m looking at you half the audience who’s like, oh, we expand it. It’s totally in line with number five here, number six, quote. If I send more email, people will unsubscribe. But Mark, this isn’t a myth. This is true. What do you want to say about this one? Rob, do you know

Marc Thomas :
Anything about

Rob Walling:
Email?

Marc Thomas :
Yeah, I come across this one so frequently because one of the things that I say most to founders and to marketing teams early stage is send more email. I think a lot of marketing science is basically voodoo, but this is true if you appear more frequently than your competitors to the person who you’re trying to sell to. And if you keep on doing that and you keep making offers, eventually someone will take notice. They might not buy from you, but they’ll certainly consider you if they have the problem that you’re solving. You think that you are appearing a lot right now. I promise you, you’re are not getting opens, you’re not getting noticed in the inbox, which gets a thousand emails a day. You’re not appearing frequently enough in people’s feeds and things like that. Email is one thing you absolutely can control. Just simply increase the number of emails that you send because a healthy email list is not the goal of building a SaaS company.
You don’t need a healthy email list in the sense that somebody who’s trying to sell an info product needs a healthy email list. You need to find new buyers in that list, or you need to sell more stuff to the people who are buying already. So just send more email. Just a specific case study here. I worked on a product once that had, who basically sending four emails a month kind of product announcements and things. I got the opportunity to basically look at that and go, here’s what I think we should do. And I just said, let’s send 12 emails a month instead of four. There was some friction there, people felt a bit sort of, should we do this? I tell you what, when we saw the data come in after doing this for a while and there was a 9% bump in conversions to paid plans after every email that we sent and then a trailing effect in the following days, suddenly people took notice. The goal is not to keep subscribers and build a subscriber base. The goal is to get more customers and send in more email and allows you to do that.

Rob Walling:
Number seven, I heard X, Y, Z company grew with programmatic SEO or insert any easy growth lever here. Why is this a trap? Because I have heard some people grow with programmatic SEO, I think Zapier did it back in the day, but what’s, yeah, talk to us about this.

Marc Thomas :
Hey, look, sometimes programmatic SEO is going to work for you, but I can’t tell you the number of times I’ve been talking to a company and they’ve gone, I think we should try programmatic SEO. And I’m like, okay, well, why have you tried creating content that speaks to your buyer’s pain? First of all, have you tried doing this other thing or this other thing? And the reason that a lot of the time people want to do stuff like programmatic SEO is because it is easy, relatively speaking, they’re basically building a feature for their marketing site. Google is not going to value that in the future in the same way that maybe they did in the past. All playbooks diminish in efficacy over time and effectiveness over time. And so if by the point that you’ve heard that somebody grew easily with whatever growth lever or growth hack or whatever, it probably is diminished in effectiveness already to a certain extent, and you should do what is more effective, which is trying to convert more people who are already in your life cycle. That’s my take.

Rob Walling:
What you said about it being easy really makes my founder myth or founder mistakes thing tingle because the founders who I see on the internet who kind of get in their own way over and over and never seem to succeed, but you’re always like, but you’re smart and you build good prop, but you never, it’s, they want to do the easy and they want to stay in their comfort zone. I see them thinking out loud on Twitter and instead of them saying, Hey, I built this product for this type of customer, what marketing purchase should I do? What would resonate with them? What are my customer? They’ll say, well, I’m good at or comfortable with, or in the past I’ve done, therefore I’m going to implement this for this SaaS app. And I’m always like, that has nothing to do with it. Nothing to your experience in comfort zone, to have nothing to do with whether this is going to be successful. You should start, you’re asking the wrong question. It’s not the easy, it’s not the comfortable. So that really just that piece of it really resonates with me.

Marc Thomas :
I think one thing I will say is I’m not trying to shame anyone here by saying this to her, and I know you’re not either, Rob.

Rob Walling:
No, I am. Yeah, no, I’m calling people out. I’m going to start throwing names. No, I’m not Just kidding. I’m just kidding. No, but not trying to shame anybody, but trying to educate and trying to be helpful.

Marc Thomas :
Yeah,

Rob Walling:
Right.

Marc Thomas :
I think it’s like, yeah, it is. Because the reality is people are scared of failing and scared of looking silly If they get the marketing or the sales wrong, look, you’re going to fail if you don’t get it right, so you may as well give it a good go on your way to the inevitable middle.

Rob Walling:
Yeah, that’s right. No, it’s never about making someone feel bad for what they’re doing, but it is saying, Hey, here’s a heads up and here’s how to do this better. I mean, that’s the whole point of this frigging podcast and the YouTube and all the books and all the reasons that I’m yapping yapping my face off for the last 20 years is hopefully we can help you make fewer mistakes. And I think the times when I get frustrated and when it sounds like I’m trying to shame people is when people keep making the same mistakes over and over, because I’ve been saying this for 10 years, stop doing B2C, stop doing two-sided marketplaces and stop staying in your comfort zone when it comes to marketing and sales. Your customers don’t care. Your customers don’t care what you’re comfortable with. They care with how they buy and how they want to be spoken to. So I like this. We got some good energy going here.

Marc Thomas :
Yeah, nice.

Rob Walling:
Alright, number eight, sales doesn’t work for us. We want self-serve only. What’s the issue with this?

Marc Thomas :
Sales works for everybody. You don’t like sales? There we go.

Rob Walling:
This is it

Marc Thomas :
You feel like you don’t want to be sold to, but again, it’s a limiting belief. At some point you validated this company that you’re building, unless you got incredibly lucky, and let me tell you, it’s not going to happen a second time. You had to validate this. It’s the same thing as sales. All you’re doing is validating in reverse. Now you’re basically saying, Hey, you’ve got this problem. I’ve got a product now that works and you’re going to the same people that you used to validate this thing, the same customer type, and you’re saying, look, do you want it? Because here’s the thing, self-serve is great, but if you’ve never done it before, and even if you have, it’s an absolute pain to get right. There are so many variables that could go in the wrong direction for you, and it takes time and energy and Headspace.
I’m not, again, self-serve models. In fact, most of the companies I work with are predominantly that. But you will learn a lot. You’ll go faster by adding a sales model and you’ll go faster by closing more deals and putting things that you learn back into the marketing, back into that self-serve motion. Definitely, even if you’re building an incredible self-serve motion, then still every now and again, get on a sales call with someone. Even if you don’t predominantly do that, just do it. Trust me, take the hint. You’re going to see some revenue from that. You’ll close bigger deals, you’ll learn that you’re underpriced, you’ll learn that people want you more. You’ll learn the features they actually care about the things they say about you. It’s like a shortcut to greatness by doing hard work.

Rob Walling:
With Drip, we were self-serve only in their early days, and at a certain point people wanted to start talking to us and what I had to do was qualify them upfront. I didn’t want to talk to everybody who wanted a $50 a month plan because it just wasn’t. And now in the early days I did, I was trying to learn, but at a certain point I was like, this isn’t worth it. So what we did was we learned to qualify with a little JavaScript pop-up questionnaire that’s like, Hey, how many subscribers do you have? Because we had just had one value metric and it was like, well, obviously you’re going to pay us two, 300 bucks a month. I’m willing to do a one call close with you. And we found that we had a two to three X improvement of conversion for those amazing instantly.
And then that’s when I hired, I had customer success. I didn’t even have a sales team. I just had one customer success rep who I then had do these warm, they weren’t even sales calls. It was more like answering questions like, I’m on Infusionsoft, how are you different? I’m on active campaign. How are you different? It was stuff like that and it really helped. And I think every business, almost every SaaS company, I know there are some very, very rare exceptions, but almost everyone can use some help with this. Not even help, but that it would help their business, as you said, along the learning and along conversion rates. And it gets you there faster. And it also can help you suss out. If you’re charging $30 a month for your SaaS and it’s all low touch, no touch, you start doing a few sales calls here and there. When someone’s like, well, I want 30 seats of this, or I want to buy 10 times more data than anyone, whatever your value metric is, you start to find those companies that do want to pay you $500 a month or a thousand dollars a month or $2,000 a month. You build that dual funnel of one low touch and one high touch, and that is where I see real kind of bootstrap or hockey stick stuff come out of.

Marc Thomas :
Yeah, totally.

Rob Walling:
Alright, I’ll tell you what we’re going to do. We are going to do number nine and then we’re going to leave it to the listeners to go to your LinkedIn post in order to discover what 10 is. How’s that for a teaser like that?

Marc Thomas :
Rob? Rob, you’re a marketer.

Rob Walling:
I’m not good at, I’m not good at marketing Mark. So alright. You just did it. That was it. That was ladies and gentlemen, that was mine. Alright, number nine. We don’t want to take cheap shots so we don’t do competitor content. So first you want to kind define quickly what competitor content is and then go into why this is probably not a healthy view.

Marc Thomas :
So competitor content would be something like literally an alternative page or a drip versus active campaign. I’ll take that one as an example. Yeah, that’s it. So people don’t want to do these because they think, oh, these never work on me, or I don’t believe it when people say things about their competitors, and that’s fine, but I tell you this, these pages are one of the best conversion points across all companies that’ve ever worked on. They’re almost always in the life cycle and the conversion path of a great customer. You can do competitor content that is genuinely helpful to your buyer without nagging your competitors, without saying like, Hey, these guys suck by our product. Instead, they’re going to choose someone in the market. So it makes sense for you to put across the genuine take rather than just saying, Hey, I’m going to take their most expensive plan and say I’m a thousand percent cheaper.
Right? Instead, just make the argument about who your product works best for and why. Because if you don’t do it, someone else, your competitor probably might put across the nagging view. They might do the potshot content and they’re going to be less generous, their stuff’s going to rank, people are going to read it. You should do it on the basis that you’re a helpful person trying to help your customers make a good choice. And by the way, if you create this content and say to people, Hey, if you are not the right fit for us, you are going to be in this group of people. These products are great for you because this is who buys these, but if you are the right fit for us, you should buy our product because of these reasons, you’re going to have better lifetime value because people are going to churn less frequently because you’ve actually sold people honestly on your product and you can deliver. That’s my big take on competitor content.

Rob Walling:
And we’ve talked about this on this show quite a bit, and we get listener questions about how do I do it? Should I do it? And I’ve talked about three gradients of going really all in and naming names and really being aggressive or naming names, but being a little more light handed with it or not naming it these different, I don’t know, even thresholds are just kind of areas of the spectrum. But in general, yeah, this is something I think probably every SaaS company should do to one degree or another. So Mark Thomas, thanks so much for joining me on the show, man. If folks want to keep up with you, of course they can search Mark Thomas on LinkedIn. It’s MARC

Marc Thomas :
And also on my website, which is positive human.co.

Rob Walling:
Positive human.co. Very nice. And again, as a reminder, if folks want to maybe chat a little more with you, SaaS institute.com and your info and Mark’s first group is coming together now. So thank you again for joining me, man.

Marc Thomas :
Thank you for having me. It’s been great.

Rob Walling:
Thanks again to Mark for coming on the show. And as a reminder, Mark’s going to be speaking at MicroConf Europe in Turkey in late September, MicroConf europe.com if you’d like to see us both there. Thanks for listening this week and every week. This is Rob Walling signing off from episode 779.
Well, hello listener. You have found the hidden track of this episode. Mark Thomas made the mistake of telling me one of his hobbies. I said, what’s your hobby? Please tell me. It’s Dungeons and Dragons. I know much of tribute. No, it’s not. It’s music. In fact, being a musician, it’s playing guitar and bass and composing and doing all types of stuff. You can actually see him singing to his own compositions on LinkedIn. But what I did is I went and asked chat GPT for 10 questions about playing guitar and bass that I could ask a podcast guest good if they’re funny in increasing order of difficulty. So I’m going to start with you. We’re only going to do three.

Speaker 3:
So

Rob Walling:
First one is easy. It’s number one, what’s the name of the four string instrument that lets you play root notes Look cool and take way fewer solos than your guitarist friend.

Marc Thomas :
Oh, that’s definitely the bass.

Rob Walling:
Alright, there we go. I’m going to jump to Medium easy. This is four out of 10, which guitar effect pedal is basically required. If you want your intro to sound like the edge from you two.

Marc Thomas :
Oh my gosh, I don’t own any pedals, but let me say this. My favorite name of a pedal, it’s the big muff.

Rob Walling:
Oh yeah, I used, I had a big muff back in the nineties I think.

Marc Thomas :
Yeah, it’s great. You know what? If you want a clip for YouTube, sure. It’s just you saying, I had a big muff in the nineties.

Rob Walling:
We can’t, Josh, do you need to bleep this? No, it is a distortion pedal, right? I’m pretty sure.

Marc Thomas :
Yeah. It’s a big, I had one big growly pedal. Yeah.

Rob Walling:
Back when I played in a grunge. I was kind of a nirvana’s cover band with the screamy grunge songs thrown. I can see

Marc Thomas :
Did you have long hair?

Rob Walling:
Yeah, kind of with an undercut. Yeah, it was pretty rough. And wore oversized sweaters. Like shoe guys. Yeah, kind of. Except we just weren’t that good. So alright. That was, oh, so you didn’t get it. So the edge from U2 uses it’s a delay pedal. Delay pedal, right.

Marc Thomas :
There you go. I thought we were asking a specific name though.

Rob Walling:
Nope, just the effect. Alright, let me see. Some of these are ridiculously hard. I’m even sure I would’ve gotten this. I’m a huge Beatles fan. Do you like the Beatles?

Marc Thomas :
I do like The Beatles. Yeah.

Rob Walling:
All right. I don’t think this one’s going to go well. This is hard. Number nine out of 10, which Beatles song features Paul McCartney’s slapping his Hoffner bass, like he invented funk, even though slap bass wouldn’t be popularized until decades later.

Marc Thomas :
Is it definitely a Beatles song? Because I was going to say Arrow, what’s it called? Arrow Right Through Me. What’s that song called McCartney

Rob Walling:
Song?

Marc Thomas :
It’s a wings one. I don’t know that

Rob Walling:
Song. That’s song. But is he just

Marc Thomas :
Couldn’t have done Worse Thing to me.

Rob Walling:
That’s a liver pu neck. This is amazing. Wow. So according to Chad g pt, it’s come together.

Marc Thomas :
Oh, okay. I can cha gt Cha G PT Hass. Never heard anyone slap a base.

Rob Walling:
That’s the thing. I was kind of like, wait a minute. Yeah, it’s one of this. Isn’t that Slap bit,

Marc Thomas :
That’s one of the coolest baselines I think ever. I think the only other baselines that I would consider cooler or a couple of top ones, anything by the jam, massive fan of that. In fact, that’s how, one of the ways that I got into playing electric bass, I actually play double bass. Oh

Rob Walling:
Boy.

Marc Thomas :
Wow. And yeah, that’s how I got into electric bass. And then the other one I’ll say is just listening to Peter Hook, kind of Blue Monday, joy Division, just generally like new order. Anything by those guys. The way he plays bass is just so incredible and different.

Rob Walling:
I love it. Yeah. I dove into McCartney’s baselines. Well, did I dive into it? What I did is I found a YouTube video as I go down these YouTube rabbit holes. And it was talking about how if you played root notes to several of these songs versus what McCartney played, and they’re like, here’s what a competent basis me. I am a competent rno basis just enough to sound good. And they were playing it do when I call you up. But then the McCartney bass says it’s like something out of a ska baseline. It’s like melodic, isn’t it? And it’s of course because he’s a songwriter and he writes melodies and all this stuff. So I love exploring outliers and I can play an instrument, but they can play an instrument. You know what I mean? It’s genius versus like, yes, I’ve been playing the bass for 20 years and I can do it competently. But it’s so different to write amazing songs and baselines.

Marc Thomas :
One more amazing baseline recommendation, if you haven’t heard it yet. There is an episode of the podcast, one song where they break down the roots, the stem, sorry, of all the different famous tracks. And there is an episode of that about London calling by the Clash, the baseline in that I had never noticed it before. It is incredible. And I’ve since listened to it and I’m like, I can’t hear anything except this bass now.

Rob Walling:
Yeah, now it’s,

Marc Thomas :
Go listen to that episode after this. Yeah, I’ll do that. Awesome. Alright man. Appreciate it man. It’s great to see you. Bye.

Rob Walling:
Being an entrepreneur is making calculated gambles. When I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later. You are listening to startups. For the Rest Of Us, this is the podcast that focuses on helping founders build incredible businesses that don’t make a dent in the universe, but might just change your little corner of it. And while you’re building that incredible business and maybe you bootstrap it, maybe you raise funding, it kind of doesn’t matter. You’re not sacrificing your freedom, your purpose, your relationships, your sanity, your mental health in order to grow it. 

It’s not growth at all costs, but it’s build incredible businesses that provide us with an incredible life and also improve the lives of those around you. I’ve been recording this podcast for more than 15 years. This is episode 778, and today I’m going to be answering listener questions, some great questions in the queue. And if you have a question you’d like me or me and a guest to answer in a future episode, you can go to startups For the Rest Of Us dot com and click ask a question. In the top nav audio and video questions tend to go to the top of the stack, although this time it looks like I have a question from X Twitter and also more advanced questions tend to go to the top of the stack rather than how do I get started? Early stage stuff today is going to be a mix. 

It’s going to be fun. We’re going to have a great time. Before I dive into my first question, I want to tell you about MicroConf Connect. It is the best paid community for bootstrapped and mostly bootstrapped SaaS founders in the world. You can add to MicroConf connect.com if you want to check it out because building a startup can be lonely and if you join Connect, you’re going to be surrounded by like-minded founders. This is our extension of our MicroComp Hallway track. In addition to the forums, the conversations, the dms, you get access to live events. So for example, on June 19th, which is next week, Matt Haman is a sales expert and he’s going to be doing a one hour session about using LinkedIn as a sales channel. And it will be a live virtual event, meaning you can join via, I dunno what a Zoom or whatever we use, but you’re there in real time and you can ask questions if you want to apply because we do not let everyone in. 

We are pretty quick on the draw to not let folks in who are trying to infiltrate and let’s say reduce the value of the community by them trying to sell stuff or being whatever. You get the idea. We try to keep the quality of the participants and the quality of the conversation very high. We have a full-time moderator who is making sure it’s the best community. It can be MicroConf connect.com if you want to check it out. And with that, let’s dive into our first question, which this one is actually a thank you and some feedback about TinySeed Tails.  

Speaker 2:
Hey Rob, long time listener. I just wanted to say thank you for the TinySeed Tails. I’ve been a long time listener for a couple of years now. I don’t have a startup of my own. I would love to have one, but I don’t. And the tiny details just showed me how much uncertainty there is behind a business. A business that has been backed by you guys, a business by a person that sounds like they have an idea of what they want to do and they still cannot find product-market fit, which is really, really helpful. I love all of your episodes, I love listening to them. I love listening to all of your guys’ experience and what you go through and suggestions, but tiny details showed me even for a person like that and for a company like that, how much unknown there is. I’m the type of person that’s interested in it. 

I work as a project manager and a product manager depending on the company, on the project, but I love coding. I’m very interested in that, but I still, I don’t have a startup because I have no idea what to do. I’m having trouble finding the problem to solve. And listening to these episodes with you, and I’m blanking on the name of the founder, I’m sorry, in the fourth season, it’s just eyeopening even for somebody that they thought they know what they wanted to do and what problem they wanted to solve, it’s still so much uncertainty. So just a huge thank you. And if you can do three founders per season, that’d be great. I absolutely love the TinySeed Tales. So yeah, a huge, huge, huge thank you for those episodes. Love hearing those, looking forward to new ones. And if you can find more founders to follow and update us on their progress, I would listen to it until I die. Thank  

Rob Walling:
You. I would listen to it until I die. That is deep praise indeed. Thank you for that. Antonio. I’ve received a lot of positive feedback about that season of the most recent season of Tiny Sea Tales. If you skipped it because for whatever reason you didn’t want to listen to it, it is a profoundly impactful experience to listen to Colleen have some early success and then lose a co-founder and then scrape and claw. And I believe we recorded, what is it, eight or nine episodes over almost two years. Yeah, two years almost to the day. So you get to hear this long journey and you get to hear how it pans out In the end, if you want to hear 90 minutes of a similarly recorded show, it’s kind of just a single audio documentary. Head to startup stories podcast.com, and that was recorded over, I don’t even remember, 15 months with Derek Reimer and I when we were first starting Drip. 

And it is agonizing for me to listen to before we had product-market fit. And then it kind of jumps to where we do at a certain point and that is a similar journey, but perhaps with a different end result, really appreciate the positive words, the kind sentiments around it. Antonio and I plan to keep doing it. I mean, tiny Sea Tales is, I’ll tell you what, per audio minute, it is way more work than anything else that we do just because of the heavy editing and the voiceover and the production value of it. It’s also for me, there’s no instant gratification. So I get to record these things over the course of a year. The original idea was to do it over 12 months. Colleen’s adventure lasted a lot longer than that, but to record things for a year and not put them out in public is really hard for me. 

Where I get the dopamine rush is when I launch a book, when I launch a podcast episode, when I ship a YouTube video, that’s when I’m like, yeah, the world is consuming this now. And then I get to hear feedback and thoughts from people about it. So it’s actually really hard for me to do that, to wait and to have the delayed gratification. But I have heard from multiple TinySeed founders and investors that the reason they wanted to be part of TinySeed was because of what they heard on TinySeed Tales and they heard the struggles or the earlier seasons and they heard the victories of the earlier seasons just generally heard the thought process and it made it more human. So I plan to keep producing them and I’m glad that you have enjoyed this last season. The next season is almost halfway done, and so every couple months I sit down with victim slash subject of season five and fingers crossed, I would love to launch that in September of this year, in fall of this year to coincide with TinySeed applications opening. But it all depends. These are things we can’t predict. I literally don’t know if the startup is going to succeed when the season starts. And I don’t know how long the season is going to be because we don’t know when the story kind of trails off. When do you ride off into the sunset? It’s certainly hard to tell at the start and we will do our best to keep shipping those episodes. So thanks again for your voicemail, Antonio. My next question is about pricing and pilot projects.  

Speaker 3:
Hey Rob, it’s John from what, what is a highly visual low code financial business simulator? We make it easy for decision makers to visually ask and answer their gnarliest. What if business questions in seconds all without formulas or spreadsheets? Users can build out dozens if not hundreds if not thousands of what if scenarios all in real time and then analyze those trends in the data and make better business decisions for solutions. Quite novel, the tech was not easy to build and we’re flirting precariously with some of those category creation type problems that you’ve mentioned in the past. My background is the visual effects industry and our go-to market is targeting large visual effects studios that have this complex relationship between revenue and capacity planning. Artist resources are a huge expense and our solution proposes a better way to forecast artist resources, reduce over time and mitigate unnecessary or poorly timed hires. 

So my question is about pilots and how to think and not overthink them. For example, we’re pitching a pilot for one of the top five visual effects studios in the world right now. They did $120 million worth of work in 2022. They’ve got a thousand employees and I think we can help them save between two and $3 million a year once our tech is fully implemented. So we’ve proposed a phase pilot, we’re focusing on one office, a subset of projects so they can get a sense of the tech and help us build out more functionality. I subscribe to the theory that pricing should be 10% of the value the customer receives, and here the obvious benefit is that we’re going to get brand recognition from a top tier company. And I also don’t want to give away too much value in the process though we’re still bootstrapped and I’m trying to recapture some of those sum costs. So how would you think about pilot pricing something so different? This is an interesting that’s been slammed by their rider strike and they are cash sensitive right now. Thanks for everything you do, Rob. Appreciate it. Bye.  

Rob Walling:
Thanks for that question, John. I like that you called out the charging 10% of the value theory. I think that’s a good rule of thumb. It’s not something that you have to adhere to, but it’s a great starting point. And if you’re going to save ’em two to 3 million a year and you charge 200,000 to 300,000 a year, it feels kind of fair and that’s a nice contract size. There are a couple schools of thought on pricing pilots. See, I’m a believer for sure that you should be charging for them because as opposed to just comping it, which is not anything that you indicated. Some founders are so desperate to get the business that they want to try to give it away. And there’s so many problems with that. Number one, you can waste a bunch of time. And number two, they don’t have any skin in the game and people don’t value what they don’t pay for generally. 

And so again, you didn’t say any of that, but I’m doing this for listeners who think, well why wouldn’t I just comp this pilot project pricing? I mean my default is to usually start with how you would price it if it wasn’t a pilot project, how much value do you think you’ll save them at just one office? And so if that number is a hundred thousand dollars or $200,000, then you charge 10 or $20,000 a year, right? I guess that’s talking annual probably how I think about it now then there’s are we doing a bunch of custom work for them? Because we may want to charge that separately. We may want to say, Hey, there truly is some integrations and some stuff we’re going to do that we don’t need for future customers or we don’t think we will. And so then you can do one-off stuff for that. 

We’re going to charge you a hundred bucks an hour or just a fixed price, $10,000 one time to do all this work for you in addition to the 10 or 20,000 a year. Now, if instead they’re giving you a bunch of guidance and you’re going to build a bunch of features that you think other companies are going to use, you can do one of two things. You can charge ’em a discounted rate for that. You can say, Hey, I’m going to charge you half. Or usually it’s about half, right? So if it’s like $10,000 worth of work, but I think I can reuse it, we’re going to charge you five grand to get it done and to be number one in the priority list to be number one on our roadmap. In essence, the thing I think about is who’s getting more value out of this? 

Or is it an even value exchange potentially that you get not only input to your roadmap, you get to have this customer zero that you really are building it for, but they also are going to get a lot of value and you’re both going to have to invest time into it. They have to invest time into the implementation, into working with you. And then you of course are investing the time to build out what needs to happen. And then the other thing I think about with the pilot project is the reason it’s called a pilot project and it’s not just a contract, is that the idea is it should lead somewhere. So that’s part of the conversation I’d be having. And it’s not that you need a written commitment, that’d be perfect, but it’s going to be really hard to get that. But it’s getting that verbal commitment of if this works, our expectation is we’re going to keep rolling it out. 

If this does everything you need it to do, we’re going to be rolling it out. And so that’s why it’s called a pilot is it is the tip of the spear, right? Or it’s the wedge that gets you into a company that then proves your value to this large company and proves to them that you are reliable and that you can in fact produce the results that you’ve promised. So that’s such a big thing of it. And the way I think about it is, let’s say you do the pilot and it works and they move forward to implementing you across the entire company or you do the pilot and it doesn’t work. In both cases, I want to feel okay about the pricing. If this is the only work I ever do for them, and they basically say, you know what? We don’t have the budget or it didn’t work, or leadership change or whatever else happens, they go out of business. 

I don’t particularly want to be in a position where I’m thinking to myself, oh man, we just did a bunch of work for free. We just ate a bunch of money. I underprice this because I thought that we were going to get all this work because that’s not a sure thing. So even if it’s not my most profitable pricing I ever implement, that’s fine. It doesn’t need be a huge cash cow, but I want to minimize the regret as I’m going to grind through this pilot. A lot of pilots can be kind of grinding and a lot more work than you think. I want to feel okay about the work that my team and I are putting into it. So that’s probably the high level overview of how I would think about pricing pilots. Thanks to that question, John. Hope it was helpful. My next question is from Twitter from Kenny Alami several months ago, well, geez, it was almost a year ago now. 

I said there’s a noticeable lack of intermediate and advanced questions on startups pod. Do you have any more advanced questions? And Kenny asks, how do you niche down to take advantage of industry knowledge and how do you de-risk the bet in case there is not enough demand? So first of all, I don’t think de-risk the bet. I think being an entrepreneur is making calculated gambles, and I think trying to, when I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later once you’ve tapped that out. What I don’t mean is once you’ve plateaued, because usually plateaus are not because you’ve tapped out your market, usually they’re because you have tapped out your present marketing expertise or you have only not really done very much marketing, which unfortunately is what a lot of the Indie Hecker folks on Twitter that I see saying, ah, I’m tapped out. 

And it’s like, oh, it’s because you thought building an audience on social media was going to be your marketing channel, and that is catastrophically misguided. So the bet is not something I’d particularly be doing in an early stage startup. There’s going to be a lot of risk in it. But the risk, here’s the thing, it’s not like you’re betting your house on it. The risk is that it doesn’t work and it’s some time and maybe some money. And the answer to that is as you get new information and you learn and you have more data, then again you pivot, you expand, you change it, you make these adjustments, these course corrections. This is something that experienced and successful founders do that inexperienced. And I’ll say the folks who I see, the founders who I see getting in their way over and over and over, are there ones that either don’t try stuff because they say, oh, it doesn’t work, or they try it and they don’t go all in and they don’t course correct. 

They try it and if it dosn’t work, they just quit. That doesn’t work. Ads words doesn’t work in 2025 SEO, it doesn’t work anymore. And in 2025, it just isn’t the thing. And it’s like, no, actually both of those things work. So does outbound sales. The playbook is not identical to what it was 10 years ago, but I’m invested in hundred and 24 B2B SaaS companies. Dozens of them are doing seven or eight figures, and there’s WP engine, which is what do we think the worth of them is? A billion. It’s a unicorn, right? And across all those companies, the successful ones are doing the stuff that I hear some people saying it doesn’t work in 2025. Well, if it doesn’t work, then how is it working for these companies that are growing? So all that said, de-risking course corrections, it’s what experienced founders do. 

Now, how do you niche down to take advantage of industry knowledge? Kind of hard to answer without specific. So I’m going to invent a contrived example. Let’s say that I have industry knowledge of electrical construction because let’s just say my dad worked in construction for 42 years and my older brother still works in it, and I worked in it for many, many, many years. I could think about any app, about an accounting app, about a booking link, like a scheduling link. I could think about a calendaring app, I could think about project management, I could think about anything. And then say for electrical contractors or more broadly for the trades, we think of the HVAC and electricians, your plumbers, your carpenters, your, your general contractors, any of these things could be narrowed down or niched down. And usually if I’m a bootstrap founder, I’m going to probably try to focus it on one of those, but I’m going to be open to others. 

I’m going to be open to where the interest is highest, right? I’m going to be looking for where the thing that I have in mind sparks that twinkle in their eye. I’m looking for when they have that moment of, wow, this could really help me in my business. And usually I’m not coming up with a solution. Usually I’m poking at a problem that they have, right? What problem does your idea solve? And for whom? Don’t tell me your idea. Tell me what problem it solves and for whom. That’s what I’m thinking about. And so the way I would niche down is probably to start pretty small and then kind of keep my ears open as to, oh, are there other verticals that are requesting this for me? There’s a TinySeed company right now that was serving one vertical of car dealerships and then rental car companies came about, and they have been looking at both of them now, and because they kept their head on a swivel and because they kept their ears open, and there’s a balance here, you can go too far and listen to everybody and be like, well, we’re going to have 20 ICPs. 

Or you can go too narrow and not listen and say, well, we’re only going to have one and keep our head down and not make any possibility that that’s going to happen. Not be open to it. Neither of those is probably correct. The hardest part, one of the hardest parts of being a founder is making hard decisions with incomplete information and all the information is incomplete, especially in the early days until you’re what at some number, 5 million, 10 million, a hundred million in annual recurring revenue. Everything’s incomplete. Even at those points, it’s still not super complete, but at least you have a more mature business. So in these early days, that’s how I’d be thinking about it is I niche down. My H one says I’m for this type of contractor, my sales conversations, my landing page, whatever I’m doing, is focused on a particular niche. 

If you think about the early days of Drip, I picked a couple of ICPs. One was SaaS founders. I had that reach and another quickly became information product and course creators. These days we call makers or the creator economy or whatever. That term didn’t exist back in 2012 when we started building it. But it quickly became apparent. I didn’t have a ton of reach into that second category, but really quickly realized it was a valuable market. Bloggers came along as well because bloggers in those course creators, there’s a lot of overlap. They’re not necessarily, it’s not a one for one Venn diagram, but there’s a lot of overlap. So I allowed, I guess, our number of ICPs to expand as I felt the demand. I felt the market pull from these different verticals. And while I didn’t have expertise really as a course creator, well, I had a little bit, right? 

I sold Micropreneur Academy, which was a membership site, and I’d sold books and stuff, but it isn’t how I identified for sure. And yet we could listen to them and listen to their feature requests and have solid conversations with them. Even though I knew SaaS so much more, it was still, I think, the right decision. I think it really helped accelerate our growth to be open to adding and expanding even early on our focus. So thanks for that question, Kenny. Hope it was helpful. My next question is from Mike about starting a business like Sidekick.  

Speaker 4:
Hi Rob. My name is Mike. I was listening to your interview with Mike Perham, the creator of Sidekick. I’ve been thinking of starting a similar business to Sidekick. I have a background in technology, been software doing software engineering for a long time, seen lots and lots of issues seeing a problem that I’d like to tackle. Let’s assume that I validated the problem with customer development conversations, Reddit, various tech communities, slack, discord, et cetera. I’m wondering, how would you approach starting a business like this? What would you focus on in the first six to 12 months? For example, I don’t have an audience similar to how Mike was present in the Ruby on rail space conferences, blog posts, et cetera, for quite a while before he launched Sidekick. Something I don’t have, and I know you preach against building an audience, this feels like it’s something that might require an audience, given that the core component is open source, but just wondering how would you go about starting this? What would you focus on and how would you think about charging money and when to start charging money? Thank  

Rob Walling:
You. So I want to start by saying trying to start a business like Sidekick is a little, it’s not exactly the same, but it’s a little like saying, I really want to go out and win the lottery today. There is a lot of luck involved, and it’s not to take anything away from Mike Perham, but on the episode, do you remember how many open source projects he launched that just didn’t get traction? The reason Sidekick works as a business is because he has this enormously successful, broadly adopted open source project. And if you had that today, you could turn it into a business. And so the question then is how do you get that? Now, I’ve never done that. I have talked to people and watched people who have done it, and usually there’s it. It’s unfortunate. Usually there’s a ton of luck involved. It’s shocking that I do think it’s a repetition. 

It’s like you got to get a bunch of shots on goal to do it. Now, with that said, what I’m not saying is build a hundred open source projects in a hundred days and launch. I do think there is some logic to this of research and thinking about where the other open source projects failing. This would be hard because there obviously are a ton already out there. And how do you find the gap in the market? I guess this is as hard as finding any idea, any type of business idea, but you said there’s a problem and you assume it’s validated. What were your first steps be? My first steps would be I want to launch an open source project that is going to get traction. And so I would look at every open source project that I know of that I’ve seen get traction, and I would study how they did it. 

So I’d listen to all the other interviews with Mike. I would listen to, I don’t know, early interviews with Matt Mullenweg, if he did them, just pick an open source project that is wildly successful. Adam Wains, tailwind, CSS. There’s a ton of ’em out there. How did they get traction in the early days? There was probably some belief in the developer. Did most of these developers have some kind of audience before they launched it? I’m guessing they did. So in that case, you probably want to go against my advice. So my advice is not that you shouldn’t build an audience. I get misquoted on this a lot. My advice is all things being equal dollar for dollar, hour for hour building an audience is not anywhere near the best marketing approach that you can use to build a SaaS. I have seen so many people with large audiences fail miserably at SaaS and plateau and build that no one wants. 

There’s a curse of an audience that goes with it. I’ve talked about this stuff a bunch, but the idea, I’m not saying an audience is worth nothing. I have an audience, it’s very valuable. But the amount of time that I have spent since 2005, 20 years, my first blog post was in late 2005, and I blog hard hundreds of hours a year for six years. Then I’ve written five books. That’s all audience. Then the YouTube channel, 515 YouTube videos, 7 78 episodes of this podcast, plus Zen Founder on and MicroComp, on and on and on. Great. So now I have an audience. I’m not saying it’s not valuable, but there are shorter routes to marketing your SaaS product. So that’s really what I’m saying is the amount of time invested, you’d be better off getting better at other things. But when I say that, I’m saying for SaaS. 

So if you were doing info products for courses, I’d say build a audience. Absolutely. That’s a reason that why am I building an audience? Why do I have an audience? Because we sell SaaS info products, event tickets where I’m an accelerator. Were not SaaS. Similarly open source projects. If in fact most of the folks who today have amazingly successful open source projects, if they had some type of audience or respect or they were book authors in their particular technology or whatever it is, if that’s what they did, then I would try to copy their approach. If that’s the one that works the most, I’m not an expert on it. And so that’s where I have a tough time giving advice. If you’re asking me how do you start a SaaS, I can tell you I consider myself quite knowledgeable on that front. But starting an open source project, I dunno, how do you do that? 

That I would then go and certainly research that from there. Let’s just say you had a wildly successful open source project. When do you start charging? Well, I mean, I would start charging as soon as I could, right? You have paid add-ons support. The moment that big companies come knocking at your door and they start saying, Hey, where’s the enterprise support plan? It’s been a while since I talked with Mike about sidekick, but frankly, he’s criminally underpriced. He’s leaving a lot of money on the table, and he knows that. I believe I pointed that out in the interview, that it could be a much more lucrative business. It could be a larger business, and he gets to make that choice of keeping it to a single developer with no employees and to keep his pricing simple. And that’s the choice he makes. I would make different choices, but that’s okay. 

We don’t have to agree on this stuff. He can run his business in the way that he wants. But I would say to Mike the question her, be careful. We all want to start a business like Sidekick. I want to run a, I forget what this revenue is, 3 million, four, 5 million, no employees or whatever, single founder. I want a business like that too, but I am under no illusion that I could just go do that. That’s not just going to happen. It’s going to be a tremendous amount, not just of work. It’s going to be a ton of hard work, which usually I’m fine to put in. Obviously you need some skills. I think there’s going to be quite a bit of luck involved with it, and unless you do have that audience, audience could offset that. If you have more audience, you need less luck. Yeah, that part I’m not sure about. So I would just caution you on thinking it’s cool to have that goal, but I think it’s going to be quite the uphill battle to try to build a business like Sidekick because there just aren’t that many. So thanks for that question, Mike. Hope it was helpful. And my last question of the day comes from anonymous.  

Speaker 5:
Hey, Rob, wanted to start by thanking you for all the amazing stuff you’ve been doing in the Bootstrap community. I’m new to this community, but this idea of a bookshelf startup really resonates with me, and I’ve been loving all the content that I’ve been reading and listening to on your podcast. So I read on your stereoscopic blog posts, but have also heard you say in some more recent podcast episodes that you can potentially skip steps depending on your life circumstances. So this question is about that. So a little bit more about me. I’ve been working at a fan equivalent for a few years now, so nowhere near financially independent, but I do have a decent safety net. In addition, I do really actually really like my job at the product I’m working on. So I’m not in a rush to escape anything, but I do have that itch, that desire, that sickness, as you sometimes jokingly referred to it of entrepreneurship and wanted to build something on my own. 

So I’m curious how you would think about skipping steps in the stair step model if you would do that. So I guess the first question is how would you skip some of those first steps? Would you go straight to building a SaaS on the side as you worked your full-time job? Would you start by acquiring something small and less established, maybe like 10, 15, $20,000 kind of range just to learn that sales and marketing side of things, or would you do something else? And then the second part of the question is, what would you think next steps would be? If you were acquiring something small, what kind of businesses would you be looking for? Things like that. Thanks so much. Look forward to hearing your  

Rob Walling:
Answer. Thanks for that anonymous. It’s interesting. Yeah, whenever I have a framework, there’s always that question of, well, when should I not do it? Because certainly these frameworks, they don’t apply to exactly 100% of everyone all the time. There are exceptions. But I do find that there are fewer exceptions than a lot of people think. And most of us, I see this a lot with TinySeed companies where I’ll come out with like, Hey, in general, you want to do this certain thing, or you should think about your pricing this way. And some founders perpetually think, well, I’m a snowflake. My business is so unique that I should skip this, or I should not do the years of grinding, or mine’s not going to take hard work. It’s just going to be luck skill or whatever. And folks have that. And I’m not saying that’s necessarily the case here, but I do want to caution you against that. 

There’s a reason that I say the things I do. It’s not just whimsical. It’s not just because I want to sound smart. It’s because I have seen patterns develop across thousands, tens of thousands of entrepreneurs. And so when I think about the stereotip approach, do I literally mean that you have to start something in a walled garden in an ecosystem and then build up and then buy out your time and then do a SaaS? Well, of course not. There are other paths to it, but the stereotip approach allows you to build your skills, to gain experience, to get confidence in your abilities, to buy your own time, to have some money coming in. It’s just everything. Everything just builds and snowballs versus you certainly don’t learn launching 20 things and seeing what sticks. You learn that luck is the way to go or something. I mean, I’ve railed on this for a long time. 

So that approach, I don’t like the one of just jumping directly to building a SaaS is not the worst. I could see some people doing that. But what I see over and over on social media are people writing into this podcast is, man, this is so complicated, man, this is really hard. Now I built it. Now what? There are way more moving parts than I thought. And it’s like, yeah, that’s why the stairs step exists. That’s why the real purpose of the stairs temp approach is to get you the confidence and experience skills, time and money to be able to do that. Next thing that’s a little harder. So you’re not trying to eat an entire watermelon at once. You’re trying to eat it in small pieces. You’re not trying to boil the ocean you are trying to look for yet. Another analogy about how doing things that are too big or too complicated right from the start can be challenging. 

Now, does it mean that you won’t succeed if you don’t do the stress simple? Of course not. It doesn’t. You can get lucky and some founders have more confidence, experience, skills, time and money than others. And so maybe you can skip some steps, but that’s how I think about it. It’s not just about, let’s say you had half a million dollars in the bank and you own all your own time, therefore you can just burn it down and you have a little bit of money. Should you still skip the early stages? I mean, do you have the confidence, the experience and the skills to build, launch market support, grow, manage engineers, do all these things to SaaS? If you’ve never done it, probably not. It’s really fucking complicated. I dunno how else to say how complicated and how hard it’s going to be if you’ve never done it. 

You just don’t know. And I’m not saying that to toot my own horn or the horn of SaaS founders around the world. It is just one of the more complicated businesses you can build on the internet because building a content website or an email newsletter, there’s hard work that goes into that, but you grind, you get better. You can just do it. E-commerce is not as complex now. E-commerce a pain in the ass with products and physical things and maybe manufacturing, yeah, there’s things, but ask anybody who has tried to start a SaaS, even when they have multiple successful businesses under their belt, if they haven’t done SaaS before, it completely knocks them on their ass. In general, that’s what happens. And most people underestimate how hard it is, and that is the point of the stair set method. So should you skip? I don’t know. 

Probably up to you. Do I think people should acquire more businesses than they build? I do. And in fact, several of my early successes were actually acquisitions. And for years, I preached this to anyone who would listen and no one wanted to listen. It became this thing of like, well, I don’t want to buy it. Well, what if the code quality is low? Well, how do I know what’s good? Well, how am I taking a gamble away? I just want to build my own thing I really want and fine. I heard that enough. I listened to the market. I pivoted my approach. I pivoted my message from these early days. But I love acquisitions. If you can find, I mean, think about it. I made a million dollars from hit tail. I spent $31,000 on that thing, and all the revenue plus the exit sale price was a million dollars. 

It completely changed our life. It had like a 90% net profit margin too. It was just me with a couple of contractors I bought that I couldn’t have gotten there that quickly. It would’ve taken me years longer to build it and find product-market fit and do it, but I was able to acquire it.net invoice. I acquired that, and that changed my life, not in the way of, oh, it made us wealthy, but it showed me that I could really do this. And then I had the skills and I learned a ton talk about stair stepping. It really, it wasn’t part of an ecosystem because there weren’t these app stores back then, but it kind of just had SEO and then as the marketing channel, and that’s what I talk about with Stepping is you pick that one thing and it’s kind of got one marketing channel. 

So you’re not trying to learn all marketing, you’re just trying to learn support and product and shipping and maybe sales if you need. You’re learning these other things along the way and you’re kind of scaffolded with it. So done Invoices was great because it made three, I guess at a peak, it made five grand one month, but it was onetime sales. It wasn’t subscription. So in a lot of months between two and $4,000, and that made our house payment. Plus we didn’t have car payments, but you get the idea. It was just a lot of extra money for us. I was working full time at the time. Sherry was still in grad school. And so I like acquisitions and I think if you could jump to that point of acquiring a full blown SaaS and you have the money to do it, cool. The challenge with what you said anonymous in the voicemail is buying something for 20 or 30 K most of the time that those things are so early stages, there’s not much there. 

And so the fact that I bought Hizo for 30 K, it was doing two or three doing two grand a month, maybe. I don’t even remember, somewhere in that range. It was pretty early these days. If you buy something for 30 grand, I just don’t know if there’s going to be enough there to teach you anything. Or if it’s still this super pre-product market fit thing that’s done. We did a lifetime deal with Sumo and now we’re selling it. It’s like, do you have anything there? That’s the big thing I’d be thinking about. Is there enough here that A, I can learn from it. But B, I have actually improved my chance of success because the acquisitions that I’ve done and that I’ve seen work are the ones where it does have you in that product-market Fit range. Because finding product-market fit, if I’m going to build SaaS from scratch these days, it’s like, what? 

12 months, 18 months, 24 months is a long time. And if I can jump ahead to that, well, I’ve saved myself a ton of heartache and headache. That’s really the way I probably the only way I’d be thinking about it. So thanks for that question anonymous. I hope that was helpful. And thank you for listening to this episode of Startups. For the Rest Of Us, if you keep listening, all keep recording and be sure to send any questions you have into questions at startup For the Rest Of Us dot com. Or you can go to the website, click ask a question in the top. Navigation. It’s been amazing having you here today, this week, and every week. This is Rob Walling signing off from episode 778. 

Rob Walling:
Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I talk with Derek Coburn, the co-author of the book, let’s Retire Retirement, how to Enjoy Life to the Fullest, both now and Later. And we cover a bunch of topics, one of which is why retiring might be the worst goal for entrepreneurs. I really enjoyed my conversation today with Derek, and it relates to things that I often talk about on this show where we’re not just about building the biggest startup for all the money and sacrificing your life and your health and your relationships. We’re about building a startup that provides you freedom, purpose, and the ability to maintain healthy relationships. And that really is a big part of the focus of my conversation today with Derek. But before we dive in, I want to let you know late September of this year, I’m going to be in Istanbul, Turkey for MicroConf Europe.
We’re going to have a handful of amazing talks. We’re going to have amazing excursions, and of course, our world-class hallway track speakers so far include Michelle Hanson, the founder of Geo Coio, and the author of Deploy Empathy. Mark Thomas, the founder of Positive Human, James Mooring, the founder of talti, and of course, yours truly microcomp.com/europe if you want to buy your ticket. Tickets are as inexpensive as they will ever be. If you want to get a ticket and don’t want to miss the event because the event will sell out, we’ve sold out all the micro comps for the past couple years. You go to MicroConf dot com slash Europe and pick up your ticket for our event in Istanbul. And with that, let’s dive into my conversation with Derek about why retiring might be a bad goal for entrepreneurs. Derek Coburn, welcome to the show.

Derek Coburn:
What’s up Rob? Good to be

Rob Walling:
Here. It’s great to have you here, man. And we’re here to talk about your book, let’s Retire Retirement, how to Enjoy Life to the Fullest Now and Later. It’s a little bit off the beaten path of most of their super tactical, technical stuff I cover on this show, but I want to hear from you first. If someone’s listening to this episode and they only hear the first say three minutes, what do you want them to take away from this book you’ve written?

Derek Coburn:
Sure, thanks. Really excited to be here with you. I’ve been a financial advisor for about 27 years, and I had sold my practice in 2019. I realized that the best thing that I have done collectively for the majority of my clients was help them come to the realization that they were not going to be happy sitting around doing nothing for 30 years. And if you think about it, most of your listeners, I’m sure if they’ve met with a financial advisor or they’ve plugged numbers into a calculator online, they weren’t asked, do you want to retire? They were asked, what age do you want to retire? And we were all opted in whether we wanted to be or not. Most of us probably said we weren’t really sure, and someone suggested to us that we should pick 65 or 67 because that’s the age that everyone else is picking.
And we’re going along with this whole premise without really thinking much about it. And so what I want people to realize, we’re seeing this through the retirement movement right now where we have over 30% of 65 year olds are going back to work because they don’t enjoy just not doing anything, not contributing, not feeling useful, not connecting with other people. And the great thing about this is once people realize and they stop and think about it, that they’re not going to be doing nothing, that they’re going to have income coming in into their sixties, seventies, maybe even longer. What that means is they now have a lot more time and a lot more money that they get to spend right now on things that are important to them, essentially because they don’t have to save as much for retirement, the income coming in later is going to offset the need to invest as aggressively as maybe your financial advisor or your financial planning software is telling you.

Rob Walling:
Interesting. And so see that’s the thing is when you say folks over 65 are going back to work, I instantly think, oh, because they don’t have enough money. But you’re saying it’s because they’re so fucking bored. So my dad’s 80 and he was an electrician his whole life, and then a project manager worked construction. When he retired, he didn’t have side gig freelance. Probably most of the listeners here being developers or entrepreneurs can figure something out. It’s a different day and age now, so you can do stuff on the side. And so retirement is a thing. I hadn’t even heard of that concept.

Derek Coburn:
Yeah, it is a big thing, man. And look, I think part of it, it just feels natural. When retirement was first established, it was in 1889 by a German chancellor named Otto von Bismarck, and he picked the age of 70 when they were putting together the first government run social plan, he picked the age of 60 because that was the age that most Germans were dying. It wasn’t lowered until 65 until about 30 years later. FDR, when he was setting up Social security in 1935 thought that sounded like a good number at that time, life expectancy was about 71, 72. So it was never meant to be this thing where we just sat around and did nothing for 30 plus years. And I have a little bit, I cover in the book about the difference between pursuing happiness and pursuing meaning. And essentially when somebody is only focused on their own happiness, they’re only focused on being comfortable sitting on a beach somewhere, having a fruity drink, it’s producing a reaction in their body that is the same reaction that’s produced when someone’s dealing with chronic adversity, when someone’s dealing with the loss of a loved one, when someone’s dealing with the loss of a job versus the people that were in a separate group during this research initiative who were pursuing meaning something bigger than themselves, contribution to the world at large.
Those people were not producing that. Those people had lower inflammation, their immunity was better. So that’s why you hear a lot of stories. I’m sure everyone has a couple that they’ve heard of where you’re retired, somebody retired, they stopped working, they died, or they got a disease within two or three years because they just shut down and stopped having a bigger reason for doing this whole thing.

Rob Walling:
And that’s a big part of it. Almost probably anyone who’s listening to this podcast reads a ton of books often on Audible. Frankly, I have 914 books in my Audible account, which is either a badge of shame or a badge of honor. I don’t know, man, but we’re not going to stop working. I, I talked to Sherry about this within the last year of like, someone said, when are you going to stop doing the podcast, right? We’re 15 years in 777 episodes and it’s like, I don’t know, never. I’ve never thought about not doing it. Obviously there’s going to come a point where I don’t want to anymore or something like that, or I just get too old. But I do think there’s a whole mindset shift that has to happen around this. And in today’s show we’re going to talk about, you have a bunch of myths.
You have the fallacy of assumptions, you have something called $50,000 moments. I want to cover all those as we roll through. But I want to start by saying if folks are interested, if you’re already intrigued and you want to pick up the book, it’s on Amazon right now. It’s called Let’s Retire Retirement, and you have a Kindle, a paperback and an audible version, or they can go if they want to find out more bi directly from you, derek coburn.com. So let’s dig in this tale of two Tony’s I love. This is for my left brain folks in the audience. We’re going to talk some numbers here as a financial advisor, financial planner. That’s something I really appreciated about this book is you can read books about the high level philosophy of this kind of stuff, but you get down to the brass tacks because you’ve been doing this for decades. So let’s talk through the Tony’s.

Derek Coburn:
Alright, so I introduced a character named Tony in my book. He’s 45 years old. He makes $150,000 per year and he has $150,000 saved up in retirement accounts. Tony meets with his financial advisor and just like what I went through a second ago decides he’s going to retire at 65 without giving it a whole lot of thought. And his financial advisor tells him, in order for that to happen, he needs to save about $2,400 per month. You spread that over the course of a year, and that works out to be about 20% of what he’s making, which is a non-starter for most people. I mean, that means you’re basically living off of the same amount that you’re saving. So Tony, like a lot of individuals that gets this information, starts freaking out. He’s behind, how am I going to catch up? I’m going to work longer.
I’m going to not go to the gym. I’m not going to see my kids as much. I’m not going to take care of myself and just kind of gives himself over to playing this game and getting to a place where he’ll have enough to stop. And I have his wife remind him in the book that he likes his work. Are you sure you’re going to want to stop when you’re 65 years old? I can’t imagine you sitting around and doing nothing. So Tony reaches back out to his advisor and he says, Hey, can you change my plan and update it? Show me working until I’m 75 instead of 65, and the numbers are staggering. So I’m about to give a lot of your listeners immediate access to a ton of extra time and money that they previously did not think they had. The number goes from $2,400 a month down to $110 per month.
The amount that he needs to save in order to retire goes down by 96%. And even if Tony were to say, I’ll work until I’m 70 instead of 75, the number goes down to $600 per month, which is a 75% reduction. Look, I’m not saying that anyone needs to work as hard as they’re working now or do the same thing that they’re doing right now. What I am saying is that if we find work that we don’t hate, if we find work that we enjoy doing, we can do it on our terms the way we want to do it. I think we’re going to be able to do it for a longer time. And having that money coming in later allows the money that we do save to compound longer, to grow longer, to work longer. And it takes a lot of pressure off of us in the here and now in terms of what we need to do financially.

Rob Walling:
And something I talk about a lot on this podcast is about through entrepreneurship, wanting to find three things, freedom, purpose, and healthy relationships. So there was a time in my life, it was back when my second son was born and I found freedom. I was working a 10 hour work week, literally I had a bunch of products. It was the four hour work week, but I was working 10 hours. It was amazing. I was free. I hung out with the kid all the time. It was great. I was so bored after 10 months, I was so bored. I didn’t have the second thing. I had the freedom, but I didn’t have the purpose. And then relationships are a separate topic, but that’s what we’re saying here is if at 65 you just stop, you have freedom now, Hey, look at all this time I have. And you lose that purpose. So even keeping something going, as you said, you don’t have to necessarily work as hard, but the bit of purpose that brings you and the bit of income is shown in this to Tony’s example, right?

Derek Coburn:
Yep. Look, we’ve all seen all these articles about how we should have saved more when we were 22 years old and we feel like idiots for not doing it to take advantage of compounding interest. But no one really talks about how you can accomplish the same thing and have it be even more beneficial because it’s such a larger pool of money by just extending the time that you have it invested before you start taking it out. And that’s what trying to bring to people’s attention with this example.

Rob Walling:
And I think if we think back to maybe my dad is an electrician or someone who worked in a factory their whole life, they probably didn’t love their job. And so they’re counting the days until they cannot do that job. And there was not remote work, there was no work from home, there’s no freelancing that times have changed. And that’s really what this book is about. I want to bounce to this concept you have called $50,000 Moments and the Time Machine Effect. Do you want to talk us through as a concept you go through in the book?

Derek Coburn:
Yeah, so look, I have two boys. They’re 15 and 12 now, and when they were about 10 and seven, we had a nighttime routine, my wife and I, where we would take turns laying in bed with each of them for about 10 minutes while they fell asleep. And I noticed myself starting to not appreciate this time that I had with my oldest, especially because I knew he was getting close to the point where he probably wasn’t going to want to do this with his dad and his mom for too much longer. However, I was sitting there a lot of nights thinking to myself, gosh, hurry up and fall asleep, fall asleep so that I can go have a glass of wine and watch a show or finish some work or do whatever. And I knew I should be valuing these moments more and I tried to force myself to do it.
And that didn’t work necessarily all that well either. So what I did is I just had the stall one day. I said, what if there was a company that created a time machine? I’m 65 years old and they tell me I can go back in time for one night to have one of these nighttime routines with my kid. What would I pay for that? To be honest, I’d pay a lot of money, but I called it a $50,000 check. I know personally that I would write a $50,000 check to go back in time when my kid is 12 or 10 and have one more nighttime snuggle with him. And so I said, look, I got to start treating a lot of these moments, like the $50,000 moments that they are. And I think there’s a lot of parents especially that are taking these moments for granted and our kids are going to be with us for a short period of time.
They’re going to be gone and we’re going to miss ’em. We’re going to miss these experiences. And knowing that I’m going to be working a lot longer knowing that I’m going to be working a lot more once my youngest is out of the house in five and a half years is really like it sponsors me showing up more for them right now. It sponsors all of the time and attention that I’m able to give them because I don’t have plans to stop anytime soon and I’ll be happily will turn it up a notch or two once they leave.

Rob Walling:
Yeah. See, and that’s interesting to hear you talk about it in your own life. Did the concept for the book come out of your own thinking of you yourself want to do this? Are you planning to keep working to 65, 70, 75 and doing this stuff? You can tell folks you run Cadre, which is a community in DC in an event, what is this stuff that you could see yourself working on for the next 20 or 30 years?

Derek Coburn:
Look, I love contributing. I know that I have a lot of skills. I know that I have the ability to add value to people in a variety of ways. I want to keep learning. I want to keep leaning into all the different things that I’m doing. So I don’t know that I can sit here and say specifically, this is what I will be doing. Maybe I’ll have eight books by then. Maybe I’ll have no additional books. Maybe I’ll do coaching, maybe I’ll be speaking, maybe I’ll do something entirely different. I mean, if someone wants to create the Granddad Olympics at some point I will happily enter into that competition. But yeah, to your point, man, look, I started writing this book in 2017 and I was going to write it as a way to attract more clients for my practice and clients for my practice were minimum investible assets of a couple million bucks.
I sold the business, COVID happened, and I just got really immersed in the lives of my kids. I spent an extraordinary amount of time with my kids, my wife, my friends, having incredible experiences compared to most people. And the idea for the book just sat there because I was living what I’m preaching, I was living what I’m trying to get a lot of other people to do. And it wasn’t until a couple years ago I said, I want to finish the book. But since I sold the practice and I’m not really looking for new clients now I can write a book that will hopefully benefit a much larger group of people than maybe who the initial intended audience was going to be.

Rob Walling:
TinySeed is the world-class SaaS accelerator that I run with my co-founder, a r and our amazing team. And we are raising fund three to continue doing more of what’s working. We’ve recently invested in our 204th B2B SaaS company, and although we’ve only been doing this for a handful of years, the early signs are really good. We’re able to help these companies grow. These companies become extremely valuable because B2B SaaS doing seven or eight figures of a RR is extremely valuable and I am wildly optimistic about the future of TinySeed and we’d love to have you be part of it. If you are an accredited investor or the equivalent of that in your country, you can invest if you’re a US citizen or if you live in I think most countries in the world. And recently we’ve actually carved out a few spots for smaller investors that weren’t able to hit the minimum investment that we previously had. So if you’re interested in indexing across hundreds of ambitious early stage B2B SaaS companies, head to TinySeed dot com slash invest to see our full investment thesis. And if you fill out that form, Einar Vollset will reach out to you or obviously you can ping a r directly on X Twitter or via email, that’s tiny c.com/invest.
And in the book you get in towards the end of the book, you get into really specific three buckets, pretax tax-free cap gains, required minimum distributions, a lot of the nuts and bolts that you bring to this as a financial planner. And I don’t want to dive too deep into that today just because it gets technical. And folks, if they want to understand that part, I think they should get the book and read those chapters. The next thing I want to talk about is I love this concept of investing in you. If you are going to work longer, you don’t have to work so hard, you don’t have to save so much, you don’t have to push it off so far, you can have more fun, you can exercise more, sleep more, your relationships can be stronger. Talk me through that part whether you have examples of folks or even in your own life having seen the transformation.

Derek Coburn:
So I think that when it comes to things like sleep and health and working out that our society overemphasizes, the benefits that will occur 20 years from now and under emphasizes the benefits that will occur 20 hours from now. So for example, yeah, if you sleep well, you’re going to live longer. If you exercise, you’re going to live longer. But the main reason to sleep well in my opinion, is because tomorrow morning when you wake up and feel amazing, you’re going to make better choices at nine o’clock. And those better choices at nine o’clock are going to leave to better choices at 11 o’clock and it’ll be easier to work and it’ll be easier to make time for friends and connection and dating your wife more and all of these things. And so the investing in you chapter is essentially me saying, hopefully I’ve convinced you and shown you that you’re likely to work longer than what you previously thought.
And the immediate benefit or result of that is you now have more money and more time that you can spend on other things. And I think that as entrepreneurs, as business owners, a lot of us feel like we don’t have the time to spend on some of these things that are good for us while we’re building the business, while we’re growing the business. But I also feel like the best thing that we can do for our business, for the value of our business, for the value that we are bringing to the table for our clients and our customers, is to show up as the most optimized version of ourselves as possible. And so I think that the best place for any of us to turn to for advice is this best possible version of us, the well rested version, the clear-minded version, the energetic version.
And even though it feels like maybe we’re taking away from the business, I am betting on myself, I’m betting on most people I know to show up, working less hours in their business, but they’re well rested, they’re feeling good in their body, they’re feeling good in their mind, they’re calm in their central nervous system. I’m betting on the results. They are able to generate more than the results that somebody who is actually in the business for an extra hour or two but is stressed out as anxious, is worn down, is sluggish, is not feeling very good.

Rob Walling:
Yeah, that makes a lot of sense. There’s a term you use that it caught my eye. It’s called the concept of a fun recession. Well, you can define it for folks. And then I think I’m curious to hear why do you think that adults do have such a hard time prioritizing all the things we’re talking about, the fun and the rest?

Derek Coburn:
I say that I think we’re in a fun recession. I think that the majority of adults are not coming close at all to having the appropriate amount of fun that they should be having on a regular basis. I mean, when my kids wake up every day, they’re thinking about how much fun can I have today? Who can I have fun with? What can we do that’s going to be enjoyable? And I think I’ve done an informal survey for the past five, seven years with soccer parents and people that I know, and I ask, when was the last time you had a good time? Most people pause for 10 seconds, they have to think about it. And the most common response is something along the lines of A month and a half ago, we went out to dinner with this other couple and we had a bottle of wine and we talked about our kids.
And it’s like, look, would the version of us that we would look back to as the version that was having a lot of fun, that was having a good time, would they be impressed with the type of fund we’re having right now with the amount of fund that we’re having right now? And so I think, look, I just think if we’re here, we’re going to be working hard. We’re doing the work, we’re spending time at work, all these things good, but we shouldn’t be enjoying ourselves a little bit too. And there are a lot of data points that I talk about in the book about how it increases productivity, how it increases just how you feel in your body, how it reduces inflammation and keeps you healthier. But I think ultimately we should be looking for reasons to have a good time just for the sake of wanting to have a good time.

Rob Walling:
And in the book, you give options of what you can do. Let’s say you do hit 60 or 65 and you’re kind of like, look, I’ve been a software engineer my whole life. I don’t necessarily want to keep grind and doing a 40 hour work week working salaried. You have options like you can transition to a new career. Maybe it’s something that makes less money but you enjoy more, right? Since you don’t need to make as much money build a side business, which obviously a lot of folks listen to this podcast are doing, you can transition to consulting or coaching, which gives you a lot more flexibility, can slow down, you can pivot, you can take a mini mini retirement or a sabbatical. Do you have any examples of folks you’ve known who’ve taken one of these tax and has really I think been able to step away? I imagine if someone worked 20 years, 30 years as a W2 employee, they might think when I’m 65, I don’t want to do that anymore, but I’m too scared to kind of do something else. How can they get over maybe that resistance in their own mind of, well, what else will I do to fill the time and make money?

Derek Coburn:
I’ll share a quick story that I mentioned in the book that came from a book called Originals by Adam Grant, and he references a study that was done that looks at entrepreneurs that start companies while they either have an existing stream of income coming in, and that’s one group. The other group went all in and just started a company sort of with no backstop whatsoever, even though entrepreneurs sort of had the reputation of being great risk takers. The best entrepreneurs according to this study, and a lot of this research are shown to be the ones that are very good risk mitigators because it was the companies that were most likely to succeed were the ones that were run by individuals who had a steady stream of income coming in from someplace else. The story that he tells in the book, he was approached by the founders of Warby Parker to invest in their company, and he says, the worst financial decision I ever made was not doing this.
And the reason I didn’t do it is because these guys all had other jobs while they were building Warby Parker. And I’m like, I’m not going to give these guys money if they’re not going to be all in and all focused on it. So I bring this up to say that I think having two things going side by side at the same time offers some nice ancillary benefits. First and foremost, the ability to be really particular about who you work with. So if you have your job now and you’re working the 40 hours a week and you think there’s something else that might be of interest to you, start it. Maybe do a couple hours a week, try to find one or two clients. If it doesn’t work out, you can pivot, you can do something else. But if it does work out, I think that that income coming in from the other job will prevent you from selling your soul or prevent you from feeling like you need to work with people that you don’t want to work with in order to pay your bills.
And I think that there’s just a lot of ways that we can all explore. We can look into taking online courses, we can look into reading about other interests that we may have. You have a really smart and intelligent audience. And I would say even though now the norm is people to just kind of stick with what they do, we’re going to be up to 45% of the workers in this country are going to be freelancers by the year 2027. And I think that even a lot of people that are listening to this that are the type of person that you just described, they’re going to be in a position where if they’re good at what they do, companies will be happy to have them. If you say, look, I can only do 10 hours a week. I only want to work on Mondays, Tuesdays, and Wednesdays, I want to take summers off. If you’re good at what you do, you’re going to have the opportunity to call the shots and set things up in a way that’s really favorable for you.

Rob Walling:
And I like having that anyways. I mean, boy, when I was in my early to mid twenties, even when I had a day job, I was often doing freelancing on the side, both to make extra money. We were kick-starting a life, but also I was always a little mistrusting at the W2. Too many of my friends got laid off. And so having extra legs under the stool I think are super interesting. And that’s something I want listeners to take away is this podcast. And a lot of this stuff I do focuses on launching products, software, products, SaaS products companies. But I just recorded a YouTube video the other day where I talk about, look, the fastest way to make money is not with SaaS. That takes forever to build a long time to launch. It’s very complicated. It’s actually to do some freelance work, to do some consulting, to take your expertise and it’s dollars for hours. And so it’s not something I ever wanted to do for decades, but it really isn’t that hard as long as if you have some expertise, especially like I say, my audience who probably has marketing or design or some type of software development expertise. So if someone’s listening to this and in your head they’re like, I want to take one action, I want to do one thing after hearing our conversation today, what do you think they should do? I

Derek Coburn:
Think they should pause and they should think about how much thought they gave to setting up a retirement plan if they have one, because I do think that a lot of people just go along with this concept on autopilot because everyone else is doing it. And when you do a retirement plan, if you sit down with an advisor or you do it online, you have to make a lot of assumptions. You have to assume what inflation’s going to be for the next 20 years. You have to assume what rate of return you’re going to get in the stock market every single year for the next 20 years. What you’re going to earn after that. You have to assume what tax rates are going to be. Oh, by the way, you’re going to have to correctly guess what age you are going to die and your spouse if applicable, if your parents are going to have any issues where they’re going to need support financially or your children.
We’re picking all of these numbers like they’re easy to pick. And look, we’re all going to be really wrong about all of this. That’s the one thing I can safely bet on is that whatever we’re assuming we’re going to want in 20 years and what needs to happen in order to get there, it’s not going to be the way that we think it’s going to be. Yet so many people are living their lives based on the confidence that all of these things are going to happen. Look, you might save, and you might have this great plan that’s based on you being in a 30% tax bracket when you stop working at the age of 65. And if that’s the year that someone gets elected and decides to bump your tax rate up to 55%, then your entire financial plan is just going down the tubes at that point.
So really just be mindful of it. The reason why the retirement movement is as big as it is, is because people were promised to feel a certain way once they got to retirement, they were promised a certain outcome, the arrival fallacy, if you will, they were promised something. If they did things a certain way, they would feel a certain way and they’re not feeling that way. And I’m trying to get the attention of people in their thirties, forties, and fifties and help them realize that they’re probably not going to be happy with this idea of sitting around doing nothing for 30 years. And I want them to think about how they can live their lives differently knowing that that’s probably not going to be an outcome that they want.

Rob Walling:
Derek Coburn, thanks for joining me on the show, man. Your book is Let’s Retire Retirement, and It is Out today, as of this episode going live on Amazon, Kindle, paperback, and Audible. Thanks so much for joining me.

Derek Coburn:
Thanks so much, Rob. Appreciate you.

Rob Walling:
Thanks again to Derek for joining me on the show. Again, you can buy the book on Amazon or@derekcoburn.com. And thanks to you for listening this week and every week. This is Rob Walling signing off from episode 777.