Josh

Rob: If you can believe it, it’s another episode of Startups For the Rest of Us. This is a show where every week we cover topics related to building and growing startups using an ambitious yet sustainable approach. This is where we talk about building real businesses with real customers who pay us real money. We seek freedom, purpose, and relationships.

Thanks so much for joining me again this week. Great conversation with Cody Duval. He is the founder/acquirer of a customer support app called Keeping.

I’m doing something a little different over the next two weeks. It occurred to me that the last time I did a really tactical tip-oriented learning episode, several people tweeted me and actually a couple wrote in saying, you should do more of those. Those are like the early days of Startups For the Rest of Us. Of course, I want to have a mix. I want to have a balance of different episode types. 

What we’re going to do over the next two weeks is today, we’re going to hear Cody’s story of acquiring and growing Keeping in this really crowded space of help desk and customer support tools. Then next week, we’re going to hear from him nine tactics for amazing customer support because obviously, Cody, running an app with a bunch of customers doing customer support, sees the do’s and don’ts. He sees the strategies and tactics that win and those that are pretty big mistakes. 

I’m excited for this format and I think it’s something I’m going to consider doing with additional guests in the future. Because someone running an app that sends a lot of email or that helps people do customer support probably knows a lot more about sending email and doing customer support than most of us do as generalist founders.

But before we dive into today’s show, I wanted to remind you that we launched the TinySeed Syndicate a couple of months ago. The syndicate is, in essence, an investment vehicle that allows us to invest in B2B SaaS companies that may be a little later-stage than the traditional TinySeed accelerator companies.

I think my rule of thumb guidance if you want to apply to get investment from the syndicate is that you should probably be doing $700,000 or $800,000 in ARR. It can be a little lower. It depends on the growth rate and a lot of things, but if you’re interested in raising from TinySeed like MicroConf, Startups For the Rest of Us, and investors, TinySeed Syndicate is something you’ll want to check out. We’ve been running 1–2 deals per month. Folks are raising, at this point, between $500,000–$1 million. They usually have some section of that filled. We get an allocation of a few $100,000, and it’s been going really well. It’s always exciting to be working on something new.

If you’re interested in that, head to tinyseed.com/apply. At the bottom, there’s a form to fill out info about the syndicate. Of course, if you’re an accredited investor and you want to invest in great B2B SaaS companies that would be listening to Startups For the Rest of Us, head to tinyseed.com/syndicate. It’s an easy application process. As long as you’re accredited, it’s all done through AngelList. It only takes a few minutes. 

You get to see the syndicate deals as they come through and you can invest in one and not the next one. You basically get to pick and choose the syndicate deals because each one is an individual investment. The minimum investments are really low, usually between $2000 and $5000 for the most part. If you’re interested, tinyseed.com/syndicate. With that, let’s dive into my conversation with the founder of Keeping, Cody Duval.

Cody Duval, thanks so much for joining me.

Cody: Great to be here, Rob.

Rob: It’s good to have you on. Keeping is your startup. Keeping is a simple customer support tool that integrates with Gmail. You’re a single founder. You’re part of the current TinySeed batch. Do you want to give folks an idea of what stage you’re at? Some founders give MRR. Some founders do, hey, the team size is this big and we’re default alive. Just some ideas so folks have an idea.

Cody: I’m a solo founder. There are three remote engineers that I employed basically full-time. I would say we’re default alive but with the caveat that all of my profit is going into building the business. I could certainly go into solo mode and make a business at Keeping, but right now, we’re very much into investing and growing the business.

Rob: As so many of us are. You started a help desk software three years ago. There are already a lot of them out there. Some of them are good, some are not. What was the thought process there of, I’m going to enter this incredibly competitive market as a solo bootstrap founder?

Cody: It is crazy that there are crowded markets and uncrowded markets. The help desk customer service tool space is huge. You’ve got Zendesk, Help Scout, Freshdesk. The real epiphany for me, at least as to why Keeping exists, is that a small business—perhaps a non-SaaS business—doesn’t need all the horsepower of a Help Scout or a Zendesk. For the most part, those tools are quite expensive and quite complicated. There’s a gap in the market between doing it yourself in Gmail just sharing an inbox, and then those big tools which are really built for customer support teams that are professionals.

If it’s not clear, when we say we integrate with Gmail, we actually prod into Gmail and turn your Gmail inbox into a customer support tool, which is basically just the right size for a lot of teams. If your team grows and you got a 10-person customer support team, then maybe that’s right, maybe you should go and buy Help Scout. But for the rest of the world, there’s a tool that’s the right size and we think that’s Keeping.

Rob: When you and I talked during the TinySeed interview process, I brought up a couple of concerns that I had. One is if you’re going after small teams, it’s not necessarily going to be a lower price point, but certainly a 2-person company is a little more price-sensitive than a 10-person support team. That was one thing. I’m just thinking that churn is going to be worse. The other is when they get to three or four support reps, aren’t people going to migrate off and essentially outgrow Keeping?

Cody: Starting with the second concern. I think most of our customers probably never will have customer support reps. They’re a wholesale business. They’re a B2B business. Customer support is a part of their day, but they’re not going to grow a big customer support team.

As far as being price-sensitive, when you’re at this part of the market, there is a little bit of, okay, what is the right pricing? It’s something we’ve talked about, especially in this space which is all per-seat pricing. You open up a bunch of pricing pages and you’ll see anything from $60 a user to $9 a user. 

For the most part, the tool becomes so integrated into your workflow—this isn’t true just of Keeping but it’s true of the category—that they’re almost immune from churn because you really spent a lot of time setting up, you build it into your day-to-day operations, there’s a knowledge base where you spend a lot of time pouring in your content, and it becomes painful to churn. It’s not like an SEO optimization tool, which is you go in and use it and you’re done. This becomes really a core part of your workflow. 

I think this is true for Help Scout and Zendesk. Once you get a customer on board, they’re pretty loyal. I’ve had customers from day zero that are still trudging along, and our churn continues to be really, really low. We’re really focusing on growth and we think we’ve got a good sense of, all right, this is the right tool for some segment of the market because they’re not churning out, at least not yet.

Rob: As much as on this show, I talk about higher price points and larger teams less likely to switch. The way that that cuts the other way is those folks take a long time to make decisions. There are often many people involved, and it’s decision by committee. Enterprise sales are a reason they take three, four, or five months.

With a tool like Keeping—or I had Christopher Gimmer with Snappa—or any tool that has that lower price point and is either aimed at (I’ll say) solopreneurs, solo founders, or just small teams, there’s one decision-maker with a credit card. If they like the tool, they sign up, and it’s done. It’s not a big, long process. Is Keeping’s sales process purely self-served at this point?

Cody: Totally inbound. Because of our ARPU (average revenue per user) being a little bit lower than some of our competitors like the Help Scouts and the Zendesks, the menu of growth channels available to us is limited. We’re all bidding on the same keywords in Google, but if your average customer is $300 a month versus ours which is way lower than that, we’re both bidding for the same keyword. We’re not going to be able to play. 

SEO content marketing has become our core channel; it goes without saying. But even there, they’ve got fleets of writers and I’ve got a couple, so it’s really trying to optimize that inbound channel. Maybe there’s a day we graduate to a little bit of outbound, but you can do the math there and figure out that it really takes a lot of effort to drag one lead in the door with outbound sales. For now, we’re pretty happy with the inbound model.

Rob: I want to get into the later challenges of being a bootstrapper in such a massive market. But before we do that, let’s take a step back and roll the clock back three years. MicroConf 2019, you were working on another idea. Talk us through how the transition happened.

Cody: That’s right. You can correct me, I think this was the last big US MicroConf—it was in Vegas—which feels just like another lifetime ago. I was there kicking around a totally different idea. 

My background is a developer. I work and live in Brooklyn as a consultant in Series B, Series C startups and really understood some of the challenges affecting software teams. I thought, I’m going to build a startup that is being sold to developers.

I was at MicroConf. I had a cofounder who just had a baby and couldn’t afford to work full-time. The zero to one problem is real. At MicroConf, I met the FE International folks. They are—I think your audience probably knows—a brokerage that sells businesses.

Shortly after MicroConf, Keeping came along. It had a great domain. It was a single-word domain, keeping.com, and a handful of customers. The out-of-pocket was not very much. It was this epiphany of, wait a minute. I could spend a lot of time trying to get an idea past the zero stage to 0.1. What about this idea? It really resonated with me that in the world of buying businesses, by the time they reach someone like me, they’ve been through a lot of channels first. A lot of folks probably passed over Keeping because it was a technical mess.

The FEI pitch is it just needs a little marketing to scale and it’s ready to go. Of course, it’s more complicated than that, but being a technical founder, I thought, okay, wait a minute. I can do the work needed to get this back into shape. Again, the out-of-pocket wasn’t very much and it came basically with a validated idea that maybe just needed some iteration.

Rob: There’s so much to dig into here. Did you know it was a technical dumpster fire when you bought it or was that after?

Cody: The due diligence process when you’re buying a business allows you to get into GitHub and poke around. It was like, oh, this doesn’t look great, but it seems to be working. It wasn’t really until a few weeks in when I was really running the business. I had customers emailing me saying, hey, the server’s down. Could you restart it again? We’re doing, basically, my customer support. 

In a weird way, that was a great sign because they weren’t churning out. They were completely tolerant of this service that was going down multiple times per day. I had to wake up at 3:00 AM to reboot the server. 

It’s really hard to know unless you spend a lot of time with the codebase to know how bad this is. It’s definitely a lesson that if you’re buying a business off of something like FE International, make sure you’re ready to support it technically because it definitely could be the hardest part of it.

Rob: I have bought many small software products. I bought info products, ebooks, and an ecommerce site. I bought probably 20+ of them from about 2006 until 2011. That was my last acquisition. There were a few SaaS apps in there, too.

Most people don’t know or don’t remember, but in the early days when I started talking about micropreneurship and being a software developer who doesn’t take venture funding, a big part of that I used to say buy instead of build because if you can get past product-market fit, amazing. You’ve saved yourself 18 months or 2 years from no code to product-market fit. If it gets you to $1000 a month, maybe you don’t have a product-market fit. What did it save you? Six months or maybe a year of nights and weekends depending on how complex the product is.

The first product I ever bought was DotNetInvoice. It was $11,000. It’s a […] load of money. It scared the crap out of me. I grew up making minimum wage, $4.15/hour I think was my first job. The $11,000 was more money than I knew about. I had never driven a new car. It’s all that stuff. It was a huge risk for me. But the moment that I acquired it, I realized this just saved me a year’s worth of nights and weekends. 

It had some issues. It was invoicing software. You have one job, it’s to do math right. And it had math errors in the invoices. It was not a technical nightmare like what you’re talking about. There were bugs, there were some overpromises, and customer support sucked. I fixed all that and it turned into a great business for me. Over its lifetime, it probably made me a few hundred thousand dollars. It was a side project. For $11,000 plus my time, it did that.

I think more people should be open to the possibility of buying apps. As a developer, oftentimes, the big complaint I get or the big reservation is how do you know what you’re going to get? How do you know if the code is going to be a mess? I’m always like, well, if it is, then you fix it. That’s your superpower. You are the person who has this ability, so what are you worried about?

Similarly, I don’t know if I’ve ever said this—and then I’ll actually continue with the interview instead of ranting—but I bought HitTail in 2011 for $30,000. It took me almost two months to get it technically to where I wanted it to be. Basically, I had to migrate servers. It was 40–60-hour weeks for 2 months, and I finally got it stabilized.

Over the life of that product, the revenue, which was almost purely net profit, plus what I wound up selling it for in 2015 was just over $1 million for a $30,000 investment and then months of my time.

Don’t get me wrong. It’s not like I was working full-time on that thing for a year before we started Drip, but I was willing to do the slog that other devs probably weren’t. There was a bit of risk because $30,000 is a lot of money. But at that time, $30,000 felt like $11,000 a few years earlier.

When I hear you talk about this, of course, I would have made that bet, too. But what I want to find out is when you were about to make this bet to put this money on the table and decide, hey, I’m going to go full-time, and I’m not going to build my own thing, were you reticent? Were you anxious? Were there second thoughts? How did that go down emotionally?

Cody: Absolutely. The amount of money we’re talking about here is not insignificant. It’s a big chunk of savings. I’ve got a wife and kids. There’s a partnership here, so it’s not as easy as just being like, well, this is going to work. 

It’s easier now looking back because Keeping is working and it is successful, so I can have some hindsight. One thing that has probably changed from 2011 when you bought HitTail or even 2019 when I bought Keeping is that the buying pool is much wider now. By the time deals make it to us little folks, they passed over private equity and really well-funded aggregators of SaaS businesses.

I don’t want to say we get the dregs, but just be aware that the good stuff may be swiped up before it gets to you. In my case, I very quickly decided that I had to rebuild it from scratch. 

As a consultant back when I was working at startups, that is almost always a bad idea. When I hear peers of mine that are saying, I’m going to do a rewrite, the honest advice I always have is you probably shouldn’t because it’s going to take five times as long as you think and it will never get done. But in this case, the app was just basically unusable.

One of the great decisions I made right away was to not do it myself and to hire a team. I hired a very, very experienced team in Poland, so it wasn’t like buying a team here in New York. Looking back, it may be a little counterintuitive. I probably could have put my head down and six months later or even a year later, come back with a working app.

I think that technical solo founders should stop developing as soon as they can afford it. They should move on to something else. They should start managing and stop developing. That’s an opinion that can’t be applied in all cases because obviously, you need to have some capital to be able to do that, but there’s some level—$2000 or $3000 a month—where the money needs to start going towards an offshore team or a person, and you become more of reviewing pull requests but stop shipping code. Again, I’m really glad I did that in my case.

Rob: That is a controversial take. It’s a take I have said many times. Anytime I say it, I get pushback from devs who say, but I want to write the code. I was like, well, who’s going to market it? Well, I’m going to hire a marketer. It’s like, huh, I think it’s harder for a developer to hire a marketer than to learn to market yourself and it’s easier for you to hire a dev because you know what you’re looking for. You have that superpower and the advantage of it.

That’s a trip. You didn’t rewrite it yourself, you hired a team pretty early.

Cody: I didn’t rewrite it myself. I even chose a tech stack. This is against the developer thing, though. You get to choose the tech stack. It’s written in Elixir and Phoenix, which is a very developer-friendly ecosystem. I was very excited to get in there and basically just spent my day writing code. But I knew from my experience elsewhere that it was just going to be a long, long slog, and I was going to be done and be at the same place as I started, except that nine months would have gone by. I didn’t have that time, nor that money to do that. It felt like, okay, my time is worth more than the rate that I’m paying for an offshore developer, so let’s do that. 

The inverse is true as well, which is if a solo marketer is involved in a technical business, they should hire a marketing team as soon as they can. Don’t learn to code, but learn how to manage developers. Get a little bit technical, find a coach, and work with someone else.

Again, for me, as I said, okay, I’m going to become more of a marketer, I quickly said, I’m going to hire a content marketing agency. I realized I had no idea if they were doing a good or a bad job. I’m just sending them a check and blog posts are going up. I realized, wait a minute, I need to do this on my own for a little while to figure out how it works, what’s good, and what’s bad. 

That’s true with every section of building a SaaS business. You have these little boss battles where you have to become good enough to manage the people you’re hiring. I don’t think we enter as founders there. You have to work for it, and that’s hard.

Rob: Yeah, especially when you don’t have buckets of funding because if you had half a million dollars, you could feasibly hire a really senior person who probably knows what they’re doing and can do the strategy. But when you’re bootstrapped like us, that’s just not an option. Like you said, you’re going offshore. 

Like you, I did customer support for all of my apps before I hired it out. I did marketing for all my apps before I hired it out. I did development on all of them except for Drip before I hired it out, but eventually, I hired it out as soon as I could.

A big epiphany for me and something I tried to preach early on through my books and all that is there aren’t that many developers who start software companies, remain developers full-time, and experience the success that they want. There’s usually some type of transition to a different role. Not always, but I find that that’s pretty common.

You hire a small team in Poland and they rewrite the codebase. Did you have to migrate? Did you relaunch it? Did you have to migrate people over? 

Cody: I bought Keeping with a handful of customers so it wasn’t like, oh my God, how am I going to migrate these thousands of accounts? It was small enough at that point that we could do it by hand. Literally, account by account got pushed over to the new database. Over a period of weeks, we moved all the customers over and then shut off the old app. 

It worked, but again because we were small. I would be really terrified to do it right now. Mostly just the database side of it, but there are patterns that you can do to do that well. It was a scary couple of weeks, but we got through it.

Rob: You get everyone migrated over and then does it start growing? Did you launch it? What happened next in terms of getting traction? When you and I first spoke, it was about a year after you relaunched, I guess. It would have been January-ish of 2021. You got done with the codebase in March 2020 and you were far enough along that it made sense for you to join TinySeed. Some magic happened in those 9 or 10 months.

Cody: I would love to say that a bolt of lightning came through the sky. What happened was that the content marketing that I had been doing started to take root. It’s always a lesson. It takes a lot longer for that to happen than you think. I started to show up in search results for some really important high-intent keyword phrases. The growth just kept happening without me focusing too hard on marketing. 

Unfortunately, that was a little bit of a trap because there was natural growth happening month-to-month, partly because I’m on the lower end of the MRR curve at this point. I realized after about six months, who my customer is? Who am I marketing this to? Keeping has grown organically to this point. There is a lot of advice in the bootstrapper community about niching down (for lack of a better term), which is like, oh, wait a minute, you’re a customer help desk for anybody. How can you market to everybody? You should be a customer support tool for school principals and lawyers.

Since Keeping already has a Gmail niche, number one, you can’t use Keeping unless you’re using Chrome and Gmail. I feel like we’re already sliced off enough of the market that we weren’t going to try to go and be yet another slice which was for some persona. Trying to build Keeping off of its revenue by the bootstraps was really hard when you’re sub-$5000 MRR. There’s just not enough money to pump back into marketing.

One of the reasons I joined TinySeed, frankly, was that you need to have a little bit of a war chest if you’re in this giant market. Zendesk has 6000 employees. It’s a publicly-traded company. There are some advantages to that. They probably move really slowly, but they also take up a lot of oxygen in the marketing space. 

A lot of what I was trying to do on my own was just good enough, but it wasn’t quite enough to get over the hump. In mid-2020, I hired Asia Orangio at DemandMaven and we did a bunch of customer marketing research, which was also really revelatory and a key step in us growing.

Rob: Asia is a friend of the pod. She’s appeared here several times. She’s a friend at MicroConf and a TinySeed mentor. That’s awesome. She’s great.

You touched on this a little bit. You basically said you’re in this space, you’re starting to get traction, and you’re competing against Zendesk who has—I thought you were going to say customers—6000 employees. They’re that big. I guess they’re a public company, right?

Cody: They are public, yeah.

Rob: That’s still a lot of people. You’re competing in this market and you’re competing with big companies. I’m sure there are some really obvious challenges, but what are some of the challenges you’ve seen? How have you overcome them?

Cody: The biggest challenge is just that there aren’t new marketing channels sprouting up every day. Given a different category, I’d be paying a little heavier in paid search because you get a little more of an instant boost of customers. Just frankly, that channel’s closed because of investment that’s coming from these big publicly-traded companies.

The other challenge is that we did a bunch of customer interviews. Another truism that we all know at this point is you have to be talking to your customer and find out what they need. When you’re in a big category that’s been existing for a long time, like a customer support help desk, when you talk to customers, sometimes they say, I just want you to build Zendesk. The features that they know about are the ones that exist in other tools. You have to be willing to say, no, we just can’t do that right now.

An example of this is a chat widget. A lot of my customers want a chat widget, something we may do, but I have to be conscious as a solo founder with a small team that the doors open up from a support standpoint.

The challenges come from just trying to play a feature-to-feature war with these big companies. You just can’t do it. Navigating, finding my little seam in this big space, and understanding why people choose Keeping over these other tools is just super important. Otherwise, I’m just building Zendesk and I’m going to lose, right?

Rob: Right, because your customers are going to just keep requesting like, I want that feature. They used to do that with Drip. Everybody wanted us to build Mailchimp. It’s like, no, that’s not how we win. We need to either have a unique feature set, unique positioning, or own a traffic channel. Just get ranked one higher than Zendesk and Google and you’ll do really well. Will you be willing to pay more than Zendesk for an ad? I know you can’t, but then you’ll do really well.

I hear a lot of people wanting to just replicate an idea. It’s like, I don’t mind people building competitors. I think that’s great. But how are you going to win at least in this small segment? What you’re talking about is understanding your differentiation, right?

Cody: Yeah. It’s communicating that in a way when folks are looking at Keeping. How is this different is the challenge. It is to immediately say, right off the jump, here’s how Keeping is different.

What we find for most folks is another tab and another tool. A lot of folks don’t want that. We have to somehow zoom that into them and say, listen, you can do everything you need inside Gmail. Wouldn’t that be nice?

That takes a little bit of communication. It takes a video. It can take more than you can get off of an h1 on a website. The core challenge right now is making sure that we have space from these giant competitors and there’s a reason to choose us.

Rob: I’m going to start a new segment on Startups For the Rest of Us starting today. I’m going to ask every founder who comes on here. I hope you keep me accountable to this. This segment is called, How Did You Know When You Hit Product-Market Fit?

The reason I want to ask that is because you know it when you see it. I remember pointing to two graphs when Drip hit product-market fit, which obviously is a continuum. You can have it with a smaller group and then more.

It’s not this binary thing, but I remember pointing and telling Derek and Anna, that’s what product-market fit looks like. The two graphs were churn plummeting, trial-to-paid accelerating, and traffic was flat, but all the numbers are going right. I knew it, and we launched automation and blah-blah-blah. But that was my experience of it. I know that a lot of people are always asking, how do I know? How did you know? Do you remember that moment?

Cody: I still don’t know. I’m waiting for the email from you, Rob, to tell me that product-market fit. I think you’re right. Churn is a big indicator. When you’re talking to customers, you can hear it from them whether they’re excited or happy that they found the thing you’ve built. I don’t think you always see it in MRR graphs. A lot of folks imagine product-market fit being this big hockey stick in ProfitWell or ChartMogul. I don’t think that’s the case because you still have to expose your product to the world and you have to sign up folks. It’s really as with these smaller metrics.

For us, we’ve generally seen a really good trial-to-paid conversion. We have some metrics internally that we use, about when is somebody an engaged user, and when did they actually go to paid. And those numbers continue to get better.

That’s how we say we’ve met product-market fit, but honestly, I think it’s a constant thing. You’re always polishing, iterating, and maybe expanding your product enough so that you’re fitting a few more customers at a time.

Rob: That’s perfect. That’s exactly how I think about it, too. Not only is it a continuum. It’s not a winner’s era. It’s more like a 0 to 100 but with a certain group of people. And that ring gets bigger and bigger, hopefully if you’re doing things right. That’s why it’s so hard.

You have this successful business, it’s growing well, you start ranking for these terms, and you applied to TinySeed about seven months ago. Is that right?

Cody: I’m in the November batch.

Rob: When did we run them? I think we ran it in August. Is that six months? Yeah, you applied about six months ago. What went into that decision? I always preface this question with, I don’t bring TinySeed founders on here to make it an advertisement for TinySeed. I think that of the founders I know who have really interesting stories, there are a lot of them that wind up in TinySeed. In addition, it’s not for us to sit here and say, oh, TinySeed is amazing and this and that even though I think it is.

I do want to know, from the outside, when you’re considering whether to take money—whether it’s from TinySeed or someone else—it’s a big decision. It’s a little bit like buying an app. It’s a hard decision to undo and it is a risk. You are giving something up. In the case of buying the app, it’s cash, and in the case of TinySeed, it’s equity in your company. What was that thought process for you?

Cody: It’s funny you asked because my decision to apply to TinySeed was always in the back of my mind. I think this is probably true for a lot of bootstrap founders. Like, oh, I think that I’m going to try that someday. If you’re paying attention to the MicroConf ecosystem, you hear the announcements that it’s happening. I was listening to Startups For the Rest of Us and you announced it like, hey, TinySeed batches are opening up. I literally, on an impulse (in my boxers), went over to my computer and said, I think I’m going to apply.

It was a 5-minute or maybe a 10-minute process of putting in some numbers into a form. I wish I could say it was more considered. You just gave a great preamble about what a big decision it is, but for me, it was like, well, I’m just going to do this first step, see if I get it, and then I’ll make the next decision.

The honest answer on why is twofold. If you’re a solo founder who has two kids—I’ve got a five-year-old and an eight-year-old—there’s the money. Of course, that’s an important reason. But the real honest answer is that you are desperate for validation as a founder. I’m like, am I doing the right thing? Should I keep doing this? It’s not just to your buddies in the business community, but to your wife and your partner.

Joining an accelerator, whether it’s TinySeed or another one, is a really important validation of being like, hey, you’re on the right path, keep doing this. It’s easy to overlook that part of taking investment or joining an accelerator. It’s an external validation that I think we all need as founders. Then, there’s a community that comes with it, which has been, frankly, as worthwhile as the money. We’re all in our basements right now with COVID doing the best we can, but it’s a grind. If anyone tells you that it’s not, they’re not telling you the whole story. Being able to do that in a cohort with other people and to be able to do masterminds with folks that are in the same spot as you is great.

The second reason is the more obvious one which is I’m in a big expensive category with lots of competitors and I need money to market to them. Going to my savings to do that is a limited option. I can’t do that forever. I can’t pour all of the profits into marketing forever, so having an outside investment when you’re in a big category is really important.

It’s allowed me to really invest in content marketing. I’ve hired two writers. I have a content strategist. There’s a whole bunch of folks that came on board because of the investment. That would just not be possible if it wasn’t for that.

Two separate reasons why TinySeed, one financial and the other is emotional.

Rob: I think you touched on some good points. Einar and I talked at one point about why don’t we just raise a fund before we launch the accelerator? It would be so much easier to just write checks because the accelerator is a lot of work. It’s what we signed up for, but we wanted to not just write checks. We wanted to be able to mentor, advise, and build that community. 

If you listen to all the Startups For the Rest of Us and the TinySeed Tales interviews I’ve done with TinySeed founders, they keep coming back to that community. The advice is actually as important, if not more important, than the money.

Cody: Right. There’s a “playbook.” It’s important that folks understand that everyone’s journey is their own journey and there’s no, okay, you follow steps A, B, C, D, E, and you’re going to be a unicorn. That’s absolutely not the case. I do think that there are things that you don’t know that you don’t know, that are incredibly helpful, and you can learn in—again, I’m using this more generally—any accelerator environment. It doesn’t have to be TinySeed that gets you up a level. That’s really important if you’re going to be a founder and a CEO of a company.

Rob: Cody, thanks so much for joining me today. Great story and told very well. If folks want to keep up with you on Twitter, you are @codee. I get the double meaning there; you’re a coder and you’re Cody. That’s if they want to see your latest Wordle. And keeping.com, of course. Again, your h1 is “Delightfully Simple Customer Support in Gmail.” You never have to leave Gmail.

When I first saw this idea, I thought, I like this because Hiten Shah with Crazy Egg and whatever else he had done—I don’t think his metrics stayed in Gmail—I know that to this day, Crazy Egg, which is a very profitable business and quite a few employees, everything’s done in Gmail. They have custom labels and all that. Have you talked to him? Have you heard about that?

Cody: I have not talked to him, but there’s a whole ecosystem of businesses that are riding on top of Gmail. God bless us if Gmail decides to not allow us into their world. Platform risk is real. But there are also three billion users there, so it’s nice to have access to that.

Rob: Awesome. Thanks again for coming on the show.

Thanks again to Cody for taking the time to tell his story and for coming back on the show next week where we’re going to dive into nine tactics for amazing customer support.

If we’re not connected on Twitter, look me up. I’m @robwalling. Thanks for listening today, and I’ll be back again next Tuesday morning.

Rob: It’s another episode of Startups for the Rest of Us. It’s episode 590 with Craig Hewitt and I answer listener questions. We cover topics ranging from building versus buying internal tools, how to compete in a competitive space, accounting software, a founder who has a zombie company where investors want their money back, and I think there are at least two or three more. 

If you recall, Craig Hewitt was the subject of the first season of TinySeed Tales. He’s the founder of Castos, which is a podcast hosting both public and private as well as podcast production services. Craig Hewitt also co-hosts a couple of podcasts, one called Rogue Startups and the other is Seeking Scale. Craig is a wealth of knowledge, runs a very successful SaaS company, and has a great take on all the questions that we talked about today. 

Before we dive into that, I want to let you know that MicroConf mastermind matching is happening again. We do it a few times a year, I think it’s about every 3–6 months. If you’re not familiar, I’ve been espousing the benefit of startup masterminds for almost a decade on this podcast. I’ve personally relied on masterminds to sanity check decisions, help myself with accountability, and frankly, just maintaining motivation and having other founders invested and interested in what I’m doing has been an invaluable part of my journey. 

We now have over 600 successful matches under our belt at MicroConf from over 50 countries across 20 time zones, with a collective ARR north of $150 million. There is a small one-time fee to be matched with your mastermind and that’s all visible on microconfmasterminds.com. That’s where you would also go if you wanted to start your application. It takes I think 5–7 minutes. You give a few pieces of information, like location, experience level, your goals, your skill sets, some business metrics, and producer Xander and the crack team at MicroConf matches you up with other folks. 

Again, we have hundreds and hundreds of successful matches. Hundreds of masterminds that are currently operating and providing value to founders. If you’re not in a mastermind—I think you should be—head to microconfmasterminds.com. With that, let’s dive into answering listener questions with Craig Hewitt. 

Craig Hewitt, thanks for joining me back on the show. 

Craig: Hey, thanks, Rob.

Rob: It’s always great to have you, man. You said you’ve been on the show three times. I think you’ve been on more. 

Craig: I think four, maybe five? Yeah, it’s been a hot minute though.

Rob: It mixes with TinySeed Tales where we did 10 episodes or something across that year. You were Season One of TinySeed tales. Have you gone back and listened to that? Because I haven’t in a while.

Craig: I haven’t gone back and listened to it, but I think about a few of those recordings a lot. We had some really great times and some really horrible times, and I’m scarred. I’d definitely go back and say I cannot believe that happened, for sure, but it’s really cool to capture it in the moment because it’s like having kids. You forget about changing diapers at two in the morning and it all seems like roses so it’s really good to grab it in the moment.

Rob: I would agree. There was one recording you made at 11 o’clock at night. You’re just like I feel so terrible. You did the reality TV thing where they go in the booth and you sent me that recording. That’s a really good episode. I’m working on season three right now. 

Craig: Awesome. 

Rob: Well, sir, let’s dive into some listener questions today. These are some of my favorite episodes where we get to hear from listeners who write in to questions@startupsfortherestofus.com. Sometimes they just send a text question like Devon Tracy did, which I’ll read in a second. Or sometimes they go to the website and they can send a video or an audio question using the link at the top, Ask a Question. 

The subject of this one is a non-technical founder. He says, “Hey, Rob. I am a non-technical founder. I have an idea for a business/software that I’m interested in pursuing. As a non-technical founder with a day job as a high school math teacher and a decent amount of marketing background selling products, memberships, et cetera through Facebook and Google ads, I have an idea. How do I go about finding programmers to help me build this? I know you’ve answered the questions about vetting partners and hiring good talent on the show. My question is even more fundamental than that. Quite literally, how do I find people to talk to about this? Short of going on Fiverr which doesn’t seem like the best option yet. I have no idea how to go about it. Thanks for any insights you have.” 

Craig Hewitt, coincidentally or not, you are also a non-developer founder. What do you think of Devon’s question?

Craig: I’m just smiling hearing this question. We’re about five years into Castos at this point. I am a solo non-technical founder and can totally relate to this situation. I’ll just say for background, I got really lucky on our first developer. Jonathan Basinger was with us for four years. It was just amazing, like really good work. It would help me kind of level up my skills as a founder working with a technical team for the first time because that is super hard. For people who haven’t built software before, to work with a developer, cold, out-of-the-box is just super hard. 

My advice would be to find a technical co-founder. I will never, ever, ever do this again by myself because we’re just at the point now with 14 people to where I feel it’s honestly tolerable, that the risk of me not being technical is okay right now. But before, it was just silly. I had no idea what I was doing and we got by with a lot of help and with a lot of really good early people. 

I think they’re asking how do you make sure you get those good people? It’s so hard. Then the risk of if you get the wrong developer, you’re just sunk. You’re going to spend a whole bunch of time, money, and knock it off the ground. I think you need somebody with skin in the game, or them like that. Unless you had a bunch of money or were really sure of your hypothesis for product-market fit and your marketing abilities, to where you’d think you’d get off the ground really quick, like a big audience or something, then you probably could swing it. If you don’t have those few things, I would find a technical co-founder.

Rob: Yeah, there is a reason that I think it’s a low two-digit percentage of bootstrap SaaS founders don’t have at least one technical co-founder. I’m going to take these off the top my head, but it’s ballpark. I think it’s somewhere around 15% of TinySeed companies don’t have a technical co-founder like yourself. Somewhere in that 10%–20%, but I think it’s about 15%. 

I think in the broader kind of indie SaaS space—we did the State of Independent SaaS with MicroConf—the number is a little higher. I think it’s maybe 20% or maybe just north of 20%. It’s a vast minority because of just what you’ve said, of SaaS is really complicated. Building info products, courses, and all of that takes some expertise, it takes some time in front of a microphone, or writing, or audio or whatever, and those are skills unto themselves. SaaS is like a moving jet engine. As Reid Hoffman says, you’re assembling it on the way down as it’s crashing to try to keep it from going. It’s very complicated and it’s constantly moving. 

Craig: And just to peel back what you’re saying, the needs of your technical team change over time. That’s the really hard thing. You could find a good developer for an MVP, but they’re probably not the person that’s going to help you scale and stabilize your AWS setup. That’s where a person that 100% you trust has your back no matter what is just super important because you don’t even know. You don’t know what you don’t know.

Rob: That’s right. When I think about it, if you had buckets of money, you could try to hire and find an expensive, really good developer in your own country. And that is possible. If I were good to go about that, I would get referrals, I would go to the Toptal. There are certain sites that are just higher priced, it’s not Fiverr. It’s places like that. 

One way to get to the point where you have those buckets of money is to stair-step your way up if you’re non-technical. It is to start with those simple products, whether they’re info or courses. Building a Shopify app, having that built, or a WordPress plugin, is simpler than SaaS, and the technical debt is less. You’re not self-hosting it so you don’t have to worry about all the DevOps stuff. 

Again, you don’t know what you don’t know, but there’s a reason that I’ve espoused the stair-step approach for years and years, it’s for both technical and non-technical people is that then you learn 60% of what you know, 70% of what you need to know in order to run a SaaS. If you’re successful, you get some revenue out of it. Now you take that revenue, and you parlay that into either hiring your co-founder, or at least when you approach a technical person and say, I want you to work nights and weekends, while you have a day job as a developer at a Fortune 1000 Company. 

They get these offers all the time, so they’re going to say, why should I do this for you? You can say, well, I have this money that I can pay you. Or look, I’ve already built a successful product. I have an audience and I want to sell it to the same one. Or I validated it, I pre-sold it. I have an MVP. There are all these things. Coming to a developer and asking him to be your co-founder for free, may be even more challenging than trying to hire one because developers just get this pitch all the time. If you’re a good developer, you do, every few months—a relative, someone says this—and that’s the challenge. 

Craig: I would say if you are hell-bent on going this way and wanting to do it right now like some kind of community like MicroConf Connect or whatever, because there are those people searching for their next thing in there, too. It’s the right time to fit in a lot of times. It’s the right person at the right time in their career, changing career paths. You might say, hey, yeah, I got six months of the runway. I can go do this. Let’s give it a whirl. But that’s a big risk for them, so you just have to understand that.

Rob: We make that analogy often of finding a co-founder is like finding a spouse, a life partner, in that you’re probably going to have to date several, and it’s not going to work out. That’s the hard part. Okay, so you start this SaaS app, someone starts writing the code, and then it doesn’t work out. Now you have this code base. You have this legacy that may be even more concrete and heavy than the emotional baggage of dating. Am I right? 

Craig: Absolutely. 

Rob: So Devon, it’s a great question and obviously, it’s not all sunshine and roses. I wish I could tell you there was a magical thing. I’ve hired good devs on Upwork. I’ve hired terrible devs on Upwork. I’ve hired good devs from Elance back in the day and I’ve heard folks hiring through Toptal. 

Again, if you have the budget, there are agencies that can build a good product, but boy, to pay them to build a SaaS app when I don’t know if you have a product-market fit. Certainly you don’t have it, but how far along your confidence level is, that this actually is a good idea and you want to drop $30,000–$40,000 on it. It gets tough. 

Then what do you do? You launch. You get a couple of thousand in MRR, best case. Now, who maintains that? Because agencies are expensive. I’ll stop talking there. Thanks again for the question, Devon. Let’s move on to our next one. 

This question is from Prabat and he says, “Looking for advice for a poor startup founder. I’m a new founder from a beautiful but poor country, Nepal. I believe software has no borders and all it needs is a good idea to be a global idea. Hence, I’ve been trying to learn for the past nine months. 

I have a question. I have a SaaS idea but I lack funding as my country’s startup ecosystem is not very advanced. I’ve started to do some client projects, which allow me to invest in my idea, but sometimes I find it very hard to manage between client projects versus my in-house ideas of my SaaS idea. 

Clients sometimes come up with very hard deadlines, which happens quite often, and that gives us no time to manage our own in-house SaaS ideas. What do you think would be a wise way to manage between these two pulling the forces? I don’t want to be dependent on client projects to sustain my startup. Every week listener, Prabat.”

What do you think, Craig Hewitt? Have you ever been in that boat where it’s kind of nights and weekends and they are competing for priorities? 

Craig: Yeah. I think all of us come from this type of scenario. Day job and wanting to start something up on the side, or doing consulting or client work and starting something up on the side. For me, there are a couple of paths. If you’re quite sure that your idea is good and/or you have an MVP, then joining an accelerator program and getting money is a good way to go. I will say in all fairness, the amount of money that you get from TinySeed is often not enough to get you from zero to one if you’re by yourself. I know that’s not the model that TinySeed is going after these days. 

This probably my second part is to try to make it work with nights and weekends and maybe work for days on client projects and Fridays on your own thing or something. Be pretty regimented about that. I know someone who owns a consultancy and owns a bunch of products. They actually build the products back through the consultancy, to make all of this work from an accountability and accounting standpoint.

I would maybe try to do both, really be diligent about setting aside a day or a half a day a couple of times a week for your product, and pay the bills with client work. Raising prices on the client work obviously makes that a lot easier, so if you can raise prices by 20% then you don’t lose any of your revenue. Generally, I think there’s almost always room for that as a consultant. 

Then once you get a product and have some degree of product-market fit, things like TinySeed make a lot of sense to really just accelerate your ability to stop doing client work and go full-time on this more so. That’s probably what I would do. 

Rob: I think that’s a really good suggestion. There is no easy answer here. There is no silver bullet or magic pill that you’re going to take that’s going to help you. I’ve heard of a lot of agencies and in fact, I was on micro agency myself as I was doing these products. I also had to say, I can bill $150 for the next 60 minutes or I can go work on this product that is making me almost no money right now. I had to make that decision every day. 

That $150 went to my bottom line and my family’s bottom line, and I really struggled with it emotionally. Morally, am I doing the best for my family if I’m taking two hours a day, $300 a day, that’s $1500 a week, that’s more than $6000 a month that I could have been billing because I was always booked full time? I just had a good funnel. I had to wrestle with that, which is the same thing that you’re asking about. How do I reconcile that? Especially with things that aren’t a sure thing. And that’s the hard part. 

I really liked Craig’s idea of being disciplined about it at either carving out one day a week, or it sounds like you have a small team. You fork one developer off and they’re doing the skunkworks project and you never pull them into client projects anymore. I don’t know how big your team is. 

At a certain point, I’ve heard some agencies that take 10% of their entire team, all you’re doing is focus on this one idea. I would be careful. I think Prabat may have mentioned that it was in-house products or projects. I would focus on one with your already limited time. Then I think a big thing is are you building or are you validating? 

If you haven’t validated, you shouldn’t be building at all. Just because you can write code doesn’t mean you should be writing code. The biggest risk is not whether you can build this product. The biggest risk is that no one will care and that you won’t be able to market it.

That’s the very first thing I’d be figuring out is, what are my channels? Where am I going to get customers from? Then start building those and talking to those potential customers to find out do they actually need this? Do they actually need this thing we’re building? Or are we wasting our time? Very much a customer development mentality.

Craig: There’s a very popular book called The Mom Test that talks a lot about this, is people tell you what they think you want to hear. They’re dishonest, not in a malicious way, but they don’t want to be jerks. I think when doing customer validation, especially these days, I think it’s super hard without a product. Maybe pick that book up and read through it so that you can make sure you’re getting honest and objective feedback on your idea before you build something. 

I’ve seen a lot of friends and colleagues in space, validate something they thought, they go build it, and then it doesn’t work out. That’s a bummer, just in terms of opportunity cost, real cost, and everything. I would definitely be careful about how you approach that.

Rob: Here’s an advantage you have, Prabat. You live in a country with a very low cost of living. I’m guessing the wages are low compared to what you might be able to charge if you’re going to market to the US market. You’re going to have a lot more revenue than you will have cost. We have some folks, TinySeed applicants or folks at MicroConf who I talked to. They’ll be at $10,000 MRR, and they’ll have a team of eight working on it. I’m like how are you bleeding money? They’re like no, we’re at breakeven. Well, how are you breakeven? Well, we are in India and it’s just very inexpensive. I can hire developers for pennies on the dollar compared to what would be in the US. You have that advantage of your cost basis is low. 

Another thing is if you are able to do agency work, do your consulting work for international clients in Europe, in the US, you can obviously bill more. That’s the internationalization of all this, the kind of globalization I think can provide you with some pretty incredible opportunities. That’s the advantage you have. 

It’s the advantage we kind of had being in Fresno, California and bootstrapping, not to the extent that you are in Nepal, but to hire a developer was about a third of the cost of the Bay Area, which was a three-hour drive away. That was a reason I didn’t live in the Bay Area. I didn’t want to deal with those costs as a bootstrapper. Think about that as potentially your superpower. Thanks for the question. I hope that was helpful. 

Our next question asker would like to remain anonymous. He says, “I have a zombie company and investors want their money back.” He says, “Hey, Rob. I’ve been a longtime listener of the show and your approach and ethos have always resonated with me. Your podcast subjects have an uncanny knack of being timed perfectly with whatever stage of the startup journey I happen to be up to. 

My question is essentially about whether I should be prioritizing getting investors their initial investment back to them or continue to grow my company for the benefit of the co-founders, but probably not the investors at least for a number of years. I will say this is a longer email so bear with me.” 

He says, “To keep the stories brief as I can, my company raised two rounds of capital—2017 and 2018—from a mix of venture high net worth individuals and a couple of friends and family. The total amount raised over both rounds was in the low hundred thousand. It’s not a huge sum overall, but let’s say the friends and family would love to have their chunk of change returned as soon as possible.”

I’m going to break in here. It’s the first two months of 2022. Let’s just say it’s the end of 2021 for date’s sake. This is a three- to four-year-old investment. If people want their money back, that’s a problem because startups don’t return money back quickly. I will couch that and resume the email. 

“My business had a rather inflated valuation for the second round so those friends and family got a pretty rough deal. Then in 2020, the business took a dramatic change in direction.” Basically, he lost his co-founder. Now, he’s running it solo. 

He says, “Although we’re finally breaking even, seeing good growth, ultimately, the company is in more of a lifestyle business for the next few years. Not so much the venture or the high net worth investors, but the friends and family seem to be getting impatient. Realizing they didn’t invest in the next rocket ship, they’re questioning when they can get their money out. If we sold the business now—and there is no guarantee we could sell—investors might get 75% of their money back, but the ordinary shareholders, meaning the co-founders, would likely get nothing.”

Breaking in here, I guess there’s a 1X liquidation preference. “If the business continues to grow for (say) another five years, it’s likely the co-founders would get something back after sale and investors are more likely to get all their money back, but realistically not much more. In other words, investors’ money would be stuck in the company, not doing a great deal for them for five or more years, but co-founders would benefit from the extended period of growth. 

Should I feel guilty for building the business essentially for my own employment and future gains of the co-founders? Or should my priorities be to maximize the return to investors no matter what, and therefore sell the company now given that they’re unlikely to see much additional return for a number of years?”

Craig Hewitt, what a predicament. what do you think?

Craig: This is a really hard one. We have raised money in two different rounds, just under a million dollars total. I will say, personally—and this is a really personal thing—I feel an enormous obligation to return money to our investors. It is probably the thing that drives me most days, the business is for me, but also a chunk of the business is not for me anymore. It’s for our investors. That’s the decision that I made about 3½ years ago when we joined TinySeed. 

I think that for folks who haven’t brought on investors, that’s definitely something I say, when you have an investor, it’s not just your business anymore. You have a responsibility to them. This is going into answering the question. I would say that you need to do a little bit of both here. You definitely have a responsibility to make a return for investors if at all possible. If they’re not going to get their money back right now, then right now is not the time to sell. I would ask them to just be patient and just explain this exactly to them. If we sold the business right now, you’d get $0.75 on the dollar back. I think that’s a pretty bummer deal and if you’re hell bent on that, then maybe we can work something out to where you could start paying it back over time or something.

To break even, that would be tough. They don’t have hundreds of thousands of dollars in the bank to just pay them back with. That’s tough, but I probably would not try to just sell the business now and liquidate to give people an impartial return. Just try to frame it with this is where we are. This is what has happened with the co-founder and the setbacks we’ve had in the business. This is what I see as our trajectory over the next couple of years and in two, three, or four years, this is what I’m hoping to see.

There’s this term of lifestyle business in there. Some people that listen to this podcast might not like this. To me, lifestyle business and investors do not go together. When you take investors, you’re signing up for the hardball and really trying to build a great business that is really high value in the market. When you create a lifestyle business, you’re creating the business for yourself so you can make a bunch of money and not work a lot, to me. There’s nothing wrong with either of those but the two can’t go together to their fullest extent.

I would say that they probably need to get serious about growing the business and make that return for their investors. That might not be the answer they want to hear, though.

Rob: I don’t know that I disagree with anything you’ve said. I think that this is the trouble with friends and family money. There’s this phrase, it’s a pejorative term, but they say they’re smart money and there’s dumb money. Usually dumb money is it’s friends and family who don’t understand startups or it’s maybe the dentist or the doctor down the street who wants to write a $25,000 check and then feels like they need to give you a bunch of business advice about your start up.

That’s not what you want. You want business advice from the smart people, the venture capitalists, potentially high net worth individuals if they were entrepreneurs. You want advice from them. I guess as a cautionary tale, it’s not going to help the asker here, but as a cautionary tale if you’re going to take money from friends and family, I would not only sit down with them, but I would put it in writing as well in an email, please realize that this is more than likely to go to zero than do anything else. It is also, if it’s going to do anything else, going to take me 7–10 years. That’s typical liquidity for venture backed startups.

I’m just going to throw that number out. For bootstrappers, that’s actually quite a long time for someone to run a company, but I would just set the expectation. It’s really far out. The go to zero part, what’s so interesting is the venture capitalists and high net worth individuals are like whatever, because (a) they probably already knew that. They did not expect money out of a startup in three years. And (b) they have a portfolio of investments. How much do you want to bet, they don’t have one startup investment. They have 10, or 50, or 100 and you’re one of many.

Friends and family, again, the trouble with it is exactly that. If they write you a check and it’s a chunk of their net worth, everything’s riding on that. If it doesn’t win, they lose a lot of money versus if they had a portfolio of 10 or 20, which realistically if you’re going to get into angel investing that typical advice is, you don’t make a lot of small bets. If you have $25,000 to invest in startups and you’re accredited, make 25 $1000 bets, or 10 $2500 bets because you just don’t know which of these is going to hit.

Craig: Maybe applicable to this but just curious, for me the return expectation for an early-stage angel investor is double their money. I’m just reading between the lines here. This is maybe not a unicorn business, which is totally cool. We’re not either, but we’re hoping to double our investors’ money. I think that that’s a fair expectation. For folks who maybe are earlier on the process of just talking to angels, that’s what they should expect and a good outcome.

Rob: Angels who are used to venture investing, they want it to go to zero or 100X usually. There are certainly more angels like a lot of the TinySeed LPs who would say a 5X or a 10X return is good because there are a lot of downside protection in SaaS because the value usually doesn’t go to zero. If you build anything of any revenue these days, you can sell it. I don’t know of angel investors who would be happy with a 2X return. Usually, in my head 3–5 is the more sure bet, the more sure thing, but also it’s a lot of individuals.

You and I are just generalizing across a bunch of people and some people are fine with a really not risky bet. Because betting on a SaaS company, once they’re north of $1 million and have a pretty consistent growth rate, there are not many bets I know that are as sure in the space. Certainly buying individual stocks is not. I don’t think it is as predictable as a return. The downside protection is really strong. 

Anyway, question-asker, I think Craig’s advice is probably correct. If I were in your shoes, if I was still interested in the business, I would continue to run the business. I would focus on growth. I would focus on getting investor returns, but also focus on getting me a return for the years that you put into this business.

To walk away from it now and walk away with nothing because some people want money, and I get it. Friends and family can be a pain in the ass and they can ruin your thanksgiving. Some people don’t take friends and family money because of it, but the right decision, the non-emotional decision is to keep going and hopefully provide them with a return and you as well but definitely feel your pain. It sucks to be in a predicament.

The next question is actually From Twitter. I had posted a few weeks ago about topics for Courtland Allen and I to discuss. There were 30-something topics and we covered four of them. I just pulled this one down because I feel like it’s a quick one. “Do you guys have any resource recommendations for accounting software for founders? It’s a boring topic but it’s essential when you do actually start making money.” What do you think?

Craig: We’ve used Bench for a long time all the way back to the PodcastMotor days and it’s really great. I think that we are just getting to the point where we might need something more at this point, and that’s a whole other topic. I don’t have a recommendation for whatever the next step is after Bench, just to get a little more sophisticated and fine-tuned or fine-detailed accounting, but it is accounting software and a service in one. It’s about $150 a month and I think it’s great until you get to (say) $1 million. I think it does everything you want it to do.

Rob: For me I use Xero. I believe they’re an Australian company and they basically went after QuickBooks Online and they said we’re not the QuickBooks Online. We are not the crappy version of that. They import from all the credit cards and all the Stripes and PayPals and all that. Then I have an accountant/bookkeeper who monthly logs in and does the reconciling. Bench has it built in where they have people on staff and I don’t know if Xero does or if you just go to their page with a bunch of freelancers and hire people. But if you’re just looking for software, I think either of those is a great resource.

Next question, “How do you build in a competitive market as a solo founder? Example, a community platform, social media tools,” and he didn’t say it, podcast hosting. I’m throwing it in there. I picked this one out just for you. How do you build a competitive market, sir?

Craig: I think that the couple of things that I would really keep in mind are first of all to have something that’s different. For us it was our integration with WordPress early on. Now it’s how we think about and how we integrate with other tools around private podcasting. Those are the two things we hang our hat on. You can easily say we’re podcast hosting for people that do X, or Y, or want Z. That’s just really easy because then you can be really opinionated on your marketing copy on your website, where you stand in the market, and how you talk to potential customers. That’s the easiest not knowing where the question asker is coming from. 

I think the other one that’s really powerful is early on, especially the founder having a really strong brand. I think that scales to a point and then doesn’t anymore. It is a really nice advantage to have early on. I think I had a personal brand we started and that helped. There certainly are people that have bigger ones. That just helps you get off the ground, but I think just being as opinionated as you can, your positioning, stance, messaging, and everything is the easiest way to stand out.

Rob: You’ve touched on one of the four advantages for faster SaaS growth that I had named in this talk that I did four or five years ago, but it was having an audience, having a network, being early to a space which, while there’s competition—that one doesn’t apply—and owning a unique traffic channel. I think any of those can help you in a competitive space. 

I liked your mention of private podcasting because that’s essentially a unique position that you’re taking. You’re being opinionated in your copying and you’re positioning Castos as different from all the other players. You’re carving out this corner and if you want public and private podcasting, you come here. 

I think I’ve harped on this a lot with Mike Taber, when he comes back on the show of what do you have that’s unique in your startup? You either need unique positioning or you need to own a traffic channel. I’ve seen entire businesses built on buying a WordPress plugin and owning that traffic channel, or being really good at SEO. We see SignWell doing quite well, but he’s competing against DocuSign and all these other e-signature things.

He does have some unique positioning. This is Ruben Gamez, the founder. He has been on the show many times. He has some unique positioning but really without owning that traffic channel. I used to call it a proprietary traffic channel, but that’s not really what it is. I’m really good at this or I own, like I said, an add-on for an ecosystem and I rank for this traffic. 

So there’s unique positioning—we’ve touched on—audience network, and owning a traffic channel. The one other thing that can help you and I don’t know if on its own if it’s enough, but it’s having a big incumbent that is hated. Having a QuickBooks for Xero to go against. Having an Infusionsoft for Drip to go against. Having—

Craig: Having Libsyn for Castos to go against.

Rob: Yes. Where people are, I use this thing and the incumbent is such a pain in the ass. It’s like, we are not that. We are that that doesn’t suck. That’s your headline. I hear this with, I think Intercom. Intercom is a good product and offers all kinds of stuff, but what they’ve done with their pricing, they’ve gone so far up market that I’m still shocked that no one has come in underneath them. 

I hear people complaining about Intercom and yet, where is that? Where’s that upstart who’s going to come in and take out the, not the bottom end of the market because that sounds like your bottom feeding but I do think there’s room in the spaces where the money’s in the enterprise and they just keep going up, up, up, up, and it leaves room for you to sneak in as a starter founder.

Craig: I got just two things to piggyback there. One, I think Userlist has a really good chance of capitalizing on Intercom’s move up market. They’re a great tool and add a lot of really cool features that are addressing the needs that people who would use Intercom have. I think that that’s one to watch out for. I agree, I think it’s an enormous opportunity. 

A recommendation for resources on positioning is a podcast called Everyone Hates Marketers. Louis there is a friend and a customer of ours. I’ve known him for a year, but just really strongly positioned himself and talks about this a lot and is just a really good resource for folks who want to say, how do I stand out in this market? He definitely does sink in.

Rob: I’ve been on that show. I was on it a few years ago. It was cool. Last question for the day. When do you buy versus build tools that you use in your business? I’m thinking this one is a softball, but I think we’re going to agree. When do you folks at Castos build versus buy tools?

Craig: We almost never built. Do the math on it. Josh Pigford had a great blog post about this from Baremetrics. It just almost never makes sense to build it in-house, unless it is really integral to the day-to-day customer experience of your application. I’m talking just SaaS specifically, but what I wouldn’t do is take people off of my platform onto the Stripe-hosted checkout page to check out or to cancel their subscriptions. I want that in-house. That’s a really specific example. Basically, anything else you use to run your business should integrate or Zapier-connect to what you’re doing and you shouldn’t have to build any of it.

Rob: Yup. That’s pretty much it. Whenever I used to hear people say we’ll just build this in-house. They’ll be talking to potential customers with whatever SaaS I happen to be part of or advising, or whatever, it’s like they have no idea. Developers think you can build… SavvyCal, it’s just this link. I’ll build Drip in a week. That’s what we think until you get to the DevOps and the security and the spam. It’s endless. It’s really hard. Build Castos in a week. I can just host some flat files on the server. Yeah, but then there’s no CDN. Okay, so now I’m going to have a CDN. Okay, but no you don’t have X, Y, Z.

It’s just this endless thing. There’s a reason that you have a team of 14 people working on a product that some developers somewhere thinks they can build in a weekend. The same thing, if you want to get onboarding stuff to Appcues-type stuff into your SaaS. 

At Drip when we were going to do this, one of our developers said why don’t we just build it in-house? I’m like, because then we have to maintain that product. You have to make it, so marketing and customer success can come in and update it. Do you want to build and manage a WYSIWYG editor? Then they report bugs and they go to you? Because I don’t want to pull you off the core product that’s making us millions of dollars to maintain this other thing that we can pay $200 a month, $500 a month. It’s crazy cheap compared to your salary

Also I think as developers, as a recovering developer myself, we just think we can hack everything together. It’s usually not the right choice. Usually, the right choice is building things that provide value to your end user. 

Here’s when we used to have to build everything was in 2005–2007. You’re building a SaaS app. There was no Zapier. There was no Stripe. There was no Appcues. All the stuff we rely on today is great that we have this ecosystem. I know it’s expensive and I know we get subscription fatigue. I’m sure you’re like $10,000 a month in a $50 a month app.

Craig: Why is my American Express bill four pages long?

Rob: Exactly, and it’s because of that. But you know what? If you didn’t have that, you would need another developer or two to build and maintain crappier versions of all of that just for you. We live in an amazing time I think.

Craig: I think that the next level topic with this is leverage of your time. Just paying Appcues $800 a month lets you not worry about it and focus on other things. The kind of rotation you’re talking about is not maintaining this thing but letting you, your developers, your team, and your support folks all focus on really important things that move the ball forward in a meaningful way, because it’s worth way more than that $800 a month to those folks.

Rob: Yes indeed, sir. Thanks again for joining me on the show today.

Craig: Good time. Thanks Rob.

Rob: If folks want to keep up with you, you are @TheCraigHewitt on Twitter. I’d like to recommend your audience a podcast. I know Matt’s doing a lot of the hosting there now, but audience, it’s legit. If folks are into podcasting and want to hear about the creative process, episodes come out every week. I’d encourage you to go check that out. And of course castos.com, but that almost goes without saying. Thanks again, Craig.

Craig: Thanks Rob.

Rob: If you have not checked out Craig’s podcasts, they are two shows that I listen to every week, Rogue Startups and Seeking Scale. I recommend you check them out. Thanks for joining me every week on the show. We are approaching episode 600 and I believe next month, we’ll be 12 years of Startups For The Rest Of Us. I’ll be back in your ears again next Tuesday morning.

Rob: In this week’s episode of Startups For the Rest of Us, I talk with Jason Buckingham about how he made essentially 70 cold calls to find a startup idea. Jason was a developer and then a development manager at Microsoft when he decided I want to build a software product, I want to build a SaaS. He didn’t have any idea how to do that or really what idea to build.

You’re going to hear the story of how he just grounded out, just put in the hard work, and eventually found an idea that became Senior Place, which is now a successful SaaS team size of four. You’ll hear us talk about how they got into TinySeed back in 2020 and then again in 2021. You’ll have to listen to find out how that all panned out.

It’s a great story about focus and about, perhaps, just putting in the time and doing the work that it took to get it done realizing that it might be harder than he wanted it to be, or it might take more hours than he wanted it to, but being really focused on, I’m going to succeed, I’m going to brute force this thing until it works. With that, let’s dive in to my conversation with Jason from Senior Place. Jason, welcome to the show.

Jason: Hey. Nice to join you, Rob.

Rob: Absolutely, man. You are the co-founder of Senior Place and your H1 is Placement Software Designed Specifically for You! Okay, let me paint a picture. You know how there are realtors, Jason? I’m not telling you this, I’m trying to tell this for the users or the listeners of this podcast. There are realtors and there’s software for realtors to be able to help manage someone buying a house. You are software for these placement firms that might help say, my elderly mother, find a senior living facility, and these are like realtors or brokers. Is that right? Am I summarizing this right?

Jason: Yeah, that’s exactly right. They’re the equivalent of realtors but for the elderly. Instead of someone buying a house, they’re helping people who are going to move into an assisted living community. They do the same job as a realtor would do. The compensation is somewhat similar. They get paid by the assisted living facility. We build software to make that process a lot easier for them to manage the communities and the clients’ needs because there’s a lot that needs to be matched from side to side.

Rob: Got it. You have a handwritten font on your website, Placement Software Designed Specifically for You. People go to seniorplace.io, they can witness this handwritten font. That’s an unusual approach for a SaaS app. Did you design this out yourself?

Jason: Absolutely. I’m going to take ownership of that as well. A big part of that is the demographic of our customers. We are not selling to hip trendy 20-year-olds. Our average customer is most of them are female, most of them are in their 50s or 60s. We do have a number of male-owned companies as well, but that seems to have worked pretty well for getting customers so far.

Rob: That’s why I wanted to call it out. There are several exceptions to rules that you and Senior Place have. If you look at the website design, it does not compare to a lot of MicroConf companies or a lot of TinySeed companies, but those companies are selling to designers, developers, picky UX people, and Senior Place is not.

If you look at the screenshots for software, if you look at, again, just the marketing side, someone might turn up their nose and say, oh my gosh, this is not the amazing Squarespace site that I might be able to get from blah blah blah. But it works because you’re in a space where that’s okay.

Jason: I think it comes down to knowing your customer and knowing what’s important to them. I don’t want to disrespect our technically skilled customers, but we do have a lot of customers who are very technically challenged. I can probably share a story here that I maybe shouldn’t if it gets listened to.

I’ve done Zoom calls where I’m screen sharing and some of our customers on the call are trying to click on my screen share saying I can’t edit the box. I’m like, are you on your page or you on the screenshare? We just have customers who fall into that category. They really appreciate simplicity. They really appreciate something that feels comfortable. We know that because we talk to our customers.

When we get into our story later about how we started the company, it’s all been conversations with our customers. I actually just had a call with one of our customers this morning who’s one of our original for-users. Talking through with them again on the phone, it’s just really great to connect directly with them and hear in their own words what they like and what they don’t like.

By and large, we’ve had customers tell us, me and computers we’re not even acquainted, but your software is so easy to use it’s meeting my needs perfectly. That’s really what we’re targeting. We’re not targeting the cool, hip audience, we’re targeting our demographic and what they need.

Rob: Real software for real people who pay us real money. It’s a tool. People don’t want software, they want a result. In your case, that’s making it easier to track and place folks. Two episodes ago, I interviewed Michele Hansen. She wrote a book about getting really good at customer interviews.

That’s a big theme of your story—your and your co-founder story—is, we’ll get into it in a second, but the entire idea came out of a bunch of cold emails and cold calls, which is unique. I’ve heard this approach espoused in certain—there were some courses five, eight years ago by a SaaS founder who has basically built an info product course about, you can just cold call and find ideas. I remember, for most people, it didn’t work.

I’m going to pull up the State of Independent SaaS report, which we do with MicroConf each year, and we ask people, which of the categories below best describes how you develop the idea for your product or company? And 45% of respondents said it was a specific problem I was experiencing and another 22% was a problem my customers or my clients were experiencing. Right there, that’s 2/3 of the results were my problem or my customer and client’s problem. Another 13% was an experience at my day job and another 11% was a problem a friend or relative was experiencing.

I think we’re over 90% at that point and we haven’t gotten to what you did, which is the next one, which is 8% of folks who responded said it was research. Then it was 0.2% purchased it and there was other. I’ve heard the idea of, you go to Facebook groups, you do the cold calls, you talk to attorneys, or you talk to real estate agents, you just find a problem, and then you solve it.

I’ve always espoused absolutely to find a problem, but finding a problem cold just by conversations is hard to make work, it often doesn’t, and it’s a ton of work to do it. With that, I want to tee you up, your story is exactly this and you made it work. Let’s flashback, spring of 2016, you’re working at Microsoft, and you’re looking for a startup idea. Take us from there.

Jason: I was at Microsoft. I loved Microsoft. I was there for almost 15 years. It was a great company, but I didn’t want to stay in corporate America forever. I am not creative enough to have a great idea. I didn’t have customers that I knew had problems. I went down that path that 8% of people did with research.

For me, I looked at my own past. When I was a kid, my great-grandmother lived near us. She was in her 90s. She needed to move into a nursing home. It was just this emotionally traumatic event for our extended family. Maybe this ties into a relative thing, but this was 20+, 30 years ago.

My grandma put her in the nursing home. She felt super guilty and then in 2016, I was thinking what if we had a way to deal with that? I know that there are home care companies that send care providers directly to your home and care for your loved one. This would have been perfect for great-grandma and grandma.

I started cold emailing some home care owners that I just found their website online, I searched for home care and whatever city, and then I sent them an email and said, hey, my name is Jason, I’m a software entrepreneur. I’m working at Microsoft right now, sure, I’m an entrepreneur. I said that in the email and that I want to find ways to help their companies with whatever their software challenges might be. 

Would you have 15 minutes to chat just about yourself, what you do day-to-day? I got a really high response rate on those emails saying, sure, because I was only asking for 15 minutes, I wasn’t asking for much. I was asking to talk about them and every email I sent was personalized to them.

With those three qualities of each of my messages, people said, yeah, let’s talk. On every call, 15 minutes came and went, and I was like, okay, I want to respect your time, no, let’s keep talking because I was talking about them. I didn’t talk about myself at all on those calls. I just said, hey, I just want to learn what you do, I want to see if there are ways I can build software that would help you.

It was super intimidating when I first started doing this because how are they going to receive me? I don’t like salespeople. But I did send the cold email first, they did schedule the meeting with me, and so I persevered. I think the thing that made it work for me is I kept going. I did 35 calls with the home care industry and person after person after person said, we don’t have this problem. We actually have this software we just bought that is working really well. Next company, oh, we’re using that software, we just switched to them last month. Next person, oh, we’re switching that software next week.

Somebody was already solving the problem and they had $50 or $75 million of VC money.  They had a big head start with a lot of money. I just kept going. I don’t give up easily, and on call 35, somebody said, well, we do home care and we do senior placement. I was like, I’ve never heard of senior placement, what is that? That’s where I went on the next steps.

They told me, we really need help with software in that space. I said, does anybody else do that? Are you the only one? I’ve never heard of this. Oh, no, lots of people and it’s a really rapidly growing industry. We went and called 30–40 more placement agencies from around the country. This was something I was doing.

I’m based in Seattle. At 6:00 AM, I’d get up and have a call at 7:00 AM with somebody on the East Coast so I could do that, then still get to work, and do my day job. I was doing those calls three or four days a week for a couple of months.

Rob: That’s the hustle. I get emails from folks who are like, I have a day job and I’m tired when I get home from it, and what should I do to work around it? It sounds like you just didn’t give a crap that you were tired and working around. It is just what you were going to do. Is that an innate motivation? Were you raised with that motivation or were you so hungry for this that you’re like, I have to do my own thing and I’m just going to brute force it until it works?

Jason: I think there are a couple of things. One, I was hungry for it. I feel like I have entrepreneurial desires. I want to run my own company, I want to figure out the problems, I want to wear all the hats, and do all the things. One, I was hungry for it. Two, I don’t give up easily.

A neat story from my grandfather. He was a three-star general in the Air Force. His dad left him. He was raised by a single mom, and this was in the ’30s and ’40s. He wanted to get an appointment to West Point. To get in, you have to have a congressman sign your paperwork and get you in. He ended up going to the congressman’s office saying, I want to meet with this congressman in his hometown. The congressman’s secretary or whoever it was at that time said, no, he’s busy. He said, well, I’ll wait.

He waited all day, Monday, came back on Tuesday. The secretary said, what do you want? I’m here for the same thing, wait all day Tuesday, all day Wednesday. Sometime on Thursday afternoon, the congressman’s like, who’s that guy who has been sitting there all four days this week? I think just seeing that when you persevere, when you keep going, and when you don’t quit, you’ll eventually find success. That’s how my parents raised me and that’s what we did when we were trying to start Senior Place.

Rob: That’s that. I often say hard work, luck, and skill are the three things you need to achieve some success. It sounds like hard work was a big part of these early days. You may have had some luck because you had 35 calls and one of them finally said, oh, senior placement. It’s like, oh, you could say, yeah, I got lucky with that. Did you or did you just work hard enough that you made your own luck, I guess, in that sense?

Jason: Yeah, I think both are necessary, as you said.

Rob: Then you have all these calls with what? You did another 35–40 calls with senior placement agencies and they’re saying, we have this same problem. Where did you go from there? Because often, there’s conventional wisdom and there’s unconventional wisdom of like, do you go in the basement and build it? There are mockups? There are presale conversations.

Walk us through your thought process there, and really, how did you decide on what to do next? Were you listening to podcasts, reading blogs, and you’ve read Lean Startup? What was it that made you say, oh, this is how we’re going to proceed, this is the right way?

Jason: After 35 calls of the home care industry hearing nothing good, and then switching over to the placement industry and hearing lots of people say, we have this problem, there were different takes on the problem, but everybody identified the problem that they couldn’t keep track of their clients and their communities to match them up and all the needs that they had. I was taking detailed notes on all of those calls, so mostly handwritten notes as I was listening on the phone and then I kind of aggregated those notes.

After 35 calls, my friend JD who also happened to work at Microsoft at the time. We actually didn’t know each other through Microsoft at all. We just lived in the same community and we’re friends that way. He’s like, hey, I want to start something too. JD is an outstanding developer. I came from a software developer background as well. But we thought it’d be great to have two of us building the system and managing all the things you need when you start a company.

We partnered in, I guess, November 2016 and officially formed the company. We had a good idea that we were going to have customers, but I also didn’t want to just move forward. It’s hard to judge. Are people just telling you they have a problem and they need it? Are they saying I’m going to pay for it but maybe they won’t? I felt really good, but not quite good enough.

I reached out to some of the customers who had been like, keep me posted if you do anything. There were some who were really eager. I was like, I tell you what, would you be willing to prepay for three months of Senior Place? We’re going to set the prices here, and in exchange, if you give us this check today before we even start building it, we’ll give you a 20% lifetime discount? I had somebody.

We actually were able to meet with someone locally in person at a coffee shop. She brought her two employees with her. We were demoing mock-ups on just a tablet and showing like, this is what we’ve drawn up, and like, yes, this is what we want. She took out her checkbook and gave us a check. We walked out of that coffee shop with a physical paper check and we’re like, wow, we just got paid for the software. We started a company.

It was just an incredible feeling. We ended up doing that with five people. Once we got to five we’re like we don’t need to pre-sell and give any more discounts. I think we feel good. We then hit the coding hard, and January, February was just heads down 40 hours a week at Microsoft, 30 hours a week writing code, weekends, and whatever else. It was craziness because I always wanted to be a good worker at my day job. I don’t want to skimp out and bail on them because they’re paying me there, even though I’m trying to reach this other goal on the side. It was a challenging time.

Rob: You didn’t need the money. You didn’t pre-sell because you needed the money. You wanted the commitment, right? You wanted to know they had skin in the game and that if you and JD spent two or three months building it, that at least they were going to try it out.

Jason: Absolutely. We didn’t need the money at all. It was absolutely about the commitment. I wasn’t going to put in hundreds of hours between JD and me over two to three months, 30 hours a week. You can do the math. I wasn’t going to put in that many hours. We had already put in a lot of hours, but I’m willing to cut my losses if there’s not an idea. But I wanted to see the skin in the game when they did that. I’m like, if they pay before we build it, I think other people will pay after we build it.

Rob: Right. That’s a really good way to think about it. During this time, the two of you were working at Microsoft. Are you married? Did you have children? Because a lot of folks who listen to this are in one of those positions. I was too. While I was building my businesses, we had a young son who was born. It was 2006 now. That was right at the time that I started ramping up nights and weekend stuff, so I know the struggles of working around a family.

Jason: Yeah. I think at that point, JD already had three kids, my business partner. My wife and I, at the time, had two kids and my wife was pregnant with number three. Even when I was doing these calls, one of the calls that I did, I had gotten networked with somebody who ran a larger placement agency. We had talked to a lot of small-time shops and I wanted to talk to somebody bigger, and somebody referred us to him specifically like this is going to be a great call to get some insights and really confirm where we’re going.

My wife had our baby four weeks early. This call that I thought I was scheduling well before the baby was going to come, I did when our third was three days old. I didn’t want to cancel the call because this guy took me a month to get on the calendar. Yeah, we had kids. I have four now. We had a fourth about three years ago.

It’s been managing and I take family super seriously being part of my family, not ignoring them, making sure my kids don’t grow up. I’m doing this so I can spend more time with my family. I don’t want them to grow up and be like, well, daddy was never there. I don’t even know daddy now that he finally has been successful and I’m a teenager.

My kids are all 10 and under right now. I want to be spending time with them. A lot of this was, I would work at Microsoft during the day. In the evening, it was dinner at the table every night with the family, helping get the kids ready for bed, spend a half-hour or an hour talking with my wife catching up on her day, stayed in touch with her, then it was an hour, two, or three of coding until 2:00 AM often, and then calls at 8:00 AM or so.

Microsoft was flexible. I could often get into work at like 9:30 AM, so if I had calls maybe a couple of times a week, once we started coding, I was trying to start selling some more. It was just juggling all of those priorities. I wasn’t playing video games. I wasn’t watching TV like people are talking about the TV shows. I don’t know what those are. I wasn’t going to the movie theater.

For me, it was the priorities. It was family. It was keeping my job, not getting fired there, and making sure I’m doing a good job, and then moving towards the next thing that I wanted to be doing, which was Senior Place in the startup.

Rob: I’m guessing you knew it wasn’t permanent. You weren’t going to work that schedule for 10 years. It was, I’m going to work it for a few months until I turn a corner. Was that what was in your head?

Jason: That was exactly what’s in our head. We experimented different times with bringing on developers onto our team. JD and I, both being software developers ourselves, are probably pickier than an average entrepreneur maybe. I know a lot of entrepreneurs are developers.

We probably made some mistakes in not hiring earlier because, again, we had the money. We could fund them out of our own paychecks, but we didn’t like the quality of what we got. So we did a lot more work on our own than we probably needed to. That led to us staying at our day jobs longer while doing this at the same time than would have been ideal. That was the path we took and we’re just both super thankful that we are now full time only on our business that was a side business now. It’s the only thing.

Rob: It’s the focus, yeah. How big is your team now? Is it still just the two of you? Do you have anybody else helping you out?

Jason: Yeah. There are four of us now. We have another developer. I guess he’s still, technically, a 1099 contractor, but he’s working for us and only for us. Then we’ve got somebody doing support and onboarding. That’s been one of our challenges.

As we were building Senior Place, we cut some corners on administrative tools for our customers because we can just do that ourselves. Customers don’t need to add a user account very often. They can email us and we can take one minute to do that. If we build it, we have to spend two or three weeks building it right. Instead, let’s build other features.

We have not built all the things. We still have some manual tasks to do, but that helped us get to an MVP. Now we’re trying to invest in some of those other things that will save us more time and/or hire people that can do those tasks instead of us.

Rob: How do you describe the stage you’re at? Some people say we have this much MRR, other people say, we have this many hundred customers, some people say, we’re a team of four and we’re basically running at breakeven. Any of those, give us an idea of where you’re at.

Jason: We joined with TinySeed about nine months ago, and that allowed us to bridge the gap to pay ourselves. We definitely took a pay cut coming from Microsoft, but we are probably taking a little bit more money than maybe a lot of startup founders are, just since we both have families, mortgages, and such.

We’re running at a slight loss monthly right now. We’re going to be breakeven within two months, probably. We’ve got a lot of other partnerships coming down the line that could cause us to double or triple our MRR pretty fast, so we’re pretty excited about the potential of those.

Rob: I’m pretty excited about the potential of those. I didn’t mention at the top, but you’re part of TinySeed batch three, I believe. You’re the spring 2022 batch.

Jason: 2021.

Rob: 2021. Yes, sorry. There’s a funny story around that about how you were going to be part of the spring 2020 batch, but then COVID hit. We’ll get to that a little later. I want to ask this question that I think a lot of people are thinking about. How did you and JD get your spouses on board with this journey? Because it was a sacrifice for you, but it was a sacrifice for them too. Did you talk to your spouse in advance, your wife, and say, this is going to be tough, but it can change our life. I want to do it, it’s important to me, or how did that go down?

Jason: We did talk to our wives. If we were talking with JD on this call as well, I’m sure he could tell you lots of conversations that he and his wife have had. My wife and I talked about it before we started. It’s pretty easy to get your wife on board when I’m not spending the evenings and weekends yet. Hey, I’m going to do this, this is what it means. Oh, sure, that sounds great, go for it, honey. And then having to continue to check-in, how are we doing as we keep going? It’s been this many hours, it’s been this long.

We took a weekend away from the kids where we got my in-laws to watch the kids. It’s just my wife and I getting three or four days, a long weekend together to sync up. I think prioritizing your spouse to get date nights if you have kids. If you don’t have kids, it’s easier to get date nights. You just have to be intentional about that. The date is getting away from your work. For us, it’s getting away from work and kids. That’s also been harder with getting babysitters during COVID, but prioritizing that. 

Both of our spouses are really supportive. My wife is very supportive. I think it helps that, as I mentioned earlier, we have that hour every evening after we get the kids to bed where we’re talking. She feels like she’s got a connection to me and me to her. All of those things helped her continue to be on board. She knows where we’re at. Yeah, lots of things like that.

Rob: All of those things you called out are super insightful. I think a lot of early entrepreneurs miss them. I know that I missed it. Rolling back 16 years as I was working stuff nights and weekends, I remember saying, all right, I’m handling the day job or the consultant, whatever I was doing. I’m spending time with the kid, our one-year-old or two-year-old, but I forgot to be intentional about spending time with Sherry. Then eventually, I realized that is way important.

I need to balance these three things plus the startup. I can’t overlook that. In fact, Sherry and I recorded an episode of the Zen Founder podcast, episode 45, Onboarding Your Spouse, where we talked about this whole process. This was years ago. It’s probably from 2013, but I think it still holds true and it touches on a lot of the things you just said, very specifically about that.

You guys wind up launching in 2017, it sounds like spring of 2017. Then you and JD applied to TinySeed. It was the spring 2020 batch. I think we ran it in November of 2019 or something. So there are a couple of years there. Two and a half or three years have gone by and the two of you were still working day jobs. Is that because Senior Place didn’t grow fast enough to the point where it could support both of you? I guess to piggyback on that is, how was that for the two of you to then be working on this side project for those two and a half years?

Jason: There were certainly ebbs and flows in terms of how much work we were putting in. We were putting in a minimum of 15 hours every week. There were some weeks where we’re putting in 30–40 hours a week. We had to manage some of the burnout and it was because we weren’t growing super quickly.

We weren’t growing super quickly because we were trying to balance which features do we need to build? Okay, well, we’re both spending time writing code. Who’s doing the marketing? Okay, well, I’m trying to do marketing, but now I’m not coding. Now we’ve onboarded these customers, we’ve got 10 customers now. Five of them are like, hey, I can’t use it because of X, Y, and Z. So now we have to go back to that, and then we’re like, well, we don’t want to try to add more customers if they’re all going to quit. 

It was this slow ratcheting up of trying to get customers while meeting the customers’ critical needs. One thing we didn’t realize about this industry is our customers. Even with those 35 one-hour calls, I didn’t realize how unique the customers’ needs were. We’ve had to do a lot of customization.

I think anytime you can stay away from that, you’re going to be a lot better off for it. That has slowed us down because, oh, this customer says it has to be this way, this customer says it has to be that way. They want some core stuff, but they won’t use it if we don’t have both of those things. We’re kind of building two things.

There have been some challenges with a particular market we’re in that has inhibited our growth early on. We’re now turning the corner past those things. We built those different customizations, but yeah, we just kept on going, plugging away, trying to balance, okay, are we ready to do a marketing push? Because if we get five more customers, I don’t think we can even handle them right now. It was continually that process.

Rob: I meant to ask you, you had the five pre-purchases who wrote you checks in essence or send you money, and then you had the other, let’s say, 30 calls that you had done. Maybe they were not as warm, hadn’t given you money, but you at least had the list. When you launched, how did the five pan out? Did they all become customers? Then with the other 30, what did it look like after a couple of months?

Jason: When we launched, actually, one of the five didn’t even join us at that point. She said she was actually pivoting her business. She moved to a totally different business and didn’t need our software. The other four joined and this was five years ago. They’ve all been with us. All four of them have been with us since the beginning. They haven’t left.

Rob: You have an incredible business in that way. I talk about customer pain versus competitor pain, where if I started an email service provider today, I’m going to have competitor pain because there are 500 of them. We know it’s a big proven market. We know it’s not that hard to get customers, but there are a lot of competitors.

Customer pain is usually when you have maybe less technical customers. They’re not exactly searching for this online, so it’s just a grind. It’s harder to get them. It’s harder to get them on board, it’s harder to get them successful. But usually, with customer pain, once you have them, the churn is zero. You have an incredible business in that respect.

Jason: Yeah, we’ve managed to have extremely low churn. We haven’t lost a customer to a competitor in two or three years. We’re a CRM system. We’re a niche-based CRM system. Theoretically, every other CRM is a competitor.

Two or three years ago, we lost customers to other CRMs that had bells and whistles that we couldn’t build in yet. We’d built niche features, but we hadn’t built some of the bells and whistles. We still are adding more of those. We’ve just focused on what are the things our customers cannot do outside of our software without us and then built those things first. We do have very low churn, but it was still family, plus day job, plus side hustle meant slow progress. It meant, perseverance was absolutely required.

Rob: I have been there and a lot of people listening to this have been there or are currently there in that exact same position. It’s just such a common story when you’re trying to bootstrap something on the side.

When you applied to TinySeed the first time, we accepted you. You had traction, we said, we think this is a great business, let’s do it. I believe we went all the way through due diligence, signed paperwork, wired money. Is that accurate?

Jason: Yup.

Rob: And you gave notice at work because you’re like, I’m home free, I’m working full time. This is February of 2020. What happened in March of 2020, Jason?

Jason: Everyone knows the COVID story and the COVID time, I don’t think any of us will forget March of 2020. It was when work from work became work from home for the last couple of years. The TinySeed money was coming in April or so. We actually got it wired in late March maybe.

I was a manager at Microsoft and I had several direct reports. I didn’t want to suddenly bail on my manager. They have been really good to me. I liked the company. I wanted to treat them well. So I gave a two-month notice period. I was like, hey, I’m going to be transitioning. I just want to help find a replacement, train my replacement, and do all of that.

I talked to my manager in February, then COVID hit early March, and then our customers who serve the elderly in an industry that I thought was recession-proof because, of course, people still get old even during the recession. People still need care even during a recession. We’re totally golden. All of a sudden, people didn’t want to put their loved ones in assisted living. They wanted them to stay at home and they were now working from home.

Our customers were not having any business. We lost five customers in one week at the end of March of 2020. We hadn’t lost five customers ever combined in the previous three years total. We’re looking at this.

The TinySeed money came in that same week that we lost five customers. JD and I are talking like, what do we do? How much runway do we have? TinySeed money is absolutely outstanding, but we have just lost 20% of our revenue, and are we going to get notice from all the other customers next month? I went back to my manager. We talked to Rob and said, hey, what are our options here?

I went back to my manager. Can I ungive notice, please? My manager said, well, we didn’t want you to leave anyway, we haven’t found someone to replace you yet. I stayed at Microsoft, we gave the money back. I think I cried the day that I wired it back. This has been three years ready to be done.

We stayed one more year and we actually grew quite substantially in 2020 after the pandemic leveled out. I think we roughly doubled in 2020. We went back to Rob, TinySeed, Einar and said, hey, can we apply again? Let’s talk again. We’re ready. We’ve been growing.

Rob: Right, and that was the thing. COVID started changing everything in the midst of due diligence, but we had made a commitment to invest. So we said, it’s not like we’re going to back out. We hand shook on that deal via email. We sent the money and if the two of you wanted to keep going, we were all for it, but you were worried like, is it six months, a year, or two years? We have day jobs that are really great.

The fact that you made that decision and you basically said, look, we don’t want to give this money back, but we are going to unravel this thing. Can we handshake that assuming things are better in a year next time you run applications that we can move forward? We were like, yeah.

This is the only time that’s happened to us. There’s always these weird edge cases, but it was just like crazy times and we’re like, yeah, let’s do this. Frankly, even if you hadn’t grown during that time, if it was still a solid business and there was recovery underway, which there was by the time the next batch went, it made total sense. That’s what it was. It wasn’t until it was another year of you guys grinding.

Jason: It was heartbreaking.

Rob: I’m sure it was, man. That was April, May of 2021, which is just eight or nine months ago, but that’s when you received the funding. How did that feel, the final day? I’m sure that was four years in the making of being able to…

Jason: It was awesome. The hard part is I had worked at Microsoft for 15 years and with COVID, there’s no real goodbye. It’s just like, see you later, I’m out. I think we had a Microsoft Team goodbye call with some of my co-workers, but certainly, anyone who had worked at Microsoft for a while and had built relationships, there used to be a goodbye lunch and all of that. Some of that wasn’t there, but being full time at my own company now and having the feeling of walking out the door virtually was still an incredible feeling.

Rob: Yeah, I remember that. I still remember that feeling, how I felt years ago. Thanks for coming on and telling your story, man. I love the elements of it that are a little bit unpredictable. I love the elements of it that are a little bit outside the standard. We get into this cold calling to find an idea, and to hear it actually working and that you have a business that is doing quite well is really cool for folks to hear.

If people want to keep up with you, they want to see what you’re working on, you’re at seniorplace.io. You said, if folks had further additional questions, they could contact you directly. Your email is jason@seniorplace.io. Thanks for coming on the show, man.

Jason: Thanks so much for having me, Rob. Great catching up with you again.

Rob: Thanks again to Jason for coming on the show and thank you for listening every week. I enjoy being on the microphone. As long as you keep listening, I’ll keep recording. I’ll be back in your ears again next Tuesday morning.

Rob: You’ve tuned in to Startups for the Rest of Us. We are approaching episode 600 here in another 12 episodes or so, and today’s episode is really good. I really enjoyed this conversation with Courtland Allen. He and I basically wander through topics that are relevant to bootstrappers, indie hackers, non-bootstrappers, and mostly bootstrappers. We talk about things ranging from inside baseball and podcast production, to talking about struggles with motivation and depression, to whether it’s easier to bootstrap today, what it looked like 10 years ago. At the end, we talk about Basecamp. We just covered a lot of things. 

I did a little ask on Twitter of what topics we should cover, and of course, we got 30 topics or something, so we couldn’t possibly cover all of them. But I am bookmarking that tweet for future episodes because I think some of the topics and questions were really interesting. 

Before we dive into our conversation, I wanted to let you know that there are just a few more days in the TinySeed application process. If you are a bootstrapped or mostly bootstrapped SaaS founder, you’re doing at least $500 a month, and you’re interested in a yearlong mentorship advice community program, as well as a little bit of funding, just enough funding, the right amount of funding for a bootstrapper, you should head to tinyseed.com/apply and find out more. 

The application process is pretty seamless. It’s 15, 20 minutes. Most people, if you know your numbers, it’s not that arduous. You’d be following in the footsteps of some pretty great SaaS companies that have been coming through our ranks. We are running batches both in the Americas time zones—North and South America, as well as the European time zones—so Europe, Middle East, and Africa. Tinyseed.com/apply if you’re interested. And with that, let’s dive into our conversation

I’m Rob Walling, your Courtland Allen. We’re putting this on both of our feeds. 

Courtland: We are.

Rob: I can’t just do the Startups for the Rest of Us intro because people will be like, wait a minute, this is on the Indie Hacker’s feed. So I think we’re coming out a day apart, but I’m excited to sit down with you, man.

Courtland: Me too. You’re always one of my favorite people to chat with in podcast form and in real life too. You asked a question on Twitter, what should we talk about, and we got like a million different answers plus we had a list of stuff we want to talk about and so maybe we’ll go long this time.

Rob: I think we can. I’m excited about it. Likewise too. I appreciate the compliment. I certainly feel the same way. I really look forward to you and I sitting down because I feel like we have enough shared views and enough shared worldviews of bootstrapping and indie hacking that it makes sense, but the overlap is not a complete circle like a Venn diagram that’s just a circle. I feel like I learn from you and I expand my thinking when we talk.

Courtland: It’s funny you say that. I listened to your episode on My First Million, and I think near the end of the episode, you were giving startup ideas and Sam Parr I think was the one hosting that particular one. He’s a funny guy because he’s so disagreeable. No matter what you say he’ll just come out and be like, I think this is absolutely untrue to say the exact opposite, and he’s not afraid of looking dumb and being wrong or whatever. That is really entertaining. I think you and I agree on a lot, so we probably won’t have that kind of talk, but agreement is also cool.

Rob: Oh yes, we will because I’m going to disagree. Now I’m going to make me disagree with everything you say just to do it. Well, the first thing I’m going to say is I just made an offer to a producer who’s going to really be heading up all the back office stuff for Startups for the Rest of Us, the MicroConf podcast, and MicroConf YouTube. Total inside baseball from one podcast to another, but do you still do a lot of the work? I don’t imagine you do audio editing, but are you scheduling guests, putting stuff into WordPress, writing show notes, or have you been able to like get that stuff off your plate?

Courtland: Off my plate. The best hire I’ve ever made was—I call her my podcast boss. Arie was a producer for Mixergy. She still is a producer for Mixergy, but she does the Indie Hackers podcast now. I just have her do literally everything that she possibly can that I don’t feel like I need to be involved in.

I like being involved in the guest selection—who’s going to come on, who do I want to talk to. Because if someone else is choosing who I talk to, I don’t know. Maybe I could outsource that, but right now, I like choosing who I want to talk to and I like helping prepare. But what’s cool about Arie is I have her come on and even these things that I want to do, we’ll be on a Zoom call where she’s sitting there watching me work and offering suggestions. I’m not even like doing that alone. She’s kind of my podcast boss. She holds my feet to the fire. She makes sure I work on it a few hours a week, and she gives me helpful feedback while I’m working on it. 

Then I sit down, press record, talk to my guest, press stop at the end of the conversation, we chat a little bit, and then I do nothing else. I don’t title the episode, I don’t describe the episode, I don’t tweet about it, I don’t release it. I’m on to the next thing. It’s such a breath of fresh air because I think a lot of podcasts, people churn. Most podcasts don’t last for much longer than a few episodes, and I think it’s because people get bogged down by all this extra work that they don’t really enjoy as much as they enjoy the conversations themselves.

Rob: All right. That’s awesome, man. I’m happy for you and I’m happy for me that next week, I’ll be in a similar situation. I mean, to be fair, I’m probably 75% or 80% of the way to where you are, but I’ve just piecemealed it together with a part-time freelancer who does the show notes, an editor who does this and that, then there are some gaps there as well, and I am the fallback. With MicroConf stuff, Producer Xander is a fallback. We’re bringing someone in to really backstop that, finally. I mean, it should have been done last year or years ago, to be honest, but it’s just one of those things that you do the same thing for too long and you don’t think about how it should change.

Courtland: Right. You get used to it. Like you said, there are these gaps. It’s stressful having to be the glue that glues all these things together to fill the gaps because then it’s almost in a way as if everything is a gap. You still have to worry about every single thing, every single part of the process, and it’s also stressful to hire somebody and just trust them to do everything. Because they’re not going to be as good at you as you at some things. They’re not going to have your particular eye for certain things.

But the cool thing is that there’ll be good stuff that you weren’t good at if you make a good hire, and they’ll improve your show in ways that you didn’t really anticipate. I think a lot of it is just learning to let go, have someone else do those things for you, see what comes out, and go with it.

Rob: Yeah, and I’ve always been able to let go when building SaaS companies, it’s like I can let go of customer support. I was able to let go of software development. I can let go of customer success, sales, and on and on and on. Letting go of creative stuff for me like writing and podcasting, that stuff’s a lot harder for me because there’s so much subtlety to it. It’s less of a here’s a job description. It’s more like, you kind of just got to do it and make it good and that’s hard, right?

Courtland: There is a popular indie hacker—I won’t say who it is—he has more than 40,000 followers on Twitter. His Twitter account is entirely automated. He never tweets. He doesn’t even know what he’s tweeting. There’s a team of people who tweet for him, and his Twitter account’s fire. It’s awesome. He tweets several times a day, people engage, and some of the tweets are really personal. But he’s like the ultimate in being comfortable, I guess, letting go of the creative element. I can’t imagine doing that.

Rob: Wow. Me either. That’s awesome, though. Yeah, I wanted to ask you, so Indie Hackers went invite-only, is that right about five, six months ago?

Courtland: Yeah.

Rob: I don’t know if you’ve talked about that publicly, but I’m just wondering, what was around that decision? Does that just come with the growth of a community?

Courtland: I mean, it was very simple, spam was out of control. I have been fighting spammers from like day two of the forum for like five years, and they’re so good. They’re not just like people making little bots. They are actual human beings, sitting in offices somewhere on the other side of the world getting paid to spam websites and not caring at all. If you put up obstacles, they will figure out what the obstacle is and try to get around it. 

At some point last summer, I think we had 6000 or 7000 people join Indie Hackers and 2000 of them were spammers. I was like, this is a battle that I’m losing. I just want to go back to basics. I’m not obsessed with growth at all costs. We don’t need to have thousands of people joining every week. We can just go invite-only mode, completely cut out the spammers, and have the community return to some level of normalcy. 

I like the idea of an invite tree where you can see every single person, who they were invited by, who that person was invited by, who that person was invited by because then you start to build a clear picture of, okay, this guy’s a spammer. How did they get invited? All these other accounts of spammers too, and so we left it on invite-only mode for the better half of last year. I’m pretty sure we’ve rooted out literally 100% of the spammers. 

Six months ago, when people complained about spam on Indie Hackers, they were complaining about people posting escort ads and Viagra pills ads. Today, when people complain about spam on Indie Hackers, they’re saying, oh, this person made a post that I didn’t like, which is a huge improvement.

Rob: Right. They’re marketing their startup. That’s a trip. I mean, I’m on Indie Hackers relatively frequently and I never saw the spam. Was it just getting rooted out before I saw it or what was the deal?

Courtland: Yeah, I mean. What time zone are you in, you’re in the United States?

Rob: Central time.

Courtland: Okay. So if you were in Europe, you saw a lot of spam. So what happens is we would go to sleep, the community manager would go to sleep, the forum would be overrun with spam, or depending on your browsing habits, if you go to indiehackers.com/newest and you just see a firehose of posts. A lot of that was just spam, and most people don’t go there. But the people who do go there are the people who want to curate the community and have some sort of control over what makes it to the front page by uploading stuff. They were just deluged with spam. 

That sucks because if they can’t go there and get a good experience, they’re not going to go there, which means no one is giving us the signals we need in uploading posts to figure out what should go to the homepage.

Rob: That’s a problem, a big problem. One of the things I was most frustrated with running Drip was the spammers/people who would hack—not hacking, but they’d sign up for an account and they do phishing attacks out of Drip. They would send shady emails and get us on a blacklist. It was such a headache, and we had all these checks in. We had this code that would validate. It was a credit card versus some actions in the app. These days, if we were raising funding, we would call it an AI thing, but it was just code that measured. We could detect patterns and behaviors.

I hated it. It was a smaller factor, but I remember being, I could see selling this company purely being on the worst days of those when Derek and I went to sleep. It was just Monday morning at 2:00 AM, and then Russian spammers created a bunch of accounts and sent a bunch of phishing stuff. I thought I could sell this company. That was early on. We’re like $20,000 MRR. Did it do that for you? Did it ever feel like, you know what, I could rage quit this thing up in the air because of this?

Courtland: Yeah, I never got quite to the point of I would quit because of this, but it’s super demoralizing. The number one thing I think about every day is how do I improve the community? How do I promote the people who are doing a genuine and authentic job of contributing great content and stories? And then you have these other people who just cause you to lose your faith in humanity. They’re just total […] like sociopaths. They just don’t care. You’re trying to build a good thing. They are just trying to ruin it. Not even trying to ruin it but just trying to promote their own thing. They don’t care that it’s going to ruin your thing.

I talked to so many people who dealt with this problem. Famously at PayPal, they’re sending money over the internet, and a huge percentage of what they needed to do to make that business work was getting really smart at fighting fraudsters. That was super hard for them to do and they had a super talented team to do it. I talked to Amjad Masad at Replit. It’s an online code editing tool and code education tool, and it’s like, what do people use Replit for? Buildings crypto bots to mine crypto using his server’s bandwidth and costing the company a whole bunch of money. They just don’t care if they’re going to ruin Replit’s business if they can make a few thousand dollars.

Time and time again, I talk to people who have this issue where you just deal with the worst people. The internet’s cool because you can reach everybody. You can reach all the good people, but you also end up on the radar and straight in the crosshairs of the bad people who don’t care.

Rob: Yeah. When you get any modicum of success, I mean, we have TinySeed companies who by the time they hit $20,000 MRR, $25,000—so it’s still relatively small—facing any type of email, if there’s any type of email sending capability, people start targeting them. In terms of I’m going to do a phishing attack, I’m going to do a spam attack, I’m going to send unsolicited email based on your good IPs.

Courtland: This doesn’t happen in real life as much. If you have an events business or a store, you don’t get people who come into your store and just start yelling loudly to advertise their product. You just don’t deal with that many. I guess you’re going to yell at shoplifters and stuff. There are not as many […] when you can see people face-to-face. You can look the owner in the eyes and see that it’s human. You’re like, I don’t want to ruin this person’s business. But online, people are just kind of […]. They default to everything is a faceless corporation. If I can take advantage of them, I’ll do it.

Rob: That’s right. Anonymity is a real problem, that they can remain anonymous. I mean, we’ve seen that with online forums, right? Facebook, I know people get out of control too, but at least, usually, real names attached to it versus YouTube comments, even Reddit to a certain degree. I think there’s a big, big case to be made there.

Courtland: Yup. But Indie Hackers is no longer invite-only as of three weeks ago. Anybody can join and now we have a whole process. A lot of it is manual where we’ll look at your contributions. 

So when you join, you can’t make a post, but you can make comments. You can help other people out in the community, contribute, discuss, and upvote comments. Essentially, if you earn your way out of that second-class citizenship (shall we call it), you’ll get a little email from me and we’ll promote you. You can now be a fully-fledged member of the community. Every now and then we’ll just promote somebody. If you do an AMA with somebody, we’ll just kick them right up to a full-fledged member because that’s somebody that we know and trust, but everybody else has to go through this process.

It’s really good at weeding out who wants to be an authentic member of the community and who wants to just do a drive-by, hey, I’m launching my product today. Can you give me access so I could launch today and then disappear and go somewhere else? It’s really funny to me how people will literally ask to do that. 

I get emails every day like, hey, I’m launching today. I haven’t put any work or effort into the community. Can you just whitelist me so I can do my drive-by post? Even when we got rid of the spam with the invite codes, I got DMs on Twitter from spammers. They’re like, hey, I’m trying to post my Viagra pills thing and I can’t get it in. Can I get an invite code? I’m like, are you kidding me? Why would you ask me this?

Rob: Yeah, it’s crazy. It’s like they think you’re a customer service rep who just doesn’t know any better and who’s going to send that. That’s such a trip, man. Similarly, it’s odd that forum spammers, community spammers, and email spammers are similar because we built up a thing, we architected it out, and we never got to build it, but it was a trust score. It was when you first signed up for Drip, your trust score was zero. And then depending on what you did, your open rates, your click rates, and what your credit card is, if it was prepaid or not. There were all these factors. There were 10 factors.

Over time, that score would go up or it would go down. If you got a bunch of spam complaints or you got low open rates, we would start to knock that down. When you get below a certain threshold, we block sending on your account. You built it up over time, I think, if you had a bunch of sends that went great, you get up to 10, 20, 30, or whatever. It sounds like you figured out perhaps an easier way to kind of hack that.

Courtland: Same thing with Indie Hackers. You basically get a little score. You don’t see your score, but okay, below a certain score I don’t even look at your comments and stuff. Above a certain score, admins can—we have some moderators and stuff—see, okay, here are the people this week who’ve reached the score, here are their comments. Who should we promote into a fully-fledged member?

It’s funny because there’s a whole Black Mirror episode on this. It’s very dystopian. Everyone in society has a little score and people can constantly score you. She just has the worst day ever and gets a negative score. Now she’s an outcast and she can’t get an apartment and can’t get invited to parties. But I think, in reality, it’s not so bleak. It’s usually pretty useful, and it makes the community better for everybody for there to be the score that’s invisible, so long as it’s responsible and it can’t be gamed to ruin a perfectly good person’s time, it works.

Rob: Yup, I agree. So I sent a tweet out. I found some pictures from MicroConf 2011. It was the very first MicroConf, and so this is like 11 years ago. I posted a picture of Andrew Warner taking the stage for the first-ever talk at the first-ever MicroConf, and we all look super young because it’s 11 years ago. So Andrew Warner, then there’s me and Mike Taber, Ramit, Hiten Shah, and the […] guys or Sean Ellis. There’s just a handful of pics.

It got me thinking though as I look back, I was like, man, we were really young and we didn’t know what we were doing and here I am still doing. I was doing the podcast then.

Courtland: Same thing.

Rob: Yeah. I was talking about startups, I was running events, and I’m still doing those things. It got me thinking. Often we’ll try to look out 5, 10, or 15 years because it’s just so far in the future, but I’m wondering if you have. Do you ever think, what am I going to be doing in a decade? Am I still going to be doing something similar, related to this, or do I think I’ll have a time doing this and maybe switch it up?

Courtland: I live in the future, man.

Rob: Me too.

Courtland: I think way too much about the future. There’s a good book, it’s called The Time Paradox where they talk about how a lot of our decision-making in life comes down to the default time frame that we live in, and some people default to the past, some people default to the present in certain situations. I think probably most tech founders and entrepreneurs are very future-focused people, which I think correlates highly with success because we’re often thinking, what can I do now to get to this desired state 5 or 10 years from now? That turns out to be a really good way to plan and strategize, but it’s also not the best way to enjoy life in the present.

I remember being in school and going to MIT and thinking, at the end of our four years in our fraternity, everybody could get up and you could just talk, you can give a speech. You can say whatever you want. It was an awesome tradition because you just got four years to think about what you’re going to say and then you get up and you talk. One of the cool things about it was everybody felt so lucky to go to that school, people would default assume that you were smart and give you the benefit of the doubt.

But I thought a lot about it and it’s like, none of us are here because of who we are now. We’re here because of decisions we made when we were 12 years old, when we were 13 years old. We’re going to take school seriously and I’m going to study for the SAT, and now, 10 years later, that’s paying off. It’s a lesson that never really left me. The decisions you make now will change your life dramatically 5, 10 years in the future.

I hope that 10 years from now I’m still working at Indie Hackers. If I’m working at Indie Hackers 10 years from now, that means Indie Hackers is an amazing place that I’m probably super jazzed about or it’s way bigger and more impactful than it is now. If I’m not working at Indie Hackers 10 years from now, that doesn’t necessarily mean it’s a failure, but it definitely means I moved on to something else that was more exciting, and it’s not really my plan right now.

My plan right now is to try to build Indie Hackers into an institution, something that really touches a ton of lives in a really positive way. I think it already does, but I think if you build a good thing, bringing it to more people is an even better thing. If you build a really cool tool or a really cool sandwich shop and you could franchise it, and now more people in the world can eat that sandwich, that’s a good thing. If you invent penicillin, it’s 100 times better if you bring it to 100 times more people.

I’ve been trying to make Indie Hackers a good thing and I want to bring it to thousands of times more people, and that might take 5 or 10 years.

Rob: It’s interesting you say that because obviously, you and I have both been doing this now for years. Talking to and trying to help aspiring and actual founders, I guess we’re all actual founders but founders who have actually shipped and who are just working on it and want to do it. It wasn’t until the last couple of years really as like, I have this podcast, I have MicroConf, and now we’re going to launch TinySeed out of it.

I started thinking, I think we’re grown up enough that I need a mission, you know what I mean? What is the mission? I’ve been honing it, refining it, and I still struggle with the exact wording. I tossed it to Producers Xander, I showed it to Einar and Tracy. What’s interesting is the mission of all three of those properties is the same thing—the mission of TinySeed, MicroConf, and Startups for the Rest of Us, it’s all the same. It’s to dramatically multiply the number of self-sustaining independent startups in the world.

Whether the word wording exactly is a SaaS startup, I just want there to be more and I want them to be self-sustaining. So look, maybe they took funding, maybe they didn’t, I don’t give a […]. In fact, I never have. I just don’t want the dogma.

What’s interesting is once I said that mission, I was like, wait a minute, I’ve been doing that for 16 years, more than that. 2005 is when I started blogging about this, and it’s like, I didn’t have that mission in mind, but that is what I want to do now for the rest of my life. That’s it, for the rest of my professional career. I think I’ll be working until I basically keel over dead.

That was an interesting umbrella term for me to realize, you know what, I enjoy podcasting and I’m going to keep doing it, but I don’t need to podcast if I’m still doing something that follows the mission, right? I don’t need to have an online community. I don’t need to have a fund, but I think I will be doing something under that umbrella forever.

Courtland: I think that’s a great vision. One of my heroes is Charlie Munger. He has a lot of writing and business advice that influenced me, just life advice and ways to think that influenced me when I was younger. The dude is 98 years old. We did last year a podcast where he’s distilling investment advice and talking about how he’s running Berkshire Hathaway with Warren Buffett. He’s 98. He’s found what he loves. It’s kept him healthy even mentally, he’s super sharp, just as engaged as ever. I think that’s a great goal.

I think your mission for MicroConf, not just MicroConf but everything, even TinySeed as well, is kind of the same as mine. I want more people to become financially independent and free to live the lives that they want to live. I think that starting online businesses is one of the best ways to do it. It’s increasingly becoming accessible and a good way for people to do it, and […] it’s encouraging to see everyone doing it. That’s my mission too.

I was reading some research. My buddy Julian turned me on to this researcher. Her name is Erin Westgate, and she published this paper about the different types of lives that people can live that are good. There’s kind of this idea of a happy life. A happy life is characterized by some of the most obvious life that people want, like a life full of comfort, joy, security, free time, money, and satisfaction. But then there’s also this other type of life that people can optimize for, which is a meaningful life. That’s a life full of significance, purpose, coherence, and societal contribution.

I think the older one gets, the more we think about living a meaningful life like, what’s the purpose of it all? Because more and more of life is behind us and less and less is ahead of us. So we think, okay, what’s the lasting impact that I’m having? That starts to become much more valuable to us than it was when we were 25 just thinking about how to be happy in the short term. 

I think it’s the same with the business and a career. It makes a lot of sense as we get older to think about what’s the impact of what I’m doing? How do I tie all the things I’m doing together into some sort of mission and impact, and there’s a lot of personal satisfaction that comes from having a meaningful life.

Rob: Yeah. I always say, entrepreneurs most should seek freedom, purpose, and relationships kind of in that order, although relationships probably before purpose, I think, or in tandem with it. But I think that’s one of the reasons I sought entrepreneurship was the freedom from a day job and the freedom from being told what to build and when. I remember working, working, working towards it because I live in the future you do and just thinking to that day when I quit the job.

Then I got it and I was like, this is amazing. It was amazing for three months and then I was like, I’m kind of bored. What do I need to do next? Because I had freedom but I really didn’t have a purpose. I had a bunch of small apps that kind of all had this autopilot traffic from SEO, ads, and this and that, but nothing was that interesting to me. It was just a paycheck. It was a nice paycheck. It was $120,00–$150,000, this is in 2007 so it went a long way. Yeah, it was great. I was like, yeah, I’m free. But then I was like, uh-oh. I need to find a purpose.

That was where I really started doubling down on talking about this in writing, doing the book, and the podcast, and all of that came out in about an 18-month period because I was like, I want there to be more, and here’s the other thing—relationships. There was kind of no one else doing it. Joel Spolsky was blogging in the early 2000s, he started a software company, and then Patrick McKenzie started blogging a couple of years after I did and he and I ran across each other.

Then I’d heard of Basecamp and they had a SaaS that I didn’t use. But I’m getting to 2008, 2009 and I’m like, is anyone else thinking about or doing this whole kind of indie hacker, bootstrap startup path? Is it a thing or am I the only one that’s done it or will do it? Because I genuinely didn’t know, and that was part of building the audience that then turned into the community was like, I want to be able to hang out with other people who talk about this stuff because this is really interesting to me. No one else in my town gives a […] about this. Can I find 100 people that I can get into a room with that care about it? That was a big thing.

Courtland: I mean, it’s that purpose thing you’re talking about like freedom. When I talk to Indie Hackers, the vast majority of Indie Hackers are looking for some type of freedom. That’s why they’re starting their business because they feel they don’t want to work for somebody else. They want more time. They want to work with people. They want creative freedom. They want financial independence and no ceiling on their income. I think that that is the purpose, right? That can be your purpose to have this epic adventure that you’re going on in order to earn your freedom.

You and I both have been on that adventure for some part of our life, but then you get your freedom, you get there, and suddenly, you lose your purpose. It’s like you had this epic journey, you completed it, you succeeded, and now it’s like, now what? It’s like Frodo at the end of the Lord of the Rings. The movie ends there. He casts the ring to the fire—I don’t know, there are 10 different ending scenes—but then it’s over and the credits roll. It’s like, well, what did Frodo do after that? Sit around in the Shire telling stories about how he had this epic adventure at some point. It’s kind of hard to figure out what you do after you’ve accomplished your mission. How do you find a new purpose?

Rob: Right. We can’t just get on the boat to the Undying Lands like he did.

Courtland: Right. He just sailed west. Not a thing.

Rob: I want to piggyback on that topic because you just talked about losing your purpose or you find it. It’s the arrival fallacy is what it is. You arrive and then you’re like, I will arrive once I do this, and you do for about a month or three months and you decide, oh, I need to do something new.

I tweeted out and you retweeted (thanks), what should you and I talk about on this episode. There are too many topics for us to cover. One that I think’s interesting as Arvid Kahl said, “Please give them mental health topics some time. Building anything is hard, building in the middle of a pandemic is even harder. Some people need permission to let themselves feel this, and you both can help there.” And this, obviously, is a topic that my wife talks.

My wife’s a clinical psychologist, you should check out the ZenFounder podcast if you want. Every week, she’s releasing an episode on this topic as a founder married to a founder, consults with founders, and as a psychologist. But aside from that, you and I have shared our own struggles with building businesses and mental health during that. Why don’t you start and then I’ll go because I think we both have more stories, you know.

Courtland: Mental health is super important. I’ve struggled with various mental health issues sometimes. I’ve been very depressed, I think. three times in my life. One of them was this past year. I had a good six months where I was just like, what’s the point of anything? Why do anything? It was a hard time because the pandemic is very isolating. I have this road trip that I’ve talked about where I was just not really seeing anyone. I moved to Seattle and it was kind of isolating as well.

I think for me, it really tied into this topic of purpose because from probably age 8 to age 34, I’ve always had this vision of what do I do with my life? It’s like I’m on this epic adventure. I’m trying to build some very big ambitious project, and it’s usually creative. It usually involves building a website, designing it, and putting code together, which is this awesome feedback loop of reward and work and then reward and then work. I think for the first time since I was eight, I kind of got off it last year and was like, well, what else is there to life? I sort of found myself spinning, and I wasn’t sure what the reason was. It was all these other proximate reasons like, is my relationship with my girlfriend going okay, or is it my living situation?

It’s really easy to blame the wrong thing. But I think at the core, I just lost the drive that I had that filled up my days and made every day feel like I was excited to wake up and do something. I think everybody has their own loop, their own natural process where left to their own devices they’ll do something. For a lot of people, it’s like, I’m going to look at social media. I’m going to come home and look at TikTok on my phone. For a lot of people, it’s like, I’m going to come home and spend time with my family.

I dated someone once, she would just impulsively just go out and just meet strangers, and she loved to do that. That was her happy resting place. For me, it’s always like, I’m going to sit down on my computer, I’m going to code something really cool, and try to work on it. I think without that and without replacing that with anything, it was very easy for me to sit around and be like, well, now what?

Now I’m dependent on other people to come in and hang out with me to do something entertaining or stimulating. It was very easy to just start questioning my purpose in life. I think this happens to a lot of founders. It’s kind of a cliché. People reach some level of financial success or they achieve some goal, and then they’re just aimless. Embarrassingly enough for me, it took me six months to figure out why. Then another few months, I go, okay, well, what can I do that has meaning and purpose that’ll be interesting and fulfill me? Then the answer is like, oh, I should just work on Indie Hackers.

Oh, yeah. I’m working on Indie Hackers for more than just these earlier reasons. I’m working on it because it actually is fun for me. It actually is entertaining. It actually is meaningful. I love the people that I work with, the people that I talk to, the problems that we’re trying to solve. All the challenges in front of me with Indie Hackers and the way that I want to grow the site are really interesting for their own sake.

I had to have this period of rediscovering why and not even rediscovering. It’s sort of changing the reasons why I’m working on the site and diving into those. I’m hoping that my entire life—I hope for everybody that this is the case—is full of these epic adventures and there’s never really an endpoint. There’s never really a midlife crisis point where I’m done, I’ve accomplished the goal, and that’s it. I hope that I’m always struggling towards something that is really meaningful and really enjoyable in the meantime, and that even if I never reached the end of that tunnel, it’s fun the whole way through.

Rob: Yeah. I don’t know if you’ve known people who retire, who work a day job for 20, 30 years and then they retire. They totally lose that meaning. Folks who sell a company and don’t have anything else to do, it can wreak havoc on their motivation, their mental health, and you can go downhill.

Courtland: Yeah. I mean, it’s kind of a cliché at this point, don’t do that. You don’t realize what you have until you lose it. I’d never had a second of my life where I didn’t have something like that, and without it, I’m like, what’s going on? It’s sort of hard to diagnose.

Rob: I have 100% gone through exactly that. I don’t even know how many times in my life from the time I was a teenager. I’ve talked on this podcast about burning out essentially while growing Drip and just how hard some of that piece was. I don’t know what I had. If I had clinical depression for part of that or if it was just burnout because it was just hard. I was stressed all the time. It was a rough go.

But what’s interesting is more recently, during COVID, 2020 I think a lot of people had a tough year that year for a lot of reasons, so did I. In fact, Sherry and I had just some—we’ve been married 22 years now. You’re going to go through ups and downs. We had a pretty tough stretch there in the middle of COVID. There were a few days where I kind of didn’t get out of bed, and I’ve never been that messed up before emotionally. 

I remember being like, I really want to keep doing life and I really wanted to hang out with my family, but I just didn’t have the motivation to get up. I couldn’t look at my Trello board and say, I want to do these things. I didn’t want to do anything. It’s tough. I don’t have depression. That’s not a thing that plagues my life. 

In fact, I’m on the other side of the spectrum where I’m a stress anxiety person. My whole family tree is all alcoholics, drug addicts who were self-treating themselves for these anxieties. My dad, I’ve talked about this before, has OCD. He had OCD so bad he didn’t leave his bedroom for seven months when I was a senior in high school. OCD is an anxiety disorder, so it definitely runs in my family, and it’s something I’ve learned to cope with as an adult.

I guess all that to say, this topic of founder mental health, in general, has always resonated with me. People never used to talk about it 10 years ago, and I think a lot more of us talk about it these days. I think that’s probably helpful to normalize it.

Courtland: One of my favorite things about living on the West Coast is that everybody on the West Coast compared to the East Coast, in my experience, is so woo woo and froufrou. Everyone on the West Coast that I know has a therapist. On the East Coast, it’s like a dirty word. You have a therapist, what’s wrong with you? I would never tell anybody about that.

I have a therapist. He’s awesome. He’s this 75-year-old Canadian dude. I want to go a million miles a minute. I talk so fast. The second I got into the therapy thing, I got 15 things I want to talk about. He’s like, let’s slow down, Courtland. Let’s take our time, find your center, and be one with yourself. I get so frustrated the first 5 or 10 minutes, and then I slow down. I’m like, okay, I want to smoke what this guy is smoking because it feels good. I know that I need it. I need to chill out a little bit.

I think it’s worth taking the time, whether you’re a founder or not. I think everybody should take the time to check in with themselves and work on your mental health because if your mental health is in a good place, I don’t think it’s wise to take that for granted. If your mental health is in a tough place, obviously, you got to prioritize that because that is the engine that powers everything else in your life.

I think about it a lot when I think about success and people struggling to do things. Everybody’s going through different […]. I had a ridiculously good Leave It to Beaver childhood. I have zero trauma. Zero real true lasting hardships that I really had to push through that left a scar on me, and so I was free in my 20s to just go tackle challenges without any mental health issues and stuff like that.

Other people were struggling to get out of bed. They’re struggling to deal with terrible things that have happened to them, and they’re trying to take on these big challenges. I think that it’s really easy to underestimate that. If you’re going through that kind of stuff, if you’re just ignoring it, I think you’re doing yourself a disservice.

Rob: At times in my life, I have ignored it for too long. The other thing I ignored was physical issues. I know we’re talking about mental health, but I had a really bad shoulder, back pain, and neck pain because we all hunched over our desks. I had it for years and it was kind of debilitating. It was to the point where I was under constant pain, and why the […] didn’t I do something about it?

I remember saying I don’t have the time, and then I went to a chiropractor and massage therapist and it didn’t fix it quick enough. I was like, I just don’t have time to carve out two hours a week to do this so I didn’t do it. It wasn’t until we moved to Minneapolis, I had sold the company, I went to three different massage folks, and I found a dude who’s really good. He integrates all these different things. It hurts like crazy, but I went to him twice a week for months. I just said, I’m carving out this time.

It also helped that I didn’t still run the company so I could just take a couple of hours a week. It took him months and months to work it out. I mean there were all these toxins and crap in your muscles when they’re like that. I would almost get sick after because I had just let it go for too long. This chronic mental, you shouldn’t live like that. I say that as much for anyone listening as I do for myself in the future. I refuse to live that again, you know?

Courtland: Yeah, it’s hard. I met a person and she was telling me about this phase of her life where she was super grumpy. She was just kind of a […]. I asked her, why are you such an […]? Why are you being this way?. She’s like, chronic pain. She literally had chronic back pain and it would fire up. You know what doesn’t make you a happy, agreeable person? Being in physical pain all the time. That makes me really short-tempered. I think lots of people have different things that affect us at a lower level and that bubble up to how we actually behave.

I think for founders, in particular, we can be so single-mindedly focused on what we’re working on, so ambitious, so driven. I got to work on this business. It’s got to take up every hour of every day. Nothing else is a higher priority. It’s easy to get into a mode where like, oh, let’s put working out on the backburner. Let’s put mental health on the backburner. Let’s put physical, all this stuff on the back burner. That can come later. I think that that is a recipe for disaster.

All these things are really basic advice. Get eight hours of sleep, take care of your body, blah blah blah, but it’s not about whether you know that advice, it’s about whether or not you’re doing it. I think 99% of people are not doing it. They’re repeating it, I’m repeating it, but not always doing it.

Rob: Yeah. And it wasn’t until I retired from Drip. Do you know TinySeed’s my retirement project, right? That’s what I told Einar.

Courtland: You’ve been put out to pasture.

Rob: Yeah, okay. I could do this thing just in my spare time. So I want to switch it up. We have so many topics on this thing, but Liam Symonds says, “If you had to fight one horse sized duck or 100 duck sized horses, which would you choose?”

Courtland: A hundred duck-sized horses easily. Can you imagine how terrifying a horse-sized duck would be?

Rob: It would be insane. I mean, that beak alone. Those things are hard. I don’t know if you’ve ever been pecked or nibbled at by a duck or a goose, that stuff is scary.

Courtland: I have.

Rob: And their tongues are terrifying.

Courtland? Have you ever looked a duck in the eyes, any bird? If you look in their eyes, they’re terrifying. They’re these deeply inhuman eyes. I can’t imagine a horse-sized duck. I would rather do almost anything.

Rob: Not with a 10-foot pole.

Courtland: Easy answer for me.

Rob: Me too as well.

Courtland: I like that one to start though. Let’s talk about mental health and depression. Okay, let’s talk about horse-sized ducks.

Rob: I had to switch it off, man. It’s too close to home. Oh, this is a good one. Greg Digneo says, “At what point in Drip for Rob and Indie Hackers for Courtland did you guys want to quit? And why didn’t you?”

I wanted to quit. I wanted to quit when Russian spammers were hacking us. I wanted to quit when I thought I couldn’t make payroll because I had overhired and I got a big personal tax bill. I wanted to quit when competitors would rip off my stuff. When we would spend months building, thinking, and marketing things and someone would just rip it off shamelessly. The worst part was they would claim that it was their idea. I take business a little too personally, I’m going to be honest, and that kind of stuff really bothered me.

When I left Drip 2018, I took a few months and I evaluated, do I want to walk away from startups altogether? Do I want to sell the podcasts and MicroConf? There were times where I was like, I don’t know if I want to keep doing this. I mean, the reason I didn’t is because, we talked about it earlier. I realize, oh, my mission in life is this thing, to promote entrepreneurship and to get more people finding freedom, purpose, and relationships through it. When I realized that it was like, well, I already have these platforms. Why don’t I build on them and just do more and double down?

In terms of Drip, the reason I didn’t quit when those were happening was momentum. To your point earlier momentum, I just had momentum going and I had a team I was working with. I couldn’t just walk away. If I was an indie founder, I may have trashed some stuff at a certain point, just table flip and say, this is too hard. I could do an idea that’s more lucrative for less work, but I had this team of 3, then 5, then 10. It’s like, everybody’s on board and they kept me accountable unintentionally. They didn’t come and say you need to be accountable, but I felt the burden of like, no, I had the vision, we all got on board with this thing, and I can’t walk away from this.

Courtland: Yeah, I see this a lot with founders. I think it’s kind of a miracle. If you look out into the world, there are billions and billions of people who wake up every day at 9:00 AM and go to a job they don’t even that much and work that job and come up. They’re consistent. They’ll do that day after day for years, right?

I talk to a lot of founders and it’s really hard for founders, podcasters, or whatever it is to last for more than a few months where they’re like, I give up. It’s too much work. I think one of the biggest difference-makers there is, besides the obvious, I got to get the bills paid, is that accountability. It’s the fact that I actually have teammates, a boss, and people who are depending on me. I think we’re just tribal creatures. We’re wired to not want to let down the people around us. If we commit to something, we agree to something, and we have work that’s waiting for us, it feels […] to just quit and not do that.

I think one of the best things you can do as a founder, if you really want to stick with what you’re doing, which is sort of necessary for succeeding, is to surround yourself with people who you feel accountable to. Even if you’re their boss, you still feel accountable to your employees, partners, cofounders, or team. I love feeling that way. I like Arie in my podcast because I don’t want to let her down. Part of her work is dependent on me getting the podcast out. We have a calendar event twice a week, I got to meet with Arie. Sometimes I cancel, but I’ll feel bad if I just abandon it.

For me, I’ve also sort of written off momentum. I never really wanted to quit Indie Hackers at all when things are going up into the right. And then in the early days, I had this email list where I would send out my progress every single week. Here’s what I did, here’s what I did, and people would respond. I feel super bad if I just didn’t do anything for a week. It would be embarrassing, quite frankly. What am I going to tell these people? I did nothing.

I had a lot of late nights on Wednesdays where I would just try to do something to report because I was accountable. The only time I ever got to feeling you know, maybe this is what I shouldn’t do, was last year when I started feeling a little depressed, a little bit down. Some of the things I was trying to do to grow the site weren’t working out. That feedback loop I’ve talked about before of positive things happening and encouraging you to try more things in the future, being optimistic was sort of slowing down.

I was like, I’m trying these things and the site’s not growing like I want. Maybe this is it. Maybe I’m out of ideas. Maybe I should rest on my laurels, I’ve done a good thing. I wasn’t working as much. Rosie Sherry, our Community Manager, quit and so our team was sort of winding down a little bit and we didn’t replace her. I had fewer of those mechanisms in place that keep you motivated. It’s the closest I’ve ever gotten to wanting to quit and exploring different things.

Rob: Wow. John Howard asks, “I always love the conversation of the scrappy early days for Indie Hackers and bootstrappers,” and then throws out a bunch of questions. “What does it take to get to an MVP? What does it take to get to dollar 1? What does it take to define your audience? I’ve been through it a bunch but a framework is always fun!”

Courtland: My favorite framework, if I was an indie hacker right now starting from nothing, is to literally just solve someone’s problem, like any problem. Put as little […] as possible between you solving somebody’s problem and getting paid for that as you can. 

Nathan Barry has this excellent blog post called, The ladders of wealth creation—I recommend it. The way he puts it is there’s a reliable progression that you can take to earn, build more wealth. At the bottom ladder, you’ve got trading your time for money, working for an employer, having a job, and then on top of the ladder is you’re selling products, right? You’ve got a social network, marketplace, a subscription software business, or something. You work your way there gradually.

I think what I would do is I would just start at the bottom, okay, I’m selling time for money. Well, how do I do that, but instead of working for somebody else, working for myself, right? You can go to, for example, Indie Hackers is a website where people have tons of problems. You can go to Indie Hackers, click monthly, see the top posts for every month. I think the top post for January is, share your projects and I’ll try to find you users.

There are 330 comments of people who were like, I’m working on this project and I have a problem. I can’t find any users. There’s just this one guy who is going through replying to everyone and just trying to figure out what their problem is and try to help them solve it. I bet you 10%, 20% of the people he talks to could get on a phone call and be like, hey, $200 I’ll do a consulting call with you. We’ll see where it goes. He can make thousands of dollars tomorrow with five or six consulting calls just because he’s solving somebody’s problem.

He doesn’t have to build a fancy website. He doesn’t have to hire a team and build an app. He doesn’t have to do anything. Just literally, what’s your problem? I will try as hard as I can to solve it for people who are motivated to solve these problems because I think they’ll make money.

If I were starting out I would do that and just follow that path and see where it takes me. Because when you solve somebody’s problem, they pay you for it. That’s a pretty good indicator that you’re onto the right thing. You can maybe tweak your idea, try to change your customer or the problem that you solve, but it doesn’t require you to be particularly brilliant. It just requires you going to a source of problems, which is really easy to find on the internet, and then rolling up your sleeves and doing something today, like right now.

Rob: I’m glad you brought up the solve a problem because I always forget to mention it because it is so ingrained. It is such a fundamental precept that I don’t even bring that up because I expect everyone already knows that, but they don’t. I’m glad that you did.

Courtland: Right, the curse of knowledge.

Rob: Yup, it totally is. I forget. Well of course you should solve a problem, but it’s well, not of course. For some people listening to this podcast it’s of course because I’ve been talking about this stuff for 17 years. I think it’s fascinating. We have the MicroConf State of Independent SaaS Survey. We do a survey and then put out a report. We talk about how people found their startup idea, their SaaS ideas specifically.

I just pulled the report up and 45% of respondents said they came up with their idea for their product or company, 45% it was a specific problem that they were experiencing, and then it’s another 22% a problem my customers or clients were experiencing. So you’re at 2/3 now. Another 13% was a problem or experience at my day job. So now we’re at 80%. Another 11% a problem a friend or relative was experiencing. We’re at 91% of hundreds and hundreds of respondents.

We’re at 91%. The last three are 8% said research, 1.5% said other, and 0.2% said I purchased the business. It’s just a problem that me or someone around me is experiencing.

Courtland: But it’s a problem.

Rob: It is and I think it’s super important because if you’re not solving a problem, this is where I get a little prescriptive with the B2B versus B2C thing. You and I have talked about this in the past. I just am so bullish on B2B and really bearish on B2C. Not only because I’ve owned I think two or three products or companies, one was an ecomm site that served consumers, but because every B2C company, specifically a subscription company that I see, bootstrappers the churn is too high. They can’t find customers’ lifetime values. It’s the same problem over and over.

I never say never do this, but I say, you probably don’t want to do this because the problems you solve for consumers, there’s not as much value as if you solve it for businesses.

Courtland: It’s super true. At the end of the day, businesses have way more money than consumers. They are more motivated to fix it most of the time. They have a gigantic list. They need to hire, they need to find office space, they need to market, they need to do sales, they need to solve their own customers’ problems. They need an email solution, they need hosting, they need accounting. Businesses have so many problems that need to be solved, it’s just generally a better bet to go that way.

That being said, I do think if you’re judicious about it and you want to do something that targets consumers, you can, you just have to really think about the problem. Again, you can’t think about, oh, I want to build the solution. I want to build this app or this service. You have to think about, what’s the problem I’m solving and what is the nature of this problem? Specifically, is this a problem that is lucrative to solve? Because if it’s not, you might solve it, you might get happy customers who say thank you, and you’re not making any money because they’re churning or they’re expecting it for free.

If you look at where consumers spend money or even where businesses spend money, I think the same formula applies. We want to find a problem that’s lucrative just what people are paying to do, right? Every time somebody spends money, it’s because we’re trying to solve a problem. People spend a ton of money on housing. People spend a ton of money on transportation. People spend so much money on education, it’s crazy. I think that’s what people are most business-like where they think, okay, if I get this education, if I go to school or I take this course, I will then be able to use those skills I developed to go make more money in the future.

People are willing to go into hundreds of thousands of dollars of debt to get an education because they see how it will make them money in the future. I think it’s not a coincidence that most of the people I know who have consumer businesses that are successful are educating consumers in some way and helping those consumers become better versions of themselves. Whereas people who are trying to sell these little tools, apps, and productivity software find it much harder because the problems they’re solving for consumers are not that valuable.

The average consumer doesn’t need a to-do list to organize their life, whereas a business might need that because they have a bunch of employees to coordinate, et cetera, and it’s valuable for them.

Rob: Yeah. And then there’s a bunch of different ways to do that, right? I’m working on this book and I have seven different thoughts of finding a problem, looking around you, translating an existing idea to a new niche where it’s like, oh, CRM software. Well, you know who doesn’t have CRM software are home improvement contractors. You know who built a home improvement contractor CRM is Jonathan with Builder Prime. He built it to good revenue and then applied to TinySeed and he was in batch 2.

Just taking a simple idea of like, we’re all familiar with CRM, but there are all these spaces that don’t have it. Another one is looking at a large space, a competitive space. This is if you’re probably further along on the stair-step approach, but have a hated competitor. For Drip, it was Infusionsoft, Marketo, and Pardot. I think for Xero, the accounting software, it was QuickBooks. They were then not QuickBooks. For Derrick Reimer and SavvyCal, a very competitive space. I wouldn’t say Calendly is a hated competitor, but there are definitely some improvements and some stagnation in that space.

The problem is the paradox of choice where there’s infinite—it’s like, well, I could look anywhere for a problem and it’s like, well, maybe focus on something you have, at a day job, or a friend or relative. Look at each of these things in turn and keep a notebook around for a month, and then look at what your expertise is in. If you’ve been a software developer at a credit card company for 10 years, you probably know more about credit card companies, finance, and banking than others, so maybe you should lean into that a bit. If you worked at Shopify for 5 or 10 years, you probably know ecommerce better than most people. There’s opportunity there.

Courtland: I love constraints for that. What you’re listing are basically constraints and not just any constraints. They’re clever constraints that raise your chances of succeeding. I think the challenge with most people looking for ideas is you get into the scarcity mindset. You’re like, oh, there’s just so few ideas out there. It’s so hard. I can’t constrain myself and limit where I focus on ideas. I need to look at everything, otherwise, I’m never going to find one.

I think the counterintuitive answer to that is actually, you’re way more likely to find a good idea if you have a bunch of constraints and rules that limit where you search because then you’ll dig much deeper. Your constraints could be anything. It could be like what you’re saying like, hey, what do I have‚ skills or experience? What have I done in my job? What problem have I experienced myself?

Your constraints can also be totally arbitrary. You can have a constraint of like, I like to be outside. What can I do that lets me be outside. You can have a constraint that says, I like to have an impact on the world. What would allow me to have an impact on the world? You can have a constraint that says, I like to work with my family. Something I can do with my family members, like food. Any of these constraints will just narrow your focus and help you dig deeper on an idea without having to have this paralysis of choice, where you’re juggling a million different balls.

The cool thing is if there are constraints that make you happy, there are constraints that build relationships with people, there are constraints that allow you to do things you’re going to enjoy doing, not only do they help you sort of come up with an idea, but they help you enjoy working on that idea after you come up with it. For me, I have a gigantic list of just random constraints and things to ask myself if I ever start a new business that I’m going to kind of go through. I could do this all day. We get a thousand questions.

Rob: I know. I am going to come back to these at a minimum in future episodes where I am answering questions or just as topics. I think you and I separately could cover these and it would be interesting. If we’re back together at some point here in the next three to five months, we should—

Courtland: I like this as a podcast format. I think you do this on Startups for the Rest of Us sometimes where it’s just Q&A, ask us questions. I never do it in Indie Hackers, but I should do it more often. I could do a Q&A and always bring on a guest and just do joint Q&As like this. I think it would be always entertaining once every couple of months.

Rob: Yup. So I have gotten a lot of positive feedback about the listener question episodes. I sometimes do them solo because, I mean, I’ve just done a bunch of them. That’s hard to do when you’re first starting out, but I’ve been able to do it and then about half of the ones I do are with guests and I rotate through the guests. It helps if people know who the guests are because if it’s just a relatively unknown person that most of the audience doesn’t know, you have to give a lot of background about why they have the credibility to answer these questions and why people should listen to their answers.

But if they’re someone that most people know or maybe you interviewed them. I mean, what I used to do is I would interview them one week, do a listener question the next week with them to be like, refer back to that episode because you just heard their story. Then I would handpick the questions. This is way inside baseball, but I would handpick because I have 20 questions available for Startups for the Rest of Us. I would think of what is this founder’s experience?

They bootstrapped to half a million and then they sold, so I’m going to do anything about early stage bootstrapping, nothing about raising funding, nothing about being a multimillion-dollar company. I would handpick the questions to make sure that they would have input on it.

Courtland: That’s super smart.

Rob: To curtate.

Courtland: Yeah. It’s such a challenge, I think, podcasts and media in general when you’re doing stuff with guests. It’s like, who in my audience even knows who this person is? Even within an episode, it’s like, okay, I know this person I’m talking to has a lot of good advice, but also, people might not even care about their advice if they don’t know their story or what they’ve accomplished, et cetera. I try to structure episodes. That stuff comes first. Doing Q&A episodes is the same. Maybe I do it the way that you do it. Have a story first, an episode like that, and then do Q&A. But then my worry is, okay, what if people didn’t listen to that episode and are like, who is this person?

Rob: What I would do is I would say if they were on the last episode. If for some reason you didn’t have it, here’s 60 seconds. I would basically have bullets of like, they started this, they got it to this size, they sold it. I would try to build their credibility really quickly.

Courtland: Here’s why you should care.

Rob: Here’s why you should care because this person knows a lot about XYZ, you know. All right. Pieter Levels asked, “How was the bootstrap scene in 2010 or earlier, and how did it change with indie makers, et cetera?” Were you around bootstrappers that long ago?

Courtland: Yeah. I was reading a bunch of Basecamp stuff back then. I was reading much of Patio11 stuff. I was reading Peldy in Balsalmiq back then.

Rob: What about me, bro? What am I, chopped liver? I have been writing all kinds of stuff. You’re like, this guy’s so […]. I hate this guy.

Courtland: I just skipped. I just click, mark read.

Rob: Nope. Spam. His emails go to spam. But you’ve named everybody. That was it. I mean, in 2010, I say everybody. I’m being a little facetious, but there was Joel Spolsky. The only two people I knew talking about entrepreneurship in any way that resonated with me that wasn’t just […] Silicon Valley, everybody raise, raise, raise dot-com was Joel Spolsky, who started blogging in 2000, 2001, and Paul Graham. Well, you could say he started Y Combinator venture capital, but I was like, no, no, no. But he actually built a startup. He actually sold it to Yahoo in the ’90s. And then he thinks so pragmatically compared to a bunch of the VC crap I was reading in Inc. Magazine, Red Herring, and all that stuff.

That was just the two of them in the early 2000s. Then Basecamp came around, it was 2005, 2006. It was called 37signals. First, it was a blog, then they were a consulting firm, then they launched a SaaS, and then it was me, Peldy, and Patio11. Those were the only people that I knew until 2008, 2009? That was kind of it.

Courtland: Super niche. It was super niche. I mean, I did Y Combinator in January 2011. I remember going into it and talking about Graham. I was like, I really like the Basecamp guys. I like what they’re saying. I remember Kevin Hale from Wufoo came in and gave a talk. He’s like, yeah, we never raised any money. We’re making $5 million revenue. We moved to Florida. It’s pretty cool.

Paul Graham went, he was super pragmatic. He’s like, don’t raise more money than you need to. It kills a lot of companies that could have had a $20, $30, $40 million exit. They just swing for the fences, try to become unicorns, and they weren’t destined. Their company can’t do that. So don’t raise that money and go for the gold if you can’t, and so he was even pragmatic about it.

There wasn’t a lot out there that was inspirational. Nowadays, it’s like a deluge. You could read and read and read all day, listen to 15 different podcasts, then discover another 200 podcasts, and never get to the bottom of it. It’s just the secret’s out, right? You can make money online in a self-funded, self-sustainable way from the comfort of your own home. I think that’s the biggest difference.

Rob: And bootstrapping, I mean, it was kind of a thing. Now you say bootstrapping and people know that’s a movement. There are tens of thousands of us that want to do that and it just wasn’t. There were a handful of people. There was no community, there was no central hub. In fact, that’s why when we started this podcast and I wrote my book, it was Startups for the Rest of Us.

If you look back, this podcast should probably be called bootstrapping blah blah blah. While the term existed, it just didn’t have the resonance with this idea. It was more like, well, I want to do startups because they sound fun, but I’m going to do it in a different way was really the angle there.

Courtland: In my opinion, I think it’s a less relevant term than it was in the past. I wonder what your thoughts are on the future of bootstrapping and how it is today.

Rob: I feel the same way. I think you put out a post about this a year ago where you’re just like, is this really important? Is the funding mechanism the most important part of this business, or is the problem that you solve, how you go about solving it, how you grow, isn’t that all really important? I’ve struggled with that whole thing technically, like ScrapingBee post, they’re a TinySeed company, but they’re very public about their revenue, they’re doing north of a million dollars. They got to the top of Hacker News with a post. It’s like, how we bootstrapped to north of a million.

The biggest conversation in there was just arguing over the term bootstrapping and whether they really bootstrap because they took TinySeed money. It’s like, if you talk to venture capitalists, if you raise less than a million dollars, most will be like, well, they’re basically bootstrap then. To them, it’s bootstrapping. I’ve built businesses with literally $0, that is technically bootstrapping. But is it at all important to define? What if my dad gave me $10,000, am I still bootstrapping? Yeah.

That’s where I’m like, stop. It’s not binary. I never thought it was binary. It’s a continuum, right? There are people who raise a little, raise a lot, raise half a million and are still acting bootstrappers. They are super capital efficient, they’re super pragmatic, and they’re building a real product for real customers and paying real money. That’s what we all do whether you have $0 in the bank or half a million.

I say bootstrapped and mostly bootstrapped now you’ll hear me. You’ll hear us say independent SaaS or indie SaaS because it implies, well, I’m not beholden to anyone. Even if I raise money, I still have control of my company. I’ve toyed around with all these terms. The thing I struggled with is in the State of Indie SaaS this year—the report’s not out yet. We did the survey, we said, what do you call your type of company, and we had all these options. It was bootstrap SaaS, indie SaaS, independent SaaS, blah blah blah, and it was overwhelmingly bootstrap SaaS. Even people who had raised $100,000, $200,000, or $300,000.

Courtland: Yeah, I think in a way, the focus on bootstrapping even as a thing, it was sort of a reaction. It’s a reaction to the fact that big tech really only cared about people who were fundraising. If you wanted to get any sort of media attention, if you want to have any sort of success, if you want to have any sort of support or resources, you kind of had to go that path, which is not surprising because it was an early nascent day of startups, not that many people were doing startups, and so the people who had all the money—the VCs—sort of control the narratives.

If you wanted to do something outside of that path, you had to be very vocal about the fact that this is different, I am bootstrapping, there’s another way. It’s like a measure of success that’s not as important anymore. The fact that it’s no longer a shocking thing that you didn’t raise a whole ton of money to start your company and it still was successful means that bootstrapping won its place. It’s a valid way to get started, which means it’s not worth glorifying quite as much as it used to.

There are a lot of different paths. Everyone’s well aware of that and pick your poison. Pick your preferred choice. When Indie Hackers started, I felt there was a big fight I was always trying to wage. You don’t have to do it this other way. The VCs, the investors—you don’t have to do that. Now I’m like, it’s obvious you don’t have to do that. I don’t need to toot that horn now. It’s more about, okay, what do you want to do and how do you do it?

Rob: There’s all these paths and funding is a tool. If you want and need that tool, then do it, and if you don’t, then don’t. You could be on Indie Hackers or part of MicroConf, and you can raise money or not. It’s just we’re all in this trying to become independent sustainable companies.

I find it interesting because you brought up that bootstrapping and the real, I think, religious adherence to it was a reaction against the broader narrative of venture funding. I had this exact conversation about two weeks ago with a friend of mine. I think Basecamp was a big part of that, to be honest. Basecamp was so vocal about it and they got a lot of press about it.

I was talking to my friend and I said, I understand why they did it. I like Jason and DHH. They invested in TinySeed’s first fund, they mentor—I get it. I think they may have long term done some damage by making it such a religious thing. They used to say like, well, bootstrap will never take funding. Anyone who takes funding is XYZ. They also would say, like, we don’t split test, we don’t track in our funnel, we would never sell our company. Planning is guessing. We don’t market. It just works.

They said all these things and they were shocking, but I think a lot of people saw that or still hear it and think that that’s the way to grow a business. I actually think it’s not. I think those are anti-patterns. I asked Jason Fried. He’s been at MicroConf. He and I have had breakfast. He was on stage. I did a Q & A with him. I asked him about some of these things, about why was Basecamp successful? He said, we got a lot of things right, but we got a little lucky. He admits that.

They were early, they built a good product, and they did hit something just right at the right time. But I do think that that narrative, the religious nature of it or this black and white nature of it I think is a bit played out. I think it’s an anti-pattern. I think it’s detrimental to new entrepreneurs coming into the scene.

Courtland: Yes, there’s a sense in which it’s like—you got to look at why are people writing and saying the things that they’re doing? The Basecamp guys are just expert marketers. They are really, really good. I mean, they built productivity software. They are trailblazers. I mean, they created Rails. They were doing this way before everybody else. But also, they’ve really got people excited about the fact that they built productivity software. How do they do that?

By having great marketing, great messaging. They always stood for something. They always had an enemy. The point there wasn’t necessarily like, let’s be responsible stewards of how everyone starts companies in the future. It was like, how do we get the word out about our philosophy and our ideals? You don’t do it by making lukewarm statements. You should go by saying, fundraising is evil. You do it by saying like, we’re fighting against the big guys.

That’s the kind of messaging that resonates, that gets people talking, people argue against you. People will take a side. Even on their Rework or It Doesn’t Have To Be Crazy At Work, one of their books. They have a chapter that’s basically like, pick a fight. They’re just telling you their strategies—pick a fight. If you are not the person to think about things deeply, it does create religious zealots who take a side and who don’t give the other side any real thought. I don’t think that’s the best way to be as a founder.

I think the best way to be as a founder is when you’re marketing, pick a side. Be super out there and—

Rob: Opinionated.

Courtland: Opinionated, exactly. But when you’re making decisions internally, be rational. Do a cost-benefit analysis. Figure out what it is that you want. Don’t close yourself off to any particular path for religious reasons.

Rob: I think that’s good advice, not only for founders but for all humans actually to evaluate both sides of that. I’m glad you said they’re expert marketers and they did this as marketing. The best marketing is when you don’t know you’re being marketed to, right? This is what Steve Jobs and Apple did so well is he would do these things that everyone would want to be like, we’re not going to live stream our product announcements. No other company does that. They want as many people to see it, but they’re like, no, no thanks. It’s this secret thing and Basecamp did well with that.

Courtland: I had DHH on Indie Hackers a couple of years ago and we did a debate. All right, DHH is this firebrand on Twitter. Let’s do a debate on work-life balance. I was trying to set him up with somebody that would be his hated enemy like Keith Rabois or something, he refused. He’s like, no, I’m not going to come on and talk to somebody that I hate. So I had him talk to Natalie Nagele, who runs a very calm company, Wildbit. It’s very bootstrapped. It’s very kind of in his style, but she had kind of a different point of view. I thought that DHH’s point of view was unrealistic.

It was so interesting the difference between him on Twitter starting his crazy fights taking these crazy, hardline, opinionated positions, and when you talk to him and it’s a real-time conversation, he’s utterly reasonable and rational. It’s like, okay, you can see the difference. Marketing is marketing.

Rob: Well, sir, we’ve been chatting for a while. There are a lot of good topics here. I hope that folks in both of our feeds have enjoyed this conversation. I’m @robwalling on Twitter, you are @csallen. And of course, indiehackers.com and microconf.com. We do a lot of things, but thanks for hanging out, man.

Courtland: Yeah, well, I think if you’re an indie hacker listening to this, you’re considering starting a company, and you want to do something a little bit bigger, raise money from TinySeed. I love TinySeed. I think raising money is totally cool. At the end of the day, TinySeed is sort of designed for people who have the bootstrapper mindset. Trying to find investors, I think, a big part of that is finding the right match. I like what you’re doing at TinySeed. I like anyone who’s basically trying to help indie hackers. I’m putting in here an involuntary ad for your funding mechanism. Check out TinySeed if you’re an indie hacker.

Rob: Thanks. This will go live when applications are still open. We do two funding batches a year in the US and the Americas, and then we do one in Europe. If you hear this and you get there quick enough, head to tinyseed.com/apply and apply to our Accelerator. It’s super fun. It’s a year-long remote, and it is focused on bootstrap and mostly bootstrap SaaS.

Courtland: Cool.

Rob: All right, man. Thanks for coming out.

Courtland: Yeah, thanks for having me.

Rob: It’s always great to talk to Courtland, and it’s been too long. He and I both agreed that we should do this more often because we could have gone another hour and I think it would still be interesting. I hope you enjoyed that. Thank you as always for tuning in. I will be back again in your ears next Tuesday morning.

Rob: It’s another episode of Startups for the Rest of Us. I’m your host, Rob Walling. I’m fired up to be here today. Thanks for joining me. A lot of interesting listener emails I’ve received over the last couple of weeks, couple of months, that we will be walking through. Some of these are questions. There is some feedback, there’s a critique of my episode 581 on Inflation for Founders that I think is really well written and well reasoned, some feedback on some statements I made about certain things being an inflation hedge or not, thoughts on renaming a podcast.

A funny story about our listener, Matt Paulson, who we’ve heard from before. He heard me on My First Million where we talked about potentially renaming podcasts and there’s a funny story there. We do have a couple of listener questions that I will dive into.

Before we dive into that tasty goodness, I wanted to let you know that as of yesterday, applications for two new TinySeed batches are once again open. We have our Americas batch and this will be a Spring 2022 batch that’ll start in just a few months, and then we have our EMEA or Europe, Middle East, and Africa time zones batch.

As you may have heard on this podcast, we raised a $10 million fund to invest in companies in Europe, the Middle East, and Africa time zones, that allow us to have a dedicated program manager there. It allows us to have calls at times that work for those time zones, so we are running a simultaneous application process.

Obviously head to tinyseed.com and there’s an apply button if you’re interested, or if you know a great bootstrapped founder who has some traction with their SaaS app. We would love for you to refer them to tinyseed.com. Those applications will run for about two weeks. I love the announcement when we get to pick the companies and then we do our live stream of talking about them.

With that, I’m going to dive into my first email. The sender asked to remain anonymous. He said, “Hey, Rob, I just wanted to say THANK YOU for everything you do on Startups for the Rest of Us. Biggest fan. I could listen to you all day long. On your podcast is how I heard about MicroAcquire, where I just sold one of my side projects. Granted, I’m on a much smaller scale but that never would have happened without you. If you ever need anything at all, I’m excited to help. Beta tester, feedback, development, help, conference. You name it, I’ll be there. I live within driving distance in Minneapolis, if you’re ever looking for someone to compare with, give me a shout.”

Thank you for sending that in. I have said this on the show many times, but I have a folder in Gmail that is just labeled thanks and it’s where I collect emails like this. These have a very deep meaning for me. They have a very deep impact and this more than anything, is why I still do what I do. This is my legacy.
I could walk away from all of this. In fact, at certain times in my career, I have evaluated what if I didn’t podcast anymore? What if I didn’t do events? What if we didn’t do MicroConf or whatever it was. This was years ago and there have been turning points in my career where I’ve doubled down on it. I’m at the point now where this is what I’m going to do for the rest of my life. I have made that decision.

I don’t need to do it for the money. The money’s nice. The money shows that there’s value to society. There’s the whole conversation around that, but honestly, that’s not why I do it these days. I do it for the impact, I do it to help founders, I do it to match the mission of Startups for the Rest of Us, MicroConf, and TinySeed, which is to multiply the world’s population of independent self-sustaining startups.

That’s why it’s so amazing to receive emails like this. Thank you so much for sending it. Obviously, if you have a success story, write in, let me know. I don’t even need to read it on the show. It means a lot.
I’m approaching episode 600 here on this podcast and working on my fourth book. In fact, my wife, Sherry, has already thought up a topic for a fifth book that she and I can collaborate on. I’m fired up about the next six months, about the next six years to keep doing this, so thank you to the person who wrote that email and thank you as a listener for showing up every week.

Piggybacking on that, we received another review, five-star review for Startups for the Rest of Us. It says, “Finally, a good podcast by and for SaaS founders.” It’s from Alex J. Sanfilippo from the US. He says, “I didn’t realize how difficult finding a good SaaS podcast would be. Most just cover theory or only want to talk about MRR, ARR. Also, they ramble on for a long time. Here’s a show with shorter episodes with a host who knows SaaS and asks the right questions while providing actionable value. A+, keep it up.”

Thank you so much, Alex. Wherever you listen to your podcast if you could drop a five-star rating, whether it’s Spotify, whether it’s Apple podcast, whether it’s the Google podcasts shop, what’s it called these days? I think they renamed it four times, it would be awesome. That’s just a small way to give back.

Next up is an email from a longtime listener, Matt Paulson. He’s the founder of marketbeat.com, who was having amazing success with his startup. He said, “Hey, Rob. I just listened to your podcast interview on My First Million. I thought that discussion on potentially renaming your podcast was fascinating. It reminded me of my experience renaming Analyst Ratings Network to MarketBeat after attending MicroConf in 2015. I told everyone the name of the business at the conference and nobody could repeat it back correctly after I told them the name. Everyone mangled it, which persuaded me I needed a simpler name.

I found marketbeat.com on Sedo for $9500 and the rest is history. When I made the change, I assume there would be a lot of confusion with our advertisers and subscribers, but really, nobody missed a beat. Everyone figured out the new name just fine. All our advertisers renewed, nobody emailed us and asked us what happened to the old name. The only thing we really couldn’t change is our sending email domain. We were never able to build up marketbeat.com’s email reputation in the way that we had with analystrating.net, so we’re still sending email from our old domain name.”

Thought you’d enjoyed the short trip down memory lane. Analyst Ratings Network, that is rough. That’s how I felt when I was talking to Sam on My First Million. I said, I avoided your show because I thought it was kind of a get-rich-quick or wannapreneur show, but it’s not. It’s actually the show talking about going deep on business ideas and business philosophy hosted by two smart dudes.

I was just talking about how hard it would actually be to change the name. I think that given the fact that you have subscribers and an RSS feed, that’s not going to change. You can just change that name, and essentially Apple podcasts and Spotify (I think) it will propagate. The harder part is do you have brand equity with people who maybe don’t make the transition? Or who looks different in their podcatcher and they get confused in the short term?

I think the bigger challenge—and I brought this up on the show—is (I said) what name do you pick? Because naming is hard. I’ve thought about it over the years. Startups for the Rest of Us, I love the name that starts with startups. It’s startups for us, for those of us who aren’t in the know, who don’t have friends and family—I always chuckle at that term—I remember the raise from friends and family ramble, […] good for you because I didn’t have rich friends or a rich family. It was never an option for me or for a lot of us.
Those of us who can’t move to Silicon Valley for three months to do an accelerator—that’s why we started TinySeed—those of us who didn’t fit in when we went to all the startup events that basically are about pitching investors, asking for permission to start your company—I never wanted to do that; that never felt right to me, and that’s why we started MicroConf—to the podcasts, the books, and the blog where all they talked about was raising funding and how to do a pitch deck and nothing about actually growing your company, that was all just this. It was like funding was the goal and that’s why we started Startups for the Rest of Us. That’s why I wrote Start Small, Stay Small was a reaction against this narrative in this script.
I think that name does still apply. The name is also long. I’ve often thought about is there a shorter, more succinct way to say, is there a better name given what the podcast has evolved into? But given that it still applies, I honestly struggle to change the name from Startups for the Rest of Us. The logo, on the other hand, that appears in Apple podcasts, that’s something that I revisit every few months about potentially redesigning that.

Onto our next email. This is from Pawel Brzeminski, founder and CEO of snapprojections.com. He has some feedback about episode 581, where I talked about inflation for founders. He says, “Rob, I tuned in to Episode 581 and I’ve got a few comments. I mostly agree with everything you said—a nice episode, by the way—but thought to comment on a few things as it may be valuable.

By the way, I was a personal finance nerd before starting a financial planning SaaS, but I learned a ton more about this when I was building and running Snap Projections. Then I learned even more about it when I started investing after I got acquired (I sold Snap to a public company, although I still run it for them). First off, gold is not an inflation hedge,” and now I’m going to flip back to me. This is news to me. I’m sure there are 10 or 20 people out there doing a facepalm, but I’ve just heard this narrative over and over and over and I never researched it, I just believed that we are holding on to gold as a hedge against inflation.

Back to his email. He said, “There is scientific research and empirical evidence that confirms this not unless you have centuries of an investing horizon. I got the papers, the long term returns to durable assets, the golden dilemma, and the gold constant with conclusions about gold pricing.”

That’s interesting. I don’t know. Do we have 2%, 3%-ish of our portfolio in metals? It’s for diversification but this is one of those things that I look at. It’s not generating any return, it’s not generating any income, and I’m always frustrated by assets like that, so not inflation hedge.

All right, next. “Successful investing relies on keeping costs low at broad diversification,” which I said and he agrees, “and reducing deferring taxes. The last bit is actually very important and usually underappreciated and worth mentioning. I spent seven years talking to financial planners and running the numbers. REITs,” which are real estate investment trusts, if you remember, “especially commercial ones could have issues not because of inflation but because of the remote work aspect. Granted, most leases are long-term, we may not see it immediately but I’d be very careful.” I do think that’s good advice. It’s not an inflation issue, but it’s just economic/changing the way we work. It’s a market force that could do damage to reach long-term.

Back to his email. “If you want to park cash, short-term bonds aren’t a bad place even if the rates are going to be increasing. VSP has a 2% payout ratio, which is a lot more than a standard checking account these days. HISA would be best, but the amounts are usually limited.” By the way, neither Pawel or I are financial advisors. This is not financial advice. For entertainment purposes only. We’re just talking about things right.

Lastly, back to his email, he says, “I was very surprised you didn’t include TinySeed in your discussion here. Angel investing like private equity or VC is another asset class and that episode gave you a perfect opportunity to talk about TinySeed. For example, I completed my first angel investment a few months ago and I totally include it as part of my overall asset allocation. There’s no perfect inflation hedge but investing in businesses, especially good SaaS, meets a lot of criteria of a good inflation hedge. Cheers, Pawel.”
Well, thank you so much for writing in. It is interesting. I didn’t want to show my own stuff, but frankly, it didn’t occur to me. What’s funny is, if you go to tinyseed.com/thesis, we talk about trying to broadly index across hundreds and hundreds of early stage SaaS companies. It’s not technically an index fund like a Vanguard fund.

We are diversifying risk right across a lot of companies. And I have thought about SaaS as a different asset class. I do include that in our family balance sheet. Since I made our very first angel investment in WP Engine in 2011, those sit off to the side. I don’t count them as such. I usually say, once I write the check, it goes to zero, but then as the company becomes worth more, we do some marking to market, as they say. Absolutely, B2B SaaS (I think) is an amazing inflation hedge.

In fact, a few years ago, we invested $22,500 I believe was the amount, and it was probably 2014, so this is 7–8 years ago. It’s one of those things where we write an angel check, I write it off. I assume that I’m going to 10X, 100X, or it’s going to go to zero, maybe something in between, but it’s not something that we’re banking on. It’s illiquid for a long period of time. That company has become quite profitable. It’s a SaaS company that’s doing single digit millions a year, but the profit margins are insane. I think their net margin is 50% or maybe it might even be 60% and they’ve started to kick off dividends.

They’re one of the handful of private angel investments we made that are LLC. Now every quarter, we get this check, this direct deposit into our bank account. The last one was a third of the initial investment. It was like $7500 and we get these every quarter. It’s super interesting that that is now an income stream and if they decided to sell that company, it would obviously give a lot back.

We actually had the opportunity to sell our stake in this company for a great markup. It would have been I think more than a 10x return on the money and I looked at it and said, but then what would I do with that cash?

That cash would come into the account, we already have an emergency fund, we have the cash we need to live on. I would then need to turn around and find an investment. What investment do I think is going to beat this company or B2B SaaS in general? And I couldn’t think of one. So we left it in there because I think it’s a great investment. All that said, yes, TinySeed is broadly indexing across B2B SaaS companies, and so far the results are looking really good. They’re definitely in line with all the projections we made.
We are closing our EMEA fund here soon, but frankly, we launched the TinySeed Syndicate, which is always open to new investors. The nice part about a syndicate is if you’re an accredited investor, you can say yes to each individual deal. Let’s say, we launch a syndicate deal every month or two deals each month, it’s going to be early stage, or even later stage B2B SaaS company that has a really low minimum investment, usually $2500 up to (say) $10,000 per investor, and you can decide to go in on it or not based on the terms.

I believe our first deal that we ran is about to fill up, which is great because this is all an experiment. We’re trying to find product/market fit ourselves. It’s like launching a new feature of your app, not knowing if anyone’s going to use it. So far, that’s great. Obviously, we’ll be raising more funds in the future but if you’re an accredited investor and if you are interested in potential inflation hedge or just having exposure to a different asset class, early stage SaaS is great.

From my own experience, we are 11 years from our first check and things have gone very, very well. Anyways, tinyseed.com/syndicate, if you’re interested in that. Of course, the syndicate folks will be the first to hear when we launch our next fund that invests through TinySeed accelerator.

My next email is a question from Matt on micropreneurship. He says, “I’m a C-level tech executive, and I’m very happy about where I am career-wise and professionally. In other words, not really interested in creating a large-scale technical B2B SaaS. When I look at investment opportunities, I’m intrigued by tech micropreneurship, as Rob laid out in Start Small, Stay Small. I viewed it as a better opportunity versus something like real estate or franchise ownership, both of which I have considered.”

I want to break in here. Before I started doing software products, I was in real estate. We were buying homes. We owned four homes in LA that we rented out, a total of seven units. I thought that was the path to early retirement—software developer by day, doing real estate by night. It was a pain and I had no advantage over anyone else. That was when I realized that as a software developer, you have an advantage in startups because non software developers don’t know the tech side of it. I different looked at franchises in real estate that any way to basically be in control of my own destiny. That was always the goal.

Back to Matt’s email. He said, “What is the state of micropreneurship? Is it dead? Or do opportunities exist for someone like myself looking to either start up or buy a smaller product with around 20%–30% return on investment? I would love to see an episode dedicated to micropreneurship. What are some markets to buy small SaaS products for example? I don’t see a whole lot on sites like Flippa. How do valuations on smaller SaaS or products work? Thank you and love the podcast.”

It’s such a great question. Micropreneurship, as laid out in Start Small, Stay Small, is truly that lifestyle bootstrapper where I want a business that’s going to do $5000 a month up to $100,000 a month. Some get bigger, but that’s usually the range. You don’t really care that much about growth. You care about cash flow. You go for net profit margins. I had apps doing 90% net profit margins. You’re doing tens of thousands a month with 90% net profit margin, absolutely life-changing. That’s what Start Small, Stay Small looks.

It doesn’t look at the more (say) ambitious bootstrappers. That’s actually my next book that I’ve now circled back on and I’m starting to focus on energy again. That’s what that focuses on. It’s more of I think that MicroConf growth, or the the TinySeed companies, the folks that say hey, I want to get to seven or eight figures in annual revenue and I either want to then become quite profitable, throw off a lot of cash, or I want to have a really nice $10 million, $20 million, or $30 million exit. Micropreneurship is definitely something you can and should do on the side. I think that’s certainly how the stair-step approach talks about it.

The state of micropreneurship is it’s absolutely alive and well. There are still a lot of folks doing that. If I were to do it today and try to launch from scratch, I would look at the ecosystem, the plugin, add-on, and extension ecosystems where you can build a product and get it into that app store. There’s the Chrome App Store, WordPress, there’s Shopify, Heroku, Jira, Slack, Figma, Jenkins, Amazon, AWS, Netlify, Grafana, and there are others. It’s not an exhaustive list.

We’re actually going to link up an article on code with wolf.com that talks about where to publish plugins, add-ons and extensions, and they have 12 on that list. I think there are at least 20 or 30 more that I would consider. You have Notion, Airtable. These are off the top of my head. A nice part about these ecosystems is you don’t need to do everything. You don’t need to do all the marketing. You kind of have this channel that’s already available to you, just to be found. It’s organic search. These are great step one businesses, which I think micropreneurship is really designed for, and that’s where I would start first.

I’m going to start today if I was going to acquire and I had the means to do it, which is what personally I would do. I had a mix of this as I was coming up. I acquired some and I built some, but I would be looking to Quiet Light Brokerage; I would get on their email list. I would look at FE International. I would look at Empire Flippers. I would look at MicroAcquire. I’ve had folks from I believe all of those companies except maybe Empire Flippers on this podcast in the past, talking about valuations.

If you go to Startups for the Rest of Us, you click that the magnifying glass at the top and you search for acquiring or acquisitions, you can get an idea of multiples, but frankly, content sites are 2–4, 3–5 times annual seller discretionary earnings, which is kind of equivalent to net profit. SaaS is a little higher now. It’s probably 4–6, I believe. This is for smaller apps. That’s kind of the going rate.

I’m going to be honest. When I was buying and selling these apps in 2006 to (I guess I acquired my last one in) 2011, it was 12–18 months of net profit. That was what we saw on Flippa. Flippa was a bit rough, as Matt pointed out, but that’s where the multiples are. Can you absolutely get 20%–30% return on investment? I think so. I guess I did it back in the day.

I know folks who are still acquiring you these micro private equity funds that are building these big portfolios of these profit-generating apps. They’re shockingly efficient and they’re capital efficient. That’s one of the reasons that SaaS and software are such a sought-after asset class. Is it alive and well? Absolutely. I think that if you haven’t taken the plunge, it’s a fun adventure.

My last email for today is from Luke. He’s the founder of bakup.io. He has a couple of questions he submitted. I actually answered one of them on an episode a while back about giving a SaaS demo, but his other question is, “If you know you have a potential $10,000 MRR product but don’t have the capital spend on advertising, where would you start with user growth? Starting a blog is easy with all the software we have access to, but what is the best way to attract readers and get them to click on your startup?”
We get this question every now and again. This is the fundamental question, isn’t it? This is what almost every article I’ve ever written or every podcast that we’ve recorded winds up being about. You could literally write a book on this. Advertising is usually, in most cases, not the way that startups—especially bootstrap startups—make it work. There are exceptions, you need a pretty high lifetime value to make it work. Starting a blog is not it either. You could start a blog and just publish articles, and no one’s going to come. You have to be strategic about it and think of it as content marketing.

I would start with SaaS Marketing Essentials—it’s a book—and Traction by Gabriel Weinberg. I would look through those marketing purchases and think where does this audience live? Is this audience online? Because if they’re not online, none of this is going to work and you have to try other things, in which case you have to charge more because you need a lifetime value or an annual contract value that can justify you spending the money to go offline.

If they are online, where do they hang out? Are they in Facebook groups? Are they on Hacker News? Are they on Indie Hackers? Or do they have their own forums or own closed communities? You can go hang out there and be part of those communities and just be helpful.

That gives you a start of seeing how those folks think about stuff. You don’t go in there and get and pitch your stuff, but you start to become part of the community where potential users are. Are they already looking in a certain place for the thing you’ve built? Are they looking in Google?

Then maybe you do need to pony up some Google ads just to see if it works, figure out which terms work for you, and convert, and then do hardcore SEO to rank for those terms. Maybe they’re searching in a marketplace because this is an add on. Maybe they’re looking at Heroku or wordpress.org. Then you build something, you put it in there, and you figure out how to do search engine optimization and rank there.
Are they on social media talking about this looking for solutions? It’s just a matter of getting in the headspace of those consumers. Even if they’re businesses, they’re still going to pay for and subscribe to your service. And they’re going to look for it somewhere. That’s how I would think about it.

To add a little more context, there are really five main B2B SaaS marketing approaches. These are the five that I think everyone should at least consider, if you think they’re going to work. There’s content, there’s SEO, there’s cold outreach, there’s business development/integration marketing partnerships, and there are ads. I’ll run through those again.

I’ve separated content and SEO, because sometimes people write content purely for SEO. They don’t care at all about the kind of social pop, or getting on Hacker News, or getting into these social news sites. Other times people do the content marketing, they don’t care about SEO at all, and they really just care about the social pop, or the initial sharing on the LinkedIn and the social media sites. Those are two ways that I’ve seen dozens, if not hundreds of startups, SaaS founders, grow amazing six, seven, eight figure companies almost solely on the back of those two.

Cold outreach, it’s a little saturated these days, but it still works in certain spaces. That can be email, that can be LinkedIn, however you do it. Certain people have opinions on that, they’ll never do it, that’s fine, too. Then don’t go into a space where that’s what you need to survive.

Then there’s business development, which is integrations. I think of that as affiliates and partnerships, where sometimes you do a full integration, sometimes you can just do a joint venture partnership quickly, and you just recommend the tool to each other’s audiences. Other times, you are trying to find affiliates who already have audiences in the space to do a webinar with or you give them a cut, 30%, 20% of the annual fees that the customers who they send you pay and now you have this amazing revenue stream from an influencer.

Then lastly, it’s ads. That could be Google ads, that can be Facebook, LinkedIn. There are all types of ad networks. These are high-level things, those are only five. There are also the caveats of well, then there are free tools, which are like engineering as marketing, there are in-person events, podcast tours, and on and on. Traction is a good book. I actually have, (I think) five or six marketing approaches that are not in Traction that work for some companies. I’m planning to mention them in this book that I’m writing. I’ve kind of put them in a chapter of it.

If you’re intrigued by the thought that I’m writing another book and want to hear when it comes out, you can head to robwalling.com, sign up for my email list or head to startupsfortherestofus.com. Sign up for the email list there.

The cool part about Startups for the Rest of Us is you receive two never released episodes that we have both an audio format and then a written guide so you can read through it—a nice-looking PDF guide. Those are called Eight Things You Must Know When Launching Your SaaS and 10 Things You Should Know as You Scale Your SaaS.

There are evergreen episodes that are fundamentals that I don’t believe will change this year or in five years but things that some of which I haven’t mentioned on the show. So startupsfortherestofus.com. You sign up for that email list, and then obviously, I’ll be notifying you when the book comes out.

Good question, Luke. I will say it’s a very broad question. There’s no super easy answer. This is the hard part of being a founder, is making hard decisions with incomplete information, because that’s usually what it is. You don’t have the complete information of what’s going to work. You have to take your best guess, you have to run experiments, you have to just see what works.

That wraps us up for today. Thanks so much again for joining me for this episode 587. Thanks for coming back every week. If you’re not subscribed, obviously hit that subscribe button and I will be back in your ears again next Tuesday morning.

Rob: In this week’s episode of Startups For the Rest of Us, I talk with Michele Hansen. She’s the co-host of the podcast, Software Social, a bootstrapped entrepreneur who has grown her SaaS to north of $1 million with her co-founder, and she’s written a book about mastering customer interviews. It’s called Deploy Empathy: A Practical Guide to Interviewing Customers. Simply a good book.
I’m going to be honest. Her experience, learning, and then practicing customer interviews is pretty unique, and you can tell in the book that this is not just another book about doing jobs-to-be-done, customer development interviews. She has a very unique take on it and you’re going to enjoy it, even if you’re concerned or scared about doing customer interviews. You don’t have much interest in them, this conversation’s going to be enlightening.
You can go to deployempathy.com if you want to check out all the ways you can buy the book and learn more about Michele. Of course, you can check out her podcast, Software Social. Without further ado, let’s dive right into my conversation with Michele.
Michele Hansen, thanks for joining me on the show again.

Michele: Thank you for having me back.

Rob: Folks might recall episode 524 of this very podcast. It was called Bootstrapping a Commodity SaaS, where you and your husband, Mathias, came on and talked about your trials, tribulations, and victories with Geocodio.

Michele: Yeah, that was about a year ago or two.

Rob: This is 586, that’s 60-some episodes, so yeah, a year-and-a-half. And I would like to note that in the book that we’re going to talk about today, your book is Deploy Empathy: A Practical Guide to Interviewing Customers. You revealed that the two of you have bootstrapped Geocodio to north of a million dollars ARR. That is awesome. Congratulations.

Michele: Yeah. Geocodio turns eight in January, which is pretty wild.

Rob: Yeah, and when you started it, didn’t it do $31 in the first month or something like that?

Michele: Yes.

Rob: You were like, hey baby build this little fun tool, and now that is an amazing, life-changing startup for you guys. Amazing, life-changing product.

Michele: Absolutely. When we started, it was actually a side project to keep another side project going. It never even crossed our minds that it could be our full-time job, and here we are now. I have actually worked on Geocodio longer than I ever worked for anybody else at this point.

Rob: Yup, and it’s a […] SaaS it’s that the flywheel that just gets going in the first year. It does X thousand, then the next one it does 2X, and then 3X. Pretty soon, you’ve built this amazing two-person SaaS company that makes seven figures and is the envy of so many people that we know. It’s like more people do it than you think but also not as many. A lot try and don’t get there.
What do you think that you and Mathias have done right? What are two or three things you might say that this is what created the success for us?

Michele: Do what you said about people wanting to get to this point. That’s something that drove me to write the book because having built a company I feel a responsibility to help others do the same. Whether that is investing to help them, we’re excited to be investing in kinds of […] or just helping them where we didn’t have help or we didn’t really have mentors throughout this whole process.
The one thing that we do is we listen to our customers and we let that guide us. That was a huge motivation for me, and getting all of this stuff about how to understand your customers and how to talk to them out of my head and on paper as a way to help other people do what we’ve done and then some.

Rob: Yeah, and I think that’s a good way to think about it or I like that way that you’re thinking about it because you have this information in your head. My guess is you’ve probably heard other people talk about customer interviews or you’ve read other books on it, and they just didn’t quite sync up with your experience.
I’ll put it this way; I’ll speak for myself. I wrote Start Small, Stay Small in 2009, published 2010 because I was pissed off at all the […] books about starting up and how none of them were for us, none of them were for bootstrappers, none of them talked about being a one- or two-person company. Everyone expected you had venture capital. I was so angry and I was like, well I’ve done this. I just need to get this out.
I’m not saying you’re as angry as I was, but I am curious if you looked around you’re like, you know? My take I think would be really helpful and it isn’t out there yet.

Michele: Yeah, there are a lot of great books on user experience research but basically—with the exception of The Mom Test—a lot of them are not written for people who are trying to start their own companies without funding, and as you said, there are those assumptions of like, oh, will it bring this to your team of people? And like, you know? You want to get some budget for this. Or like, think about budgeting for travel to visit them.
I started out doing user research as a product manager in a bigger company, and those things were not off-putting to me at the time, but throughout the years and throughout having this experience of jumping on a call with a founder and just helping them figure out how to interview customers and I would recommend the books that I had used when I was learning how to do this, people would be off-put by it because they’d be like, oh, I don’t have a budget. I don’t have a dedicated researcher. I don’t have a dedicated UX person to prototype with them. I don’t have all these things that this book is assuming I have. Is this still for me? It made people feel like this was not something that was for them or that they weren’t welcome, and something that they had already built up some fear around of talking to people and understanding it.
There was already a large amount of fear built up around just the interaction itself of interviewing someone, and then adding on this additional layer of insecurity around, oh my God. This is only for people who have funding. It’s only for big companies. What am I doing here? I don’t belong here.
The goal is to make it approachable to everyone, but also think about how The Mom Test is on a lot of people’s shelves and it does such a great job of talking about that stage when you’re figuring out what you should build, whether you should build it, and how do you get that really early feedback from people.
You also need to get feedback if you’ve been running a company for 5 years or 10 years, or once you’ve got it going how do you stop churn, or how do you figure out why people are bouncing off of something, or how do you figure out why people are happy so you can get more people who would be happy. There are all these other things that you can use research for, and there just wasn’t really a book geared towards the indie software experience.

Rob: That’s why it’s so helpful and why it resonated with me. As I read through the book, your examples all feel very much in line with my experience and the experience of the founders around me, and it’s because you are a practitioner both of customer interviews and of being a bootstrap founder. If folks check out your podcast (Software Social), they’ll hear you and your co-host (Colleen) talking about this kind of stuff.
It was probably six or eight months ago, but you either did a sample interview on air, where you interviewed her. I don’t remember what it was, but that episode struck me as really interesting because hearing the insights, and you have at least one transcript, maybe a couple in this book of sample interviews.
That’s what I like about this book and that’s why folks listening should pick it up. It’s for $10 on Kindle and $25 on paperback. It is crazy practical. There’s a tiny bit of theory—just enough—there’s a framework, but then it’s like, when should you do interviews, recruiting participants, how to talk so people will talk, sample interviews, sample scripts, and if you really want to hit the ground running you flip through this. And you also give either the justification of when to do it and why.

Michele: Yeah, I wanted to make it really practical for people, bearing in mind that they may already be feeling overwhelmed by this. I don’t want to bog them down with theory. There needs to be enough that it needs to be woven into it, and ideally you could sit down, skim the book. There’s even a section at the back of the book that’s like, if you just want to skim this here’s your little cheat sheets for the stuff you need and you can just get running and go on it.
Actually, being a practitioner, that was something that I didn’t realize until the book had been out for a couple of months at that point, when someone pointed out that most of the books on user research are written by consultants, which makes sense because the book is written for them in a way.
And there are very few books that are written by practitioners, like Cindy Alvarez’s Lean Customer Development comes to mind, for example. Never mind a small SaaS practitioner, so yeah. The ideas you can just pick it up, run and get started, and have what you need there as reference if you need it later.

Rob: I’ll quote you from your book. People sometimes quote me what I’ve said on a podcast or in a book and I’m always often like, did I say that? Because either it’s like, huh, that’s actually really insightful. I’m happy that I said that. Or I don’t remember saying that and that sounds kind of dumb, or I don’t agree with it anymore.
Anyway, I want to read this quote from the book because I was struck by the title. It’s Deploy Empathy, and I had to think of deploy as a code, but if you’re deploying code… Then I was like, no, it’s not that. I think it’s bringing empathy to the customer. Actually, a piece of this you took from a different definition.
There are embedded quotes in here, but the bottom line is it says, “Empathy is about understanding how another person thinks and acknowledging their reasoning and emotions as valid even if they differ from your own understanding. In this context, in the context of this book, empathy means entering the other person’s world and understanding that their decisions and actions make sense from their perspective.”
The subtitle is, A practical guide to interviewing customers, but the title is, Deploy Empathy. It’s an unusual title, I’ll say. What brought you to Deploy Empathy?

Michele: I wanted to have a title that was sort of a wink to developers, so that they knew that this was a book for them. When I initially started writing the newsletter which became the book, it was very much geared towards indie developers and makers.
The audience has since expanded significantly beyond that, but that was really the core group of people. I thought by using the word ‘deploy’ in it, it’s like you’re deploying code and what you are deploying has empathy for your customer embedded into it, but you’re also using empathy.
What I didn’t realize until well after I had launched the book, which I wish I had done more research on, was that apparently deploy empathy is also a Gary V phrase and I had no idea about that. It’s basically really hard to search for on Twitter because you get all these Gary V people in there.
I seem to have a talent for picking ungoogleable titles because Software Social you get all this stuff about social software, and it’s like ugh. Don’t ask me for naming advice, but yeah, it’s a very subtle wink to developers but also that a non-developer would also understand the title at the same time.

Rob: Got it. I totally picked up on the ‘deploy,’ and I thought to myself, am I reading too far into this? Is there […] symbolism?

Michele: Do you have it? Flip over to the back cover. Do you have a copy on you right now?

Rob: Yup. I have a PDF you sent me when we hooked up.

Michele: Okay. On the actual book—I’ll have to send you a picture of this—there’s a little code block that says, “Empathy deploy, Initializing mental models… Building interview skills… Softening tone of voice… Configuring recruitment template… Preparing tools… Loading scripts… Installing debug protocols… Processing results… I thought it was very clever by doing that.
Rob: That’s the tell. That’s the confirmation. It’s funny. Let’s talk about feature requests as customer research. Your book is nice and concise, about 200 pages, and then there are 100 pages of extra stuff. There are transcripts, sample interviews, and appendices. When I looked at the appendices, I was like, oh yeah. There’s a whole appendix aimed at single founders or people without teams and all that. One piece of this, Chapter 56, is Feature Requests As Customer Research. Want to talk to us a little bit about that?

Michele: Yeah. This chapter came out of a lot of the conversations I had with readers of the book. I very much did a build-in-public, write-in-public process for writing the book, and started writing it out as a newsletter. When I got to where I was, I had a full draft. I interviewed 30 early readers of the newsletter for those early drafts, understanding why they want to learn about this in the first place, but also what are their fears around this, what have they already tried, what other practical business books they liked and what did they like about them.
One hesitation and fear that came out of those was people feeling they didn’t have time for this on top of everything else you’re doing. Great. I know this myself. If you’re running a company, you’re doing everything from building new features to security issues, to negotiating a contract, to dealing with your account, and to answering customer support, you’re doing everything. The idea of adding something else on top of it, even if people get the point of it, they see the value of it, and they want to do it, it’s like how the heck do I fit this in?
I don’t have time to just stop what I’m doing and just research for a month, which is something Colleen and I had talked about on the podcast. I was always like, no. Integrate it into what you’re already doing. You don’t have to go into a research cave for a month and stop building features.
Feature requests are a really helpful springboard for understanding what people are trying to do without necessarily having to chunk off all this time to do interviews or recruit people for them because people are coming to you. There is a whole chapter on how do you take a feature request and turn it into something that helps you understand what that person is trying to do and why.
A lot of people, when they get a feature request, their first thought is, is this even possible? How would I make that work? What else do I have going on? What is the time? It feels like someone handing you a project, especially if you’re a developer.
Instead, reframing that as, let’s just pump the brakes on figuring out if we can build this, or should we, or where it fits in. Then let’s pull back and say, thank you for the suggestion. I’m really curious, can you tell me what leads you to want that? What are you currently using to get that done? You can understand what someone’s process is and understand how valuable it is to them.
If they’re currently patching together four different tools for that and they would rather use your product, that’s a really great sign. There’s a lot of frustration, hassle, and probably money spent there for just a random passing idea they had, and that’s something they do once a year, then probably not so much. It’s really important to get that context first. You can always make it become a phone call so you can really understand what they’re trying to do and use some of the interview techniques from that method.
If you do use feature requests as a springboard, then you don’t have to do that recruiting process. I imagine after you do a couple of calls with people requesting feature requests, you will want to go, then recruit people, understand better, and you’ll really see the value of it.

Rob: And you have a list of questions that if the feature request happens to come while you’re on a phone call, here are some sample questions you can use. I won’t read all of them, but you have questions like, can you walk me through the context on when you might use this? How did this project come about? What do you currently use for this? What did you use for this in the past? Do you pay anything for those other tools? Can you walk me through which one to consider?
It’s really about getting more context and about getting a deeper, more complete understanding of what they’re actually trying to do and what they’ve tried in the past. With any app I built—Drip is the most recent one—I remember getting feature requests, like for the campaign builder, I want an ‘if,’ so I can say if they have this tag, then send them this email. Otherwise send them that email.
It was always like, okay, why do you want to do that? What are you trying to do? Show me the actual emails you’re trying to send, and (a) we can probably do it with two campaigns, but (b) that would be a really clunky way to do it the way you’ve described. I don’t want to do it the way you’ve done it, but we are trying to get to the problem, not their solution.
Oftentimes, customers are not software people. They just think, what’s the simplest? I need a check box here but that will actually ruin your app over time because then you’ll have a gajillion check boxes everywhere. And it turns out that particular one we kept getting variations of, eventually we just need a visual workflow builder.
That’s a better way to express an if, rather than attach or bolted on to the campaign builder like the customers were suggesting. But we never would have understood (maybe) the depth of their request or what they’re actually trying to do without asking questions like you have here.

Michele: Yeah, and very often people express problems as solutions. That can be a little bit frustrating as a product builder. I remember being a product manager. You very often get that from executives too. That’s like, oh we need to add this feature. Okay, but could you walk me through what’s leading you to say it? You can deliver on their problem but maybe in a way that’s more coherent, cohesive, or fits in better with the product vision, but that the problem they’re expressing through that solution is still valid.
That’s where the role of empathy comes into this. The perspective this person’s coming from is valid. The way they’re expressing it to me may not be the most optimal way. Let’s put that aside, let’s try to figure out. What is the problem beneath all of this? What are they really trying to do? What is the context that has made them think about this so much that they are now proposing a solution to me? They put a lot of thought into this. Why have they put so much thought into this? What is going on here?
Then when (as you said) you get multiple people coming to you with these features that have similarities in them, then it’s like, okay there’s some underlying context here, and the fact that we’re getting them so frequently means that this is a shared problem among people. This isn’t just this one particular person with this very particular problem.

Rob: Right, and the interesting part about interviews, usually when I hear someone do a talk about interviews, or I see a book or a podcast episode, I cringe a little bit for two reasons. One to your point earlier, who has time for this? The other one is it’s a little intimidating if you’ve never done them. It’s like a developer thinking about doing sales, where it’s like, oh I really don’t want to do that.
You seem to be a natural at these interviews because, again, I never heard your sample and then when I see the transcript in the book, it seems to just come to you without a lot of effort. Was it always like that, or were the early ones pretty rough and you had to get better, and now you’re really good because you’ve practiced?

Michele: It’s definitely not a natural for me. A lot of the tactics I talk about and how to talk so people will talk, mirroring someone and leaving space for them to talk, how to phrase follow up questions and show that you’re listening, all those things I had to learn. I write this book about empathy from the perspective of someone who had to learn empathy both for other people and for themselves.
I was fortunate enough to learn interviewing under the tutelage of a PhD user-researcher and an experienced design leader. I was basically a silent participant in their interviews for several months, handed books and papers from them about how to do interviews, had them sitting with me, partnering with me as I was doing them for several years.
I really got that kind of experience and I feel very grateful for that. Most people can’t get that kind of experience, especially if you’re a solo dev running your own company. The idea is how do I teach this to people in a gentle way, that if they’re coming at this from the perspective of, this is overwhelming, this is scary, I don’t like regular social conversations, and now you want me to talk to these complete strangers who pay me money. What if I what if I offend them and they don’t want to pay me anymore? There’s a spiral of anxieties that come up, so it was really important to me that the book exhibited an empathy for the reader so that they would understand what empathy feels like on the receiving end through the process of reading the book.
That was something I really focused on as I was writing it, to almost be a bit repetitive about, it’s okay if you’re worried that this is going to be a waste of time. It’s okay if you’re worried you’re going to say the wrong thing. It’s okay. The fact that you’re worried about it means that you care, and that’s a good thing.
You don’t have to push that feeling away. You don’t have to just tell yourself not to worry about it. Anyone who has tried to tell themselves not to be worried about something, knows that you end up just more worried about it. It’s, how do we exhibit that empathy and gentleness to the reader so that they feel confident in doing this.

Rob: And that’s somewhat a unique take. I think because you experienced both the academic side of it and reading all these papers and books, you received an apprenticeship in this by watching the PhD, and then you are now a practitioner in your own company, that there are a handful of people on this earth who have done those three things in this field.
You have such a unique experience that I think that’s why this book will resonate or who resonates with me and I will resonate with founders is because doing any one of those things is great and you could have written a book. It would not be this book. It would have a different feel to it or a different focus.
A piece of the book says this book will help you, and it lists a bunch of things. It’s, launch a product, see if people would pay for something, understand why people are canceling, know why people are buying so you can find more customers, determine which features to add next, figure out how to keep customers and why people buy again. It’s not just, here’s interviewing for academic’s sake. This is what a perfect interview looks like. This is how you accomplish all these things.
As I look down this list, actually it feels a lot, it reminds me a lot of jobs-to-be-done. Most people would have heard of that by now, and there’s interviews. How would you compare and contrast your approach or your mental framework of it to jobs-to-be-done?
Michele: It was very much a jobs-to-be-done book. I am hugely influenced by Clayton Christensen and Bob Moesta. By the way his book, Demand-Side Sales, also has three sample interviews in it, so if that is your favorite part of my book, go get Demand-Side Sales. So good. Very, very influenced by jobs-to-be-done.
I only namecheck it a couple of times because I don’t want to introduce too much jargon into the book. There are references throughout it to a lot of jobs-to-be-done books and at the end of it, but it’s very much a jobs-to-be-done book. It’s, what are people trying to accomplish overall? What is the process they’re going through to do that? And then the idea from a business perspective is if you solve steps of that process and make it easier or faster or cheaper for people to do the things they’re already trying to do, then you will have a better chance of having a successful business because you are solving a real problem that they are already trying to solve.

Rob: Right. I realize I should have said this at the top but folks want to buy the book, it’s on Amazon. You can search for Deploy Empathy. We’ll obviously link it up in the show notes as well. You both have a Kindle and a print version. Have you considered doing an audio version?

Michele: Oh yeah. I did a private podcast presale last fall. I was just recording every chapter, basically, so I release one chapter a week from the end of August to the end of December. I actually just hired an audio editor today to do the post production work, to get the audio book out there.

Rob: Awesome. Are you going to put it on Audible?

Michele: Unclear. I thought I was going to do Audible. I’ve been reading a lot about Audible lately, and it doesn’t seem super great for authors. I might find a way to distribute it instead, but it seems there might be some hijinks going on with how Audible calculates when they pay an author.

Rob: Well that’s a bummer because I have two books on Audible.

Michele: Yeah, but it would find a way. It’ll be available through public libraries.

Rob: Awesome. You have testimonials. You have a testimonial from Patrick McKenzie, says, “Deploy Empathy is far and away the best book ever read on user interviews.” You have a testimonial from my friend and yours, Adam McCrea, founder of Rails Autoscale.
If folks are listening in here at all, interested in learning about interviews, you should go check it out. It’s Deploy Empathy: A Practical Guide to Interviewing Customers Of course, if they want to hear you chat about this stuff as well as running your own bootstrapped company, they can check out Software Social. It’s the podcast you’ve been running for a couple years. Thanks so much for coming on the show.

Michele: Thank you for having me.

Rob: Hope you enjoyed this week’s episode. I’ve been trying to mix up formats with some conversations with founders, some solo episodes, some Q&A episodes, bootstrapper news, conversations with authors and people who are going maybe a little deep, because sometimes you hear a 30-minute conversation about a topic and you realize, I would love to listen to a 10-hour audiobook or read a physical copy on that topic.
Hope you enjoyed the variety of content that I’m putting out for you, and hope to see you back here again next week. I’ll be back in your ears again, as always, next Tuesday morning.

Rob: It’s Startups for the Rest of Us episode 585. Where I welcome Dr. Sherry Walling, my wife, back on the show. We talk about a few things. We talk about moving outside your comfort zone. We talk about the power of relationships with some very specific examples of how having strong relationships, having a solid network helped Sherry with some recent things that she’s working on. We also talk about her book that is coming out in June or July of this year, a book about grief. And we talk about her interest in psychedelic-assisted therapy.
I always enjoy the episodes when she comes on the show because surprise, surprise, we have rapport. We’ve known each other for 26 years, been married for 21. I think this conversation turned out pretty good. The MicroConf State of Independent SaaS Report is in the works, and just three to four weeks from now, we’ll be releasing that report as well as doing a live stream of some key findings.
Producer Xander did a bang-up job this year on mixing things up. I believe 20–25% of the questions were different. We have sentiment about how people felt about the last year, what hiring is like, asked about no code, and asked about just a bunch of topics that go beyond just the numbers and the nuts and bolts. I’ll make sure to mention that once we have the date set. With that, let’s dive in to my conversation with Dr. Sherry Walling.
You know how I don’t drink coffee anymore?
Sherry: Oh God, really? Are you buzzy?
Rob: I drank a latte and I added a shot. I had a three-shot latte today.
Sherry: Why did you do that?
Rob: I feel so alive. This afternoon is going to be a little rough.
Sherry: Says every addict ever.
Rob: Since I don’t drink coffee anymore, I’ve talked about it on the show before, but it makes me anxious like I feel my heart pounding. It really impacts me.
Sherry: I thought that was just you hanging out with me.
Rob: I stopped, but now, I started tea in the mornings, as people know. But what I found is that every once in a while when I have a latte now, it’s great. I’m so focused and productive. Caffeine, highly recommended.
Sherry: Are you going to have a really focused and productive day today?
Rob: At least for the next hour or two until I crash so hard I fall asleep. Thanks for coming on the show.
Sherry: My pleasure.
Rob: Dr. Walling, back again.
Sherry: You had to book me quite a lot of it in advance.
Rob: I really do.
Sherry: My people had to call your people.
Rob: Yes, they did. I’m glad we’re able to make it work. I have so many questions for you. You’re doing so many things right now. I don’t mean literally right now, but you are working on a book. In fact, the book is done. Here’s the thing. You wrote a book like two years ago, I read it, and it’s amazing. It’s a book about grief. It’s called Touching Two Worlds. The title has changed.
Sherry: That is the title we’re going with.
Rob: Awesome. Instead of self-publishing, which you had done for The Entrepreneur’s Guide to Keeping Your Sh*t Together, you decided to go through a publisher. I’d love to just kick us off. I have like four topics to cover today. All things that you’re doing that I think are interesting and at least tangentially related to folks who listen to this show. But I want to find out why not self-publish this book?
Sherry: I was lucky to have the choice. I worked really hard to write a proposal and to work my network and work connections to try to do the traditional publishing route. I just want to, of course, honor that I had the choice, which not everybody does. The reason for me that I decided to try to work with a traditional publisher on this particular project is because it is an expansion of the audience that I normally speak to. While I have lots of wonderful connections in the community that we share in working with entrepreneurs, this book is really written for a much broader audience and more general audience. It’s an audience that I haven’t cultivated per se.
I was hoping that working with a traditional publisher would help me to think about how to better launch a book into a general audience. I also did get it in advance, which isn’t a game-changer in our world in the sense that we can put some funds and resources towards the cost of publishing a book. But I think the advance does help feel like there are resources behind launching the book. Like the book is sort of paying for itself. The book is funding itself in some ways, which I think is really helpful.
Rob: Right. You said that the advance doesn’t make a difference to us, but even 7, 8 years ago, it was a substantial amount of money. It’s not nothing that they’re investing in, which is really cool.
Sherry: Yeah, specifically, I’m working with a publisher called Sounds True, which is a really cool publisher for me to work with. They are kind of like the publisher that does really scientifically informed wellness and personal development. They’ve published authors like Brené Brown, Wim Hof, people who many of your listeners will recognize. To be in that community of authors feels like a really big deal. I’m not sure if it’s going to pan out, but I’m hoping that being published by this particular publisher will help me to get in the room and get some connections with people who I think could really be advocates for this book.
Rob: Yeah, there is an aspect of being part of a club, of being able to reach out to someone like Brené Brown or Wim Hof and say, hey, we’ve been published by the same publisher. That instantly separates you from someone like me. If I reached out where it’s just like a cold email random guy on the internet. I can see there being a lot of value with that.
To get the book deal though, you had to go outside your comfort zone. I remember you contacting 30 agents, right? You kind of need an agent? I don’t know how it all goes, but you were cold emailing, trying to get intros, and just working it. I remember that feeling frustrating/you felt like it was a bit of a waste of time because it wasn’t yielding for like months.
Sherry: Oh sure. Someone told me to prepare for 100 rejections. That’s just to get an agent. That’s not to get a book deal. Ultimately, none of that cold emailing mattered at all. The agent that I eventually got connected to was a connection of a connection of a connection. There was a direct trail of someone that I knew and had spent time with to someone who read the book, loved the book, and passed it on to their agent. Ultimately, of course, it was the network and it was the connections that helped get the deal.
Rob: The person whom you met who made the intro you met at an in-person event, right?
Sherry: Yeah. It was Tucker Max, who your audience may be somewhat familiar with. But yeah, we met at an in-person event. He runs a company called Scribe Media, which helps people write books. I went to a workshop that they were doing about writing memoirs. The dominos felt that way.
Rob: I often say doing things in public creates opportunity. By that, I both mean shipping things like writing, podcasts, video, social media, or whatever, just being out there, shipping apps, shipping products. But also going to an event. For someone like me, I actually…
Sherry: You really don’t enjoy it for a guy who runs a lot of events.
Rob: I enjoy my events, but I don’t enjoy a lot of other events, to be honest.
Sherry: Do you go to any events that aren’t your events?
Rob: Certainly not since COVID. I can’t remember the last event I went to that wasn’t one of my events. But which is part of COVID and just part of the last couple of years of me realizing where I’m at, where I want to go. I actually think that once things settle down a bit, I do think I will go to some other events that I have not attended before. It’s outside my comfort zone. I bring that up because you’ve gone to a bunch of events and I’m sure some of those were outside your comfort zone. But dominoes fall and eventually, you get a book deal almost exclusively because you did that. You took yourself outside your comfort zone.
Another thing you’ve been doing outside your comfort zone recently is asking people for essentially, I call them testimonials. It’s like recommendations or just someone’s name below a quote about your book, right?
Sherry: Yup.
Rob: That’s been a lot of cold and warm emails as well. You’re hammering away at it. You’re doing a good job, but I can tell that you don’t love it.
Sherry: Yeah. I’m getting ready to put together the landing page for the book and then we are also finalizing the print version of the book. Any testimonials that will go on the back cover or to the book jacket have to be in basically this week, even though the book is not coming out until this summer, but those things have to be in and will be on the website.
Yes, once again, I’ve been cold emailing lots of people who would be great to have their name on the book. This worked really well for me before. I actually reached out to Seth Godin. It wasn’t a cold email because he and I had spoken at the same event. I had handshake met him. We weren’t like buds, but I had at least this point of like, hey, remember business of software? He did an endorsement for my first book which appears on the back cover and that was a really big deal.
I’m doing it again. I’ve reached back out to Seth Godin. He was like no, I’m not really doing a lot of blurbs. I was sad. A lot of the people that I reached out to either did not respond or some of them responded with very kind no’s like Seth. Once again, I’m working with the network. It’s people that I know, have met, or have been in their room with in some capacity who have responded.
It’s been so interesting because a lot of very busy people will say, I’ll glance through the book, why don’t you write me a few sample endorsements and I’ll tailor it to make it my own or I’ll sign off on it. I actually really value that. Someone is lending you their credibility. Whether or not they have read the whole book or whether or not they have written all of the words of the endorsement themselves, they’re still lending you their credibility and I hold that in high regard. That matters to me. I don’t want to diminish that.
But then there are some people who have read the book like my mentors, people who I have worked with, and people who are my professional contacts. They’ve read the book and they’ve written long emails that have been so, so meaningful to me in terms of giving me a lot of personal feedback about what the book has meant to them and then writing these wonderful statements of support for the book.
Even though it’s this long arduous process and a lot of the email and a lot of the work that I’ve done has yielded nothing, the people who have responded, oh, it’s been really, really meaningful and encouraging. It makes me really excited to launch the book out into the world because I already have a little circle of fans who are people who are really important to me.
Rob: It’s so interesting. I mean, there are two points on that. One is, it’s hard work and you don’t particularly love it. You are very gifted in a room and you’re very gifted speaking on the mic, in front of a camera. But sending cold email, I would say, is perhaps not high on the list of things that you are best at.
Sherry: Email in general, not my strength.
Rob: But you’re grinding it out. You’re doing what needs to get done to do it. I think the second point is, I know that there’s someone listening to this thinking well, it’s easy for Sherry because she knows everybody and she has this tremendous network, or it’s easy for Rob to do it, similarly when I talk on this podcast. Do you remember 10 years ago when we knew no one and no one knew us in the entrepreneurial space.
Sherry: I still feel like that. I almost didn’t get a book deal because my social media following is so small. They were like, you have 2000 or 3000 Twitter followers? We don’t talk to people like you. They didn’t give a crap about my Ph.D., but they’re really worried that I don’t have enough followers, that I don’t know enough people. I guess knowing people is also very relative because there’s always someone with more celebrity and more connections. It is like you got to start somewhere. You have to start somewhere.
Rob: You’re talking about audience, I was talking about network. The two are different, right? It’s like who knows you is your audience and who you know is your network, that’s how I think about it. I think that you have a pretty strong network. You have an audience, but we’re all still building it. But you’re right, your audience is not as big as some others.
I just want someone listening to this to say, this didn’t happen magically nor overnight. It’s been a decade. I started blogging in 2005, that’s 17 years ago. I started podcasting 11 or 12 years ago. You started podcasting 10 years ago. We started speaking and it’s like how many conferences did I pitch and crickets? No one would take my calls, so to speak. This podcast had 200 subscribers after 12 months of doing it weekly, it was incredible. It’s like tens of thousands now, but you work up to these things.
You getting a book deal and you being able to get these testimonials, it doesn’t happen overnight and it doesn’t happen by accident. Hard work, luck, and skill, right?
Sherry: And risk. My network has come from me speaking. It’s speakers, it’s the other speakers. That’s how I got access to Seth Godin. That’s how I had an afternoon chat with Sam Power. Anybody that I know is almost always because I pitched a conference, got up there, and did it. I’m not the most gifted speaker. It’s not easy for me. It’s still hard and stressful, but that’s been the investment that is now yielding. Any network connections that I have are through that.
Rob: I have a couple of other topics that I want to chat through. I hope we have time for all of them, but the last one that I will get to is you talked to so many founders and you put out so much content about founders. It’s fundamental help, but it’s just like being a high-functioning individual. I want to find us some common things that solo founders struggle with, small teams, et cetera.
But before we do that, you put out a tweet two days ago, a couple of days ago, as of this recording, you said, “100 hours of training crammed into an already full life. I’m glad for the chance to learn and to cultivate a thoughtful, informed voice about psychedelic treatments. Thanks to the team at @mindcurehealth for allowing me to partner with them. And to @MAPS for a great training.”
MAPS is MDMA Therapy Training Program. You have a certificate of completion. Folks have been following your social media or your podcast, Zen Founder, you’ve been talking about psychedelic-assisted therapy for I don’t know, six months, nine months now.
Sherry: A couple of years actually.
Rob: Yeah, I just don’t know when you start talking about it in public. You and I certainly talked about it for several years. I’ll admit, let’s say, five years ago I heard Tim Ferriss talking about this on his podcast. So much of the stuff he talks about to me, it’s just eye roll. It’s like oh, here it goes, off on this thing that’s like nobody else cares about or he’s trying to do it for attention or whatever it is. And then I heard Joe Rogan talk about it. That’s instantly like Joe Rogan’s entertaining, but let’s just say I’m not a big supporter or a fan. A lot of stuff he talks about just feels way fringe or just out there in a way that I’m like yeah, whatever.
But when you started talking about it, you were, like, yeah, this is a thing.
Sherry: You started rolling your eyes, didn’t you? Like oh, here she goes.
Rob: There’s a book by Michael Pollan, is that his name? Michael Pollan. The book is called How To Change Your Mind. He had written really good books about dietary.
Sherry: The Omnivore’s Dilemma.
Rob: There you go, Omnivore’s Dilemma. This is three or four years ago, you had me read How To Change Your Mind. It’s like, oh, okay, this isn’t something people are making up. There are clinical trials and the FDA is involved. There are dozens of tier-one universities that are using psychedelics in therapy.
Sherry: About 70—Yale, Harvard, UC San Francisco, UC Berkeley.
Rob: It’s not a joke. It feels more like a coming wave of something. It’s really helping people. I guess there are a couple of questions. Like any innovation, it’s like people roll their eyes at Web3, which is crypto and NFTs, and like, oh, this is about the people roll their eyes at the dot-com boom, people roll their eyes at whatever other innovations.
When you mentioned psychedelics, your mom might be like, oh my gosh, do you mean drugs?
Sherry: My mom is very worried that I’m a drug addict, by the way.
Rob: What should people know? What is happening in a nutshell? Who will this ultimately help? What’s the benefit beyond traditional therapy and timelines? Give us a five-minute primer on what’s happening?
Sherry: Yeah. We will see in the next five years that psychedelic-assisted psychotherapy will become much, much more common than it is now. And that it will be used to treat a variety of concerns. The common ones like anxiety, depression, post-traumatic stress disorder. There’s also some really promising research related to eating disorders, obsessive-compulsive disorder.
Psychedelics, of course, are a class of medication. Psilocybin is the active ingredient in magic mushrooms, LSD. There’s a lot of work happening with MDMA, which is also the street drug ecstasy. MDMA is not a classical psychedelic, but it’s sort of grouped into this whole movement.
What’s happening is that people are pairing psychedelic experiences, which is usually sort of a fold day under a medicine. They are combining that with psychotherapy, usually 12–15 sessions of psychotherapy and maybe 3 sessions of medicine. And have developed some treatment protocols that the FDA is currently reviewing and they’re in the last phase of that review. Phase III or Stage III, which is the final phase. Very likely we will see the FDA approve MDMA for use as a treatment for PTSD. Psilocybin for use as a treatment for depression will probably be approved in 2023.
I think these are super interesting interventions. It’s the only protocol that involves both therapy and medication that the FDA is approving as a package deal. We’ve long known that the best way to treat mental health concerns is a combination of a biological or biochemical intervention and therapy. But they’ve never been approved in a package before. I think just as an innovation that’s probably really important.
There also is some really interesting promising research that looks at the ways that these medicines impact the brain differently than our traditional psychiatric medicines like SSRIs— selective serotonin reuptake inhibitors—I mean, other medicines that are sort of commonly prescribed for mental health. Psychedelics work a little bit differently. Well, they work a lot differently. They work probably more comprehensively. They work in different parts of the brain all at once.
One other sort of quick thing that I think is really interesting, The New England Journal of Medicine just published an article looking at a comparison between psilocybin—mushrooms—and SSRIs like your Prozac and found that psilocybin was as effective at alleviating depression as SSRIs were. But one of the significant differences that I think is really important is that SSRIs tend to numb emotion on both ends of the spectrum or diminish emotion. Numb probably isn’t the best word.
For example, it makes your depression less, which is wonderful for folks who are really experiencing depression. But it can also make you joyless. It can turn down your capacity for positive affect.
Psilocybin doesn’t seem to do that. The research is still pretty new, but The New England Journal of Medicine found that it was a strong enough study to go ahead and publish it. They only saw that diminished emotional capacity in the negative end of the spectrum, in the depression side. People could still retain their level of joy and enthusiasm even when using this kind of biomedical intervention for depression.
I could obviously lecture about this a lot. I’ve been thinking about it a lot. I think the science is really interesting. Actually, last year, I worked with a company called Mind Cure to do a podcast all about psychedelics called Mind Curious, which folks are welcome to check out. But I think this is something that you just want to have your eye on. You want to be aware of folks who are informed consumers in mental health care.
I think these medicines have tremendous promise. But like all new interventions, there are going to be some bumps in the ways that they’re rolled out. There’ll probably be some folks hanging shingles who aren’t necessarily that qualified who don’t totally understand the science. I’m really wanting to position myself as somebody who can speak the science, but also talk about the practical applications of these interventions and help people really be informed about what’s coming and what might be accessible to them.
Rob: That’s the voice that I think a lot of folks need to hear. I’m guessing, many people may be hearing this for the first time, that this is a legitimate thing on this podcast. That’s why I wanted to talk even briefly with you about it is that this is happening. It’s in fact, psilocybin—mushrooms—are already legal in the state of Oregon for this treatment. They got legalized in the past six or eight months. This is happening. To your point, misinformation may be strong, but there will be people who say they know what they’re talking about, but they don’t. There’s certainly an underground version of this that’s not FDA-approved that’s happening.
Again, Tim Ferriss and Joe Rogan talking about doing mushrooms a few times a year is something they do. To hear how legitimate this is becoming and how effective it is without so many of the downsides of SSRIs have a lot of side effects from my understanding. You take them for a long time versus these are kind of, like you said, more focused treatments that they kind of re-cut the trenches in your brain. Re-cut is a weird way to say it.
Sherry: We talk about resetting the default mode network is the language that will be used. It’s just a good thing to be aware of. There’s a difference between recreational use, there’s a difference between spiritual use, and the sort of area that I’m most curious about is the clinical application. The treatment uses of these medicines.
Rob: We published The Entrepreneur’s Guide to Keeping Your Sh*t Together three years ago. To date, I still see that book getting recommended a lot. I see people talking about it on Twitter. It really has had an impact on a lot of people because it covers all these aspects of a founder’s journey. I’m curious, since then, if you could add a couple of chapters to that book, is there anything that you feel like you’ve learned, come across, or experienced in the past couple of years that you would be like, you know what, that would make it a cool addition to an updated version of that book?
Sherry: To return to where we began the conversation today, I think one of the things that I would want to emphasize more in the book is the power and importance of network. We talked a lot in that book about the internal life of the entrepreneur. We did talk some about relationships, but I think that network is of paramount importance in a way that I didn’t even quite understand then. Network, friendships, we did talk about it, but I think the isolation that has come with the pandemic and the isolation that a lot of solo founders or small team founders already feel is really the biggest mental health vulnerability of the day-to-day founder.
The ability to have a really strong network, to be in a mastermind, to have deep, connected relationships with people who understand the ins and outs of the business and your life, I just can’t emphasize it enough. It’s like the song that I want to sing all the time every day to everybody that I talk to.
Rob: I want to emphasize that you’re using the word network, but I think it’s the word relationships. Let’s say five years ago when I heard network, I was like, oh boy, it’s the person who walks in, hey, I know that person and had this whole I’m playing chess with people and I’m matching them up. But you’re not talking about that, you’re talking about having relationships. Sure there are professional relationships that help intro you to a book agent and then write a recommendation for your book—those are great to have. But you’re also talking about having friends and having both founder and non-founder friends.
Because the founder friends understand you, but you also don’t want to talk about business all the time. It’s like having those people to backstop you and to be like, hey, when we were trapped in the house for six months in a pandemic shutdown, who will do a Zoom happy hour with me? That really brings me joy.
Sherry: Yeah, network maybe has a bad rap. But it’s all the web of connections that support you. Some are much closer to you. The people you live with, the people you’ve known for a long time. Some are getting farther and farther out away from your day-to-today life. But they’re still important connections. People that you can ask a favor for or offer a favor to. It’s those human relationships that are hard to build. Let’s not oversell it. It requires a lot of work. It’s a lot of awkwardness.
I’m not great at developing relationships, certainly not over emails, certainly not virtually. But the importance of figuring out those skills is as important as a lot of the hard skills that go into building the business and promoting the business.
Rob: Yeah. This is something that I learned that I’ve talked about before, but you recall in the 2000s when I was still working full time jobs, I kept saying, I don’t like working with people. I don’t want to work with anyone. I don’t like coworkers.
Sherry: I thought you said that like last week, honey.
Rob: No, that’s not true. Tracy, Xander, Einar, Alex—I like you guys. That’s when I was like I’m going to be a solopreneur. I’ll have no employees and I’m just going to do it myself. What I realized is not that I didn’t like coworkers. It’s that I didn’t like coworkers who weren’t very good, who I couldn’t handpick, who didn’t care about the job, and who weren’t really good at what they did.
I did the solopreneur thing for a few years. And then as Drip started taking off, it was like, I can’t do this as a single founder with no employees or no support. I started building a team around that and learned that lesson of like, oh, I actually really enjoyed being on a team, but a team of high-performing individuals. I thought I could do it all on my own.
To come back to your thoughts and idea of network, it’s like what would starting TinySeed have been like if I couldn’t have just reached out and emailed Hiten Shah, Laura Roeder, and Rand Fishkin, all the people that are mentors. That instantly made TinySeed stand out.
Sherry: It wouldn’t have happened.
Rob: No.
Sherry: You’re really smart and I like you, but I don’t know how in the world it would have happened because you didn’t have that social credibility and you wouldn’t have had access to the people who knew you and believed in you.
Rob: That comes from, like I said earlier, it doesn’t happen overnight and it doesn’t happen by accident. It comes from doing things in public. Doing things in public creates opportunity. It builds relationships and puts you on people’s radars. It puts you in people’s minds as someone who does interesting things, and therefore, it’s like we want to be around those folks.
To bring it back to your earlier comment, it’s not just about business networks and being able to reach out and get a testimonial or have someone be a mentor. It’s also about some deep relationships and having someone to rely on and to help support you.
Sherry: Yeah. I think it’s about realizing that you’re on the journey with other people. You’re not exactly on the same path, but you can sort of see where they are and they can see where you are. You’re watching their progress and legitimately celebrating it. Caring about how they’re growing and developing in their personal and professional lives. Then watching them or letting them care about you. Letting them know like here’s what I’m struggling with. Here’s where my successes are. Here’s this book that I wrote about my family and our losses. You’re invited into my life, into my world. I’ll show up for you as well. That happens, of course, in all these different levels of intimacy. But it happens because you give it attention.
Rob: With that, I think we should wrap up. I know, this is good stuff. But I literally hear the dog barking because I think the cleaners are arriving right now. It’s about to get really loud in the house and we’re at a nice transition point. If folks want to keep up with you on Twitter, you are @zenfounder. You, of course, host the weekly Zen Founder podcast. Your book comes out in June or July. If someone is interested in reading this book, it started as a memoir. You wrote the whole thing as a memoir and then the publisher said put in more, I don’t know what, actionable kind of—
Sherry: Be helpful. Be helpful to people.
Rob: For what it’s worth, I think it improved the book.
Sherry: Yeah, totally.
Rob: If folks are interested in that, they should go to zenfounder.com, sign up for your email list, and you’ll reach out when the book is in pre-order.
Sherry: Absolutely. Thanks so much for having me.
Rob: Absolutely. It’s great to have you. Thanks again to Sherry for coming on the show and thank you for coming back every week and listening and subscribing. If you haven’t given a five star review in whatever podcaster you use, I would appreciate it. If we’re not connected on Twitter, hit me up @robwalling. That’s it for this week. I’ll be back in your ears again next Tuesday morning.

Rob: Welcome back to this Happy New Year edition of Startups for the Rest of Us. I’m Rob Walling and this is the first episode of the new year. I recorded a version of this episode two days ago while my family and I were at a resort in Jamaica. I was actually looking out over an infinity pool, looking at the Caribbean Sea, and it was an amazing respite from the cold of Minneapolis, but also just the day-to-day of life.
We were in a place where we couldn’t decide to get distracted by doing laundry, being bothered by how dirty the kitchen is, or going into the basement seeing all the clutter. We were away from it for about eight days. That episode I recorded was just not good. It was really bad. It’s funny. First I thought there would be a bunch of background noise and there wasn’t. As I listened back to it, I thought to myself, this is not helpful, it’s not generalizable to people, and it was quite rambly. I’m re-recording it today with a new kind of tighter focus on a few key points that I had covered in that version of this episode.
This is a prior year reflection on 2021. This is the point where I look back at the prior year and think about what went well? What didn’t go well? What did I not enjoy? What do I want to do less of? What do I want to do more of? Then I look ahead to 2022 and whether you are the type of person who plans, who has goals, or who just wants some high-level ideas and thoughts of what they’re going to do over the next 12 months. That was my process during this time away.
It wasn’t a typical founder retreat. If you listen to this podcast, for any length of time, we call them founder retreats. I actually took this practice from my wife, Sherry Walling, also known as Zen Founder, who has actually written an ebook called The Zen Founder Guide to Founder Retreats. You can buy it, I don’t remember if it’s $20 or $25. It’s so worth the money if you’re going to take a couple of days away and do this kind of deliberate ritual.
Whether you do it twice a year or you do it once a year, it is something that can really help shape where you’re headed long term. It pulls you out of the day-to-day so that you’re not thinking what am I going to do this week? What am I going to do next week? You start thinking, what am I going to do next quarter, next half of the year, and next year?
I know that for myself, I tend to get heads down and relentlessly execute on whatever’s in front of me. Oftentimes, I don’t pull my head up and look and say, where do I want to be one, three, and five years from now? That’s what a founder retreat can do for you. If you’ve never taken one, I highly encourage you to do it.
This one that I did in Jamaica was with my family. It wasn’t a typical I have 48 hours completely unplugged from everything where I’m just thinking through, making goals, and making plans. This was more of an intermittent hour here, two hours there sitting, looking out over the ocean with my feet in the sand with a notebook and a pen, and giving some thoughts to all the things I just said. What was good, what was bad about last year, what do I want to be doing more of, and what are some high-level things that maybe I haven’t given enough deliberate thought to as I look out over 2022?
During that process, I also asked my two kids, just briefly off the cuff, what they were looking forward to either hopes or goals that they have for 2022? I’m going to roll some of that tape here in a minute. Before I do that, I know that some folks like goals and some folks don’t. I get it.
There’s a time and a place for goals given how specific you want to make them. Sometimes they’re like, I want to be at $20,000 MRR by the end of the year. Other times it’s like I want to have written 1000 words a day by the end of the month or I want something maybe more amorphous. I want to be enjoying what I’m doing in my day-to-day work by the end of the year. All of these things have a time and a place. Sometimes you just have a year where you can’t be as specific as you want to be, or you’re going to set some goals where you just don’t know if you’re going to be able to achieve them.
What I will say is that if you’re running a startup, if you can’t estimate your growth over the next year and make that some type of goal, then either you’re too early meaning you don’t have a product-market fit. Before you have product-market fit, before you ever product, it’s so hard to estimate how long something is going to take to get there. Either you’re too early or if you’re past product-market fit and you still can’t have some type of estimate of where you want to be at the end of the year, then it’s likely you’re getting lucky and that you’re going to plateau at some point and not be able to fix it or not know how to fix it right off the bat.
Maybe you’ll figure it out. You’ll probably figure out how to fix it because you’re a smart founder, but you might stay plateaued for potentially a very long time because what I see in startups that work post-product-market fit, as you have escape velocity, is that there really is a predictability to a lot of your numbers.
A lot of your funnel is coming in, you can tell visitors to trial, you can tell trial to paid, you can tell churn, you can see how many new trials or visitors you can get over the next 12 months, blah, blah, blah. Even if you don’t dig super hard into the numbers, it’s more science than it is an art to be able to project out a quarter or a year of where you’re going to be, and you’re not always going to be accurate.
This is not the time to say we’re going to 10X in the next year and to set goals that maybe you’re not going to be able to achieve. What I’ve found is that folks who do look at it pretty realistically and say, look, at our current course, we’re going to go from 1 million to 2 million this year. At our current course, doing what we’re doing today. Who can then say, well, what would we need to do to triple, to get to 3 million? Assuming that’s something we want to do.
I’ve talked about lifestyle entrepreneurs, and if you do want to be a lifestyle bootstrapper, awesome. You do want to put it on autopilot maybe or just back off and just do the minimum amount of work and get from one to two million, that’s amazing. Power to you. That’s a great business.
If you are looking to be more ambitious with your startup and with your growth, to ask yourself this question of, well, we can get from one to two, given our current trajectory, what does it look like to get to three or four? What would we have to do?
We’d have to hire ahead. We’d have to have two marketing efforts that really clicked or one that clicked really well. There’s just all these answers and all these questions that come about if you look at this as something that you’re aspiring to do, and some people are motivated by that. In fact, as much as I don’t really love the process, planning, looking ahead, and doing a lot of stuff that’s not just working in and on the business, this high-level stuff I found to be a necessity for me over the years growing as these companies get larger.
When I look around at the founders who I see who are doing really well and getting that fast growth, some are lucky and a lot of others are planning, they’re looking at these goals, looking at these the projections, or they’re looking at the goal and then saying how can I get there? Whether they hit it or not, it matters less than if they set that, they execute on their plan, and they do their best to achieve it. With all that said, I’d love to roll the tape of my 11-year old. I asked him what are some goals or hopes that you have for 2022.
Son 1: I’m working hard in school, but I want to work harder. I want to take care of the animals we have in our home because that’s important. I want to live with screens, but in a controlled amount be healthy. I want to have fun with the family. I also want to work hard on the violin and maybe improve on that. I want to help people when they need help. I want to live a good life. I guess that’s broad, but yeah.
Rob: I asked my 15-year-old the same question. I’ll roll that tape in just a couple of minutes because something that I was quite pleased with during these moments that I was thinking about or reflecting on in 2021 was just how much that my team and I have been able to accomplish in the last year.
It gave me the sense of I think gratitude, but also pride. Just pride in the fact that we closed TinySeed Fund 2 and are on our way to closing our EMEA Fund—Europe, Middle East, and Africa that we funded two more batches. We’re almost to our 60th company, and we ran six MicroConfs, two were remote and four were in person. Just to run in-person events this year. We hadn’t run them in so long. Shipping 52 podcast episodes, doing 20-something live streams.
There’s all this stuff that you forget in the day-to-day. Until I wrote it out, it just hadn’t sunk in how much we’re actually able to accomplish in 2021. Even though the first half we didn’t have vaccines. I got my second dose in May of 2021. Before that, it was still mostly lockdown-ish depending on which state I was in. We’re back and forth between California and Minnesota.
It was just 2020 and the early part of 2021 kind of all blended together for me and I think for a lot of us because it was kind of like pre-vaccine and post-vaccine. That’s when things started to change. As I looked at this list of what we were able to accomplish as a very small team, it made me realize the potential that we have to accomplish in 2022 in terms of running even more events and being able to fund another 40–60 companies across multiple batches. We’ll have two in the Americas and one across EMEA.
I was able to celebrate those wins and get excited about the year ahead. I was also able to reflect on probably some things that I should have realized earlier—mistakes or at least miscalculations, things I could have done better. One thing that I’ve been mulling over and trying to kind of hire for five, six months is to hire a podcast and YouTube producer who can help with this podcast, the MicroConf podcast, potentially TinySeed Tales, although I do have a good producer on that already, and our MicroConf YouTube channel.
I realized over this break and upon reflection that I should have gone after this more aggressively. I probably from the start should have made it a full-time hire. First, I was trying to do freelance, part-time, and then I was like, well, I could do full-time freelance, or maybe I could get multiple people. It’s just this dilly dally. I talked to some agencies and I see that as a process that didn’t go fast enough upon reflection.
I realized now that it has been slowing producer Xander and I down to still have too much going on in the day-to-day of these things. There are people out there who can produce this content really well. When I say produce, I mean, I’m still the host of Startups for the Rest of Us and the emcee of MicroConf. There’s all of that, but there’s all the behind-the-scenes stuff that needs to get done.
I am going to be looking at hiring someone full-time to help with all the things I just mentioned—podcasts and YouTube. It’s time to do it. We put out so much content kind of on the side. It’s on the “side” and I don’t mean our main events that producer Xander is putting out, all the MicroConf stuff, but everything else has just always been a side project. I wished I had realized that sooner.
If you are someone who listens to the show, you’d probably be a perfect fit. If you are either audio or a video editor/producer, someone who can weigh in on content decisions and help us ship more stuff, I’m going to be putting a job description together. Please do reach out to me at rob@microconf.com because I’d love to have a conversation.
One of the other things that I reflected on that I would have done differently in 2021 is when we decided to schedule the MicroConfs, we clustered them together and kind of a roadshow. There are going to be four of them in four weeks. Then we had to relocate to London, so it’s going to be five in five weeks. We couldn’t have London because of Delta, so we wound up doing four in four weeks. It was a ton of work and it wasn’t something that I think we’ll do again because spacing them out is fine. No one else cares.
Attendees coming to one event don’t really care that there’s another event the next week, but it did put a ton of pressure on producer Xander, who’s trying to basically plan all these events all at one time, and then it was a lot of travel in a short time span, which is obviously hard on some of us and hard on me because of the family back home.
This wasn’t one that I feel like is—I wouldn’t say, oh, it’s a mistake. It was an experiment. So many of these things in startups are experiments. We just made the call, we got excited about it, and then when we did it, it was like, huh. Xander and I looked at each other, let’s not do that again.
What we’re looking at in 2022 is making a change and it actually gets me excited to look out and think, okay, well what if we had one event almost every month in 2022? There’ll obviously be our flagship growth events, then we’d be looking at some local, which are the one-day events, and then a couple of remote events as well. I have a couple more thoughts for you, but I want to roll the tape of my 15-year-old when I asked him what are some of your hopes or goals for 2022.
Son 2: I’m hoping 2022 is finally going to be the year that COVID ends. We drop the mask mandate and I can walk around the school again without masks, social distancing, and stuff. That’ll be nice. It’s also going to be the year that I turned 16 so I’m hoping to get my driver’s license. If I finally stop procrastinating, finish my book.
I’m also hoping to get a good gaming computer, not the one that I have now, so I can run stuff on high graphics without my CPU spontaneously combusting. I’m also going to try and expand my Warhammer 40,000 collection. I own a decent amount of stuff, but no complete armies yet. I’d like to fill those out.
Rob: By the way, if this format feels familiar, you’ve probably heard it on Zen Founder. Sherry’s the one who has actually done a lot of interviews with our kids and bringing them into the podcast episodes. I’ve never done it on Startups for the Rest of Us, and it was just so easy to do. These interviews or these short clips of the boys were actually recorded while we were in Jamaica, and that was one of the advantages of being there with a family with a microphone in hand.
I want to leave you with one final thought about the power of focus and the idea that most of us have shiny object syndrome. Most of us take on too many things and continue to work on things that aren’t working. Maybe we don’t know they aren’t working because we’re not measuring the right things. We’re not evaluating the data, or maybe we do know that they’re not working but we do them anyways out of a sense of obligation because we just don’t take the initiative to stop doing them or because there’s some kind of emotional attachment to doing these things that we feel like if we don’t ship one blog posts a week, even if we’re getting no traffic to our blog, that somehow we are failing as a founder.
In my experience, the things that we decide to stop doing or the things we decide not to do are as important as the things we decide to do. As you reflect on 2021 and 2022, or even if you’re listening to this a year or five years from now, I encourage you to think hard about what’s working, what’s not, what do you want to do more of, what do you want to do less of, and what do you want to stop doing in the new year?
Thanks so much for joining me, not only this week but this year. I know this is going live shortly after the new year, but it is technically the last episode of this show recorded in 2021. I look forward to being a part of your journey throughout this new year, whether that’s through strategies and tactics that I’m able to pull from guests or share from my own experience, from the experience of the founders that I work with, inspiration from the stories told on this show, or through the mental frameworks and almost the more philosophical topics that I sometimes cover in my solo adventures.
I just look forward to being on this journey with you. My hope is that you enter a prosperous and happy new year with you and your family and with you and your startup. It’s great to be along on your journey. As always, I’ll be back in your ears again next Tuesday morning.

Rob: It’s not just any show, it’s Startups For the Rest of Us. It’s episode 583. I’m your host, Rob Walling, and I catch up with Sam Parr. He’s the founder of The Hustle, a wildly popular email newsletter. He grew to several million subscribers, eight figures of annual revenue, and he sold it to HubSpot earlier this year. Sam is also the co-host of My First Million, which is a podcast that really dissects business ideas and looks with a pretty unique lens about areas in our economy, in specific industries, or just in the world where new business ideas and new startup ideas can take shape.
I really enjoyed today’s conversation with Sam because he’s just an interesting person to talk to. He’s thinking about so many things. He’s educating himself by reading books. He goes off on research tangents, I can tell.
I’ve heard some episodes of their podcast and you can tell that he’s just constantly thinking about how do these things work. Why do they work? Why are they maybe broken on the edges? Where are their opportunities to be found? As a result, I felt like the conversation he and I had was super interesting, and I hope you do as well. Let’s dive in.
Sam Parr, thanks for joining me on the show.
Sam: What’s up, man?
Rob: It’s good to have you on here.
Sam: I was reading your blog. I couldn’t afford to go to your event when I first started out, but I read your blog. You’ve been doing it for 10 years maybe, right? I feel like it’s been since 2012-ish.
Rob: Yeah, I started the blog in 2006, then wrote the book in 2010, and then this podcast started in 2011.
Sam: Yeah, I was reading your blog for a very long time. I’ve always wanted to go to your event and I modeled some of our events after your event. But when I first got going, I couldn’t fly somewhere. It was a big deal.
Rob: That’s so funny because you and I have never met and it’s cool to meet you for the first time. I was googling for a calendar event last night. I’m in my Gmail and I typed in your name. There’s an email from 2014 from you when I lived in Fresno. I actually want to read it.
It’s funny. You say, “Hey, Rob. I followed Justin Jackson on Twitter and he recently retweeted one of your tweets, and since then, I’ve been reading your blog a ton. Anyway, I saw that you’re into bootstrapping and live in Fresno. I’m throwing an event about bootstrapping in San Francisco on January 22nd and wanted to give you a free ticket. I would love to be able to say hi. Password for the ticket was Sam is cool,” which I thought was so great.
Then you’re like, “P.S. The pre-launch strategy case studies have really helped me for launching my own blog.” It’s a good cold email, right? I get a lot of these.
Sam: That’s awesome.
Rob: Yeah, and I replied. I was like, hey, I would love to, but it’s like a six-hour round trip and blah, blah, blah. I’m running MicroConf and all this stuff. Then we got into a thread about I was about to go on Mixergy again and we started talking about that. Then you asked me a question about time management. It’s so funny, man, how you and I run not parallel lives, but parallel industries or parallel tracks.
We do a lot of similar things with events and email marketing. It has been a big impact for both of us. My last SaaS app obviously was Drip. It is fascinating to me that we haven’t run across each other before this.
Sam: I’m happy that that email that I wrote to you was good. It’s 2014 so I was probably 24, 25 years old. I’m happy that I was professional sounding and not like a douche.
Rob: Yeah, totally. That could definitely happen. I have met a few people in person who I will find emails from years ago and I’m like, what were you thinking doing that email? But this one was definitely not like that.
Sam: That’s why you know it’s real. People say I’ve been a fan of you for a long time, you have proof.
Rob: Yeah. No, that’s so cool. But I want to talk about The Hustle. I want to talk about a lot of things today—hotdog stand, The Hustle, and selling the HubSpot. These are really interesting topics to me. You build, correct me if I’m wrong, but it’s thehustle.co. It’s a new site, but it’s an email newsletter. You build it to eight figures in revenue, is that right?
Sam: Yeah. I mean, how do we not sell? I kept working on it for a long time. There’s clearly a path to $100 million revenue, I think, with these styles of businesses.
Rob: How is that? Because I think a media company is just sponsorships and this and that. Yeah, I just love to hear how you did this.
Sam: When we first launched, I always wanted to start a media company. I admired Ted Turner. You can’t really see it, but I’ve got this wall with pictures behind me and Ted Turner’s on there and so is Felix Dennis, two guys who had media companies. One’s British, one’s American.
I always wanted to do media because I like content. I love sharing ideas. Even in 2012 and 2013, if you looked at the math, you’re like damn, to build a media company to be huge, it’s really, really challenging. This page view model sucks. Upworthy and all that stuff got a lot of traffic at the time, but it was very clear like, oh, man, this is […] content and this is not going to stand the test of time. This sucks. But good content—at least what I describe as good content is […] I liked—was hard to share and get the page views.
I’m like this model stinks, so I got to figure out how to do this. I read Mixergy. Andrew had an interview with Ben Lerer, the founder of Thrillist, and two or three other people who had email lists, and I’m like, oh, that math is pretty crazy. One writer can reach as many people in the world. I just type in an email, and if I have your email address, the likelihood that I can get you to read it is pretty good, at least higher than writing an article.
I just thought, what niche that I care about is big enough to reach millions of people? I picked business and technology and it worked. In order to build a $100 million business, you easily can get—when I say easy, I mean simple. So it’s simple but hard. You easily can get to like $40, $50 million a year in sales, through advertising sales. The way that you do that is you charge $35 to $40 per 1000 sends, you have one major list that has 3 million people, and then you have a handful of smaller lists that are in similar but different targets.
Collectively, your list should be like five million people that will get you to around 50 million in revenue. Then you have a subscription service, which we did, trends.co. When we sold, it was going to do close to eight figures in revenue. If you just did trends, but for different niches, that can get you to another $30 or $40 million in subscription revenue. Then our events were pretty thrown together. They weren’t the best thing, but they made seven figures, and that definitely could have gotten to like $10 million in revenue.
Rob: That’s incredible. A 5 million person email list is anomalous. That is not something that exists everywhere.
Sam: I think it’d be incredibly challenging to get five million on one list, but we had nearly two million on one list. It’s easy, in my opinion, to be like, well, if you give it two or three years, it definitely could get to three million, and then you could launch like 8 or 10 offshoots that could get hundreds of thousands and collectively add up to five million.
Rob: Got it. That’s how you do it. How did you grow an email list to two million?
Sam: We got between 90,000 and 150,000—I don’t remember the exact number in the first year—just through me blogging. I would blog a lot. In the first six weeks, we had maybe a million people come to the website, and of that number, 3% or 5% entered their email. I just continued doing that for a year and that added up to 100,000 people. I would just post content like crazy. Then eventually, from around 200,000 or 300,000, I forget the exact number, we started buying ads. We could buy ads on Facebook and do an arbitrage.
Rob: That’s what I was going to ask about. It sounds like it’s anything else. It’s driving a ton of traffic and having a funnel. You obviously had email capture and a certain percentage signed up.
Content marketing is something obviously a lot of SaaS founders who listen to this podcast use. But the biggest lists that I know of like the AppSumo list and The Hustle figured out a way to pay for subscribers. That’s fascinating. How did the economics of that work? Is it because we were able to charge such a high CPM or cost percent?
Sam: It’s a SaaS business. It’s not literally SaaS, but it’s the same. If you get a SaaS calculator on churn and LTV and just use our numbers. We email every day, but Saturday.
If we’re emailing every day but Saturday, that’s 26 sends a month-ish. Then you say, so it’s 26 sends a month, your churn is 4% or 3% a month, you’re charging $35-ish per 1000 sends, therefore, if you want your payback value to be like—I forget what we wanted ours to be—it was pretty tight payback time because we didn’t have a lot of money. Basically, if you could spend $3 to acquire a person, we knew for a fact that we could make like $18 off of them. So it was like, all right, just spend.
Rob: Right, so there was a lifetime value.
Sam: Yeah. It was incredibly sophisticated. We had a team of maybe six people dedicated to this, we use Periscope, and we had all these dashboards every day. We check them and we would say, we had all these sources. Let’s say it’s Facebook and then a subset of different ad sets and audiences, then Instagram and then a subset of different, and then podcasts and then which podcasts and everything and which creative.
Then we would say, all right, within eight days of that sample size, what’s their open rate? We’d categorize them as gold, silver, and bronze. We do the LTV of gold, we do the LTV of silver and bronze, and then we’d say, all right, spend more there. It was quite sophisticated.
Rob: That’s something that really high end SaaS companies—I say high end or […] sophisticated SaaS companies do as well—is they get into their funnel and they look at their retention grid. We used to look at in Drip and I could see it was, oh, by month 10, we’ve only retained 84% of people. A lot of folks shy—especially in the bootstrapping community—away from that stuff. They shy away from getting into the metrics, getting into the weeds, and they just kind of want to handwave it and build a great product.
Sam: Because it’s really hard. Technically, I don’t know how to do it. I can look at it and feel it out. But I had to hire guys who could really properly do it like scientifically do it.
Rob: You had a subscription business. You had effectively a SaaS business without the software, and then that’s where you say it’s simple but hard because SaaS is really complicated. SaaS is complicated and hard because building a product and then doing everything you’ve done—doing the marketing, doing the funnel, making the sales—is, I would say, a more complex business than a newsletter. Do you think that’s accurate?
Sam: Yeah, I think so. I think maybe there are more people who could build a SaaS business than build a business I did, maybe. But I didn’t find my business to be intellectually challenging at all. To me, it was like getting big muscles. It’s like, well, if I just lift weights, increase those weights every week, and then eat a lot, you’re going to get big muscles. It’s just going to take like four or five years.
That’s how I felt about my business. I was like, look, I’m just going to create good […], which I’m very talented at and I’m skilled at. I’m going to hire good people to do it, and I’m going to do it for five years. It was pretty straightforward on how to do that. I would say that my business was simpler, but SaaS is way more valuable for a reason.
Rob: Right, the exit multiples. You sold to HubSpot, which is really interesting to me when I heard that because I would expect you to sell to a media company being a media brand. You had a tweet about this recently. I was reading a tweet thread. But what was behind that decision to sell to a SaaS company?
Sam: When we launched, I always thought like a Salesforce or at the time, when we all thought WeWork was legit, I thought WeWork should buy us because I’m like, man, look at the math. I knew how much sales we’re driving to some of our advertisers. I’m like, if one of them just bought us, it’s far better to drive 5000 customers over the course of a year to a thing that spends $40,000 a year in subscription revenue than it is to just ad arbitrage this. It’s far better.
The issue was I didn’t think that Salesforce or another company like that would be bold enough to believe that that could be true. HubSpot hollered at us, and I was like, finally, someone is brave enough to do this. When HubSpot bought us, they were worth $16 billion. I looked at their numbers, their quarterly earnings report, and I was like, these […] guys are growing 45% a year or whatever it was, whatever they reported. They only have like 100,000 customers. I’m pretty sure literally every business in America could potentially be a HubSpot customer.
I think this has legs. So I was like, I think this could be a $100 billion company inside five years. This is a no-brainer. We have to do this because it could take off. At its peak so far—a couple of weeks ago before the sell-off—it was like $40 billion. It’s proven to be not all the way true, but close to true.
I look at a lot of the media companies’ stocks and it’s like, […], I don’t want to own BuzzFeed. I don’t want to own Vice. I don’t want that. It’s also a really crappy life. Making money off of ads, it’s kind of addicting and it’s kind of exciting, but for the employees, it’s pretty […]. For someone who wants to be a purist and a writer, it sucks that you have to—sometimes, even if you say you don’t, in the back of your mind, you don’t say certain things because of your advertisers.
I didn’t care because I’m like, I own the company. It’s not like I can get fired. But I was like, this woman, Katie, just sold all these ads. If I act like a douchebag, this advertiser is going to get canceled and she’s going to lose money. In the back of my mind, I was like, I don’t want to hurt her, therefore, I’m going to tone it down. I think that sucks. I don’t like that.
Rob: Is your model still the same or is it funded by HubSpot now and there are no ads anymore?
Sam: The way it works, we went into the year with a bunch of ads booked. This year we probably would have crushed on ads because of what’s happening. We gave it all back. We canceled all of our contracts. HubSpot’s the only advertiser.
We make money through trends. Trends is a good business, and that potentially could pay for a lot of the HubSpot media budget. The math is simple. It says, let’s just say that they have 100,000 customers, they have X amount of leads that they’re getting per year, and Y percent of those leads become customers. Their line of thinking is if we acquire The Hustle, that just gives us more leads and more customers, and they can track all of that.
Rob: Absolutely. It’s top of the funnel for them. With MicroConf or TinySeed, would I acquire an email newsletter that was aimed at SaaS people? Absolutely because I know the numbers. It doesn’t make sense, and for HubSpot at that scale, to me, when it was announced, at first I was like, wow, that’s a really interesting acquisition. Then I dug into it and I was like, oh, this is a seven-figure email list, which like I said, is an anomaly.
HubSpot knows their numbers. They’re really smart marketers. They know their funnel. I know Dharmesh. I’ve known him for years. I know how that culture must be. It makes a ton of sense why they would do it.
Sam: Also, just a few other things. For example, a lot of people in the SaaS industry are really good at just content marketing. Content marketing, if you’re a journalist—which I’m not but I hired a lot of those folks—that word content marketing is like the worst word on earth. Because they say, no, I’m not a marketer. I’m out looking for the truth, and I’m creating cool […] that people love, but I’m not marketing.
Anyway, HubSpot, I imagine they were like, we already reached this amount of people based on search, but how many people share HubSpot content just because it’s badass? Maybe they’re like, not as much as we hope. With The Hustle, we didn’t know anything about SEO. We only wrote stuff that we thought was cool and we grew entirely from people sharing. They’re like, man, if we bought this, maybe we can get some of this DNA in our company. I imagine that’s how they felt.
Rob: Yeah. When I talked to SaaS founders about B2B marketing approaches, I mentioned content and SEO separately. They’re related, but they can be done separately. You can do content marketing that is truly driven just on the virality and the pop of getting on high on Reddit, high on The Hacker News, and all these things that have no SEO value; or you can create stuff that doesn’t do any of that and is solely focused on SEO or you can create content that does both. I’ve seen all three succeed. It sounds like The Hustle originally was just the content side, and now HubSpot’s bringing that SEO expertise.
Sam: Yeah. To me, when people say content, they’re like, how do I do good content? I’m like, I don’t know, man. That’s like asking me, how do you do good art? Are we talking painting? Are we talking to make you rich? Are we talking about how to make you happy? Are we talking about music? There are a thousand different things here so we got to be more specific.
Do you just want to rank on search? Okay, let’s talk about that. Do you want to go viral through sharing through just emotions? That’s another thing. I think you can do both, but they serve different purposes and they are both important.
Rob: Right. Lars Lofgren who ran SEO for KISSmetrics, then I Will Teach You To Be Rich, and now he’s on doing his own thing focuses on—it’s all about SEO, but he needs the viral pop in the early days or wants some type of pop in the early days to build the links to then get the long tail SEO. For him, he’s like, all my content, if I’m not getting organic traffic, 6, 12, 18 months down the line, I have failed. His focus is to get that recurring flywheel going.
Sam: Yeah, and that’s really hard. It’s kind of hard, but it’s not that hard. You start seeing patterns. With content, I can tell you which type of emotion will get shared more often. I can read a headline and be like, oh, that’s going to take off. You’re not right 100% of the time at all, but it’s like a batting average. I could be right like 30% of the time and that’s really good.
Rob: Right, and you get better. It’s a skill. It’s a learned skill. So you work at HubSpot now.
Sam: Yeah, kind of. Right before we sold the company, I had recruited a guy who ran—I think I could actually say this now—Motley Fool. He was an executive there who was the head of growth. His name is Jordan, and I wanted him to be CEO of The Hustle.
We got this deal worked out and everything. Then HubSpot hollered at me and said, we want to buy you. I said, this is a good deal, I’ll take this. So I had to go to Jordan, man, I’m sorry, I have to do this. I told HubSpot, look, I had a CEO lined up because this company’s gotten too big for me. I can’t be a CEO of it. They go, all right, fine. We’ll replace you and you only do the podcasts. I go, great. Deal and they hired Jordan.
Jordan is now the boss. Jordan previously was an executive at Motley Fool. He is now the boss and my only focus is on our podcast. It’s working pretty well. I think in December we’ll hit 1.5 million downloads.
Rob: Wow, good for you guys. The podcast My First Million?
Sam: My First Million, yeah.
Rob: Which is a trip because My First Million was on my radar. I had heard about it, but I thought it was different than it is. When I listened to it I was like, oh, this is really good. But I thought it was kind of a start your business type thing, and it’s like, I’m not there anymore. I used to listen to those. But then Courtland Allen, you guys did an episode swap, I believe. Courtland and I are good friends. We go back years. I was like, all right, I’m going to listen to his episode. I was like, I really liked the show. Your format is so dynamic. Do you have a fixed format, even? I probably listened to 10 episodes and I feel like it’s just whatever you guys want to talk about?
Sam: It is. The name is really bad. Of course, my first company was called The Hustle., so clearly, I’m not good at naming things. It was called My first million because—so the hustle owned the podcast the whole time, and Sean was one of my closest buddies. He goes, I want to launch a podcast where I’m talking about people getting the first million users, the first million revenue, or whatever. That’s what he did.
For years leading up to that, every week, me and Shawn and a couple of their buddies would meet and just brainstorm. For some reason, we started doing this. Someone didn’t show up for his interview. and he goes, hey, I booked the studio but no one showed up. You guys want to come riff and just do our thing what we do? I go, yeah, all right, whatever. I showed up, we did it, and then it hit. Then it was like, all right, well, let’s just brainstorm.
We started brainstorming, and that took off. But then we’re like, let’s just talk about whatever we want to talk about and maybe people will find it interesting. That’s what we do now. When we log in, basically, we log in at 1:00 PM, we both pop up on our screen just like you and I just did before this, but we purposely don’t say a word to each other. We won’t talk to one another or if someone says, how was your weekend? We say, shut up, don’t say anything. We hit record then we have the conversation that we want to have so that way it’s far more organic. Then we don’t really edit it and we just put it out there.
This past November, so a month ago, we just started doing some growth stuff. But prior to that, if you asked me how it grew, I would be like, I don’t know, man. It just did. I have no idea. It still shocks me that people listen to it.
Rob: I guess on growth, it’s like no one I know has been able to growth hack podcasts, so I do want to ask you about that one.
Sam: No one.
Rob: Yeah, it’s always—
Sam: I know one person. Jordan Harbinger.
Rob: Okay. What did he do? What was his approach?
Sam: I’ve talked to him. Jordan has been my homie for a while, and I was like, you know, Jordan has I think 10 or 15—I forget the number, but I believe on the high end it’s like 15 million monthly downloads. I was like, Jordan, are you 15 times better than my podcast? Let’s say we’re at a million. He goes, no, if anything, I could be a little worse or even just slightly better. But I’m probably 15 times better than you at marketing. I go, what are you doing? He goes, all I do is I buy ads on podcasts. That’s all he does. He goes, that’s the only thing I’ve ever found.
So I guest on other podcasts, I buy ads on those podcasts, and that’s all I do.
Rob: You said you were going to start doing some growth stuff for your podcast, is that what you’re going to do?
Sam: Yeah. We bought a bunch in November, December, but they don’t go live until after the new year.
Rob: Wow. I guest on a lot of podcasts, I’ve never bought an ad. It’s something I need to think about. Something that I did for this show last—when was it? It was probably pre-pandemic. So I did some tests because I’m an old school marketer, right? I used to do direct response stuff. I grew HitTail on Facebook ads. I tried Facebook ads, and of course, getting someone to switch mediums doesn’t work. It’s like they’re on Facebook, they don’t want to click over and subscribe to anything. So then I started buying ads inside podcast players.
Sam: That’s what he does as well.
Rob: Yeah, Pocket Casts and there’s Downcast. I mean, there’s more than most people think there are.
Sam: Yeah, there’s Castbox, there’s Stitcher. Maybe there are 30 or 50 that could do it.
Rob: Yup. I tried a bunch of them and I actually had some luck at it, and then they got really expensive when the COVID hit. I mean, that price quintupled, I think, overnight. I don’t remember what the price went to, but it was like $4 per new user. Of a podcast, I don’t know. That’s a pretty long funnel.
Sam: You have to do the math, so it’s the same exact thing. So Jordan’s math, his show is like every day. It’s like, well, if my show is every day and I have three or four ad spots every day, it makes sense.
Rob: He directly monetizes it. This show is not directly monetized, obviously. It’s always just been the podcast of MicroConf really. That’s how MicroConf pays the bills, you know? It’s like, can I even equate a listener of this podcast to tickets sold or whatever? It’d be pretty hand-wavy.
Sam: Also, it depends on how big your target market is. We slowly got into a little bit more pop culture stuff, not entirely, but we’ll kind of go on that. People, shockingly, will say that they listen because they find it to be funny and entertaining. That’s weird to me. I can’t believe people are laughing at those stuff. But anyway, because of that, our total addressable market I think has gotten a lot larger so we can do that. Jordan, his addressable market is just anyone so it’s a little different.
Rob: I’m envious of businesses like that. I think it’s a genius to just have a wider focus. I’ve always been focused on software. First, it was software startups and now it’s SaaS. It’s just a small world. It’s not as big as a lot of people think. You had a luxury with The Hustle and now with My First Million that you have broadened that scope. I think it’s a really smart thing to do.
Sam: Yeah. Do you use TikTok?
Rob: I don’t.
Sam: You should. It’s pretty fascinating. When I was 18 and I was into business, I was considered a freak. Not a freak, but people were like, what the hell? So when I was 21 years old, I got a job offer at Airbnb. They had like 200 employees and my mom was like, what the hell is a startup? That sounds like a Ponzi scheme. This is not real.
Now it’s way more common. There are 18-year-olds on TikTok who have millions of views and all they do is talk about startups. The target market is quite huge. We did something really cool. Last week, we said on our podcast we’re going to get $5000 to maybe two or three people who take our YouTube videos, chop them up into clips, post them on whatever social media channel, and use our hashtag. We’ll give you $5000 based on some combination of do we think it’s cool, creative and does it have a lot of views.
There’s a handful of guys that have channels now on TikTok that have gotten roughly 10 million views in a week. It is crazy. The target market for business content, particularly amongst young people, is significantly larger than I thought.
Rob: All right. Well, I got to turn into TikTok now. I’ve been around long enough that each of these is like, really, another one? But I hear it. You’re not the first person to tell me this, I’ll put it that way.
Sam: I’ll share this with you. Check this out. Can I send a link here?
Rob: Yeah.
Sam: Here it is, chat. So if you click that thing I sent you, and you’ll see that #MFMclip currently has 8.6 million views. These guys are making videos based on our stuff. I don’t think you could see the view count on your computer, but if you look on your phone you’ll be able to see the view count. Some of these videos have over a million views.
Rob: Is it because they have channels?
Sam: No. They just launched these. Their channels are named after us. There are channels like MSMsnips or MFMclips.
Rob: Got it.
Sam: They just made them.
Rob: We’re doing this on YouTube and not seeing anywhere near this reach. It sounds like the blue water is TikTok. That’s what it seems like.
Sam: Yeah, but I didn’t know that. It’s all like these 18-year-olds making these clips, and it boggles my mind how they’re able to do this. It’s huge. Collectively, we’ve just reached. We’ve just gotten an additional 8.6 million. This contest, by the way, is seven days old.
Rob: Right, and it’s not costing you that much.
Sam: It’s going to cost us $15,000.
Rob: Yeah, it’s a great hack, man. One thing you guys do on your show is you bring business ideas. You’ll brainstorm business ideas and you’ll also analyze existing businesses. There were some trucking companies and you went down a rabbit hole of like, I saw this name, then I Googled it, and I found out they’re a big conglomerate.
The business idea side is fascinating to me. I think folks listening to this are always trying to come up with bootstrappable ideas that put you on the spot. What have been some recent bootstrappable business ideas that maybe you and your cohosts have discussed, have thought about, or just anything that’s on your radar that’s pretty fascinating? If it’s software, that’s cool, but if it’s not, that’s fine too.
Sam: Is that okay if I change software to internet?
Rob: Yeah.
Sam: The thing about our show is basically I am not an expert in, let’s say, email marketing software. I’ve used a lot, but I wouldn’t say I’m an expert like you. Let’s just say that that industry interested me. I would have to go and work at Drip, ConvertKit or MailChimp in order to kind of master and spot problems. It’s really hard to spot problems to solve.
With our show, what we try to do is make it so you don’t have to go work somewhere. We just show you interesting problems. One of the most fascinating problems that I’m obsessed with at the moment, I’ll tell you a couple. But the first one is the trucking industry. A lot of people say autonomous trucks. You just said I talk about trucks. That’s because I’m a little obsessed with it.
But right now, in America, there’s a huge shortage of truckers. A lot of people who work in the startup Silicon Valley-ish industry like we do, we don’t really give a […] about that because we don’t know many truckers and we don’t really think about it. We just think, oh, it’s this other group of people who just gets it done. Well, I have a legitimate fear that in the next 5 or 10 years, how are we going to be able to get […] to our house? How are we going to buy stuff without trucks?
A lot of people say like, well, driverless trucks are going to be a thing. I’m like, probably not. I don’t think it’s going to be as popular as you think and as soon as you think. A huge thing that interests me at the moment is basically just lead gen for trucking companies. I spun up a website just to see if I could do this, and I made $1000 in two days off of it. I’m very fascinated by it. Lead gen for truckers, I think that a lot of the people in the space—so basically, you get paid $50 to $100 per person who applies for a job with a commercial driver’s license.
Rob: I was thinking it was lead gen of people hiring them to haul stuff, but you’re saying it’s employees. It’s just finding new drivers? Because of the shortage.
Sam: Yeah, there’s a massive shortage and they are really struggling. What I would like to do is start with that business. I think I could scale that to seven figures in revenue and make it relatively profitable, then use that money to actually create a proper company where I could make the environment better for these guys because I think it’s messed up. I’m an investor in this company called CloudTrucks, which is doing the same thing, so I’m very fascinated by that business.
What else am I interested in? Okay, I have an interesting one. Here’s one that we just talked about. It’s so fascinating to me. There’s this company called Storyworth. Have you heard of Storyworth?
Rob: Yeah, and I had in my Trello board forever to send it to my parents. It […] an email once a week.
Sam: Dude, it’s so cool and it’s so simple. I’m a customer of theirs. and the guy who started it, I shared an office with him. It’s called Storyworth, storyworth.com. It’s the simplest […] on earth. It’s one guy running it, and it’s very easy. You spend $25 or $50 a month (I don’t remember) and it automatically sends email prompts to family members and asks them questions about when they grew up. What was your favorite memory about your father? Eventually, they write. Then after 30 weeks or something, you’ve got this practically a book, and then you could upload pictures.
Now you got this book, and you could pay an additional fee in order to get this book. I think it’s amazing, and it’s the simplest business. I think that you could launch this in a weekend. I know it’s working because these guys, Storyworth, I see them buying ads on YouTube, and I think I even saw them buying ads on TV. I’m almost positive that the company only has two or three employees. On LinkedIn, they’ve only got two or three people. I knew the guy who started it, Nick, and it was just him for a long time.
That business is incredibly fascinating. I think there’s actually space in the market for more people, and they could do it slightly differently.
Rob: Right angle it differently. Yeah. I’ve seen them advertising. I’ve seen their ads on Instagram, and I used to hear it on some personal finance podcasts I listen to. That’s super interesting. You have a recent podcast episode that it’s the company you would build if you have the energy and the time, and then starting a company based on who you want to employ. What did you dig into that?
Sam: It was energy, time, and money because that’s an interesting question. One thing that I think is kind of crazy, have you ever studied recycling?
Rob: No.
Sam: Okay. Do you have a blue bin at your house?
Rob: Yeah, two of them.
Sam: That blue bin, that’s […]. That gets thrown away in the trash and burned.
Rob: Really?
Sam: Yes. It’s a complete lie. The energy that it takes to recycle—you live in Minneapolis, right? So they’re pretty green. I bet that they have these areas that have these huge bins where you throw plastic ones, this bin plastic too, and this bin is green glass, blue, or whatever. It doesn’t work in such a way where you can just give a bucket of tons of different plastics to a company, they sort it out, and turn that and reuse it. It’s all dirty and it’s got styrofoam in it. It doesn’t really work that way.
The majority of stuff that we’re throwing away in our blue bin just goes to the trash. We created this system so we feel good about consuming more […]. It’s like, oh, I’m recycling. It’s okay. It’s not a big deal that I just bought 24 cans. It’s no big deal. It kind of is a big deal. I’ve talked to a lot of waste management companies and they’re like, we try, but it’s just impossible.
It costs more money than we make from it. It takes actually more energy than we’re actually saving. What I’m incredibly fascinated about is recycling and how we can solve that problem because I think it’s like a sin—I don’t believe in God—against humanity where I order something from Amazon and they send me all of this packaging. I’m just going to throw it away and it gets burnt. I feel horrible that I just used that much energy to get the stupid book.
I’m incredibly fascinated by what’s going to happen with different recycling businesses. I think there’s a world where you could create a better recycling business. There’s actually been a lot of people. The company Waste Management was started by a guy named Wayne Huizenga. Wayne Huizenga launched Waste Management and he bootstrapped it. I think there’s a world where you can do that. Additionally, Wayne Huizenga started Waste Management. Then from there, he started AutoNation, the world’s largest car dealership. After that, he started Blockbuster
Rob: Wow, unreal.
Sam: And then he bought the Miami Dolphins. I believe he bought the Miami Dolphins and then one more sports team. I could be getting the sports team wrong, but it’s Florida football and maybe a baseball team. This guy is amazing. I read his biography because I’m so interested in waste, and I’m like, how do we solve this problem? Recycling is a huge industry that I think is under-talked about. I think this problem is not discussed enough about the amount of waste that we have. I’m like, what do you do?
How do you rally around this? There are a few interesting things. There’s this company called the Buy Nothing Project. It’s basically started by two friends in Washington. They’re now in 44 different countries. They create a website with local groups, and they form these gift economies. It’s basically a ton of different Facebook groups where people lend stuff for free or they give stuff away for free—just stuff that they don’t want. This company now has 4.2 million participants, 44 countries, 6500 communities, and 13,000 volunteers.
It should just be like, reduce reuse, not reduce, reuse, and recycle. Just say, reduce reuse, and then just cross out that recycle. Anyway, that’s an interesting way of solving this problem. I’m kind of obsessed with that at the moment.
Rob: That’s interesting. It’s fascinating how deep you go on these things. I mean, that’s what makes your podcast, your show so interesting. It’s not surface-level cursory thinking about recycling. It’s like you’ve just told me I knew 5% of what you just […], 20 times more about it. You obviously did a bunch of research. You must have read books on that. I mean, what drives you to do that? Is it just natural curiosity, the desire to learn about these things?
Sam: I’d make a joke, I’m a manifest cowboy. I remember being a little kid and walking around a city and seeing skyscrapers. I’m like, holy […], a guy or a woman just came up with this idea and convinced all these people that we should build buildings that are 50 stories high, and they built it. That’s amazing. I cannot believe that you could do that. But I was like, but I can’t do that. Others could do that and super few heroes can do that, but not me.
Once I got a little success in business and when I had the Hustle Con and I met the founders of WeWork, the founders of Casper, folks like you and your wife, and people who are doing interesting […] I was like, oh, they’re smart. Maybe they’re smarter than me, but they’re not billions of dollars times smarter than I am. We’re in the same ballpark. We can shape the world any way we want. I’ve always been obsessed with the idea that I can bend the world to my reality.
So I loved figuring out how things work. If you read his biography about Wayne Huizenga with Waste Management, I’m like, oh, that was super easy what he did. It took a lot of work, but it was very straightforward. I could totally do that, but that’s how I wanted to spend my time.
Rob: I think that’s such a good lesson or just a way of thinking about things that I think some entrepreneurs have naturally and I think some entrepreneurs learn along the way. I think folks who are listening to this today, that’s something that you should take away from this conversation is the idea that there aren’t many outliers. Like you said, the people who sell a company for a billion dollars are just not that different from us. They’re probably about as smart as most of us. Maybe they had a leg up.
I mean, I always talk about it as hard work, luck, and skill. Maybe they got a little lucky. Maybe they worked a little harder, but we can all work hard. Developing skills is something any of us can do now. It’s not like 50 years ago where there’s no internet and you have to go to university to learn anything and maybe you don’t have the money to do it. I often say, we live in the best time in history to be an entrepreneur because I truly believe that you can build the skill, put in the hard work, and be successful almost on your own merit.
It depends. I know that if you want funding, but bootstrapping especially, I bootstrapped 10 businesses or whatever and no one knew who the hell I was. It was just me working hard and shipping stuff.
Sam: How much in revenue was your biggest company, like your run rate?
Rob: A few million. That was Drip. It’s much more than that now. But, yeah, when we exited.
Sam: I don’t know if you talked about it or not, but I imagine a $3 million SaaS business is definitely eight figures in personal wealth, or at least in that ballpark, I would imagine. I believe in luck, luck’s a thing. I’m not like this guy that says, well, I just worked really hard. Luck is real. You could say it’s just lucky that I was born at this time in America, but then you could also say it’s lucky that I was healthy.
It’s lucky that I came from a family that was emotionally supportive. I came from a family that could put me through a good high school and things like that. Luck is real, but I think that if you give yourself 15 years, you can create eight figures in wealth. Now, I do think that there are some people—like Elon or Bezos—I think that when we talk about people who are or are not better…
Rob: They’re outliers.
Sam: Yeah, they just have more horsepower. Their brains are just better than mine. Would I want to trade spots with Elon Musk? No. I’m super happy and I don’t think he’s happy. But I will acknowledge that I think he’s just smarter than me. It’s amazing that we’re both considered humans. That said, there are a significant amount of people who I’ve met or who I’ve read about that are worth hundreds of millions or billions of dollars and I say, you’re not better than me even at all. Or sometimes I’m better than you, but you stuck with it for 20, 30, 40 years. Bravo to you.
The only thing that you’re better than me is that you did it and didn’t sell.
Rob: Well said, sir. Well, thank you for joining me on the show today. If folks want to keep up with you, you are @theSamParr on Twitter. And of course, My First Million. It’s a good show.
Sam: That’s awesome, man. Thank you. This is cool. I’m happy we got to finally talk. I’ve been listening and reading forever.
Rob: Yeah. It’s great to finally meet you, man. Thanks for coming on. Thanks again to Sam for taking the time to join me on today’s episode. I hope you’re having a great end of your year. We’re almost to 2022. I know I’m excited about what the new year is going to bring and looking forward to what we can accomplish with our next 365 days. With that, I’ll be back in your ears again next Tuesday morning.

Rob: You guessed it, it’s Startups For the Rest of Us episode 582, where I answer listener questions about enterprise sales, crowdfunding, replacing yourself, and things that every B2B SaaS founder should know. Today, Einar Vollset joins me. He’s my co-founder with TinySeed. He joins me because there’s a question specifically about TinySeed and he knows a lot about enterprise sales. I was just a good fit to bring him on the show today.
I hope you’re enjoying yourself on this festive time of year and that you are able to take a little bit of time away from your business, not because we don’t love our businesses and enjoy what we do, but I think this is a good time of year to take a couple days and be with friends and family. Take that little break, that mental break that can help bring you back recharged with renewed energy wanting to invest in your business as we enter the new year. I hope you enjoy today’s episode. Thanks for joining me as always.
Einar Vollset, thanks for joining me back on the show. We got some good questions that I think are right up your alley today.
Einar: Glad to be here.
Rob: Let’s dive into our first question from Stuart at Growth Method.
Stuart: Hey, Rob. Stuart here calling from a wet and windy UK. Hope you’re well. I’ve been a listener for many years. Thanks so much for the podcast. I actually have a question about TinySeed. I recently invested a relatively small amount, $5000 in a couple of startups by Republic for the first time through the Reg CF crowdfunding offering.
I’m not an accredited investor, but obviously can invest under Reg CF. I wondered whether you’d ever considered or would consider enabling people within your community network and Startups For the Rest of Us listeners, the ability to invest in a future TinySeed fund under Reg CF. I thought it’d be a really nice way of bringing together people with very similar attitudes to bootstrapping, self-funded businesses, and sustainable profitable businesses, and enable them to invest $1000, $5000, $10,000 into a TinySeed fund. I’m really interested to get your thoughts. Thanks so much.
Rob: That’s a good question, Stuart. Einar, what are your thoughts?
Einar: Honestly, I’ve been thinking about this for a long time. There were recent regulations and the CF thing that changed. We’re still doing a million max crowdfunding campaigns. You could do $5 million max. This is all good.
As far as I’m concerned, there are some new requirements around the financials you need to release and things prior to doing a crowdfunding round. But we were originally quite excited about it, particularly when we started to see funds starting to raise in this way. The problem is—in the US, at least—you’re not actually allowed to raise crowdfunding for a fund. That’s actually illegal, which most people don’t know.
Rob: Such a bummer.
Einar: It is. It doesn’t make any sense to me, but you can do crowdfunding for an individual business. What some people have done, and I think probably most famously, is like backstage capital. They did a big crowdfunding round. They raised (I want to say) $5 million or something like that.
Rob: I believe it was that, yup.
Einar: Yeah, but that went into the actual partnership itself. They sold a piece of the whatever partnership that’s behind that. Legally, they aren’t allowed to go in and take that $5 million, put it in a fund as investment money, and invest that money. That’s actually not legal. I wish it was, but it isn’t. That’s where we are with that. Unfortunately, we can’t do it.
One of the things we’ve thought about is do we do some sort of a parallel vehicle where we come in and our fund, TinySeed invest in this company, and then alongside that the crowdfunding whatever can come in alongside into that business. Candidly, it became too much of a gray area legally, and honestly the ball ache and the compliance stuff just meant that we wouldn’t do. I think if we were to do a crowdfunding-type play, it would need to be us selling part of TinySeed, the partnership, which we haven’t actually discussed. Maybe we should do that, I don’t know.
Rob: And it’s such a bummer that regulation tends to be a real hampering to fundraising. We’ve talked about the 99 investor rule being a big pain that we’re literally lobbying congress with a bunch of other folks who run funds, and who run into this same problem in the US, and then there’s this one. There’s often tax implications of just trying to set up funds, like we’re setting up our EEMEA fund right now in Europe, Middle East, and Africa. That’s been like a month or two of your time. I forgot how to even set this up and it’s like, if this was all simpler, if this was Stripified or if it was AngelListified, but none of it is, and it’s a lot of money.
Einar: None of it is. There’s so much stuff in compliance and there’s different percentages. The cost and compliance are domicile and say TinySeed, EEMEA in Europe are just out of control compared to the US or even the Caymans. We were like, oh, let’s set up in the Caymans. But then you go to the Caymans, then you talk to European investors, and they’re like, oh, Cayman Islands, I don’t know. So there’s compliance and then this perception of it, too.
Actually, one of the things that I just started paying strong attention to, even beyond the whole investment side of things is this. Have you heard about the Platform Competition and Opportunity Act that’s making its way through?
Rob: No.
Einar: It’s got nothing to do actually what was asked, but it shows and tells you that kind of thing. There’s now a new piece of regulation coming through or going through Congress, where basically they’re trying to almost ban big companies from buying smaller competitors, which could have a pretty devastating effect on entrepreneurship in the US in general.
It showcases like, is it good that you can crowdfund into a fund? I don’t personally think so. Obviously, this is a selfish view, but is it good that apparently we’re going to ban large companies from buying smaller ones? I also don’t think that’s a good idea, so I don’t know.
Rob: It’s tough. Thanks for the question. It’s super interesting. Obviously, it’s something we can’t do.
Einar: I wish we could.
Rob: Yeah, wish we could is the answer. Our next question is from Simon Thompson.
Simon: Hi, Rob. My name is Simon. I’m the founder of podseeker.co. My question is around enterprise plans and pricing. If I have a standard SaaS product that I’m charging a monthly subscription for, approaching small to medium businesses who buy the product in a fairly standard way with a credit card, but now I’d like to offer that same product to enterprise-level companies. What are some of the things that I need to start thinking about in order to approach those companies?
For example, I know that deal breakers sometimes can be things like a single sign-on capability or the ability to buy with a purchase order. I’m wondering if you could expand on what some of those other deal breakers might be and if there’s anything else I just need to be aware of before I start to approach enterprise companies with this product.
The second part of the question is around pricing. How would you price the enterprise product differently to the standard plan, assuming it’s more or less the same product but with some of these potential deal breaker features like single sign-on, for example? Thanks very much.
Rob: Enterprise sales, sir. This is why I have you on this episode. Do you want to roll with this one? And I’ll say what he said when you’re done.
Einar: That actually often comes up in TinySeed companies. Often, people come along and they say, oh, I have this big contract and they’re stoked to have the logo or whatever. But now they’re asking for redlining my terms of service, or they’re asking for custom contracts, or all this stuff. They’re sending me a security questionnaire, what do I do? My standard answer is, you get them on the enterprise plan, you make them pay a ton more.
My rule of thumb is almost like—and it shocks people—if you have a public pricing, you should probably 20X it as your base price for the, we’ll call this enterprise-type plan. My general view also on enterprise planning is like a binary search to try to find the trade-off in terms of pain points and value and it’s probably higher than you think. The kind of things that we often see for enterprise type triggers, where basically what it boils down to is, if you want this, then you need to be on our enterprise plan.
Like I said, any kind of custom contract, if you have $100 a month SaaS business and people start sending you (like) Word docs of your terms of service, redlined by their legal, definitely this is an enterprise plan. You’re not going to want to do that. If your lawyer’s cheap, he’s $300–$400 an hour, you’re going to burn through (like) two years worth of SaaS income just having him review the red lines. So that’s a definite one for me.
Also, there’s some random stuff in there you want to be quite careful. If you don’t want to just say like, okay, fair enough, yeah, sure, redline, done, I want the big contract or in some cases, the medium-sized contract, because you end up in some scenarios where they’re putting in identification clauses, where if they get sued using your software, you’ll cover all expenses. You definitely want to avoid that.
Other things are common like payment methods. A lot of the time, people, big contracts, want to run it through procurement and then once it goes through procurement, it’ll be negotiated again because that’s what procurement does. They get paid, basically, to negotiate contracts. Any kind of like, we need to go through a different kind of payment system or you sign up for this service that we use to handle invoicing, that to me, is an enterprise trigger.
Like I said, very often, you get security questionnaires, and that’s less of a trigger. It suggests that the business is quite large. I guess it could be a trigger. Those kinds of things, I would say, I wouldn’t fill out a 300 security questionnaire if you’re selling something for $29 a month. But I think what you’ll end up with if you’re wanting to do enterprise sales, you need to come up with some sort of a solution for that. We see that over and over again. It just becomes a must-have part of enterprise customers.
You can get away around that or bypass most of the pain that comes from that with something like an SOC 2 certification or there was one in Europe they prefer as an ISO or something, but it’s basically a variation on SOC 2.
Or there are certifications like HIPAA compliance stuff. You might actually be asked to basically become “HIPAA compliant” just by saying, hey, sign this. It’s part of the HIPAA process. You have to have all your providers sign a certain agreement. Often, people won’t even ask like, hey, are you HIPAA compliant? I just say, hey, just sign this agreement. HIPAA is another one that’s common.
Some of the more esoteric stuff that you’ll see, particularly for very large clients and very large things is they want the code in escrow. It’s not unusual. They’re like, you’re a small company, most likely. They’re an enormous company. If they’re going to use you in some kind of mission-critical way, if you go under, they want to be able to get to the software and you do that stuff. The key thing there is to make sure they pay for it. If they want to pay to put your code in escrow with a third-party, then that costs money, so they should pay for it.
Then some of the other stuff that comes in is custom development work, which can be triggers for enterprise, but also can be a good way to subsidize future app development, basically. Just make sure that you get the IP and the right to resell and things that are in the changes. Then there’s some stuff that I would almost never do. In some cases, you get like, yeah, we want to do a big contract, but as part of this contract, we get a right of first refusal if you get acquired so we can buy you.
There are certain things that they might put in enterprise-type contracts, where basically you’re snickering yourself at future acquisitions that you don’t want to do almost no matter what. That’s the high-level view of that.
Rob: I’ll add a few of those. I think you may have mentioned single sign-on custom contracts, for sure. The other one, I remember back in the Drip days, is the moment someone said, all right, we want to use Drip, but we want to integrate it with Salesforce. I was like, ding. If you’re paying for Salesforce or any big expensive piece of software, that’s a trigger. Then an export or an integration with a data lake, I guess that’s just expensive software, but is it Redshift to the Amazon equivalent?
Einar: Redshift, yeah. Segment face is famous for this. Segment, we used to be like, it’s $9 a month, except if you want to hook up your data to Redshift, in which case it’s $150,000.
Rob: Right. That’s the thing. If I were a SaaS app and most of my plans were $100 a month or $200 a month, if one of these triggers happens, one or more of them, you want to learn them early when it comes about, suddenly, the price has to be $20,000, $25,000 a year or it’s not worth doing this. It’s not worth doing the process.
The moment I hear procurement, figure dozens and dozens of your hours to get through it, and a huge hassle in months potentially. We had this expression in electrical contracting when we’d bid on a job. There are no bad jobs, there are just jobs without enough money in them. There’s no procurement process is bad. There’s just procurement process where you didn’t charge enough money to make it worth your while. Or the SSL, or the redline, POS, or whatever. All that back and forth, you just have to.
That’s why enterprise software is so expensive because it’s not the software. The software’s pretty much the same as the one you charge $50 for, but it’s this. So excellent. It’s a good question. I hope that was a helpful answer, Simon.
All right, I had a tweet from Amar Ghose. It’s @itsjustamar on Twitter. He said, “If you had a company making $1–$1.5 million annually and you want to step away for your business,” then he has a few questions, “how would you go about finding a replacement? Where would you search? How would you structure an offer? What questions would you ask?”
I don’t recall specifically if he was saying it was like a SaaS company, but let’s assume it’s a startup. It’s a tech company. This is not a dry cleaner. Maybe he sells info products or maybe it’s SaaS, but I actually chimed in and responded with some tweets about it. I did like 280 characters and this deserves way more than that because it’s a complicated question.
Let’s start with the first one. Where would you look? How would you go about finding someone? I guess how would you structure and how would you evaluate them?
Einar: I’m really about structure more than anything else, like where are you fine, because I’m not a hiring genius exactly, which is effectively what you’re trying to do in many ways, shapes, or forms. The way that I think about it is, there are basically three different variations in this. One of them is just trying to find someone to hire, someone to replace you like a CEO type.
The problem with just saying, I’m going to pay this guy or girl like $150,000–$180,000 a year, is that you might not actually find anyone very good, just for the base salary. You have to figure out some way to incentivize them in some way, shape, or form. I think you could obviously do the whole standard stock options nature. For something like this, you’d probably have to give the person 10% or 15% of the company if they’re going to run it full time and you’re truly going to step back.
I think the very minimum for someone good would be that kind of equity option. Then the problem comes like, okay, what happens if this doesn’t work out, if this person is not very good at what they do? These are clawbacks, like how do you get them off the cap table if that doesn’t make sense.
Actually, one of the things to look at is how they do it with search funds. Do you know the structure that these guys use? Basically, a search fund is like, okay, if someone goes out, they look to acquire a business, they don’t have any money but they have some investors, and then they go out, they acquire the business, the investors bring in the money, and then the operator or whatever goes along. The way that that works is because obviously the operator who’s buying the business doesn’t have any capital most of the time. They can’t technically help buy the business.
The way that works usually is that there’s some sort of a preferred return to the investors, 4% 6%, 10%, whatever. Then after that, when the company sells or some sort of liquidity event, then there’s a profit split between the investors and the founder. The nice thing about that structure is basically what it says is, if you’re a terrible operator, you’re not able to grow the business, you don’t really get anything because you got a salary and that was it, but the investors get most of the return because of the preferred return hurdle.
If you’re amazing at it and you triple this business, then as the operator, you get rewarded quite handsomely because you get a good chunk of the profit at the end. That’s one way to do it. Honestly, it’s hard, particularly in this size, 1–1½ . It’s valuable enough, but is it really a big-enough opportunity for somebody? Someone who can come in and run a $1–$1½ million ARR business can also probably come in and run a $5–$10 million ARR business where the upside is much bigger. It’s a very tricky question.
Honestly, one of the things you should ask yourself if you want to step back is, why not just sell it? You could sell it and roll some equity. That means basically keeping a piece of the equity still, so you get some upside if things go well, but you get some chips off the table. I think it’s very hard, almost impossible to just base just on salary alone, find someone super competent to just take over the reins and run it because the incentives aren’t quite aligned there. I’m a great believer in incentives.
Rob: That’s how I think about it too, is incentives. I think that if someone’s going to run this business, I was thinking along the lines of, if it’s already growing at X dollars per month, then if someone does nothing that will continue—it’ll eventually plateau and go down—if someone doesn’t improve the business, it’ll keep doing that. That was going to be my mental baseline of looking back six months and saying, what’s been the average new MRR added each month? That’s the baseline.
If it does that, there’s no bonus for this person. I think they should still get equity in case of an exit, but there’s no annual or quarterly payout to them. Then I think they should get a salary and then some type of performance bonus based on how much they’re able to grow it.
Einar: I think one of the interesting things, I know that one of the people that do this actually from what I hear, they’re pretty secretive, is Constellation Software. This is a big firm out of Canada that buys a lot of businesses. They have operators in-house, they take it over. The way they do it is, I think, they do something like set very aggressive goals for growth or for top-line revenue. If you get to those top line revenues, you get a hefty chunk of that payout like, I think, 30%–40% of whatever comes in or something like that.
Rob: That makes sense. Then I think about what questions I would ask—back to your point—it’s going to be really hard to find someone to do this because the questions you want to ask are, have you done exactly this before? Almost, no one’s going to say yes because if they have, why are they working for you? It’s like an unusual size.
You’re going to have to have someone who is like, is it software that’s mostly built? Is it a SaaS that’s just one feature and you don’t need a bunch of product management, and it’s really just a growth exercise? Well, then you need to find someone who’s a good strategist and implementer there. Or does it need to be truly like a SaaS CEO? Again, I don’t know if this is a SaaS company. Yeah, so there’s a challenge there. When I heard it, I was like, I don’t know, man, take your millions off the table. I like the idea you had, though, that I wouldn’t have thought of, which is to keep a piece of it. You keep 10%–20% so that you could feasibly have some of the upside.
Awesome. Thanks for the question. Amar just asked it on Twitter, so it wasn’t like he sent it into the show. He did note at the end, he said he was asking for a friend, winky face, so I thought that was kind of fun.
Next question is from Luke Embrey. He’s the founder and CEO of bakup.io. He has a couple questions that I think I’ll just jump to his question about software demos. “What is the best way to give a demo for a SaaS product?” He gives two options, “Present a 10–15 minute PowerPoint, or go straight in with a shared screen demo of the actual product?” What do you think?
Einar: I have an opinion on what you shouldn’t be doing.
Rob: You shouldn’t be showing every feature?
Einar: Yeah. Don’t confuse a sales call or a sales demo with the training session. That’s my number one mistake I see people make. Deep in their software, they know all the stuff. They may have even done research on all the potential things that the buyer could possibly want to do with this based on their particular scenario and things, and that’s great. But if you spend half an hour, 45 minutes, an hour, just training on every possible thing the software could ever possibly do, a lot of the time, what you end up is just overwhelming the buyer who’s going to be like, you know what, I had pain that I thought this software might help me solve. Given how complicated this software is, I think this might be more painful, so maybe I don’t buy at all. That’s probably my main piece of advice there.
Rob: Yeah, and I’ve seen demos done both ways with presentations or with demos of the actual product. I think the way to make a demo, the actual product really well is it should obviously be populated with data, you should be touching on just a couple of pain points, and you should be listening more than you talk. You want to find out what the prospect’s goals are. Especially if you have a software that’s a lot of features, they may only want to use one quarter of it, and then you don’t really need to go through all of it.
You ask them, what’s your use case? What’s your job to be done? What do you need this software to do? Then answer that question throughout the demo and pause to let them ask questions. There’s some really good information on close.com’s blog. Steli Efti, he and his staff have written several ebooks on giving demos to do really well.
Also, frankly, youtube.com/microconf. We have a sales playlist. You can go through there and it is videos of talks, MicroConf talks from Steli and a few other folks who have talked about exactly this. These are literally world experts on this topic of how to do a demo.
Personally, I like to see software demoed because I’m a product person. If you show me PowerPoints, I have the thing of, well, if the product was good, you would probably show me the product, but everyone doesn’t feel that way. Everyone doesn’t feel that way. I don’t want to make my opinion the gold standard of it because I do know folks who run successful sales processes with PowerPoint demos.
All right, for our last question of the day, I actually went to Quora. We still have a couple of questions in the queue, but I don’t feel like we’re going to have a lot of back and forth on it, so I might do it solo at some time in the future. You know what’s super annoying to me, is that I typed in startups in Quora and the first 8 or 10 results are all about, how do I raise funding? What does an angel investor need to know in order to invest in me? Should I raise angel?
Why isn’t anyone talking about building businesses? This is my annoyance with the whole narrative. People want to build a slide deck instead of building a damn business. Seriously, this pisses me off. I invest in startups and this pisses me off.
Einar: And now is a good time to mention the TinySeed syndicate, Rob. New ways for bootstrap founders at a later stage to get funding.
Rob: There it is, tinyseed.com/syndicate if you want to know more. But also, tune into this podcast, and everything around MicroConf and all of our education about how to actually build a real business that sells real products to real customers for real money instead of sitting there flapping your gums all the time like these people do. It’s just like, go build a business, seriously.
Einar: I know for a fact like having a real business launch some things and then going out to raise money sometimes can be hard because then you have actual metrics to show and things.
Rob: That’s only in the Bay Area. That’s in Silicon Valley.
Einar: I think a lot of the time, people are better off just hiding their numbers or certainly don’t do projections. Like, here’s my thing about projections. I don’t know how we ended up in fundraising talk, but if you’re going to have to put a deck together and do fundraising, don’t put future pro forma financials, like future financial projections in there, because the only thing you’re going to do is disappoint your most optimistic investors.
Most people will think you’re full of […] and won’t hit it, and some people—a small number—will think you’re going to be much bigger than this and when you tell them the number, they’re just going to be disappointed on the downside.
Rob: Yeah, I still think outside the Bay Area like revenue. Is revenue traction? Especially in SaaS B2B. Here’s this question. It’s an interesting, philosophical one maybe, but what one or two things should every entrepreneur working on a B2B SaaS startup know? Maybe it’s three, maybe it’s four. Let’s not put a limit on it, but what are some fundamental things that you feel like startup founders should know and some folks who we talked to in MicroConf, TinySeed to this podcast know most of these things and other people I think don’t?
Einar: It depends. What kind of thing or how do you frame it? Like, should know. If I ask them about their business, there are certain things that I think they should know.
Rob: Right, their numbers. Know your numbers, like your MRR, your RFC.
Einar: Their number is the key. That’s what I care about. You should know your revenue churn, you should know your […] churn, you should know your ACV, you should know for different cohorts. You should know that my bigger customers churn at this rate, my smaller customers turn at that rate like that. That thing, I think you just should know that I’m not sure that’s what they meant.
Rob: No, that’s a great answer, though. I think another one for me is that thinking years, not months. Know that this can take a really long time because SaaS takes long. There’s a reason that TinySeed is a year long accelerator and no one else is. Every other accelerator I know of, there’s 90 days. We do that for a reason because SaaS is just this very long ramp in almost all cases, right?
Einar: That’s true. One of the flip sides of that, too, one of the things, I think, particularly B2B SaaS founders should know is that their businesses are sellable and valuable at an earlier stage than most other startups. I feel like sometimes I’m frustrated talking to ex-founders who have sold their business and I’m like, woah, you left 3X on the table by selling to somebody who did not take advantage of you exactly, but you didn’t fully understand the value of what you had. The fact is, you get a B2B SaaS business north of say, a million a year, it’s a super valuable asset that you shouldn’t just flip for seller discretionary earnings, multiples, or anything like that.
Rob: Yeah, that is an interesting point. I think another one is that for most SaaS companies, as you grow, if you’re growing really fast, then money will be a problem. It’s hard. I’ve been in that position where we’re growing fast and the growth didn’t backfill. We needed money, we either needed to raise money, or sell, or I needed to pull more money out of my personal growth cost money. But the second thing is that the other biggest problem for most companies—not all—is going to be finding good people and keeping them around.
I know that for developers, we don’t want to hear that because we want to build SaaS’s software. It should be automated, but building a team is crucial. Having some people you can rely on, even in the lifestyle. I often talk about this lifestyle SaaS or lifestyle startups, where truly, you’re just building an income stream and it’s a $10,000, $20,000, $30,000 a month, 90% net profit.
Then there’s the more ambitious, whatever you want to call it. It’s like the growth bootstrappers that I think about. Either of those paths, you still need a person or 10 to back you up so that you’re not constantly on support and you’re not bringing your laptop with you on vacation in case the servers go down, that you have somebody that can back you up.
Einar: I actually think this relates to what I was talking to before, in the sense that, I think sometimes the mindset needs to change a little bit once you get to a certain size. I think a lot of people think, the more I can do on the fewer people, the more valuable it is. I guess, technically speaking, it leaves you with a higher profit margin or wherever you are.
The fact of the matter is that your business isn’t more valuable if you’re doing the same level of revenue, but there’s just you and you do everything. Versus you have a team of two or three, or maybe four people in place. You’re just a lot more valuable business to most people than if you’re the key person who feels like you need to do everything and keep it on a super low budget, that sort of thing. That’s the flip side to the cash side.
Rob: Yeah, that’s a good point.
Einar: Yeah, like having a team, having someone other than just you or maybe just you and your co-founder isn’t a bad thing. It’s inevitable at a certain point. I do see some particularly bootstrap founders fall into the trap of waiting too long to start that process of trying to build out a team.
Rob: You bring up a really good point. I had this epiphany, not an epiphany. I knew it in the past, but it just hit me like, I should say this out loud at some point and it was exactly that. If you have a $2 million ARR SaaS company and it’s just you, I would pause it. It is actually harder to sell than if you had a team of 5 or 10, but made a lot less profit. Because it’s not sold on the profit, it’s that the team goes with it. That’s, I think, counterintuitive.
Einar: Yeah, and it’s a much more scalable business, some bigger business, more potential, not so dependent upon you and whatever’s in your head. It’s just an easier business to acquire. It’s an easier business to imagine how you’re going to scale further.
I actually don’t know where the cutoff is. But certainly, once you’re getting within striking distance of a million or maybe even at $500,000, I’d be like, okay, if it’s just you at that point, I’d be like, why, what’s wrong? What is wrong with your business or you? That means you can’t keep people around.
Rob: Yeah, I would be thinking about, at a minimum, hiring. The early hires are usually someone in support because just tier one support can grind a developer. Because usually, if it’s just you, then you’re the developer. So you have a backup, and can go on vacation, and they can whatever. They can do all the stuff so you’re not grinding it out.
Then of course, if you’re doing all the sales, it depends on the type of business. Some SaaS leads heavy sales and others don’t. Certainly, as a founder personally, I did some sales until the moment I could hire someone to do it because I didn’t like it. If that’s not your gifting or whatever, these are all things you could hire out.
Einar: You definitely should. By the time you go to a million, there are very few or few 2 million era businesses that sanely can be run by a single person.
Rob: I’m sure there’s one or two out there. I’m sure there’s a listener right now thinking, well, I’m doing that, but most companies are not. They can’t do that.
I think the last one that comes to mind—there’s a bunch obviously; we could throw out 10–100 different things—I feel like finding predictable repeatable growth channel requires a lot of effort, and it requires a lot more time than you probably think it will, and you’re going to be wrong a lot of the time, either with the approach itself that it’s not in alignment or that you’re not doing it right.
I think it’s harder than most people think because they see the case studies. You see a SaaS app launch, and then they do the case studies of the five things they did, and three of them caught on. It’s just not like that for most founders.
Even founders who are having success and are growing, they often (a) either don’t know what’s working, or (b) if they know what’s working, it can be a bunch of different things or it can be one. It’s often like, even when it’s working, I remember always thinking, how long is this going to work? It was fleeting to me.
I never felt like I was in the middle of a growth thing and I’m like, this is going to take us to $5 or $10 million, and I’m super confident in that, and it’s going to work the whole time. The whole time, you’re still looking for the next thing to get you to that next level.
Einar: I think it’s true. That is something that I talked to TinySeed portfolio company founders about reasonably often. It’s a mistake a lot of people make, because in some cases, they have sort of half understand where business is coming from, kind of, maybe. Or they have like one channel that works, and then they’re like, yeah, I’m probably going to put $500 on Google ads next month, and then I might go to a conference next year. I’m like, no, you’re not moving anywhere near fast enough to do this.
You should have a very strong preference for action when it comes to just iterating through these growth channels because most of the time, you won’t have a clue about what works, and you’re just going to have to do it, and you’re going to have to spend enough time and money to really explore each one. Then if it doesn’t work, move on.
I see people sticking to their hobby horses. This is obviously true for features and things, too, where founders are like, well, this is what I want to build, and their market is telling them, that’s not what I want, I want this other thing, and you just refuse to build it. It’s like, all right, well, then you’ve left money on the table for sure.
The same thing is also true for channels. People are like, I want it to be self-serve. I want it to be content market–driven. I don’t want it to be cold email, or impressive events, or sponsorships, or Google ads, or integration marketing, whatever it is. It’s hard to know, but once you do find it, it tends to be disproportionate.
It’s not like, oh, one thing is 50% better, 30% better. It’s like, one channel is holy crap, this is 20 times better than anything else. If you don’t move fast enough, you’ll probably die before you figure out which one isn’t so good.
Rob: Very good, sir. If folks want to keep up with you on Twitter, you are @einarvollset. Awesome. Thanks again, sir.
Einar: Thank you.
Rob: Thanks for joining me again today. That was actually a fun and unexpected rant that I had. I was so angry at Quora. I’m just angry at the tech press in the narrative around just funding, funding, funding. It’s like, no, we can actually spend time investing and growing our businesses and not just concentrating on this lottery ticket mentality. With all that said, I enjoyed the episode. I hope you did as well. I will be back in your ears again next Tuesday morning.