In this episode of Startups For The Rest Of Us, Rob checks in with Mike Taber’s progress on Bluetick. They revisit some topics that were brought up from their last episode together including motivation, personal retreat, accountability, the Google audit and more.
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In this episode of Startups For The Rest Of Us, Rob and co-host Tracy Osborn answer a number of listener questions on topics including funded competition, growing an email newsletter audience, white-labeling and more.
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Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups in an ambitious and repeatable fashion. These are not your typical Silicon Valley startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses. The things we’ve espoused for the past 460 episodes, things like freedom, purpose, and relationships, much of being a founder is making decisions with incomplete information, where the right answer is impossible to find through math or data.
On the show we have several different formats. Oftentimes we have tactics we discuss, we do interviews, founder hot seats, and this week we have listener questions. Questions sent by you, the listeners, over the past couple of months. I’ve been mixing up the formats as you’ve noticed and the feedback I’ve heard is that the tactical interviews and the interviews of the agony of defeat have been really well-received in addition that the listener question episodes tend to be listener favorites.
I want to get back in the groove of doing those and today, I welcome a co-host, Tracy Osborn, to come back and answer questions again. She joined me about six or eight episodes ago answer a few questions. Before we dive into those, there’s been a few comments on startupsfortherestofus.com website. Go to startupsfortherestofus.com, we have a new design, you can check it out.
On episode 456, we had a comment from Karen that said, “Just popping in after listening to this episode to say how much I value your podcast. I’ve been listening for quite a few years. As other shows have come and gone, Startups for the Rest of Us continues to be a staple for me. I’ve really enjoyed the mixing up of the format lately. It’s been good to hear from different people. In saying that and as much as I’ve enjoyed and got something out of each episode, I would not really be keen on having the podcast moved to an interview format every week.” I actually agree with that.
“I always enjoy the listener question episodes and get a lot of value out of those. The episode that really left a lasting impression on me was the one with Mike just before he started his hiatus. The way you skillfully weaved your questions in and around Mike’s comments and your observations were very eye-opening and I’m sure it resonated with a lot of listeners, too. I would love to see more of that format, like a one-off mastermind session with the SaaS founder, where it explores a specific challenge that they are currently experiencing.
No matter the format of this podcast is, it continues to be a cut above the rest and a big thank you from this listener for everything.” Thank you so much, Karen, and another listener chimed in and said, “Plus one on that.” I appreciate the feedback on that. It’s super helpful just to help guide things, to look at doing some more hot seats in the future.
In episode 457, I answered a few questions. One was about starting a market place and TJ wrote in and asked about two-sided marketplaces and how he should start it. Shawn the Wolf chimed in and said, “Great show. For two-sided marketplaces, I would suggest, number one, populate the list with the basics for free to satisfy your consumer funnel. Number two, give all artisans a basic free listing with an option to be removed. Number three, find sweeteners to sell to the artisans, to give the individual listings a competitive edge.” The sweeteners he lists are enhanced listings, ads at the top of a given page in their category, subsites inside of your website, and prospect information volunteered from consumers can go the artist for a fee.
Thank you so much for that Shawn. TJ, thank you in the comments and I appreciate everybody coming in. As a community, we obviously have so much more brain power and experience than just a podcast host or two, sitting on the microphone each week.
Also, if you haven’t got your ticket to MicroConf Europe, it’s in late October this year, head to microconfeurope.com. We still have some tickets left. It’s in Croatia and it looks over the Adriatic Sea. Every hotel room has a view of the Adriatic, it’s very nice. Consider doing that, hanging out with 120 or 130 of your closest founder friends. If you didn’t hear the save the date, MicroConf US next year is in Minneapolis and it’s April 19th through the 23rd. We’re pulling it out of Las Vegas this year.
We’ve actually been trying to do that for the last several years, in the overwhelming feedback from both folks who attended folks who don’t, that they would prefer seeing it in a different city. It happens to be in Minneapolis, this year, April 19th through the 23rd, that’s growth and then starter. Check out microconf.com. Enter your email address to hear about when tickets go on sale. We do expect the conference is to sell out, so you want to get on the email list, if you’re at all interested in joining us. I believe we’re expecting to sell tickets here in September. With that let’s dive into some listener questions.
Tracy, thanks for being a glutton for punishment and joining me on the show again.
Tracy: Happy to be back.
Rob: I’m stoked to answer some listener questions with you again today. Our first question is a voicemail. As always voicemails go to the top of the stack. This question is from a founder who has an idea or is working on a product and a funded startup with the same idea shut down in 2016 and he’s curious how to process that.
Ryan: Okay, question about a strange experience and what you think would be a good way to go forward. I’ve been working on an app for about a year. It’s a search engine your personal computing history, it’s at apse.io. The acronym is short for A Personal Search Engine.
Last week I found out about another company building almost exactly what I’ve been working on. The thing is, it is a $20 million round at 2016 and also shut down later in 2016. If I were reading the press coverage of marketing materials, they might as well be talking about my app. I can’t find any reason for the shutdown, and attempts to contact people who worked on it have been unsuccessful.
I’ve been working on the project solo for about a year. I have no idea they have existed until a few days ago. I’m bootstrapped and never released a working product so I’m not at danger of going under myself. My focus right now is I’m growing the customer base. What do you think I should do now that I know all this? Any thoughts would be appreciated. Thanks, Ryan Fox.
Rob: Interesting question. What do you think, Tracy? What are your thoughts on this?
Tracy: Super interesting, especially since $20 million is not pocket change and the fact that it shut down within the same year. Then he said he tried to contact the people running it and hasn’t heard back. There’s a lot of very suspicious things going on that lead me to think that the company shutting down was not due to the product, but probably due to something internal. I don’t know if you have the same impression that I do.
Rob: I don’t. It does sound a little weird, but frankly, if you’re going to raise that much money, then you raise it at probably $100 million valuation. It tends to be $80 million or $100 million because you typically sell 15%-25% of your company. If it’s a standard round and they were definitely go big or go home, and go big or go home is basically spend all your money in 18 months.
The fact that they spend it all, they probably hired all the way up and try to do a big marketing push, so I don’t know that it sounds suspicious, but it definitely sounds like a typical Silicon Valley play, I guess.
Tracy: I wish that they were able to contact the founders. I’ve done that for my apps, where like my old WeddingLovely app, I was able to talk to a few other founders who did something very similar, but shut down the company. In those cases, I was lucky that I was able to get a hold of them and they’re excited to tell me all the things that went wrong because there are done and over it and moved on.
He said he only heard about it a few days ago, so maybe there could be some contact. There could be valuable information if he’s able to contact those founders and be like, “Hey, above board, what happened? Is there anything to be worried about?” If that doesn’t happen, in general, I feel like it’s not something that should stop the caller from starting a company.
Rob: No, not at all. I wouldn’t be discouraged in the least. Just because a venture-funded company couldn’t make it, that can almost be a good sign at times. If they were burning through $1 million a month, hired a team of 50 people or whatever it was they were doing, a lot of ideas don’t work that way. A lot of ideas maybe they take years to do or maybe it’ll never make more than $1 million a year, but that’s a great full-time living for an individual. I don’t want to speak to this particular idea. I haven’t looked into personal search engines or really what’s it about, but just the question is really about a venture-funded company went out of business, how should I feel about that? I wouldn’t feel bad about it all.
I would feel the exact same way I do today as I did yesterday before knowing it. The other thing I would say is I wholeheartedly agree with you that getting in contact with someone from that company no matter what, if it’s the founders or if it’s an old salesperson or whatever, I have done this multiple times. Oftentimes you need to send a lot of cold email, LinkedIn outreach, Twitter DM’s, all the things to get a hold of someone, but once you get a hold of one person, they will often refer you to other folks. I would spend more time on that than you probably think, a judicious use of your time.
If they raised that much money, they had to have had, at some point, quite a few employees. I would head to LinkedIn, Twitter, and Google and try to figure out, “Hey, who was a former employee of this company,” and reach out as like, “Hey, I’m a founder of this thing, you worked on it, and I wondered if 30 minutes your time just to talk to me about something.” It works pretty well. Again, I wouldn’t stick just to the founders, although that would be ideal, but that conversation could be super valuable.
Tracy: Yeah, very valuable. I’ve used in the past myself. It’s so great because there’s some things that you probably could learn that you didn’t know about just from looking at from the outside. Try to do the internal investigation, try to talk to someone in the company. Also, just investigate everything that’s public, see what they did, see the things that they released and see what you can learn from what they did that apparently didn’t work, to see what you can learn from that.
Rob: Thanks for the question. I hope that was helpful. Our next question is another voicemail. It’s about growing an email newsletter audience.
Ben: Hey Rob and Mike. My name is Ben DeFrancisco and I run a small consultancy here in Philadelphia doing mobile web and increasingly crypto- and Blockchain-related work. I fell down the crypto rabbit hole many years ago, so it’s been awhile for me to watch you enter the mainstream consciousness so much over the last couple of years.
About a year ago, I started running a weekly newsletter covering technical topics in the crypto world. It’s called The Blockchain and you can check it out by going to newsletter.buildblockchain.tech. I post about it on Twitter and sometimes on LinkedIn and it has grown steadily but slowly over the past year. I have excellent open rates at 50% and I often get people writing back to me with a positive feedback. I think generally I’m doing something right in terms of the content. Still, the list size itself is rather modest.
My question is, how do I grow a newsletter audience? I often hear about people talking about building a list, but there’s no viral component to a newsletter and at a certain point, it seems like posting to social media has diminishing returns. Are there some tactics and strategies that I could be employing?
For context, I don’t have anything I’m trying to sell to this list right now, though in the back of my head, I can imagine launching a book, a course, or even a software product down the road. For the moment, I’m just focused on finding and growing my audience. An audience that has interests and aspirations that align with my knowledge and skills. Thanks in advance for any insights you can offer on how to do this.
Rob: What are your thoughts on this Tracy?
Tracy: This is a really good question and it’s funny when watching the last few years as newsletters have become more and more of a thing as compared to blogs. It does have that difficulty in sharing something that’s over email, and after I read this question beforehand, I went through all of my favorite newsletters that I personally subscribe to and be like, “Okay, how do other people do it?”
I feel like number one, the way I’ve found newsletters and the way all the ones I’ve been reading or have been doing it, in the newsletters, they’ll have asks, saying, “Okay, if you want to support this newsletter, please share this newsletter on social media. You can sponsor the newsletter,” and the other ways of helping out. It’s just being really clear in the newsletter, may be at the top and maybe at the bottom. Just give people an opportunity and remind them that, “Hey, if you’re enjoying this content, here’s a way to share it.”
Rob: Yeah, that’s a good approach. There’s a lot you can do with this and it depends a lot on your constraints. Do you have more time or do you have more money? Something that I would think about if you have this newsletter, you’re providing valuable content and with 50% open rates, that tells me that you’re writing engaging content, people are getting value out of it because they’re continuing to open it. What I would look for is opportunities to get your newsletter or your brand out to a broader audience.
You’re right, sharing on social is getting it out to your audience and maybe get lucky and three people will retweet and then you get it out to their audience, but that is not a predictable way to grow a subscriber base. I would think about approaches like this to reach larger audiences or audiences you currently don’t have reach into.
One is you’re already creating content. Is there a way to either repurpose some of that or create new content as guest posts? Whether you approach Inc Magazine, Entrepreneur Magazine, any of the crypto, there’s tons of crypto sites, take the top five or the top 10 and pitch them on, “Hey, I’m a writer. Here’s the quality of my writing. I want to write for you,” and you get a byline or a mention of your site within the article itself. This is a tried and true tactic. It takes time, but that’s one way to get in front of 100,000 crypto enthusiast, by being on the number one crypto news site.
A second one would be to do a podcast tour. If you’re an expert and you have all this experience and you can say, “I’m an expert because of this,” or, “I’m an expert because I’ve interviewed a bunch of experts,” and going to a podcast tour and of course you mention your brand while you’re doing that, expose it to new people.
Doing interviews. It looks like you might already be doing some interviews. I’m wondering if you are gently asking for the interviewees to social share when the post goes live. That is something I would consider. I wouldn’t do it heavy handed, but if one out of three shares it, that exposes you to a new audience. People say, “Wow, this content was really good. I want to find more like that,” and on and on. It’s the same playbook that I would say for any startup.
You’re building the list to some end, what are the marketing approaches you could go down? SEO is another one if you have a larger footprint on your website, you ought to value it. Is SEO too hard in the crypto space? Do you have the time, the money to do it? Maybe or maybe not, but that’s something I would personally value as it has such a nice fly wheel of traffic if you’re giving something away like an open source library or something else that folks aren’t able to get anywhere else. Everybody links there, then you get the SEO juice and then suddenly you triple your newsletter subscribers.
Another way that I would think about and this comes back to that time versus money thing. If I had more money than time to devote to this, I would have absolutely seen people grow email newsletters with ads. With Facebook ads, Instagram ads, Google ads may be a stretch, but ads in other email newsletters.
That depends. If you’re not monetizing at all, then that’s probably a tough justification, but that would then lead me to think about longer term, “How am I going to monetize this?” whether it’s with affiliate stuff or ads or whatever. That allows you to then know, “Oh, per subscriber, I make X dollars per month or X cents per month, that means I can pay this much for a new subscriber.” That’s where you’re going to get to if you’re going to grow it in a sustainable fashion.
The last thing I’d say is you mentioned that your URL is newsletter.buildblockchain.tech to sign up, I would just move it to the homepage. You actually have it, you have a drip put just there on the homepage, it’s buildblockchain.tech. Go there to sign up and it’s just less for people to remember.
Tracy: Yeah, it all makes sense. It basically comes down to, make it easy for people to sign up, make it easy for people to share, and put yourself out there so that more people will know about you, so they have opportunities to share what you’re doing. If you can, then you can try using ads, that’s the step-by-step process.
Rob: That’s right. Using ads is dangerous to do early on. It’ll help you move faster, but you need some budget to do it and you can churn through money if you don’t have any way to monetize or any idea of how you’re monetizing. Again, if you know the lifetime value of a subscriber, then this becomes a no brainer.
This is how Noah Kagan built the AppSumo less up to three quarters to a million or a million people was by running ads because he knew what the value of a subscriber was. This is one way that Brennan Dunn grew his Double Your Freelancing list, was using ads. It’s doable, it’s just a matter of what are your constraints, do you have the time, do you have the interest, and how big do you want to grow it?
Tracy: Yeah. Try doing step one to three first and see what success you can do for these “free ways” of growing your list and then using that as a cherry on top.
Rob: I hope that was helpful Ben. Thanks for the question.
Tracy: Our next question, by James Barnhartus, says, “Hi Rob and Mike. Thanks for all the great insights you share on the podcast. I came across your podcast about a month ago after starting my own startup journey. I’ve already learned so much from you guys. The knowledge and experience you share is amazing and has really stoked my excitement for entrepreneurship.
My question has to do with the process of transitioning from a consulting-based model to a true SaaS model. My co-founder is a consultant who helps small businesses better manage their operations. One of the tools he uses in his consulting is an app that he put together in Microsoft Access to help his clients find and track their operations. I’ve been brought on as a technical co-founder to turn this Access app into a SaaS product.
The SaaS app would initially continue to be used as a tool for my co-founder’s consulting work with the goal of eventually moving towards offering it as a standalone product. I was wondering, what is your take on this approach? Are there any benefits we should be sure to take advantage of or pitfalls we should try to avoid?
On the one hand, I see a potential advantage in the fact that we already have an initial user base in his current customers, but on the other hand, I am wondering if the fact that our initial users are using the app and a consulting context might lead to unanticipated headaches when we try to scale. Thanks again for the great podcast, James Barnhartus.
Rob: That’s a good question. I’ve seen folks do this well and I’ve seen them do it poorly. The first thing that I would make sure is that you have the IP, that your partner owns the intellectual property to the thing and that the Access app was not built under a contract that if you forked a SaaS app out off of it, that somehow that comes back to bite you in the future. That is just something that you have to clear up and make sure you have. The pitfalls I would avoid or the big one is assuming that because he has had to build this for a number of clients, that everyone needs it, or that there is a market need for this.
I would validate that other people need it, that it is sellable at a purchase price that you want to sell it at, and that you can reach them somehow in some type of scalable fashion. Obviously, there are companies that want to pay for this, but if each sale cycle is 6-12 months long and people are only willing to pay $100 a month for it, it becomes a less viable business. I would be having a lot of conversations before I went off and build a SaaS app with his existing clients.
Also then, where is a list of another hundred clients that are your potential clients that are like these other ones? How do I get in conversation with them? It’s easy, you’re not selling anything. You say, “Hey, we are building this thing,” you just tell the story of what you’re doing, “Would you be willing to have a 30-minute phone call with me?”
If you send 100 emails, maybe get 10 yeses and that will be tremendously educational for you to ask the questions of, “What are you using today? How much would you be willing to pay for this?” You pitch it, “Hey, would you be willing to pay $1000 a month?” or whatever the numbers are. There’s a lot more that I would do before I wrote a line of code on that SaaS app.
I do think that there’s a big benefit to doing this and that your partner or co-founder obviously has a lot of knowledge, institutional knowledge in his head about how this works; that’s good. You guys have built-in testimonials from the start. You could even ask the consulting clients if you can use their logo from day one, even though you don’t technically have product customers, you do have consulting customers or clients and you have logos and testimonials which is a nice thing to have from the start. You can also get their input of course to help shape the direction of the product. That’s my hot take, my initial thoughts on it. What do you think Tracy?
Tracy: I love the fact that there are existing customers that you can ask for help for building this product. I agree with you. This is a place where you can get more information, talk to other customers, and make sure there’s a market before you do any writing of code. As you start building a product, you can go to these existing customers with the MVP and start getting that feedback with people who are already hopefully fans of your co-founder because they’re working with them in that consulting context, and these people can help inform how the standalone product can grow.
Having that little bit of help helps an app grow and help the app launch, especially if you can get to a point where it’s just good enough that then you can start taking that elsewhere. Not building a full-on product, but getting just to that MVP, so then you can start talking with other people outside of this consulting contact. I think it’s going to be a huge help and it’s a really good sign to have those extra customers, but I completely agree with you that there are some pitfalls, as you mentioned, and just to be aware of what you said.
Rob: Yeah, and I was trying to think of the dangers of it being consulting today and how that can impact your mindset. Let’s say you built 10 or 15 existing consulting clients. Is there a danger that they really have a lot of input on shaping the product and they do it in such a way that it makes it less useful to the rest of the industry, or do they want undue influence on it or whatever? These are things you have to navigate. I definitely think this is more of an advantage than a disadvantage for a lot of developers go and built products and then you can’t get anybody to buy and no one will tell you why they want it or won’t pay for it. You’re not going to be in that situation, but they are definitely some things I’d be thinking about as I build this out.
Tracy: This is a process that people have done before. A lot of SaaS apps have come from consultants who realize that there is a need and that they can build something off that need. Of course, there is probably a lot that have failed as well, but this has been done before and some people have had success in it.
Rob: Yeah, and I would consider tweeting out and saying, “Hey, we’re looking to do this. Has anyone done it before so I could ask you some questions?” My guess is typically when we get a question that is this specific, we often the next week get an email from someone saying, “Hey, I did that,” connect me with him.
Rob: Yeah, it’s been cool. It’s like the Startups for the Rest of Us community coming to the aid of one another, which is really, really cool.
Tracy: Yeah, using the community. One of the big secrets for this community is the fact that we can use each other, learn from each other, and help each other out.
All right. We’ll move on to the next one. This has been submitted by Casio. He says, “Hi Mike and Rob. Thanks for providing such a valuable podcast. We have a bootstrap SaaS making low seven figures and ARR. As the founder, I constantly get emails from people interested in white little partnerships. These emails typically come from bigger businesses that are in the industry but don’t offer the feature we are most known for. Other times they come from random people who want to build a similar product but don’t have anything to offer.
Our product is somewhat complex, not rocket science but large like an ERP, HER, et cetera, and we have a brand that is trying to get some recognition in the industry. White labeling on our product would be nontrivial from a technical perspective and I believe it would distract us from building our own brand. I want to know what your general thoughts are about white labeling. These emails are so frequent, I think I’m leaving money on the table. Thank you.”
Rob: This is a good one and it’s common. If you start something that gets traction you will get these emails. My default response to these is very much like the default response to the junior partner in a venture capital firm. You’ll get two or three of those a month as well asking if you want funding and in general the answer is, “Now is not a good time.” These white labeling in general is quite distracting. It is way more technically challenging than most developers or most people think it is. It’s not just tweaking a product and swapping out someone’s logo in the upper left. There’s billing and there is provisioning. I won’t even go into it.
We evaluated that at one point and it is months and months of development work. What’s cool is that if you’re getting these interests, it shows that this industry has interest in this tool. It’s almost like you’re going to get out ahead of these bigger players, they’re trying to hedge their bet, and they’re trying to have the features that you have. To me, white labeling basically devalues your brand and creates a brand for someone else. There are cases in which to do this, but I don’t think that’s a real, kind of MicroConf, Startups for the Rest of Us self-funded move. To me, you are trying to build a brand for the long-term. You’re an ambitious founder. You’re doing low seven figures, huge congrats on that. Most people do not make it that far.
If I were in your shoes, I would not be having these conversations. If you’re curious, maybe respond to one or two of them, and do a call or two, and cap your time at five hours of exploration for two different deals or for two different conversations and see where it goes. I’ve done that, I’ve gone down the road. This is with multiple products, not just Drip and HitTail, but back before there were DotNetInvoice and a couple of others. I would say, for me it was without fail. That doesn’t mean it’s without fail, but it’s going to be a waste of time because you are trying to build a brand that you want to last. To give someone else that brand equity and have to write a bunch of code on top of it, if you already have some figures, you feel like you’re growing, and things are doing relatively well for you, I don’t see why you would entertain this at all.
Tracy: I would agree with you and I’ve done the same thing with WeddingLovely. We had a bunch of white label requests from other companies and I didn’t do that process that you mentioned. I did a few calls with them, with the folks just to see what they wanted, what they are thinking, and what kind of money was involved. Every single time at the end I was like, “That was a waste of time.”
Again, I could be wrong. There’s probably instances out there where this is a good idea, but it’s one of those things, whereas in general, I guess for this audience, it’s going to be more pain than it’s worth, especially if you’re already doing that much in ARR.
Rob, I have a question for you. Is there any situation in which you would think that, that would make it worth it for you? Would it be an upfront contract? What would you think would be the only situation where it would be worth it?
Rob: I was just asking myself the same question in my head. It’s not a blanket “no,” it’s a 99% “no.” What is that 1% or the 5% time you should do it? I’ll go on a little tangent here. There’s a SaaS app that I know of that was in the ESP space. Originally, they were a downloadable software that you installed on your own server. They white labeled for years and no one knew who they were. They grew into the seven figures and then they had to pivot out of that. They decided to pivot out of that and build their own brand. Their software was mature, but they had to build brand equity from scratch. I sat and watched and I thought to myself, how would they have been because their competitors were doing so much better by that time. I thought to myself, how would they have been if they had never done that.
The thing that comes to mind, there was one time that I almost went forth with white labeling. It was in the very early days of Drip and it was with a colleague I knew or a guy I knew who was in a completely separate, very tight vertical. It was a vertical we were not going to sell into. It wasn’t a ton of dev work. It was weeks’ worth of dev work and he was willing to commit to—I don’t remember the numbers—a non-trivial amount of MRR. He had a big email list, it’s a prosumer niche, so it was a really large list and he had a large number of paying customers doing seven figures of ARR with a relatively low-priced product. He was going to email a list and promote it over the course of a year and do webinars.
He was going to really push it in and it seemed like it could add 5K, 10K, or 15K of MRR a few times throughout the year and that was back where that was a substantial amount of money to a company. That was one time where we needed the money. We almost went through with it. I honestly don’t remember. I think it petered off and we were going to do some research.
Eventually, we mutually decided this is not going to work and I don’t regret that. I actually think that would have been a burden. It would have been essentially legacy cruft that we would have had to maintain because within 6-12 months of that, we were growing by 10K MRR a month and it would have been this thing that we had committed to, that we have to maintain, and would have always been like, “What were we thinking?” but at that time, it may have made sense and helped us move faster. That’s the one time I can think of it perhaps working for more of the self-funded indie funded types.
Tracy: The only other thing I can think of—this might not be the self-funded, indie-funded type of people—was when I was evaluating white label partnerships, just one other variable was if that company that wanted me to white label was an acquisition possibility. I have heard stories and some friends where they’ve built a product, they white labeled it for that company, but in the process of white labeling and working with that company, it comes out that it’s just easier if they just get acquired. If you wanted to be acquired, it can be and this can be very risky. This is a very risky way of trying to get an acquisition because things could fall through the white labeling, it could just suck up all your time getting it to work. I have heard instances where people start working the company under a white label product and ended up acquired at the end. If that’s something you might be interested in, that could be a path.
Rob: That’s a good point. It’s with the words that is strategic partnership. You’ll see that with a strategic investment of like, “Hey, big competitor. Number three wants to invest by 10% of the company,” and maybe they’re an acquisition partner long-term. White labeling will be another one, a really tight integration where everything goes back and forth. Before white labeling I would almost vote for a really tight-coupled integration, but you’re right. It’s risky, but I could see that as a play or a reason to do it.
Tracy: All right. Moving on to question from Lee B. Lee says, “Hey Rob and Mike,” had some really nice things to say about you and the podcast. A couple of paragraphs. I’m going to skip that and jump over to the question. Lee, thanks for the wonderful compliments.
Lee says, “Here, to contribute my own question. Is it not uncommon for developers to start at a small company with a reduced salary in exchange for a share of the company? This is what I proposed to two founders of the company where I am now writing software and they’re onboard. They feel reassured I’m in it for the long haul and will feel more confident taking ownership and business decisions along the way. Now, I take it for granted that I will want a lawyer to review any offer before it signed. How does one go about selecting a lawyer who will represent me without being overly aggressive? Googling business lawyers near me is easy enough, but I would like some advice about what questions to ask and what to look for when dealing with a master of the dark arts of law. Thank you again for providing a back catalog of knowledge and advice.”
Rob: Dark arts of law. I like that phrase. That’s a good question and good on you for having a lawyer review it; that’s a good call. The blanket advice I have is upcounsel.com. You start there, you look at the reviews. It’s like Upwork for legal. I have had generally good luck when I try to find someone with an expertise there. The way about it is I don’t want a small-town lawyer who specializes in tax, accounting, to review my startup equity grants, my stock option offer, my employment letter offer. I want someone who is familiar with the startup space so that they know.
Any lawyer can read a document and say, “Yes, legally this is saying this and this means that,” but do they know what the standards are? Do they know how the Silicon Valley treats it? Do they know how people treat it outside of the Silicon Valley? Have they dealt with startups that may have raised funding? Have they dealt with equity grants before, stock options, vesting cliffs? All of this stuff is more than academic.
It’s something that the more experience you have with it, the more you know, “That’s a common clause to be in there,” or “That’s not a common clause and this is unusual where I would push back.” What I found is when you’re dealing with lawyers who are out of their depth or out of their expertise, that’s when they get overly aggressive because they’re uncertain and they’re trying to mitigate risk, but when they’re in their comfort zone of like, “Yeah, I’ve reviewed 10 of these in the past year,” they tend to feel much more comfortable with it.
The last thing I’ll say is I’ve dealt with a lot of lawyers, way too many, actually, just over the years of forming companies and doing all this stuff. It’s only been about 10% or 15% of them that I really enjoyed talking to and having conversations with, that I feel like actually have my business at heart, my well-being, and the company’s well-being at heart rather than just logging time, and that’s super unfortunate. That’s just my experience.
I’m not saying that’s how the whole industry is, but once I found a couple of attorneys with a couple of different areas of focus of expertise, I hold on to them for dear life. I refer people to them and I use them for everything. There’s one guy who doesn’t do anything with tax accounting, but I’ll even ask him tax accounting questions just because even his almost inexperienced answer is often better than the tax accounting attorney who is just stiff and giving me some boilerplate ECYA answer.
Now, it this attorney is just going to review one document, do you need a long-term relationship with them? Probably not, so you don’t need to take it so far. I bet if you go to UpCounsel and look for folks who are experts in startup loan and equity grants, I bet you’ll be fine with it. Those are my initial thoughts. What do you think Tracy?
Tracy: The best lawyers I’ve ever worked with have been referrals from friends. There’s so many out there. You don’t want to spend the time chatting with a bunch of different lawyers and then seeing if they’re the right one for you. That’s like Googling for random lawyers near you. You can follow this trap or it takes way too long and you’re talking to these lawyers and then you’re not getting your contract reviewed.
If it is at all possible, asking people near me, other startups, other friends, people or anything for a referral to their lawyers and getting their recommendations and their thoughts about how that lawyer works upfront saves a lot of time. I’ve worked with some, like you said, terrible lawyers that never respond, or respond cryptically, or respond with one liner and then charge me a lot of money for that one liner, and I’ve worked with some really amazing lawyers. The amazing lawyers have always come from referrals from other people who used them for the same situation that I did.
Rob: That’s great advice, and asking your personal network. Going to Twitter and asking other startup founders, if you’re in a founder Slack group, if you’re in the MicroConf crowd, if you’re in FounderCafe. There’s all these resources you can go in and say, “Hey, who knows a good lawyer,” and we don’t know the jurisdiction of your law so I don’t know if you’re in the UK or the US. If it is a law, that would be state-dependent. Or you can get a lawyer in any of the 50 states and employment law tends to be state whereas tax law is IRS and on and on. You ought to look at the nuances of that, but I wholeheartedly agree with you that the best attorneys you’re going to find are going to be referrals from other folks.
Tracy: That’s a good point about different states. I wasn’t thinking about that before. Probably about 90% of the lawyers I have worked with, I haven’t met in person. I’ve always just worked with them remotely. You don’t necessarily have to have someone who can go to the office and sit down and show them the contract. If you can find the right person to work with you where you can just send over that the contract over email and get their thoughts and pay without having to meet them.
Rob: For me, I prefer solo attorneys who work out of a home office, use Dropbox and DocuSign, aren’t working for some huge firm with a big office downtown and still using paper documents, that everything needs to be a phone call, and they won’t email. There’s this real dichotomy and the attorneys I enjoy working with the most are more like us. They’re more like startup founders. They’re agile, they use the tech, the cool hip stuff these days, and that’s what I personally would look for. Again, to review one stock option doc, you don’t need to look for all of this, but if you’re going to have an ongoing relationship, that’s what I would be looking for.
Cost is part of it. A solo attorney working out of a home office tend to be less expensive. They’re also not going to delegate a bunch of stuff. That’s what I hate when I work at big firms, you talk to the attorney, great. You charge $700 an hour and your law students, paralegals, and such are charging $350 an hour, but everything is delegated to them, and they don’t tend to know what they’re doing. They tend to have to loop the attorney in to make the hard decisions anyways and you’re the whole time dealing with a junior associate. I guess that’s where I get super frustrated.
It’s like, no. I want to work with someone super knowledgeable and I am willing to pay for it actually. I’m willing to pay the rate, but please answer my questions and don’t funnel me through an intermediary and when I have a solo attorney, they’re answering your questions and you know that they’re the expert in what they do.
Some good questions today. Thanks so much for coming on the show again with me, Tracy.
Tracy: Yeah. Again, super happy to be here. Thanks for having me on.
Rob: Absolutely. As a listener, if you have questions that you’d love to hear right on the show or you want to send us a voicemail, make it to the top of the stack, please email us email@example.com or you can always call our voicemail number if you’re on the road. It’s (888) 801-9690. Tracy, if folks want to keep up with you, they can go to tracyosborn.com or you are @tracymakes on Twitter.
Thanks again to Tracy for joining me on the show. I had a good time answering some listener questions. Seriously, send in your questions. We have bandwidth for even more listener questions over the course of the next few months. If you haven’t subscribed to this podcast, I encourage you to head to iTunes, Stitcher, Spotify or wherever greater podcasts are sold and enter Startups for the Rest of Us, subscribe, or head to our website, startupsfortherestofus.com.
We have an email list. We almost never talk about this, it’s a mistake. There are several thousand people on the list, but if you really want to be in the know, you want to hear about inside baseball, and hear about when formats change and new designs, we don’t email very much, but it’s being within the Startups for the Rest of Us community. Go there, enter your email. Again, we don’t have very many emails and you can unsubscribe at any time. Thanks again for listening and we’ll talk to you next time.
In this episode of Startups For The Rest Of Us, Rob interviews Craig Hewitt of Castos, about the unique set of challenges to starting and growing a SaaS product as a non-technical founder.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups in an ambitious, but in a sustainable and repeatable fashion. These are not the typical Silicon Valley startups, where fundraising can be a goal in itself, and where people build slide decks instead of building businesses. We want to be meticulous, disciplined, and have a way to repeat our success instead of relying on so much luck and so many things to come together that it’s a one in a thousand chance. We want to build real businesses with real customers who pays real money.
In this week’s episode, I speak with Craig Hewitt about how he went from his day job, to running a product-type service, to running a fast growing SaaS application called Castos; all this as a non-technical founder. This is Startups for the Rest of Us episode 459.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth start up or you’re working on your first. I’m Rob and today with Craig Hewitt, we’re going to share our experiences to help you avoid the mistakes we’ve made on our journeys.
Thanks for joining me this week. I’m excited to talk to Craig Hewitt. You may know him from his podcast, RogueStartups, where he has chronicled his journey over the past several years. If I recall correctly, that’s where I first heard about Craig. What I like about Craig is he has been doing this for years, 4½ years ago, he started a productized consulting service.
Two years later, he quit his day job. He acquired a WordPress plugin, he started Castos, which SaaS app for podcasts hosting. He’s built it up to the point where he has four full time employees, two part time employees and he’s part of our inaugural TinySeed batch.
You’re going to enjoy the conversation with Craig. We dive into a lot of stuff that he hasn’t talked about on his podcast and per the interviews I’ve been doing recently, I try to dig into some points in particular and not just cover a broad story, but really look at the important points along his journey, things he learned, advice that you can take away to help you build and grow your startup as well.
I want to do a little experiment this week, it’s something I haven’t done before. I talked to Craig offline and said, “You know? I bet folks will listen to this episode and they might have questions for you.” Whether it’s a question about how you did it, about your journey, about podcasting, about startups in general, just anything that you would like to hear Craig and I riff on and talk about, or frankly if it’s just for Craig, that’s okay too. I want to invite him back in probably two, maybe three weeks, and any questions that have been submitted, he and I can run through on the show. It’s a Q&A episode, but it’s a Q&A episode with a guest host and you have context about his experience.
As you listen to this episode, please try to think of a question or two for Craig and then email it to firstname.lastname@example.org and you can send that as a text question or attach it, Dropbox link to an MP3, or you can just call our voicemail number if you’re on your phone right now. It’s (888) 801-9690 and I’d love to have Craig back on the show, assuming we get questions, and we can run through those.
It could be an interesting and fun experiment to have these guests to come on the show, not just tell their story but also offer practical advice and tips. This is something I’ve been talking about for quite some time about how I’ve enjoyed a Q&A episodes because it allows all of us to be smarter.
The fact that I’m here on the microphone, talking in answering questions is good and I’ve been able to share knowledge along with Mike Taber for the past nine plus years. The community and everyone out there, collectively, we are all smarter if more of us can weigh in on these topics. I love to pull guests back on the show and do questions, so please do send any in, email@example.com, if you have any questions for Craig. Maybe put “Question for Craig” in the subject line, that’ll help me catalog them. Let’s dive into the interview with Craig, I hope you enjoy it as much as I did.
Craig: thanks so much for joining me on the podcast today.
Craig: My pleasure. Thanks from me on, Rob.
Rob: I bet a lot of folks know who you are from your RogueStartups podcast. You’ve been known for several years—congrats on that, by the way—so many podcasts don’t even make it 20 or 30 episodes and you guys are at 170 something?
Craig: Yeah we’ll be at 200 around the end of the year.
Rob: Good for you. On these milestone episodes, everyone always tries to do something cool and interesting and I always find it hard to come up with new things. Have you been given thought to what you might do on that episode?
Craig: We have thought about it. We did a really cool episode at 100. It was a mash up of a bunch of little interviews that Dave did at MicroConf two years ago. We might do something similar to that, just talking about a little bit of everything, founder stories, lessons learned, stuff like that. I think those are really neat.
Rob: That’s cool. I was asking you because our 500th episode is coming up and I wanted to steal your idea and do it before you even do it. Of course I wouldn’t do that.
Craig: You’re welcome.
Rob: Yeah, exactly. The reason I wanted to have you on the show today well, there are many reasons, but one is you’re a non-technical founder who has built a successful SaaS app. Successful to the point that you have four full-time employees, two part-time, TinySeed, we backed you, you’re part of our inaugural TinySeed batch. Stuff’s really been going up into the right for you for a couple years now with Castos.
I wanted to walk through that story because starting a SaaS app is hard enough. Starting a SaaS app as a non developer, there are unique challenges with it. I want to take people back to where you started.
Now, you live in Annecy, France with your family, but you’re from the States. You were living in New Orleans, if I recall, and you were working a day job as a sales guy. Is that right?
Craig: Yes. I’m the dreaded sales guy at heart, which is actually a really nice thing. If you’re not a developer, you have to be a salesperson or a marketer. That’s what I bring to the table I guess, but yeah, I was in enterprise-level medical sales, so selling stuff the hospitals and doctors.
I started the podcast, started RougeStartups just really as a fan of entrepreneurship, software, SaaS, and stuff like that, online business. Ironically, that’s what led to my first business that was any kind of success. It’s called PodcastMotor, we do podcast editing and production, we’re a productized service. That’s what led me to quit my day job. We traveled the world for a little bit and ended up living in France. Then all the opportunities with Castos came along as a result of that. Podcasting has been the door through which all of this stuff has opened up to me.
Rob: Podcasting has been a great thread for you. Obviously, you’ve listened to podcasts for years, then you started your own, then you started a productized service that does podcast editing, and you have a quite a client list. As you said, PodcastMotor allowed you to quit your day job. Then, you have acquired a WordPress plugin that will get to podcasting and then turn that into a SaaS. It’s not often you actually see a thread like that where there are 4-5 different levels in the same space.
I do think that’s been one of your super powers is you haven’t wandered all over the place. You had invoicing software, then an SEO tool, then email service provider, and started a conference. You’d be an idiot to do something like that and wander all over the place. You have just been focused, but you’ve been able to do it in a much more succinct timeline. When did PodcastMotor start?
Craig: PodcastMotor started 4½ years ago. The very beginning of 2015.
Rob: You were working at a day job and you’re good at sales, presumably, that’s what you’re doing at 40-50 hours a week. The PodcastMotor process involved that super power, I’m guessing. There was a lot of demos in sales because it’s several hundred dollars a month for you to produce episodes for folks. I’m imagining, everybody wanted to get on a phone call. Did you find that that asset of being a salesperson and being comfortable with demos helped you a lot getting PodcastMotor off the ground?
Craig: Absolutely. At first, I was doing the sales calls, doing the editing, doing the writing, publishing to the hosting platforms and stuff, and then we built a team around it. For a very long time, actually up until just about a month ago, I’ve been doing all the sales calls. Just because I’m really good at it, we close a lot of customers, and like you said, we’re really fortunate to be able to work with a lot of the podcast that people that listen to the show probably have heard of.
It’s really cool. It’s been a really nice experience to be able to have relationships with folks like that, too, that we’re on a first name basis and able to email up a whole lot of these power players especially in our space.
Rob: PodcastMotor grew to the point where you were able to quit your day job and then fund other stuff you’re doing. Was there a point in the first, let’s say, 12-18 months where you were like, “Oh, […]. This isn’t going to work,” or, “Man, this is really hard right now,” or was it one of those Cinderella stories that I often say don’t exist?
My famous quote is, “Even in the Cinderella stories, blah, blah, blah, and there are no Cinderella stories.” I’ve been saying that. I don’t recall PodcastMotor being that hard for you to get off the ground. I guess, to summarize, what was the hardest part or the lowest point as you were building that?
Craig: It was both. It was really successful really quickly, which in a service business is really hard, because in a SaaS business, if you make it and a bunch of people sign up, there’s no more work for you other than maybe support. PodcastMotor is a relatively complex one to scale the team up, create all these processes, documentation, workflows and stuff to be able to handle to go from 5 customers to 30 is really hard. It was not hard in the fact that the business floundered, but that the business was successful, which is its own problems. That was the challenge. For a long time, I loathe the business because it was just a constant game of catch-up.
Now, I have a lot more respect for it because productized service model is absolutely fantastic for folks who are out there and they’re consulting or they have a day job and they want to quit their day job and go out on their own. There’s no faster, more clear way to do it than a productized service. There are some downsides, like scalability is a lot harder, but for folks who just want to quit their day job, there’s nothing better because it’s pretty simple.
Rob: I’ve never run a productized consulting… actually that’s not true. CMSthemer was that and that was a constant pain in my ass. I had a bunch of other stuff for products and CMSthemer was bringing in more revenue than a lot of them, but it was this constant back-and-forth with clients and I didn’t have enough volume to hire the staff to do it, so I was doing it a lot of it myself. Were you working the day job, then you’d come home and then you just work four, five, or six hours at night to keep up before you had the bandwidth to hire someone to replace yourself?
Craig: Absolutely, and that’s the hardest part in any business. Whether it’s a productized service or it’s a SaaS business, that time when you’re making a few thousand bucks to even $10,000 MRR is just really hard because you don’t have the time or the money to really do anything. That’s why stuff like TinySeed is really cool because your sweet spot with TinySeed is to take these folks that are that $5000 or even $10,000 and say, “Okay, stop messing around with your day job, go all in on this, and really dedicate yourself to marketing, or hire someone from marketing, or hire a developer, so you can go do marketing or something.”
That is the point that probably a lot of folks get burnt out on is, “I have all of these demands on my time and my mental energy and my stress is through the roof,” because yeah, you’re working a day job and you have family or whatever, then you come home, work on this, and there’s a fire to put out every day. If there’s no light at the end of the tunnel in some way, then it’s just really depressing sometimes, which is weird because then, you have this growing business that is making you depressed. It’s a strange thing, but that’s how it was.
Rob: Yeah, there’s so much to be said for the power of focus. The ability to just focus on one thing and not have a day job and side projects in addition to whatever it is you’re doing, and to your point about folks who have $5000 MRR or sub-$10,000 MRR and are depressed, shutting business down. I’ve seen that over and over and I’ve seen folks trying to do it nights and weekends for years, unable to get it past that point where they are able to quit the day job. It’s a real shame.
There are businesses that could have succeeded or could succeed faster if they just had a little more time and a little more of their best energy, the good glucose. Not the, “I just worked in an eight- or nine-hour day from my day job. Now, I commute home and I have three or four hours.” Even if I’m a developer and I can write the code, you’re just so tired, you’re not as productive, and you don’t get in the flow. There’s a lot to be said there.
Can you give us an idea of how large PodcastMotor is? I know you don’t talk about your top line revenue. Have you ever talked about number of clients or any idea, maybe even employee headcount? Something to give us an idea of the scope of the business?
Craig: We do about $30,000 a month and most of it is recurring.
Rob: That’s cool. How long after you started PodcastMotor were you able to basically quit the day job?
Craig: About two years.
Rob: Did it take that long to get to the point where it could provide a full-time income for you or were you working a job and also banking extra money in preparation for that event?
Craig: It was a little bit of both, it was more that we had wished we had a day in mind. We had a day in mind for a really long time, almost a year. My wife and I agreed, with some stuff with the kids and them finishing preschool, we wanted to quit around the summer so we could travel to Europe for three months. We just had a day in mind and the day included some personal stuff. It included PodcastMotor getting to a certain size so it could provide for us. I was in sales, so you’re making pretty good money which was allowing us to save up for this transition time, too.
Rob: I know it grew pretty well from the start. I almost would have thought the productized consulting given how quickly it can scale up, would’ve allow you to quit your day job before two years. It sounds like it would have if you really were desperate.
Back in 2008, I was just clawing and scratching to get out of the day job. The moment that I was able to, I quit If you had done it at the moment, that you had enough income to do it, it sounds like it would have been a lot sooner.
Craig: Totally. I mean, I’m always been reinvesting more back into the business than maybe I have to, and it’s venture for both Castos and PodcastMotor where the businesses don’t throw off as much profit as they could certainly, but I’m just always oriented towards growth. We were hiring team members, getting people in place, and doing all these things to where I didn’t get as much money. When I had a day job, I didn’t “need it,” but if I had to quit my day job or if I’d gotten fired, we could have lived off PodcastMotor pretty early on.
Rob: The next thing I want to touch on is your acquisition of a WordPress plugin called Seriously Simple Podcasting. This is a plugin that folks who run WordPress or want to run a podcast, they install the plugin and then when they do a new post, it allows them to upload an MP3 file and have that go into an RSS feed in iTunes, settings and all that stuff.
To the listeners, we on Startups for the Rest of Us were on PodPress for ages and it was abandoned. It did the similar functionality and it was abandoned six years ago. We just never upgraded because you just don’t do these things. You came in and generously offered to migrate us to Seriously Simple Podcasting. We’ve been on it now for about a month or two and really enjoying the more modern interface, the maintained code base, and all the things that we were lacking with PodPress.
This very podcast that runs on that plugin, but you didn’t build that, you acquired it. I wanted to dig in a little bit on that story. Namely, when did it happen in this timeline? Right now, we’re at two years after starting PodcastMotor, you’ve quit your day job. Did the acquisition happen before or after that? How did it come about? Just talk us through that process.
Craig: I had already quit my day job, we’re already in France, and it came about just an email from actually one of our PodcastMotor customers who is also in the WordPress space, emailed me and said, “Hey, the guy who’s the original creator of this plugin is selling it because he’s going to work at Automatic, the parent company of WordPress. I think you should talk to him. This sounds like a pretty interesting fit for what you’re already doing with PodcastMotor.”
I talked to Hugh Lashbrooke, the guy that wrote the plugin. Pretty quickly he was like, “Yep, this is a good fit because you’re a reasonable person, already in the space, you’ll probably take good care of it,” and we saw it as a way to expand what we’re already doing with PodcastMotor as a service business getting into a product business and SaaS, and the idea was always to build a hosting platform to connect to the plugin. The plugin, like all plugins in the WordPress repository, is entirely free and will always be entirely free. Now, the Castos hosting platform is an optional add-on to the plugin and we use the traffic flow and the lead gen from WordPress like our main source of business.
Rob: Did you think from the start, when you are evaluating the purchase of the plugin, was it in the back of your mind like this is going to be good traffic and lead gen flow to a SaaS app someday?
Craig: No, it was dumb luck. Very fortunately, but it turns out to be one of the best decisions I’ve made in a long time.
Rob: That’s the thing. If I’ve learned anything doing all the entrepreneurship stuff, the podcasting, and being in public is doing things in public creates opportunity. I don’t care whether you’re blogging about things, whether you’re podcasting, whether you’re actually have a productized business, a productized consulting business like you do where you have a SaaS app, if you had not started a podcast then decided to do PodcastMotor, you would never have gotten that email. No one would pick you out of the blue and it happened to be, “Oh, this guy’s already in the podcast.” There was some warm relationships there, there was a recommendation by someone saying, “Hey, he’ll take good care of it because we already know he’s proven this and that.”
I often give this advice to folks who can’t ship, or who are either have been working on something for years, or thinking about it or, “I just don’t know what to do to start,” I often say, “Just start podcasting or start writing. Even if you want to ultimately do software products just get out in the world, build a small tool and ship it. Help bloggers, help podcasters, help developers, something that gets you out in the world and has your name in the footer.” You’ll be shocked at how many of these little things come along just from being out there.
Craig: One of the things we all discount too much is just the value of your relationships with human beings, talking to them on the phone, and meeting them in person and stuff. We go to conferences, like MicroConf, or like […] Conf, or whatever maybe once a year and you meet up with all of your online friends. That’s really great, but I think that, especially if you’re talking about developing business acumen and a real network, that we should all take this a lot more seriously than most of us do. I was definitely on that boat. I was like, “I have my computer and run a business.” Now, I could run a really good business without a computer and just talk to people and work it like a regular business, where it’s all the relationships and the people that operate in the business and that I know in the industry and stuff. It’s an interesting flip that that’s taken.
Rob: I’ve totally seen that in my career as well. A lot of it starts with nuts and bolts, providing a service in marketing in a funnel, split testing, and then at a certain point there’s a lower leverage activities for you now because now it’s working relationships, it’s building partnerships, it’s shaking hands, and like you said, at an event that can get you hundreds of customers right off the bat rather than grinding it out with AdWords as the case may be.
To give listeners an idea of maybe the magnitude of the plugin, I know you haven’t talked about purchase price, you don’t have to name an exact number but to give listeners just some context what realm of numbers did you pay for Seriously Simple Podcasting.
Craig: I paid mid-four figures for the plugin, and at the time it was an entirely free plugin with some add-on modules which are also free and had about between 10,000 and 20,000 active installs in WordPress.
Rob: That sounds like a good deal to me.
Craig: Yeah, it was a great deal.
Rob: Long term, knowing what it turned into, obviously was a genius maneuver that I know you architected from the start.
Craig: Oh yeah.
Rob: From day one, I knew it. But even then, it sounds like that was a good exchange. You acquire this plugin, this is your first exposure to WordPress. I know you’ve used it as a podcast host or whatever, but you first time owning and operating a plugin, how long after the acquisition did you think we should build a SaaS app to back this thing?
Craig: That was always the idea, was to buy the plugin, to build a hosting platform on top of it because the model had already been proven. There’s another player in the space that does a very similar thing. I think we do it better, but there’s someone else that already does the exact same thing, basically. Our idea was, “If there’s already a player doing this in a certain way, I think we can do it better, because there are some things about that tool that I don’t like and a lot of other people don’t like.” That was the idea from the beginning.
Rob: And the rest is history, to be honest. You build Castos, it’s a SaaS app, a big channel has been your WordPress stuff. I know you have a lot of other channels at this point growing the company. Castos is about 2½ years old, four full-time, two-part time folks. Successful SaaS app on all metrics and I know your MRR—we won’t announce it here on the show—but it’s successful by any measure.
I’m curious, there’s a couple questions I have for you. The first is, podcast hosting is a very competitive and almost I say quasi-commoditized space, there are a lot of them. It’s commoditized in the way that email service providers are. There’s differentiation. It’s not truly a commodity, but there are just so many that you could go out and throw a rock and hit three. What made you think that you could enter that space just 2½ years ago after there are already as many as there were and gain enough traction to build a real business on it?
Craig: Even now and for sure back then, the thing that sets us apart from most all other players is the plugin and our WordPress integration. It makes managing your podcast content just so easy. It is Seriously Simple Podcasting. All joking aside, you just go into WordPress, you create a post, you upload the file, and your podcast is live as opposed to, “I’m going to log into Libsyn, I’m going to go over here, upload the file, then I get this iframe code which is all janky, then take it back to my WordPress site, make sure the post is published at the same time and all this kind of stuff.” There’s none of that. You just manage all your content wherever you’re managing all of your content already, which for a lot of people is WordPress.
I still believe that if I wasn’t the owner of Castos, I would still use it because it’s the best tool for my workflow, because I use WordPress for all of my sites. I manage all of my content in WordPress, so it’s the obvious tool and I would tell anyone else that. If you have a site on WordPress and you want to start a podcast, it’s just the clear, easy, good way to go.
That’s our competitive advantage. I think we have a pretty good moat around that. It would be hard for somebody to create a plugin that does as much as we do, get the traction, the name recognition and everything. I’m sure somebody could and maybe somebody will after hearing this, and that’s cool. Competition is healthy, it validates the space a lot, but that at this point, we’re a long way down that road, so it’s a pretty defendable competitive advantage for us.
Rob: Early mover advantage with stuff like WordPress plugins, SEO. I often think of WordPress plugins just as another form of SEO. If you get a plugin with a bunch of five-star reviews in the WordPress plugin repository, then you appear at or near the top of the search results when people search for podcast plugin. It just dumps hundreds or thousands of people through your funnel. And it’s a free funnel, so it’s not like they’re eating your website, but they’re downloading the plugin and then from there, you nurture them. This is a playbook where we’re seeing folks do, whether they’re moving them towards the premium plugin add-ons to a free one or towards a SaaS app as you’ve done.
Craig: Free like a puppy Rob. WordPress and WordPress plugins are not free.
Craig: It’s an expensive channel to maintain, but a very high-quality one.
Rob: Yeah, no doubt. Again, coming back to non-technical founder, you don’t write code, but you’re a more technical person than most salespeople that I’ve met. It probably comes from you selling medical devices. You have that left-brain edge and I know that you’re savvy with some of the tech stuff, just not a coder yourself. I’m curious what the hardest thing has been for you as a non-technical founder building and maintaining a SaaS app?
Craig: I know that Jonathan, our early developer for Castos, listens to this podcast so he’s going to laugh when he hears this. At the beginning, it was just him and I. He’s been our developer since day one. He started about two weeks after we acquired the plugin. We have had quite the journey of how we communicate, how we plan, how we work together, and it’s just been really challenging. It’s not anything to do with him because he’s actually been really great and gracious and forgiving of me.
For most non-technical folks, learning how to communicate effectively, and maybe efficiently is the right word, with developers is the hardest part. They speak a different language, but just being really, really clear the first time about what you want to build and why, what the user experience is going to be and all of these things.
Even to a developer that is a western person, that native English is their first language—Jonathan is both of those, he’s from South Africa—even though I would consider him a really, really good senior developer, I would come and say, “Hey, I want to go build this thing,” and he would go build it. I would come back and say, “This is not what I meant,” and he would say, “Yeah, that’s what you said.” So, just some of those things. It’s not even just scoping a feature. It’s how we track, report, decide which bugs to fix, in what order, prioritize the workload and stuff. All of this project management stuff is just really challenging. At this point, we do a pretty good job of it, but for the first year at least, it was just fires every day.
Rob: Can you give me an example of one time that you remember where you feel like you really struggled and basically did an example of what you’re talking about?
Craig: I can’t think of an example, but the classic thing, actually I’ve heard Hiten Shah talk about this recently. He calls it dropping Hiten bombs. He’ll just come in and say, “Hey, we should do this thing sometime,” and then the person that “works” for you says “Wow, Hiten or Craig, thinks that’s a really important thing. I should go do that.” That’s the biggest specific challenge for me, is organizing my thoughts and my product road map into something that’s really predictable and clear, and that we can all follow in the same way, not just scattered message and Slack every day, and changing directions on a whim. That’s just an impossible way to work. Getting over that has been huge.
Rob: I can see that. It’s amazing that if you’re like me—you and I are similar in personality—you view yourself as a scrappy founder who just wants to get stuff done, worked a day job, you built something, you’re the same person you were 10 years ago, but you’re not viewed that way by the people you hire. When you have a team and whether it’s 4 or 40 people, you still feel like you can just brainstorm like you did back in the day with a co-founder or with a mastermind group, “Yeah, I’m thinking about doing this, this, and that.”
You’re right. The Hiten bomb concept, I’ve seen it over and over with founders of you throw out an idea and it just train wrecks everybody or your thought process is really anxiety-provoking. It can be really anxiety provoking. If you say something one day and then change your mind the next day and you’re like, “No, it was just a brainstorm. It was just something I was thinking.” Folks don’t know that, and they’re trying to get a job done. I wonder, is that just learning to be a manager? A boss? Or is it learning to be communicating with developers? Maybe both.
Craig: It’s definitely more of the former. Also being more mature. I hate to say that because I’m going to be 40 next year. I need to chill out a little bit about some of these stuff and say, “Okay, the house is not on fire. We have a really great product and plugin, and everything is super stable. If I can just keep my mouth shut for another two weeks until the sprint is over, then we can talk about this.” That’s where I am these days.
Rob: As we move towards wrapping up, it seems like a tangent question or whatever, but I know that especially folks who listen to RougeStartups or maybe who have their own podcast and are building their own product on the side might be wondering, do you feel RougeStartups as your podcast you’ve been hosting for many years, do you feel like that’s had an impact on your ability to launch and grow Castos.
Craig: Totally, and I think in two ways. One is that, it is what first got me into PodcastMotor which is the door that got me into running my own businesses and was the introduction that got us into Seriously Simple Podcasting. The other reason probably is the more applicable to everybody, is that it really is honed to my niche expertise. I am pretty knowledgeable about podcasting because I run a podcast and I run a productized service around podcasting where we help a lot of really good podcasters run their podcast. Now, I run a SaaS app and a WordPress plugin around podcasting.
I just have a lot of domain expertise around this. The show itself, probably like Startups for the Rest of Us, is a really good channel to get your name out and build brand equity and stuff like that directly. Our show has helped grow Castos directly some, but more so, it has allowed us to make a lot of really good product and marketing decisions. The vast majority of our thousands of customers, I don’t know and don’t come from our listener base. That tells me that the podcast probably has helped us a little bit, but more than anything, we’ve built something that people really like.
Rob: And I would guess that the podcast has helped you more with a couple things. One, knowing what to build and knowing how to support people who are editing and posting podcast because you run a company that does it, know how to help folks who are creating podcasts, because you create one. You do have an expertise that most people even building podcast hosting SaaS apps don’t have. You have the whole gambit of being a listener, creator, and running a company that edits and produces them.
That’s one thing, but the other thing is I’m guessing that RougeStartups probably helped you more with credibility, perhaps with potential affiliates or partners like in space in the MicroConf world, they’d probably know you from RougeStartups. I’m guessing even PodcastMotor clients.
Those would be the folks that would email. I’ll admit, I’ve received at least—just over the years—probably two or three emails asking about, “Do you know Craig? Do you know about PodcastMotor? Are they legit?” that kind of stuff.
Early on, the way I first heard about you was RougeStartups. You spoke at MicroConf Europe a couple of years ago, you’re speaking again in two months, and the first time I invited you was because I had listened to you talk on this podcast for months and I was like, “This guy is sharp. He knows what he’s talking about. I think he’ll do well on stage.”
You would come to MicroConf and I believe we had met, but I meet a lot of people at MicroConf. It’s like you were in my ear buds literally six months or nine months and that was a piece of it. I’m not saying you speaking at MicroConf Europe, but you and I knowing each other has changed the course of anything, but that’s probably one of 50 examples that’s come out of it.
Craig: Yeah. Podcasting even here, getting into the fourth quarter of 2019 is probably the best use of time that anybody can put into personal branding. It’s wonderful. It’s really efficient from a time perspective. You just spend 45 minutes recording a show, edit it a little bit, or send it to somebody like PodcastMotor, or find a guy on Upwork to edit it for you, and then you get 45 minutes and a bunch of people’s ears every week. It’s just really impactful as a medium for building brand awareness, and getting your name out there.
Rob: You’re not just saying that because you run an editing service.
Craig: I’m hugely biased. Yeah.
Rob: Totally. Take it from someone like me who doesn’t run an editing and hosting service. I’ve been talking about this for years. Mike and I show up every week. We shoot a show every week and I stopped blogging years ago. I really want to blog, I just don’t have/make the time to do it, but I do make the time to podcast because it is so much less of an effort.
We need to talk offline about getting Startups for the Rest of Us moved over to Castos in the next couple weeks. Let’s figure out a good time for that to happen. We’re already on Seriously Simple Podcasting and my understanding is the move to get all of our files. Right now, for listeners, we set it up in 2010, so we literally have flat files, MP3, flat files, just sitting on a shared hosting account and a CDN over that.
We could have done Libsyn in 2010, they were the only host that I know of and they were so janky, and a lot more expensive than what we have because I have somewhat a limited shared hosting account. We’ve done that for nine years and frankly, there’s just a lot of challenges with that approach, I’ll leave it at that, and we’ve been looking at getting a legit podcast host for several years for the metrics and all that stuff, but it’s probably time we do it.
Craig: We’d love to.
Rob: Sounds great. Thanks again for coming on the show. I know folks want to keep up with Castos, they can go to castos.com. If they want to follow you, if they’re into podcasts of course, check out RougeStartups on iTunes, Stitcher, and all the other places. Where else might they keep up with what you’re up to?
Craig: The best place is probably on Twitter. I’m @TheCraigHewitt on Twitter and I tweet less often than I should, but that’s probably the easiest place to reach out and say, “Hey.”
Rob: Sounds great man. Thanks again for coming on the show.
Craig: My pleasure. Thanks.
Rob: I hope you enjoyed my interview with Craig. Again, if you have any questions that you’d like to hear Craig and I talk through on the show, please email firstname.lastname@example.org or call our voicemail number at (888) 801-9690. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Mike returns to the podcast to give updates on the fate of Bluetick as well as progress updates on his motivation and health.
Items mentioned in this episode:
Rob: In this Taberrific episode of Startups for the Rest of Us, Mike returns to the show. This is Startups for the Rest of Us episode 458.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the mistakes we’ve made on our journeys. Mike, it’s been a long time.
Mike: Hi. Yeah, it has. What? 10 episodes?
Rob: Ten episodes. I don’t think either of us realized that it would be that long. Just so listeners know, you and I had literally not spoken verbally. We’ve texted since that episode, but we have not spoken since episode 448.
Mike: That’s true.
Rob: We’re not talking that much. We tend to text and email a lot.
Mike: I hear that from people when I talk to them at MicroConf. They have the expectation or the inclination to believe that you and I talk either everyday or at least a couple of times a week. That’s totally not true. We’ll email back and forth. We will sometimes go for a couple of weeks without talking at all.
Rob: Yeah, if we don’t record the podcast. Ten episodes. What have you been doing with the enormous amount of free time you had not had? Showing up every week to record this and all that.
Mike: I’ve come to the realization that I was probably recovering from a pretty massive dose of burnout. I feel like I’m at the tail end of getting over that. How do I put this? There were times where I would just take an entire day off just because I felt like I needed it. Then, there are other times where I would just sit at my desk. I really wouldn’t feel like I was getting any work done. I would say that was the early stage when I started to take the time off.
I got to the point where I realize just sitting at my desk wasn’t actually doing anything. If I wasn’t actually being productive in any ways to perform, I’ll just get up and go do something else. What’s the point of sitting there if it’s not doing me any good? Because then, I’m just going to feel bad about it later and that’s not good for me either. It was rough to get through, but it was probably necessary, too.
Rob: It’s nice to have the luxury to be able to take that time and did not have to show up everyday for a season. It’s like over the course of years, you need to show up everyday in general, but when you’re burned out, you have to take time off. There’s really no other way to get around that. You have to get away from it. It’s hard to show up even once a week and be like, “All right. I’ve got to sit there and talk on the mic about stuff that I don’t really feel great about.” I’ve gone through months of time when I felt that way. When I listen back to the show, I can hear that in either one of us at a given time when they’re burned out.
It’s great you have that time to step away. You just got to give yourself permission to do that. That’s the thing. I often feel guilty when I do it, but you come back the next day or the next week assuming it’s not a long term depression or a chemical imbalance, which is totally very valid and real thing. But assuming it’s not that and you are just burned out because of the work or whatever it is, it’s super valuable. Each of us should give ourselves permission to do that.
Mike: Yeah. That was a good realization for me is just giving myself permission to walk away then come back later either when I felt like it or maybe the next day if I didn’t feel like it. Sometimes, there were definitely a couple of periods where I would take two or three days just because I didn’t feel like doing anything and I wasn’t being productive. You can’t beat yourself up all the time because that’s really what was happening to me. I don’t know how long it was going on, either.
When you’re sitting there trying to get work done, it’s like you’re concentrating more on beating yourself up about why you’re not getting things done, not focused, and not moving at all forward. Then, you are about taking a larger view of things saying, “How long does this been going on?” I try to forgive myself, I guess, for those periods of not being able to get stuff done. Like I said, things just has gotten a lot better over the past month or so.
Rob: We’ll dive into that. That’s the whole point of this episode. I have a couple of questions for you before we get into what you’ve been thinking about, how things have been with your health, your progress, and what’s going on. Have you been listening to the podcast?
Mike: I’ve not. I’ve gone into hermit mode.
Rob: Yes. You haven’t been on Twitter at all, right?
Mike: Aside from logging in very briefly on Twitter and Facebook just for authentication purposes for a couple of different things, I haven’t gone on either one of them. Nothing. No social media. I don’t even really watch the news or anything like that. There’s stuff going on. I’m just like, “I have no idea what’s happening in the world.” It’s just hermit mode.
Rob: Mike, do you miss it desperately and feel like there’s a huge Twitter-shaped hole in your heart?
Mike: No, not really.
Rob: Not at all?
Mike: I do miss some of the playful interactions and stuff like that. At the same time, I know they’re also distracting for me. I miss reconnecting with people just to shoot them a message here and there, and just make a comment on different things that are going on. At the same time, a lot of those doesn’t necessarily add any real value for me. I guess there’s a social contact, but I’ve tried to find personal social contacts outside of the internet.
Rob: That makes a lot of sense. I find it fascinating you have been listening to the podcast at all. The listeners who’ve been listening, they know the format. I’ve changed the format. I’ve been doing a lot of interviews, really trying to dig in and not just do the same old. We never wanted an interview show. There were enough interview shows. I’ve been trying to dig into people’s stories and the struggles. Done several Q&A episodes. I did a Q&A episode where Tracy Osborn came on and co-hosted with me. Jordan Gal came on for one.
That’s been actually the cool part for me. It was almost an excuse/motivation/force to me to figure out how I run the show on my own. It forced me to innovate. It’s the mother of invention to sit here, stare at the mic, and be like, I don’t just want to do what a lot of solo hosts do which is interviews. I don’t just want to monologue on the mic. Heaven knows I can sit and talk for 30 minutes. How do I try to up the game?
I’ve been spending a lot more time on the podcast than I used to. Over the course of the last several years, we show up and we talked about on the mic, but I’ve been trying to be really deliberate about trying to craft stories, just experimenting with new ideas, and new formats. It’s been cool. You can go back and listen to them now, I think your hermit mode is great, and it’s probably what you needed at this point. Someday, go back and listen, and let me know what you think.
The response I have asked in some of the episodes for folks to write in, or write me personally, or tweet, or somehow give their thoughts on the new format are overwhelmingly positive. I probably got 20-25 responses saying, “Yup, this is great.” “Keep being creative.” “Keep changing it up.” Some folks have mentioned that they missed the Q&A episodes probably the most. We used to do it every other episode, this Q&A.
That’s easy enough. I did one that went live today when we’re recording this. It was just me doing Q&A. I listen through it and it’s good. I think that works. I also like bringing experienced folks like Jordan Gal or Tracy to co-host with me on the Q&A. I think I’m finding my groove here in a way to keep it going.
Mike: Yeah. It’s interesting that you bring up the forced innovation. There’s a couple of things that come to mind in terms of just the podcast in general. I call it a general success and general longevity. The fact that we show up all the time, I guess until 10 episodes, we show up every week. Then, the past 10 has just been you showing up every week. The fact that it’s there and people can rely on it is not just a testament to the show, but it’s one of the reasons why it has been successful.
The other thing that you look at is you can continue to do the same thing over and over again, but eventually, maybe it gets boring. Maybe you decided that there’s other things that you want to do or there’s other ways to innovate on this show or whatever it is you’re working on. Those things don’t get done sometimes unless you force it because you’re either afraid to make changes or you decide, “I’m comfortable now. I don’t want to go through the…” I don’t want to call it pain but the uncomfortable mess of trying to change something that is already working. That applies in not just the podcast but in a lot of other places, too.
Rob: I would agree. I actually have a snippet from one email that we received from […]. He had a couple of comments, but one thing he said, it was indicative of what a lot of folks said. He said, “You asked for feedback about the new format. I’m really enjoying the in-depth nitty-gritty interviews with entrepreneurs who are in the trenches and openly talk about their successes, failures, and what they’re currently working on. It’s so valuable to hear what people think through the challenges, problems, and decisions. You’re a great interviewer because it doesn’t feel like you’re an interviewer, if that makes sense.”
I really appreciate that piece because I’m trying to deliberately do that. I’m not trying to be an investigative journalist. I’m trying to be a founder who’s just having a conversation with another founder much likely we would have whatever, at a bar, or at a conference in hallway track or something.
Back to his email, he says, “I also appreciate how you introduce the guest’s background yourself so you can go right into the good stuff with your guest.” That’s been very deliberate. The first 2-3 minutes, I hammer through their history so that we don’t have to sit there for 20 minutes talking through, “So, when did you become an entrepreneur?” Nobody really cares about that, in general. We really want to know what’s this pivotal piece of your story and let’s dig into that; that element of it.
His emails continues. He says, “I’ve learned so much from the topic-focused/listener-questions episodes as well.” That’s some more of the older format. “There’s so many concepts I’ve incorporated into my own thinking that have made me vastly more productive and effective.” It’s cool he rattles up a bunch. He said off the top of my head, relentless execution, road blocks versus speed bumps, almost all decisions are reversible, good glucose, moving a business forward, I could go on. He says, “I like the new format. I like the new voices, I like the stories, but the previous format is also great and it has taught me a lot.”
I appreciate that email. That was in general, indicative of the feedback that I saw. There was one person who wrote in and said, “I like the old format better.” That’s not super helpful without more description, but yeah, in general, it’s been a fun adventure.
Mike: That was cool.
Rob: How about the website? Have you been to the website? I’m about to announce it today, but about a week-and-a-half ago, brand new, Startups for the Rest of Us website went live.
Mike: I did see that.
Rob: It’s a new WordPress design. I’m sorry that I had to deprecate our 9½ year old WooTheme that we customized. Oh Mike, the humanity.
Mike: That was so hard to work with.
Rob: It’s not because it’s a WooTheme, it’s because it’s 9 years old. It was so crafty. Everything was breaking. We have plugins that were deprecated six years ago. Thanks again to Rich Staats at the Secret Stache who jumped in. The podcast feed would have died three months ago. We weren’t able to get new episodes in. He jumped in a day’s notice and hacked something in a plugin to get that going. That was cool. It keeps us going.
I don’t know if you know, but we’re now on Seriously Simple Podcast hosting which is Craig Hewitt’s WordPress plugin. We were in ProdPress and it hadn’t been touched in six years. Craig did us a favor, jumped in, and spent several hours migrating us over. We were just bailing the water out of the boat, in essence, to keep the podcast going. That’s cool. Now, we have a new theme. My hope is that we’re in a much better situation now.
Mike: Yup. In 2027, we can update it again.
Rob: It’s the thing I was thinking. It was like, “Oh my. We need to do this a little more often.”
Mike: It might be a good idea, but I think we both just got busy doing other things. It’s still work and it’s functional, it’s a little along the priority list.
Rob: Yup, that’s right.
Mike: That happens.
Rob: I was motivated by the fact that the momentum carried through were I was like, “Okay, here I am doing this show on my own, setting up interviews.” I kept going to the site and being just like, “I’m so bothered by this website.” The copy’s out of date. The greatest hits ends at 220, it’s like half of our podcast feed had been analyzed for greatest hit, and just the design and everything. It’s never fun to redesign a site, but it’s fun to have redesigned it. Now that it’s done, I’m glad that it’s all taken care of.
Mike: Now that it’s over and it looks nice, then it’s much better off.
Rob: Yeah. Episode 448 really struck a nerve. We received north of three dozen comments on that episode, tweets, emails to myself, emails to email@example.com. It is the episode that received the most feedback, perhaps, of any episode in our 450 episode run.
Mike: Yeah. You can probably at least add 50%-75% to that. I’ve got a ton of things that came directly to me through email as well. I don’t know if anybody has tweeted at me. If they did, I apologize because I have not logged into Twitter since 2½ months ago. On top of that, I’ve got a ton of personal direct emails to me, as well.
Rob: That’s cool. Thank you to everyone who reached out, honestly. I’ve responded to a lot of them, but I read every single one of them. I know you did as well, the stuff that came to you, Mike. In general, it was just super encouraging. There was a voicemail last episode that I felt like it had a couple of questions. He had a piece that I felt summed it up nicely. He said, “I wanted to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the podcast community. As a fellow, still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenge he’s facing and I deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next.”
I felt that was, in general, like, “Thanks for coming in the mic and doing this, both of you.” “Thanks for diving into this difficult topic in front of 20,000 listeners,” and, “This is helpful.” That’s what I keep hearing is, “This is helpful for me to hear as a founder to know that I’ve gone through this, I am going through this.” It really humanizes it and a lot resonated with a lot of people that we were able to dig into that for 40 minutes, 10 episodes ago.
Mike: Yeah. When that episode went live, I got inundated with a ton of emails upfront. Then, they just kept trickling in. They tapered off after three or four weeks. It was hard for me because I wanted to respond to every single one of them, but I just really wasn’t in a place where I could. I apologize to anyone who I didn’t respond to. I started replying to them and I got to a point where I just couldn’t. It was like I was seeing the same things over and over again to people which is continuing to beat me down, I guess. Apologies to anyone, but I do want to say, definitely, I want to thank anyone who did email me. I did appreciate it.
Rob: Mike, when we last left our hero, we were talking about […] of things. I have seven or eight bullet points here to cover and revisit. You don’t need an answer to all of them. Some of the answers maybe. I don’t know. I haven’t figured that out yet. To take 2½ months off and expect that everything is thought through, everything is fixed, I don’t think is realistic. I am curious and I’m sure the listeners are, too. Did you give this particular bullet a thought? What’s your conclusion? Where do you stand now? Where do you see it heading over the next months and years?
To start high level, a question I brought up a couple of times in that episode was, “Do you still want to be an entrepreneur?” and you said, “The answer is absolutely yes.” That’s cool. The other question towards the end, “Should you be an entrepreneur? Do you feel like this is what you should be doing? Or do you feel like you should—not want to, but should—take a step back? Do some consulting? Build up the bankroll? Take a salary job?” because healthcare is so expensive. I know salary jobs make both of us sad. They make me depressed, but they are so stable, they’re so much less stressful, and there’s less need for that intrinsic motivation. Did you have a chance to think through that stuff?
Mike: I did think about it. Coincidentally, it was maybe four or five days ago, I got an email from a recruiter who was asking me. He’s like, “Hey, I saw your job experiences and stuff on LinkedIn. There’s a position over here at Amazon that you’d be really good for.” I looked at it and I thought for eight or ten seconds, “Oh my God, No. I just can’t do that.” Not just the fact that it would be all the way up for in Summerville. It’s taken me an hour to get there, so no. Absolutely not. That’s part of why I went out on my own anyway.
The thought of going back to a full time employment, there is an attraction from just the healthcare standpoint, but at the same time the lack of flexibility. The past couple of months, we’ve been able to make things work because I’m working at home. My wife’s got her business. She’s in and out. We just tag team on all the stuff with the kids during the summer. It’ll be so much harder if I had a fulltime job. Yeah, I could probably make it work if I were working remotely, but it’s still just the hassle of working for somebody else.
I saw this Dilbert comic. My wife and I actually talked about this, me going back and working for somebody else. I remember coming across this Dilbert comic very recently that really summed it up. The boss comes in and he says to Dilbert, “Hey, good news. We just won this nationwide contracts to roll out a wireless network.” Dilbert says, “Newsflash: We don’t know how to roll out a wireless network nationwide.” The boss says, “How hard could it be to not roll out wires?” That completely sums up exactly why.
Don’t get me wrong. Not every company is like that. But there are some things that I see that companies done where you’re just like, “This is the dumbest thing ever.” Yet, it’s hard to say something in those situations. Then you come off as an adversarial employee, you’re not working with the team, it’s just like, “Come on. This is a dumb idea. I can’t believe you don’t see it.”
Rob: Did you just quote a Dilbert comic as a reason not to get a full-time job?
Mike: I think so.
Rob: I hear what you’re saying. Honestly, if you were to get a job, it should be for a startup. It should be for 10, 20, 30, person company. Probably, with funding so they have good benefits and it should be remote.
I get it. I’m not saying you should do this, but I think that not wanting to go back to the cubicle form or the hour commute, I get that. Neither of us should do that. But I don’t think you need to in this day and age.
Mike: Yeah, I totally agree. I could probably find something that’s remote. I thought a lot about it. Even if I had all the money in the world, I would still build stuff. The problem with that is that money isn’t necessarily a main driver for me. That’s the problem that I’ve run into. I have enough money in the bank and I have enough income coming in where I don’t have to work my ass off in order to have the things in life that make me happy. The problem is I’m not really making a ton of forward progress on a lot of things.
It really comes down to an existential question of, “What is it that actually drives me if it’s not money?” It used to be money because I was the only one in my household who was working and now I’m not. My wife is able to help out with the income side of things. It’s great because now I don’t have to push myself nearly as hard. But as a direct result of that, the question is, if I don’t have to work nearly as hard, why am I doing this? What’s the point?
It’s something I definitely struggled with, to be perfectly honest. I don’t have a great answer for it yet. I’m still working on that, but the reality is, that is what stopped me or prevented me for going full speed on a lot of stuff because I haven’t needed the money, so what’s the point?
Rob: That makes sense, although you’re not independently wealthy. You do have to work. If you stopped working altogether, it’s not like you can take five years off. When I was in your shoes, that was my motivation. It was to get to a point where I could take years off or the rest of my life to achieve financial freedom. It’s an overused term and it’s almost devoid of meaning at this point, but I wanted the ability to never have to work again. That was a big motivation for me. Does that not motivate you?
Mike: I feel like the runway’s long enough. It’s not like a hardcore motivator for me, if that makes sense. I’m not under the gun. I don’t have two months or whatever to make ends meet or I’m done and I have to go find a full time job because that’s not the position I’m in. I’m fine for probably several years. That’s not a big deal. The problem is that there are going to be points along the way.
Let’s say Bluetick completely went away, for example, I lose that income. Yeah, I would probably be in a little bit of trouble, but I would still have plenty of runway left to figure out what I was doing at that point. The question is how do I address that? What do I really want? What am I really looking for?
I don’t necessarily have specific answers for that. I’m still working on those. I agree that the financial freedom aspect of it is a good and worthy goal. The question is, what is it that I’m really looking for above and beyond that? If I have that, what am I going to do? What’s going to drive me and motivate me? Even if I achieved that, then what’s next? What’s going to prevent me from just saying, “Okay, now what?”
Rob: That’s so interesting. I hear you, but I would get to that point then say, now what? I have gotten to that point a number of times. For me, quitting a salary job was this huge goal of mine. I quit it and went full time contracting, remote, consulting, in, let’s say, 2002 or 2003. I remembered being like, “Oh my gosh! This is it. I’ve dreamed of this for 20 years since I was in high school. I wanted to have this remote job.” And I did. Six months later, I said, “Now what?”
You know what “now what?” for me was? It was, “Huh, I’m bored of working dollars for hours. I want a product. I want a product to support me.” Then, in 2008, I’ve got a full time income from products. I remember loving it for about a year. Then, I said, “Now what? I’m bored. I needed to do something bigger.” That was podcast, conference book, Micropreneur Academy. Then, it was HitTail. It was like, “I need to level up.” Then, after that it was Drip. After Drip, it was, “Now what?” Now, I spend more time in the podcast than I do in TinySeed.
Your and my motivations do not have to be the same thing. That’s not what I’m saying. I do think that the best entrepreneurs I know have a driving motivating factor. It is either to create—to build stuff that people use—or to achieve. There are a bunch of folks who just want to build a big company. They want to build the Amazon, or Google, or the Uber. That’s not my motivation. My motivation has always been to create interesting things that other people can use. I’m sure there are other motivations.
The thing that I’ve seen, if you ever heard of the Enneagram, it’s a personality test. It’s like the Myers-Briggs or whatever. It’ll tell you, “This is what motivates you and this is what doesn’t.” I’d be fascinated for you to take that. Whether you talk about it on the show or you just take it for yourself to get some insight into your likes, dislikes, your pros and cons, strengths and weaknesses, and your motivations.
I think that until you know that, it’s going to be a challenge for you to really be motivated to launch products because this […] is hard. That’s what we’ve experienced. It is hard to do this. Without a real drive of, “Man, I need financial freedom,” or, “I need to create stuff that a bunch of people can use,” or, “I just need to escape this inner voice in my head that probably my dad or my mom put in me.”
These are the motivations that I’ve seen drive entrepreneurs to do really interesting things. I don’t even mean great things, you don’t have to build a multimillion dollar business. That’s not what Startups for the Rest of Us is about. It can just be about shipping cool things into the world that people use and showing up everyday to do it.
Mike: Yeah. Part of my question that I’m kicking around in my head is, what is it that I want? All of the things you talked about are like, different people have different goals. Some may want to build the next Amazon and for you personally, that doesn’t resonate. It’s not what you want. But when you’re talking about your journey from going to self employment to building a product then to HitTail, Drip, and TinySeed, that whole journey is a series of challenges that you’re undertaking.
In my mind, what I’m really struggling with is what is the challenge that I actually want to tackle? What is it that I personally want to do. That’s not something that comes over night. Especially, if you have the time to figure out what it is you want to do rather to be in having some forcing function that makes you decide within a week. Within a week, that’s a time constraint. You have to deal with the constraints right there and then versus I’m in a position where I can take some time to figure out what it is I actually want, reflect on exactly why that is, and why it’s going to make me happy. If it’s not going to make me happy, I don’t want to do it.
Rob: You’re right. Until you’ve been there, it’s hard to understand how saying, “I can move and live anywhere,” actually makes it a lot harder. It’s tough to say, “I can build or do anything. I have a few years of runway,” makes the choice a lot harder because there is no forcing function for you to make a decision. There’s not a ton of things pressing on you to do it. I hear what you’re saying.
It sounds like, “Here’s what I’d like to do with this because this is really an interesting topic.” I noted, “What is the challenge that Mike wants to tackle? Why is he doing this?” I want to revisit this. I think that you should give a thought, do a retreat, do whatever it is that you’re going to do to figure that out. Take the Enneagram. I’ll just put the link. It’s not a silver bullet. Take it. Take some personality test and do some thinking and stuff. Think about what it is you want to do. This is a time to be deliberate about these things.
The mistakes that I’ve seen some founders make, it’s a founder I have in mind in particular, he sold a company and sold it for several hundred thousand dollars and didn’t have enough to retire, but he could take time off. He didn’t take time off. He made a quick decision that said, “I got to get right back on.” He launched this next thing within a few weeks. It was a mistake because it was almost like a rebound, like a rebound startup or like a rebound idea.
You’re not in a position to where you’re shutting Bluetick down and looking for another thing. You are in a place where you have the luxury of taking a month or two, set a timeline so you don’t take a year or two, but figure it out. That’d be my advice. What do you think? Do you think I’m full of BS?
Mike: Well yeah, but no. That’s a great way to phrase that question. I like that. An excellent point about the fact that when you got a blank slate, you can live anywhere, and you can do anything, what is it that you’re going to do? When you’re facing the problem, there’s all those constraints. It helps guide you in the right direction. But when you have no constraints or very, very few that makes it a lot harder. That’s the position I’m in. I have much fewer constraints on me now than I probably did five or six years ago.
Rob: The paradox of choice.
Mike: Yeah. I’m just trying to make sure that I make the right choice for myself, go in a direction that is going to make me happy, and that’s actually what I want to do. I remember a time when I was a kid. I was like, “I want to do this. I want to do this. I want to do this.”
Fast forward 30 years and you don’t have time in your life to do all of those things. The question I’m trying to answer for myself is, in 10 years, or 15, or 20 years, when I look back on my life, what is it that I want to have achieved? What would make me happy? Or what do I believe would make me happy? That’s what I’m trying to figure out right now.
Rob: And you’ve taken a couple of months off of the podcast. I know you took some time off of work to think about it and this is not something that could come overnight. Let’s revisit that in future episodes. I feel like you should come back in three or four episodes and cover all this stuff again—anything that is an open question.
Whether you have an answer then or not, I’d love to hear updates on your progress and I think the listeners would as well. It’s been an ongoing story for nine years and continuing that thread is going to be good for all of us to hear the decision you make.
If we come back in seven days and I ask you the same question, you don’t have progress because it’s like, “I can’t figure these things out in a week.” But if we give it time to breathe, I feel like we can potentially follow the story in a way that’s helpful and doesn’t put pressure on you to force you to have answers to things that you probably don’t have.
Mike: That’s a double edged sword because there are times where having a forcing function like that makes you make decisions. It is not to say that it makes the decisions for better or worse. It’s just that it forces you into making a decision.
It could go either way. I’m not saying it should. I’m just saying that it could go either way where it’s like if it’s seven days versus three or four weeks or whatever. Sometimes, having to make the decisions earlier is better. Sometimes it’s not. I don’t know if that’s a good answer either way. That’s why the classic answer from my consultant is, “Well, it depends.”
Rob: Yup. When we last left you, there were some speed bumps that we were talking about, like roadblocks. Then there were some health stuff, there were sleep stuff, there were coaching and failures, a bunch of stuff I have bullets about that I want to run through.
The first thing is there was Google drama. Google needing an inspection certification that could cost tens of thousands of dollars. Potentially, no one was getting back to you. That was two months ago. That was a weekly thing that was going on. Is Bluetick going to get shut down because of Google? What’s going to happen? Update us on that. What does it look like today?
Mike: I’m past 95%, it’s probably 80% because of the 80/20 rule. Then, I’ve got another 80% to go. Everything is done with Google except for the security review. Actually, I reached out to the companies that are doing the security reviews before and I dropped it. I didn’t get back to them because I was just not in a place where it was worth my mental energy to continue pursuing it.
I’ve gone back to them recently. One of them had a survey that I needed to fill out and give them a bunch of technical stuff. I gave that to them and scheduled a follow-up call with them. The other one I’m trying to get us a meeting schedule with them. I’m basically trying to get the price quotes hammering out and seeing how much is this going to cost me. In some way, that probably impacts what I’m going to do with Bluetick moving forward, but maybe not.
Maybe I just made a decision that’s like, this is going to be the path forward for me. Regardless of how much that cost, I’m just going to do it. Whereas before it was much more on the mindset of, “How much is this going to cost?” “What’s my growth trajectory?” “Is it even worth me going in that direction?” Part of the factor of that was how much is it going to cost to have that review done. Right now I’m just in the process of figuring out what the cost is.
It’s hard to say that I’m not less focused on the growth trajectory because I still think that that’s very important, but is it something I want to do? Probably the bigger question that I need to answer is do I want to continue working on Bluetick and moving it forward? I definitely think that some of the recent conversations I’ve had with existing customers has really added to my motivation to do that. I got away from talking to my customers nearly as much as I probably should’ve been. That has dramatically helped that motivation.
Rob: Fascinating. To summarize then, Google stuff is moving forward. You don’t have exact data yet, but you’re waiting to hear back. Bluetick shutdown is not imminent based on Google doing anything. You’re in the process of answering this question of, “Is this something I want to continue working on?” probably based on customer interactions.
Rob: Related to that, there was a technical issue that you brought up which was this sealed .NET component you’re using, untestatable because it’s hard to get into all of this stuff. Have you done anything with that? Have you made progress? Or are you just saying, “Forget it. I’m just going to deal with it the way it is”?
Mike: Do we have a 20 minute profanity filter or a beep that we can put in here?
Rob: We do.
Mike: I went back and forth with the support people on that. I’ve made the decision that I’m going to need to rip that out and replace it. I’ve already got something I could replace it with. I’ve already started going through the process of replacing it. Their support basically came back and said, “Yeah. This isn’t a priority for us. We’re not going to make any changes with that.” “Too bad,” is really what the bottom line was. That’s a nice way of phrasing what they said, but yeah, I’m really, terribly, unhappy with the response I got from them.
Rob: But it’s no longer a roadblock because you’re going to fix it and you can move on. It was something you brought up multiple shows in a row as well. It seemed to be really hanging you up. This was one of the options we threw out, remember? I was like, “You can shut down the whole company. You can write the component yourself.” You brought up, you could switch components or I said, “You could just deal with it and not have great test or whatever.” This is one of the options. At least it’s one of them and you’re moving forward with it.
Mike: Yup, and I’ve already started that process. The problem with ripping it out completely and switching over is that it’s a process is going to take probably several days for my servers to turn on. It’s a little terrifying to have to pull the trigger and actually make that complete switch. There’s the architectural changes that needed to be made as well. I’m trying to push it off or make it so that I can do one mailbox at a time or something like that. I haven’t dedicated a huge amount of time to that beyond the initial prototype and stuff.
Rob: Don’t let it hang around. If I have one piece of advice, it’s get past this. It’s easy to put this off and be like, “Oh, I don’t really want to. It is a headache,” or, “It’s hard to pull the bandaid off.” If you’re going to do it, do it, and get past it.
Mike: The question in my mind that I’m struggling a little with is, does this add anything for the customers?
Rob: No, of course not.
Mike: You’re right. It doesn’t, but at the same time, there are places where it’s a detriment to me to be working in that code because I have to be super careful about things breaking because of that code. My time is better spent on doing marketing stuff anyway. Should I be focusing my time on that even though this thing is hanging out around up there?
What I struggle with is the fact that it’s mental overhead. I know it’s there, I know that it’s a problem, I know it needs to be dealt with, but if it weren’t there, I wouldn’t think about it at all. I have a hard time just pushing it out of my mind because I know that it’s there, but at the same time, I need to be working on other things. I don’t have a great answer for that.
Rob: It sounds to me, you know that there are four or five options. We ran through those. Shut the business down, replace it, rewrite it, whatever. It sounds to me like you made a choice to replace it. If you’ve made that choice, just do it and get past it. What is it? A week’s worth of work? Two weeks’ worth of work? You have the luxury. If you haven’t made the decision, then that’s fine. If you made the decision but then are half doing the work on a decision because you feel like you need to do other stuff, then it sounds like you really haven’t made the decision.
Mike: No. I have made the decision. It’s just a question of trying to slot it in when I’ve got other things that are also relatively high priority to get done. I’ve got a challenge around prioritization as well because I’ve got so many things that need to get done. We can come back to that. There’s other stuff of it.
Rob: Exactly. We don’t want to run two hours. I have an open questions for future episode where we revisit all these. This is one of them.
Another thing was during the last episode, listeners know you’ve had issues with low testosterone and your doctor taking you off this patch. You felt like you’re unmotivated, that you are having trouble sleeping which is related, but not the same thing. You were not doing great in that last episode, to be honest. I could tell and we talked a little bit after we closed that episode. What has happened since then?
Mike: To be blunt about it, I was a total mess when we recorded that last episode. The very next day I went back on my medication which is just a dramatic difference between them. I basically told my doctor I was never going to do that again which he wasn’t happy about. I’m like, “I’m sorry you’re going to have to deal with this.” Things have been a lot better in that regard.
I’m actually off two other medications. That was really tough. That took probably six or eight weeks to get through and get over. There’s withdrawal effects and things like that. I had to deal with them. It was just low energy, low motivation, hard time sleeping. Things have gotten dramatically better in the past three or four weeks, I’d say. But it was hard getting through that period, to get off those medications.
It has done a lot of good for me. I’m no longer suffering from a lot of those side effects. That’s part of the reason why I was on some of those medications because I wasn’t sleeping very well. It created this vicious cycle. To be more specific, I was on Adderall because I couldn’t focus during the day. Then, I was on sleep meds at night to try and get me to sleep. It’s just like they’re basically fighting against each other. The reality is I couldn’t sleep at night because of the sleep apnea. I ended up on these other meds that have addictive qualities and things that go really sideways in your body when you’re trying to come off of them.
Those things are a lot better. I’ve noticed in the past few weeks that things have gotten dramatically better in terms of my energy, my ability to focus, and my ability to be productive. Productivity is, I don’t want to say it’s a choice, but you have to focus on being productive. If you don’t focus on that, then you’re just going to sit there and not get anything done. At least I found that way for me. I don’t want to overgeneralize that.
Rob: Yeah. That sounds like a rough couple of months. I’m glad to hear that you’re feeling better.
Mike: I’m only at one medication now. Well, actually two. It’s like for testosterone and I’m on blood pressure meds. My doctor’s done all kinds of test. I actually have a doctor’s appointment this afternoon. As far as I know, I also don’t have cancer. I guess that got back down going for me.
Rob: Yay, that’s good news. Great! That sounds like a tough couple of months. Taking time off was probably the right choice to deal with that because that’s not something you necessarily wanted to be working through. I’m glad to hear it and I really hope that that continues. You don’t know what you’ll feel like in three months, or six months, or nine months. Things come and go.
You sound more awake and alive than you have been for a long time. I don’t know if it’s just because you’re fresh, because you’re like, “Oh boy!” I don’t know if you ever lifted weights all the time, but if you lift seven days a week, your body gets tired. If you take two or three days off, you come back, you can just lift crazy amounts of weight. You just feel amazing because your body has had time to recover. I feel like there’s been a bit of that. You just sound better.
Mike: For sure. I’ve been doing a lot of little things. I’ve been tracking when I sleep well, when I don’t. What was I doing the day before. I’ve been tracking what I eat a lot. I’m trying to lose weight, but that’s only going marginally well. Coming off of the Adderall was really hard because I added 10 or 15 pounds really quick. I’m back down to only about five pounds over what I was, but still, I wanted to lose weight on that point anyway. There’s that.
Then, I found that there’s certain types of music that I can listen to. If I listen to it first thing in the morning versus I sit down and I start working without listening to music, then, I’m way less productive and I’m way less energetic. I’ve also realized that I need to have a routine as much as I hate it. I can’t stand going through the same routine all the time. It’s boring to me. My brain just doesn’t deal with it well. At the same time, I need that structure.
Those are the kinds of things that I’ve found to be very helpful over the past month or two. It’s been a learning process because I’ve been on my own. I’ve been able to do whatever I want and still make it through, still be productive, but things have changed. I don’t know if it’s just because of burnout or because I’ve gotten older and things like that. Drawing lines between work and playtime, the exercise has obviously made a little bit of a difference. I’ve gotten back to that.
Then other little stuff like getting rid of small annoyances. We were talking before the podcast started. You’re like, “Wow, your keyboard’s really loud.” I was like, “Yeah, I bought a new one.” It’s a total of really little thing, but it’s got a volume control built into it with little roll bar. I can put the volume up or down on my music while I’m sitting there as opposed to banging on a button or having to go use the mouse and change the song that are on. It’s all the little stuff, but I made a conscious effort to identify those little things that were annoyances that are now smoothed out. They’re no longer impact my day and they no longer cause me to either get out of a rhythm or get angry about stuff that’s going sideways.
Rob: Yeah, that’s good to do. that’s good to recognize. To summarize all that, it’s like you took a step back. You took a step back and you look at your life, your worklife, your day to day progress, and you got over some off medications which is always hard to do. You took a step back and you said, “Hey, what can I improve in my life?” At least one listener is thinking to himself, “Mike, welcome to 2015 with the volume control on you.” But I’m definitely not thinking that.
How was your sleep? We have a couple more bullets to cover. We’re just going to have run long today. How was your sleep? That has been such a big issue, frankly, for years.
Mike: It’s a lot better. I definitely noticed that there’s days of the week where that I don’t get as much sleep as I would like, but then, there’s other ones where I would just wake up feeling completely refreshed and ready to get to work. That’s what I was just talking about where I’m trying to be more deliberate about tracking what happened the day before, how the day went before, and what specific things may have caused that. I don’t have a lot of information on that yet, but I’m definitely keeping a close eye on that, being very deliberate about looking at that, and examining it because that’s going to be important for me.
Rob: I’m making a note here to check back on this as well just because it’s something that’s important and it’s important to be honest about it. Everytime doesn’t have to be, “Oh, everything’s great. My health and my sleep are great.” You got to be able to talk about when it’s impacting you, like in episode 448, talk about when it’s negatively impacting your progress. Something you mentioned on that episode and prior was like, “I think I need to be in a mastermind.” “I need more accountability.” “I’m thinking about hiring a coach.” There was stuff bubbling around that. What’s the update on that status?
Mike: I have a new mastermind group. We’ve been meeting at least once or twice a week, more on a Monday or a Friday, just because of the scheduling and stuff like that. That’s been going really, really well. I’m really glad that I picked that up and thanks to the listener. I won’t call out the specific name of who it is, but know that the person who introduced this probably listens to the podcast, so I just want to say thanks for that.
In terms of a coach, I’ll say a pseudo business coach, more or less who’s holding me accountable on a weekly basis saying, “What did you do these past weeks? What do you plan on doing this week?” Then, we’ve had a couple of calls here and there not just for accountability. We have a call just yesterday or within the past three days about going through my marketing plan, picking it apart, and saying, “Are these things really important? Are they not? How are these things ranked and weighted against each other? And what should you be focusing on next?” Those are the things that are going to end up on the shortlist of stuff that I implement moving forward. He’s just going to hold me accountable to it and get me a sanity check.
Rob: So far so good?
Mike: So far so good. Yeah.
Rob: I have a bullet here to ask about you. Your motivation, your effectiveness. Have you developed a system because we covered that as well. You already talked about that. It sounds like for the past three or four weeks, things have been feeling a lot better?
Mike: Yeah. I would say things started to turn a corner about three or four weeks ago. The past week-and-a-half to two weeks, things have really started amped up a little bit. It’s a combination of no longer really suffering from the withdrawal symptoms of the medication and then also getting to the tail end of burnout, which maybe I’m still working through that. I’m not really sure. It’s really important for me to figure out not just what it is that motivates me, but what it is that I want to achieve.
Rob: As we start to wrap up, something that we talked a lot about that I brought up multiple times in the prior episode is about making progress on Bluetick or making progress to your day to day work, figuring out how to differentiate Bluetick, how to make it different from the other offerings such that it’s a product that you can sell, and you’re not just picking up crumbs. Do you have clarity about how to do that? That’s the first part of the question, and have you started making progress towards that end?
Mike: I wouldn’t say that I have absolute clarity on it, but I would say that I have some ideas about what the direction of it it should be. It’s more or less, I believe, doubling down on the warm email follow ups because I’ve been talking to a couple of customers here and there about what it is that they used Bluetick for, why they use it, and asking questions to help me figure out what the direction for it is, what it should be, what are they unhappy about, what are they using it to begin with, and consolidate that information.
One of the customers that I talked to, interestingly enough, he said that he started out using it for cold email. Then, when he switched over and started using it for warm email for other things, he’s like, “Oh, I’ve got this tool. I might as well use it.” Then a lightbulb went on for him. I was just like, “Oh, that’s interesting. Why?” Then, he started talking about the fact that it’s really built well for those types of scenarios. He was talking about why he was using it and how if there were some minor changes to it, it would be more helpful to him and just easier to use.
It gave me some ideas about how to go in that direction a little bit more. The problem I see is that when I ask him if he were talking about it to somebody that he knew or another entrepreneur or something like that, how would he pitch it to them? He’s like, “I really don’t know.” That’s something I struggle with is how to present it to people that in a context outside of use cases, maybe I just have to go on to that direction, and talk about it in terms of specific use cases.
Rob: How would you summarize that?
Mike: How would I summarize what? How it’s used?
Rob: No. Just the whole thing. If I were to say, do you know how it should be differentiated? I think I do. It’s the warm email context. Then, making progress towards that, not yet? Still in the thinking phase? When I say progress, have you shipped code or marketing material or different copy? Updated the website? Anything to that, and yet.
Mike: Yeah, I haven’t done any of that stuff yet. I’ve just been consolidating the information, kind of thinking about it. I’m not sure what the best ways for me to present that to other people are. I’m not sure if that’s the absolute direction I should go. Should I niche it down a little bit so that it is much more like a pipe drive plugin or should I integrate with a bunch of different products that are similar to that?
I have some open questions about that stuff and I don’t have the answers yet, but they are things I’m trying to actually figure out. Like how should this be pitched to people? Who are the exact people that I should be solving this specific problem for? When I first started on Bluetick, it was much more open-ended. It still is open-ended and it can do a lot of things, but if I were to niche down and only solve a very small sub-segment of the bigger problems that it can solve, I feel like it could probably get a lot more traction, and the question is, what exactly are those?
One example might be to reschedule meetings that have been cancelled. Those people are probably high profile prospects or high value prospects. If somebody cancel the meeting they scheduled, that’s probably a good situation where Bluetick could help you get those people back to a meeting. But is that the place where I want to niche down into? I don’t know the answer to that yet.
Rob: How are you going to answer those questions? You said you had several open questions. Do you have a plan to figure out how to answer them?
Mike: I’m going to be going through in talking to the rest of the customers that I have and seeing if that is something that they generally use it for. If so, then, I can at least generally answer that. At least try it out as a direction. I don’t know. Let’s say I decided to do that today. It may take another month or two to figure out, is this a reasonable direction? Am I going to get any attraction with it? I don’t know that.
Even if I made the decision, I’m still going to have to test it out. I’m still going to have to try it, see if I can get enough customers, and get some sort of traction. If I’m not getting that, then I have to probably go back to the drawing board and try and figure it out.
There’s going to be a decision point activity and then wait to see what the results of the tests are. If I don’t go through all three of those things, I can decide what the direction that is all I want. It doesn’t mean it’s going to be successful and there’s no way to verify it.
Rob: Makes sense. To be continued in a future episode of Startups for the Rest of Us. Stay tuned to hear the stunning conclusion of Mike’s journey with Bluetick in a few episodes. Mike, I have the next three episodes mapped out or recorded already. What we’ll do is…
Mike: I’m totally screwing up your […] system.
Rob: Yeah, you are. No, this one slides perfectly in place. I have all that dialed in, but what I’d like to do in the interest of both keeping the story going is also giving you time to get stuff together and make progress on these things is record with you again in a few weeks. I don’t know if it’ll be 461 or 462, somewhere in that range, and to hear what else is going on, hear updates on your thinking.
There’s a lot of open questions. I have six or seven bullets here that I have taken about differentiation, accountability, health and sleep, to what challenge do you want to tackle, and what it is you really want to do. I’m glad that you’ve made the progress that you have. It sounds like you’re out of the fog. It seems to me like what you have been doing for the past two months is working. Keep doing that.
I feel good just talking to you about it. It makes me feel good to hear you, the old Mike. It’s the Mike that I remember. You and I have gone in and out of these things. There’s an old Rob and a new Rob where I was super depressed for six months doing stuff. It’s not just about you. It’s cool to hear that. Do you feel that in yourself as well?
Mike: I do. It’s hard for me to look back on it. It’s one of those painful things to look back on. It’s like, “Oh man, I wish I hadn’t felt that way,” but it is what it is. I’d rather take the time and do the right things for myself, what I want, what I’m trying to do, and make the right healthy choices, I’ll say, but it doesn’t necessarily mean that going through those periods is easy either. I definitely agree that I feel alot better today than I did two months ago, or three months ago, or even six or eight months ago. The word you used earlier, coming out of a fog, that was woefully accurate. It’s the way I’d put it.
Rob: Well, thanks for coming back on and digging into these stuff. If folks want to keep up with you—no, I’m just kidding. You know I always do at the end of the interview. “If folks want to keep up with you, Mike, where would they go?”
Mike: I would say Twitter, but I don’t use Twitter.
Rob: Very good. I feel that wraps us up for today.
Listener, if you have a question for us, call our voicemail number at (888) 801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt of We’re Outta Control by MoOt, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit stratupsfortherestofus.com for a sexy new website and the full transcript of each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob answers a number of listener questions on topics including starting a marketplace, marketing channels, resellers and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This week I’ll be covering a few listener questions about starting a marketplace, which marketing channels to pursue with the new app, evaluating re-sellers, and why the path from the agency work to SaaS is so hard. This is Startups for the Rest of Us episode 457.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob and today I’m going to share my experiences to help you avoid the mistakes I’ve made in the past.
I’ve tweaked the intro a little bit today based on suggestion from my 13-year old. He said, “Built your first product or just thinking about it” is too narrow. He says, “Aren’t there people who’ve started their first, second, third, fourth that are still listening?” and I said, “Yeah.” So, tweaked it there. Each week on the show I talk about topics relating to building and growing startups, in order to better your life and improve the world in a small way.
In our world of startups, we strive to have a positive impact on other people, be it your customers, your team, your family, yourself. We are ambitious founders, but we’re not willing to sacrifice our life or our health to grow our company. We have many different show formats. Sometimes, we come on and we teach a tactic, talk about philosophies and thoughts of starting startups and growing them. Other times we do interviews, then several of those over the past weeks. We have listener questions which is what we’ll be doing today, founder hot seats, and other things like that.
My co-host Mike Taber is on a brief hiatus. I do think he’ll be back in the next few weeks, and we can catch up with him, find out what he’s been doing with the enormous amount of free time he’s had not doing this podcast. Listener questions have been piling up, including a couple of voicemails. Today, I’m going to run through a few of those and give you my thoughts and insights on them.
First one is a comment from Adrian Rose Brock, fan of the show a long time, many times a MicroConf attendee, and his comment is about our Gmail clients, and even paste and match style which I was complaining that Mailplane didn’t support.
He says, “In the last Startups for the Rest of Us, you were discussing Gmail clients two tips. Number one use Kiwi for your desktop client for Gmail. Amazing client, works really well, has good integration with other G products. Number two, if you need to paste and match style, you do Command+Shift+V on a Mac. It will work in the majority of applications and saves a right click.”
Good tips. Thank you, sir. I have not checked out Kiwi yet, but it is definitely on my list. I’ve actually ceased the exploration for a desktop Gmail client for now. I have enough going on and somehow flipping back to doing it in Chrome it’s not bothering me anymore. There was some real performances which I was experiencing and I’m not seeing those any longer.
Our next question involves starting a two-sided marketplace and TJ’s asking whether he should charge from day one.
TJ: Hey, guys. This is TJ Astro calling. I’m focusing on a startup for artisan makers to get them more exposure. You guys have been a tremendous help to me, and I’m just trying to figure out if I can launch with a charging right away or what I should be doing. My gut instinct is to onboard them for few months. It’s a double-sided marketplace, so the synergy of all of them together as a collective community is where the value will be coming from eventually.
My instinct is onboard them, show them I’m active in the pro-members chat only in those forums, and that I’m committed to helping get more exposure and sales by offering strategies, advice, and such, then maintaining transparency with my site analytics as it modestly grows. I’m hoping that I’ll be able to get it quite grassrootsy and the way that I’m providing them these services and such, and they’ll be able to share the site because I don’t really have a marketing budget. Let me know what your thoughts are. Thank you so much.
Rob: TJ also wrote in and he said, “Hey, I just recorded a voicemail, it wasn’t very clear or well-spoken.” TJ’s launching a two-sided marketplace, no marketing budget, and it is a membership site. Primary focus is to aggregate the Instagram post of artisan brands. He has an email list of 2000 artists who he’d like to curate on the site, but they’re mostly cold contacts.
He’s going to have both free and paid monthly memberships. He says he has no market validation, everything he’s heard or read says, “Charge. Don’t give away your product or you won’t know if you have real product market fit. But since it’s a double-sided marketplace, both shoppers and artisans, I need to be able to demonstrate value to the artisans by attracting shoppers to the site.”
TJ talks about the different pricing tiers. There will be a free plan for artisans and also a paid plan. He says, “My gut instinct is I should onboard the artisans for a few months, a free trial of the paid pro member level but not collect credit cards on sign up. Show them I’m active in the pro-member only chat forums, that I’m committed to helping them get more exposure in sales by offering strategies and advice, maintain transparency with my site analytics as they modestly grow, encourage them to share my site with their list as it play to help them and other members gets more exposure. See where the analytics are in a few months, emphasize to them a growth trajectory. I’m hoping I’ll see and try collecting a card to charge them to stay on as pro members.”
Obviously a complicated question TJ. There’s a lot here. We’ve talked about two-sided marketplaces before, and my advice tends to be for bootstrap or indie-funded companies, is to not do it because they’re just so hard to get started. You even heard Tracy Osborn a couple of weeks ago, talking about WeddingLovely.
While we didn’t delve into the difficulties of two-sided marketplaces, she definitely has had some thoughts on that. It’s very hard, it’s hard enough just to get one funnel working, but you literally have to get two separate funnels working, and you have to have them at scale before things will work. You are definitely pushing a boulder uphill with this one. The way I always think about this is thinking back to how Uber did it. With Uber they needed at least a couple drivers in the field before they could release the app and have it provide any value.
If my memory serves me correctly, Travis Kalanick and his co-founder literally were driving the black cars just as a test. Obviously this doesn’t scale, it’s not what you’re doing, you’re just testing. If people have this app, will they call a car in Downtown, San Francisco? That was the hypothesis.
Once they started getting people calling them, then they had some data, enough metrics that they could go to black car drivers either cold-call them, or just approach them at the airport, or whatever and say, “Hey we have this app. Do you want to be on the receiving side of it? Right now we’re getting two calls, three calls a day, but it basically takes you right to them, and then you get paid directly, and you have to go through your dispatch basically.” That’s how they built it up.
Now it’s an incredibly long and painful way to build an app until the two-sided marketplace has a network effect. Then it’s amazing and it grows super fast. But almost knowing gets there. That’s the hard part. The challenge is getting past those early days. In the early days that you’re in, with zero marketing budget, the odds are even less in your favor. They’re very very difficult what you’re trying to do, but granted that this is what you want to do, you have to be super scrappy and it sounds like you’re thinking in those terms.
All the stuff you’ve read about […] charge, don’t give away product, if you have a SaaS app that provides value, people only pay for something that is providing them value. If I build an email service provider, or a long-tail keyword tool, or invoicing app, or whatever, when someone puts a credit card in, they pay, the next day they can get value out of it, or that same day they can get value out of it. That’s not the case with the two-sided marketplace with a no consumer, no demand side so to speak.
Getting suppliers on to your marketplace without the supply side, you’re going to have to have it be free to some extent. Whether you just have the free plan the whole time, whether you tell them, “You’re on a paid plan, this is the difference and in three or four months, by the time we have demands, I will be charging you $49 a month, is this interesting?” That’s the conversation to have.
I don’t see major problems with the plan aside from two-sided marketplaces are really hard especially when you have no money. But aside from that, I don’t see how you can possibly charge suppliers when there is no value being provided. I don’t know anyone who would pay for that without that supply side. The one thing I would say is if you haven’t already started building up the supply side, because you have the artist list, is there a way to get an email list, a blog following, an Instagram following, a podcast following, just some demand side built up so that you’re not starting at a standing stop?
You said you’re relying on defenders or the suppliers to promote it and while that’s fine, it’s not going to be enough, I’m guessing. I think that you are doing some type of marketing, you’re going to have to get creative. It sounds like a pretty creative having again, no budget and you’ve thought through pretty well. I would be looking at ways to have enough interested consumers.
Think about it this way, Groupon is also a two-sided marketplace. When Groupon went to a new city, they would cold-call the stores, the retailers, the supply side, and then they would post a landing page for the demand side. Getting the demand side is the consumers, and that landing page would then, they would advertise it, they would promote it in any way they can.
Obviously you’re saying you have no budget, so it’s hard to do this, but that’s how I would approach it. I would have a landing page up of like, “We’re coming here soon,” or “This is something were going to have soon,” and then I would have whether it’s Facebook ads, Instagram ads, or if you need to do it for free, then you’re going to have to put it in sweat.
It’s going to be a blog post or many of them, it’s going to be interviews, it’s going to be viral content, whatever it is that you can get. Guerrilla marketing style essentially with no cost. That’s one way to build up that demand side, and then you can point to the artist and say, “Hey, I do have 5000 or 10,000 people on an email list that are interested in hearing about it.
I still think your approach of going with no credit card, not charging them but giving in the expectation upfront, is fine, but then you don’t have to start from a standing stop. That’s how I would think about it, I hope that’s helpful.
My next question is another voicemail. Voicemails always go to the top of the stack. This one’s a bit long, but I will have our editor clean it up a bit and it is from Keith Gillette with tasktrain.app.
Keith: Hi Rob, my name is Keith Gillette, My founder-funded B2B SaaS startup tasktrain.app is in private beta right now. TaskTrain is lightweight process management platform that allows service managers to integrate standard operating procedures, and just-in-time training into everyday workflow, enabling teams to deliver service quickly and correctly.
Based on our expertise and our early customer development feedback, we’re targeting IT operations directors and digital marketing agency COOs as our initial customer segment. Our launch plan has been to market and sell per user subscriptions directly to customers via the web. I have two questions. One, what marketing channels would you recommend pursuing? We have a PR plan when we’re ready for a full public launch, but are not sure how aggressively to invest in building a social media presence and/or in paid advertising, neither which we have yet tried as we’ve been too focused on getting a functional product.
Rob: We’re going to cut the voicemail there and I’ll answer this question and then we’ll roll in to his second question. Congrats Keith on getting to launch. It’s sounds like, you’ve been too focused. You’ve made a traditional mistake of heads down basement coating. I know you’ve been having customer development feedback, but you haven’t done any marketing. I guess the first thing I would say is go to robwalling.com and enter your email address and you’ll get a book that I wrote called Start Marketing the Day You Start Coding. Whether you read the book or not, just having the title is really what I would say.
It’s typically before I have anyone break ground, I will validate the idea and then put up a landing page, such that even if you only have 50 people on an email list at that point, that’s your starting ground. That’s where you begin when you launch. Talk about having a PR plan in place, which is fine. I haven’t seen PR work for apps like this that are just line of business apps. They aren’t that interesting and PR likes to tell a good story. If you happen to have a good story, that’s fine. I don’t think you need a social media presence at this point.
Reserve your twitter handle or whatever. That’s not going to bring you customers yet, especially if you don’t have an audience, if that’s not your thing. Obviously, if you have a podcast, or an audience, or a blog, or something and you are on Twitter talking to people, you’re taking the Ben Orenstein, the Derrick Reimer, the Brian Castle approach, then that would be one thing. But you’re not doing that yet, so I would not spend any time really in building that out.
What I would do is, there’s an endless number of traction channels you can go after. Obviously SEO and paid advertising are two nice ways to get traffic. But whether that traffic converts is a real question. An outbound sales is the third and those are the three avenues that really scale well.
Which of these do you have experience with? If the answer is none, pick one and dive in. That’s how it is when you’re starting out. One reason why I espouse the stair-step approach to bootstrapping is that which your first product from the standing stop, trying to manage all the complexities of building and launching a SaaS app and then looking at the massive array of marketing options available, it’s hard and it’s overwhelming. Without the experience, the confidence, the budget, it’s not an easy question to answer in essence.
I’d say, of all the episodes of Startups for the Rest of Us—what is this? 457?—more than half, I would guess 2/3 maybe ¾ deal with this question of how do I market? How do I get more customers? How do I get more leads? What do I do? Literally, books have been written on this topic. Two books I would recommend, number one is Traction by Gabriel Weinberg and Justin Mares, they go through 20–22 traction channels. You can look at those as starting point for zeroing on each of those areas. It includes paid acquisition and SEO, running events, and all kinds of stuff. The other book is SaaS Marketing Essentials by Ryan Battles. That’ll be a pretty good start for you because this question of, “What marketing channels would you recommend?” really depends. For me, just looking at it I would do some content and I would do some LinkedIn ads. That’s probably where I would start. That’s not to say they’re going to work. It’s just the two things I would start with—Facebook ads and Google AdWords—just to see, are they going to work? I don’t know.
Audience building, is that a skill of yours? If it is, build an audience. If it’s not, then don’t. There’s a lot of variables in terms of how much budget do you have, how quickly do you want to need to grow, what is you skill set? Do you have experience with any of these? Any desire to try any of them? It’s a pretty broad question, but that’s where it comes down to doing your own research, making that list. Basically, your marketing gameplan.
I’ve talked about them on the podcast in the past about how with each app I would build or acquire, I would make this marketing gameplan. The HitTail marketing gameplan, the Drip marketing gameplan, it was a huge bulleted list. That was seven pages, single spaced, bulleted list with some headings of, “These are the types of things we want to do right at launch,” and, “These are the people I’m going to talk to who’ve agreed to perhaps promote it.”
Then, I want to try Facebook Ads here in the market segments. I wanted to try AdWords in these segments. Then, you’re going to a spreadsheet and you put out the ones that you think are going to work at this stage. You take a guess at how much traffic you can generate, how much cost you think, time you think it’ll take, and figure out, do you do it yourself? Do you hire it out? Do you hire someone internally to do it? There’s so much to think about it here. You have a little bit of research and thinking to do. Good luck with that, Keith.
Now, let’s dive into Keith’s second question.
Keith: Second question, one of our beta users has expressed interest in becoming a reseller of our platform as a value-added offering in his virtual CIO consulting service portfolio. I had the potential for bars in mind when designing TaskTrain. I had not expected to pursue the channel until we were bit further along. Now, we have zero paying customers at this point, no data on margins, customer acquisition cost, or lifetime value of a customer, on which to base sales commission or revenue sharing. How would you recommend we think about structuring a potential reseller contract? Thanks for any guidance on those early stage marketing and sales questions.
Rob: Every product that I have launched typically gets interest from resellers and whitelabelers. This is very common for you to get reached out to by folks who want to resell or whitelabel your software. When we launched Drip even really early, we were getting two emails a week from people. “I want to do this but for realtors.” “I want to do this but for mortgage brokers,” “or for the hair salon,” or whatever. “Can I whitelabel it?” It’s just a totally different market. Whitelabelling is one.
I realized you’re asking about reselling here. Whitelabelling is one thing that I discourage people from exploring in the early days. It dilutes your brand equity to huge distraction. It’s almost a completely separate product. It’s very rare that people make it work. It, of course, can work, but it’s not something I would encourage you to do unless that’s really what your heart is set on. Don’t let it be a distraction.
Resellers are different because it’s not a product distraction. It’s going to be more of a, I would say, almost a founder distraction in terms of having to come up with the model, sign a contract, work with them to help promote, and make sure they’re not reselling it to people who don’t want to be part of your customer base, I guess. That’s the thing. With the SaaS app, are they just an affiliate? Are they reselling it? I guess the difference with affiliates is affiliate would just sell it based on your pricing and they would keep a commission to pay them 10%, 20%, or 30% of the recruitment revenue. Whereas a reseller, maybe they have an account that they can put a bunch of people in and they’ll pay you a certain amount. Then, they just sell it for more. That’s probably the difference I would think about.
I know in the IT, since you are targeting IT operations directors, marketing agencies, COOs, maybe resellers would be helpful. I would only consider it if this reseller already has a huge network, already has leads. If this person’s just going to go out, run ads, and do cold outbound, you can do that. You don’t need them. If they have a list, if they already have an audience that they essentially want to pitch it to or market to, it’s worth considering.
Personally, I don’t have enough experience with it to do it. I would get offers like these and I would basically say, “Nope, not right now,” or “Not until we know our customer acquisition costs, our margins, our LTV,” all those things that you’re saying you don’t have. My advice would be to kick it down the line a bit. Once you get some customers, you know what your churn is and your revenue share. You want to be in your sales commissions and all these stuff. It’ll be a lot easier to get something like these done. It’s just there’s so many things flying in so many directions right now that having yet another distraction is not something I’d be super stoked about unless this really is a golden opportunity.
In my experience, people who want to resell a product that has zero customers, it doesn’t tend to be a golden opportunity. I’d be pretty surprised if they did actually have an audience that they had a lot of reach into. I would kick it down the line, three months, six months, and just say, “Hey, we need to revisit this. There’s so much going on right now with the launch.” It’s easy to say that you’re busy because you are and you have competing priorities. I would try to revisit that later.
Keith: A final postscript. I want to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the Startups for the Rest of Us community. As a fellow still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenges he’s facing and deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next. Gratitude for you both for your Startups for the Rest of Us work.
Rob: Thanks for that, Keith. I appreciate it. I hope my discussion was helpful.
My next question is from Ash and it’s about agency to product journey. He says, “Hi, Rob and Mike. I’m a big fan and listen to almost all episodes over the past five years. In the past episode, Rob mentioned the path from agency to product especially Saas, is a hard path which I understand. Could you please dive a bit deeper into why? If one is on that path, how to run that transformation successfully? Thanks a lot. Keep up the great podcasts.”
Good question, Ash. So many of us have done this. I didn’t run an agency per se, I’m more of a consultant. I did have some contractors working for me, so I was a micro agency. It was a handful of us. I was doing sales, doing some of the codings, and such. The reason it’s hard is because when you’re an agency or a consultant, you can bill $150 an hour. Whatever it is you’re billing, it’s really hard to not just book more hours and to make that $250,000 a year or $300,000 a year just by coding for someone else with frankly very little risk.
You have some headache dealing with clients, of course, but there’s not a ton of risk in it versus turning down work to block out a day or two, a week, to work less, to get paid less, to build something that you don’t know if it’s ever going to work. You don’t know if you’re ever going to get it launched, if it’s going to have a product market fit, if it’s going to make enough money to ever pay it back.
There was a good MicroConf talk a few years ago. It was one of our attendee talks and it was by Ted Pitts from Moraware software. He talked about how he and his co-founder launched good jobs and then they launched the software. When he traced it forward, they were doing millions a year and pulling out quite a bit of profit before he felt like they hit the breakeven line of how much money they could have made if they just kept working their jobs, if they have just stuck at day jobs with promotions and bonuses. Just a steady pitch the whole time versus the ups and downs of some years they make more and some years barely make any in their early days, and not paying much. But they wouldn’t have any other way. They didn’t do it for the money. That’s part of it, obviously, but they did it for the freedom and satisfaction. The freedom, the purpose, and the relationships.
It’s hard to see that. It’s hard to look ahead. It’s especially hard to convince a significant other that instead of making $300,000 a year like you could as a consultant, or $250,000, or whatever it is, I want to make $125,000 and I want to launch this app. It’s going to take me six months or a year to launch. Then, maybe two or three years to get to the point where it’s even making as much money as I could be making if I just work full-time on this consulting work, and then the payback period of the money I lost is even years out from there. That’s the hard part. That’s a big part of why moving from agency work which pays well to starting a SaaS app which doesn’t pay anything for a very long time, takes a really long time to get going, and here’s a bunch of risk that’s why most people don’t make the transformation.
If you were in college or if you were like me when I first started launching products, I was working construction. I was an electrician. There really wasn’t much downside to me. I did it all nights and weekends, obviously, because I was out on a construction site. I had learned to code when I was 8 years old. I’ve been coding for years, but I didn’t know a lot in the modern web languages. I literally went to the public library. I got books on PHP, HTML, a little bit of Perl—this was obviously years ago—and I started to hack in the way of stuff on nights and weekends. That’s how I learned.
I eventually did make the shift into full time employment as a developer. That helped increased my […] really fast. Then, when I went to build stuff on the site, I was way, way, faster at it. But it still was a 9-5 and it was helpful for me that I could go in 9-5 and when I left, my time as my own.
Once I transition to consultant and I was billing hourly, I was obviously making a lot more money, but it became hard for me not to just do consulting work all the time because to consult 50-60 hours a week, I can make more money than I had ever seen or ever heard of anyone making. It was crazy to bill $125 an hour and works 60 hour weeks. This is 15 or 20 years ago. That money really went a long way. It’s tough. It’s a long term view. It’s having a confidence in yourself. It’s being able to look in five years and say, “It’s going to hurt for now, but long term, I think this is the better path.”
In addition, this is why either stair stepping your way up is better because you can get some small wins along the way. It builds confidence in yourself, builds a little bit of recurring revenue, build confidence from your spouse or your significant other if you have one. But also, acquiring. Acquiring small products or even large products is a nice way to do it. If you are running an agency and you have money—you should be making a decent chunk of money—acquiring a product gets you past that product market fit, that wall. It puts you forward, hopefully, in 18 months, maybe 24 months depending on the space that you’re in. That’s one reason why I acquired products early on. I did have more money than I had time. Once I was at that level where I could build $125 an hour and stay busy full time.
Not everyone has that. Maybe you’re scraping by to get agency work. Maybe you do have downtime during the week or during the month. That’s nice because then, you can use that to focus on the product. I always felt guilty just focusing on the SaaS product, not going out and finding more work. I thought to myself, if I ran out of work and I don’t have any in three months, am I going to look back on this and regret it? You get over that guilt if you’re going to do it.
I’m guessing a lot of folks listening are experiencing this or thinking. It’s the conundrum of nights and weekends are hard. This is one reason why people raise funding so they don’t have to do that. It really is interesting to see someone raise around $150,000– $300,000, with the sole purpose of they don’t have to make this decision. They don’t have to scatter their focus. They don’t have to worry about agency work or doing it nights and weekends. They can just focus for a year or two on getting something to the point where it’s viable, where it’s making enough money, that it’s sustainable, that’s it’s default alive, as Paul Graham would say.
I’m not saying you should raise funding or shouldn’t. Obviously, I never did. Building my stuff up, it also took me a really long time to get there because I did it this way. It was nights and weekends for me. It was building an app, acquiring an app, parlaying one, stair-stepping from one to the next, and that’s why it took me so long to get to Drip. If I had raised funding 5–10 years earlier, I would have built a larger SaaS app like Drip. But I just didn’t have the resources, the experience, perhaps the confidence to do it at that point.
It’s a good question, Ash. I appreciate you asking that. That was helpful.
That about wraps us up for the day. If you have a question for the show, call our voicemail at (888) 801-9690. Voicemails go to the top of the stack. Or you can email us at email@example.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob interviews Ruben Gamez of Bidsketch, about his 10 plus years of bootstrapping, lessons learned, improved decision making, and his new product.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in a way that’s organic and sustainable and that works around your life. We’re ambitious founders, but we don’t sacrifice a life in order to build our startups. These are not the typical Silicon Valley Startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses.
In this week’s episode, I have an in depth conversation with Ruben Gamez. We talk about the new app he’s building, Docsketch, in the electronic signature space. But more importantly, we look back at the 10 plus years that he’s been bootstrapping. We look at lessons learned, how he’s learned to make better decisions, how he’s meticulous and disciplined, and how that leads to him being able to make repeatable progress and being able to have repeatable successes. This is Startups For the Rest of Us Episode 456.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob. I’m with Ruben Gamez. We’re here to share our experiences to help you avoid the same mistakes we’ve made.
The first email I received from Ruben was in January of 2009, which is more than 10 years ago, and he was asking about something I had written up, a few essays about acquiring software products. From there, he and I struck up a friendship. He had been reading my stuff for a while and wound up being one of the first four or five members of the membership website that I launched called The Micropreneur Academy that was teaching software developers, really teaching engineers how to market.
This is back in the day just as SaaS was starting to become a thing and Ruben was an early success story. He hustled and as I said in the intro, he was meticulous, disciplined, and just shipped stuff every week, even though he was working a full-time job in “managing managers who manage developers,” as he used to say. What I’ve always respected about Ruben is his analytical nature, but he has the gut instincts of a founder, and he’s someone who you know that no matter what the chips deal him, he is going to succeed at what he’s doing.
Today, in the interview, we talk about both his first product which is called Bidsketch and it started as proposal software made for designers, and he later expanded it to creating professional proposals as a horizontal play. We talk about trying to upgrade that from Rails 2.0 to Rails 3.0 and all the technical headaches that went with that in the six months of essentially wasted engineering time. And we talk about his new app that he’s running in tandem and building that in tandem with Bidsketch. It’s called Docsketch and it’s an electronic signature app. We talk about his AppSumo deal and why he decided to do that and his whole thought process of whether to do that or not. We dig into free plans at marketing first before building a whole bunch of stuff.
Ruben doesn’t do a ton of interviews. He doesn’t do conference talks, even though I ask him every year to speak at MicroConf. Every time you hear him talk, you will hear someone who’s been doing this a long time, someone who’s had substantial amount of success, and someone who’s really thought through these issues. I thoroughly enjoyed talking to Ruben today about the ups and the downs and the sidewayses of being a bootstrapper for more than 10 years, and I hope you enjoy this interview as much as I did. So, let’s dive in.
Thanks so much joining me on the show today, Ruben.
Ruben: Thanks for inviting me.
Rob: You and I talk every few weeks and have for several years, so it’s fun to get on the mic every once in a while. You have several popular Startups For the Rest of Us episodes, actually. You have the one about beating plateaus. There was one where you and I just talked about metrics. Remember where you’re doing trial-to-pay and all that? To the listener, if you go startupsfortherestofus.com, search for Ruben Gamez.
He has been on the show several times, but today I wanted to dig into stuff you’ve been working on for quite a while, Ruben, both in terms of your new app, Docsketch, but also the decision process. You run a bootstrap SaaS app for 10 years which very few people have done that. Most people sell, or they shut down, or they move on, or they find a CEO to run it or whatever, and you’ve been through a very long journey in it in a short amount of time. Ten years running a SaaS app is like 50 years in a lot of other business.
Ruben: Yeah. It’s funny you say 10 years. In some ways it doesn’t feel that way and in other ways it does.
Rob: I know because so much has changed when you think back to your very first homepage and what that looks like, or your early demo videos, or what pricing felt like back then. There’s so many things have changed and yet, you have Bidsketch. Folks who want to check it out, it’s bidsketch.com, and it’s a successful SaaS app that has employed you and your whole team. You have a team of four or five people?
Ruben: Yes. We’re hiring more people right now, so rebuilding in that process. We could talk about that a little bit later.
Rob: The first thing I want to ask you about that’s interesting is when you first launched Bidsketch, it was proposal software made for designers and you targeted the design space. It was a vertical proposal app and it caught on really well. Then a few years later, I don’t remember how long it was, you went horizontal. The headline stay as, “Create professional proposals in minutes.” You’re going after anyone who would send a proposal, any type of freelancer, contractor, agency or whatever. What led to that decision? You really did the land and expand which is a playbook in MBA speak or whatever, but you came across that organically and made that decision to expand.
Ruben: I’m trying to even think about why I chose designers to start with. I think it had to do with the amount of keywords for people searching for proposals related to web design or just graphic design. That helped me make that decision. Later on, we’re just getting customers that weren’t that, and we were getting people asking us, “Does it work for my business?” There was nothing in there that would prevent them from using it successfully for the business.
There were a lot of different signs that made it clear that we should move beyond designers. Plus, the market just for designers was too small. It was maybe a good starting point, still not sure about that. We could have just started where we ended up later, but I didn’t know back then if that was a good idea.
Rob: I was going to ask if there was any regret or if you feel like it was a mistake to start small and then go horizontal, or if you should have just started horizontal, or do you think really matters?
Ruben: At least for the app that I had at the time, there weren’t any proposal apps. So, we were creating that category. It probably didn’t matter as much for our product at that time.
Rob: Since you’ve built Bidsketch back in 2008–2009, it was written in Rails 2 and then you upgraded to 3 or you built it in 3, if I recall. You went through a painful year or so of trying to rewrite it in Rails 4. If I recall, you had a tough time finding Rails 3 developers and maybe patches weren’t coming out for it anymore. This was just 2–3 years ago, you were doing this. It’s a real struggle, I remember. Can you talk us through that? Why did you make the decision and what was the process there to try to get it rewritten?
Ruben: We actually started in Rails 2 and it’s still in Rails 2 now, which is crazy.
Rob: Oh, that’s what I forget. I say 3 because that sounds old enough, but you’re right.
Ruben: 3 is the thing we wanted. We were eventually trying to get to 4 at the time. We were like, “Okay. We can’t jump straight to 4. We need to go to 3.” From what I understand, going from 3 to 4 takes some work, but it’s not the end of the world. Going from 2 to 3 is, if you have a really mature app with a lot of code that’s been around for a while, that’s a beast and that’s what we were trying to do.
Rob: You had the bulk of your team working on that for, was it a year? Is my memory correct?
Ruben: It was maybe like eight months or so. A lot of developers working on just that and at the same time I was working on the design side. Just going back a little bit, the decision to upgrade had to do with us hitting plateaus and like you mentioned, there’s that episode that we did about plateaus and stuff. We hit three or four plateaus at different stages of growth. I don’t remember exactly what they were, but we did things like change pricing, 10X our content strategy, just different things to break out of each plateau at each time.
I got pretty good at breaking out of plateaus, but now what I know or what I feel is that if you’re hitting that many plateaus, fundamentally, there’s a problem there that needs to be fixed. We were hacking out of the plateaus for a year or two of more growth, but there was a bigger issue. Part of it was just going back and trying to figure out, “What’s going on here, how can we just stop doing this, and fundamentally fix what’s wrong?”
We did a lot of customer interviews, a lot of analysis of the data that we had, did over 100 jobs-to-be-done interviews and using the Switch framework. Switch framework has to do with when somebody switches away from a product to your product or when somebody switches away from your product to something else, during onboarding and people that canceled. You can imagine people getting people on the phone to do 30–45 minute interviews. Once they’ve canceled, it isn’t that easy, so we bribe them with Amazon gift cards, like $100. In theory, you don’t need that many, but we were interviewing a lot different segments and trying to find patterns and stuff.
After all that, we came up with three things that we could do. One of them was go upmarket enterprise, which the majority of the funded startups that were going into the proposal space were doing. They start off like we would and then just wasn’t big enough and they would go upmarket. The other one was just better served as a couple of specific segments within our market, build out better team features, agency features, go deeper in that direction. Then the third was just sell more to our existing customers. They were using products that were related. That’s why we built up Docsketch later.
The first thing that I decided to do was basically build out version 2 of Bidsketch and go with option one—better serve a segment of our market that would pay more money, that would stick around and all that stuff. But out existing product was lacking some features and to add these features and to change how it did the main thing that it did which is create proposals, we had to use new technology and hiring developers that could work with that was really hard.At the time also, Rails 2 was really old and everything was just hard because of that. We had a bunch of technical bet and we were in a bunch of code. If we were going to rebuild core parts of the application, that was a big project and we just needed to add a whole bunch of unit tests and all this stuff. We spent six months going in that direction, adding unit tests.
About that time, I saw a talk, it was DHH from Basecamp. This had already been out for a while, but I had just caught onto it, just watched it, and he was talking about how they made a mistake by trying to do the same thing that we were doing. It really gotten my interest. I watched the whole thing and basically what he was saying was that they had a very hard time. He spent six months to a year trying to make Basecamp into the next version of Basecamp. He just talked about it in terms of trying to make a chair into a desk or something like that. It was really hard. It just didn’t work and they abandoned it and started from scratch.
I watched that night and I thought, “Hmm, I think we can do it.” Of course. We kept going for a little bit longer, but I kept just thinking about that. So, I went back and I was looking at how much progress are we making. I started doing some forecasting and estimating, given our pace, that the entire team is working on this. It would have just taken way too long. We made very little progress, so then I just decided to abandon that effort.
Rob: How was that, when you decided to abandon? That must have been a really tough choice for you. What was your emotional state like once you made that decision or as you were making it?
Ruben: It’s always tough because you spend so much money with so many people working. It’s tough on several different levels. You don’t want to fail at something and just be like, “Oh, this was a really big mistake.” A couple hundred thousand dollars maybe in salaries. I didn’t calculate it out still to this day. It’s probably pretty expensive.
Rob: Too painful.
Ruben: Yes. Just a lot of developers working on it for eight months or whatever it was exactly. That’s a ton of money to just say, “Nope. This didn’t work out. Let’s do something else.” It’s tough from that perspective but also for the team. You have the team working on just this one thing and you really sell them on, “This is the direction. This is what we need to do.” Then, having to tell them, “No, this is not going to work. You should do something else.”
Rob: That’s got to be hard. When you talked to the team, did you do it on a group call? What was their reaction?
Ruben: It was on a group call. I don’t remember the specifics, but I remember that they took it much better that I thought they would. I think they were burnt out.
Rob: They were probably relieved.
Ruben: Yes. There was a little bit of relief, basically.
Rob: That’s crazy. Probably some relief for you, too, to make the decision as hard as it is. You let go of the sunk cost, right? The sunk cost was all the time, the money, and your ego of like, “Well, I made a bad call here.”
Ruben: Exactly. Before I actually had that call, it was tough just thinking about a lot. Then after the call, it was just a relief. It’s like, “Okay.” Once you make the decision, once you know you’re starting over, it’s different.”
Rob: Yeah. Wipe your hands together and say, “What’s next?” you turn your sights. That brings the question, now you are building Docsktech. Was it an immediate realization of, “I want to build an electronic signature app”? Or was it, “We’re going to build like how they do Basecamp, 1.0, 2.0, 3.0. They are all project management. They are all just approached differently. Did you think of doing Bidsketch 2.0 that would essentially be proposal software as well and complete with yourself in the sense that Basecamp did?
Ruben: Yeah. That was the next thing. It’s like, “Okay, maybe we should just build this from scratch.” We actually started doing that and spent about six months doing that and realizing that we had to make it backwards compatible and all the stuff. That’s years of work-arounds, codes and all these stuff. This is crazy. This is a lot of stuff.
Rob: So it’s a new code base, but what was the backwards compatibility? Was is like the data model or something? To import in one direction, you needed to adhere to certain standards?
Ruben: We have a feature that allows people to create proposals from scratch using HTML and CSS, so there was a lot of that, just making that old templating system work with whatever we were building, trying to make everything fit. There were just many, many examples of this. This one was a little bit shorter, it was maybe four to six months where it just felt like, “This was going to take years. I think we should go with option three,” which was basically sell more to our existing customers and better serve them.
This was the creation of the electronic signature tool, our new app, Docsketch. It felt like this one’s way easier, this one’s much smaller, doesn’t have that many features. We’re not doing a bunch of what-you-see-is-what-you-get design, development and all that stuff. You are uploading files, your over link fills, sending them out, getting documents signed. Let’s go in this direction.
We stopped again. There were a couple other reasons. Our progress was super slow with the new rebuild of Bitsketch because the team had a Rails background but not a React background. We decided to build this version 2 in React and we started to do that, but they we’re so inexperienced that as they we’re learning more, they were like, “Oh, let’s rewrite this or restart this. Oh, this is the wrong way to do that.” That was not good. They just slowed everything down even more.
Rob: Do you wish you hadn’t built in React or if you were going to do it, you need developers who were verse to it.
Ruben: Going back to that point, the better decision on my end would have been, we either build it with what we know and what we are good at, which was Rails, or we need a new team that is very experienced in React and what the direction that we’re going in.
Rob: That would be a really hard call to make, to fire most of your development team or I guess you would keep someone around maintain Bidsketch, but that would have been a tough call.
Ruben: It would have, but we wasted a lot of money because I didn’t make that call back at that point. Even when we started with Docsketch, it was also like, ” Okay, let’s do this in React. We know way more. We have six months of experience,” which is not a lot. Having a background and managing what development department a lot of developers. This is all the stuff that I’ve come across and had known. For some reason, I just made decisions that, now thinking about it, don’t really make a lot of sense.
I’ve gone back and really thought about that a lot and worked on improving both my decision-making and my ability to change and switch earlier once I recognize that we’re going in the wrong direction.
Rob: Here’s the thing that I have respected about this journey that you have taken, is that you shoot through let’s say 14 months, 16 months, 18 months, whatever of two false starts. It was to upgrade the app and then to rewrite it from scratch. It was super brutal, painful, irritating, but you did it anyway.
During that time, I remember asking you, “Are you impatient? Do you feel stressed?” And you kept saying, “No, I’m not stressed. I just want it to move faster.” But it didn’t seem to bother you the way it would bother me. I would have been super stressed and anxious. There’s just so much. I have such a tough time standing still like that. You’ve said you do, too, that you have a tough time standing still, but what does that feel to you and how did you deal with it? Most of us in our product ownership career, we’ll never stand still for 18 months or however long you did. It’s a real anomaly like how did you manage your own emotions around that?
Ruben: I think part of it has to do with me just being optimistic about my ability to do things successfully, number one. Number two, having spent so much time doing things like SEO, where you have to make these bets. It’s not like ads. You can run ads and immediately as soon as you put money into it you know that it’s working or not.
With SEO, you’re going months without any sign that it’s working a lot of times. Then eventually it starts working and I’ve done that so many times where I’m used to grinding for long periods of time. I was really thinking about this the other day, which is probably a bad thing where having grown up just feeling uncomfortable for a lot of my childhood because of being in bad situations, bad neighborhoods, bad everything, and just having this constant feeling like I’m working towards something and it’s really […] right now, but I know I’m going to eventually get out of it, so it makes it so I can deal with that a little bit better nowadays, but maybe it’s a bad thing.
Now I’m focusing on setting up these trip wires beforehand. Before a big effort, I set an expectation or a deadline or something that lets me know, “Okay, if we are not here at this stage, then either I’m going to take a really close look at stopping, or changing what we’re doing, or something, instead of enduring and grinding.”
You said many times that if I have a lot of patience and a lot of people say that about me, but I don’t feel that. I feel very impatient a lot of times and I don’t remember where I heard this, but that when there’s this mismatch of what you feel about yourself and what other people think about you, that has to do with the mismatch between your internal dialogue—which makes a lot of sense—and your actions.
Internally, I maybe saying something like, “We need to move faster. This sucks.” But externally, I’m projecting maybe something else and just continuing.
Rob: Show up everyday, shipping, getting it done.
Ruben: Right. Getting it done. There are a lot of things that just take a lot of time. I’m good with making progress when it comes to things like that.
Rob: Yeah, it makes sense. Folks want to hear more about your background. You mentioned it earlier, there’s a cluster of episodes that are really popular of the Zen founder popular podcast where Sherry interviewed several founders of their origin story. Yours is episode 25 and you go through a pretty in-depth story of your upbringing which is shocking to a lot of people and is just super interesting tale to hear, how you grew up, and how you came to start your own company.
I want to get into Docsketch, but I have one more question before we do that. Did it ever cross your mind to sell Bidsketch and just start fresh with a new app or was your plan C was to sell more things to the Bidsketch audience? Was that too compelling to make you consider selling it?
Ruben: I don’t think I ever seriously thought about selling Bidsketch because even if you think about how I started Bidsketch, I started Bidsketch when I had a full time job. I just like the approach a lot better of not starting from scratch like some people who quit their jobs and they do their new thing.
I think I would be stressed if I sold it and I had a bunch of money in the bank, but that money was going down and nothing was coming in. For me that’s different and I’m not sure why.
Rob: I’ve been there and I did the same thing. I had HitTail, I didn’t sell it, and then started Drip because I didn’t want the bank account going down every month. I was trying to run it on the side and have it throw off cash and […] the asset because then you can have your foot on two islands. You don’t have to swim to the other one and you can do it. That makes sense.
I’ve been impressed with how you approach the process of building Docsketch, not from a technical point of view, but just the thought process you went through. You started with the marketing and in this day and age, obviously you want distribution first and you want a channel, but you were way ahead of it. Before you had mock ups, before you guys had really started digging under the code, you had this whole plan of how you were going to build up this momentum and this marketing engine. Can you talk about how you were thinking that through?
I’m specifically thinking, obviously about the organic, like you are really good with SEO, but also there’s this whole thing about free plan and getting people to use something, any type of tool first and then turning that later into a Docsketch customer. I really think that, that would be interesting for folks to hear about.
Ruben: Building an electronic signature tool was basically starting from scratch. Before building it out, I just spent some time figuring it out how am I going to get customers because I’m not sure how much I’m going to be able to leverage the Bidsketch audience and I don’t want it to completely depend on that either. This is a much bigger market. Much bigger market like DocuSign is the biggest company in the market and they are at $600 million a year maybe more. They’re way more signature electronic apps in that category. There were a lot of things that appeal to me.
Freemium is being done by a couple of them, so I also wanted to play around with freemium and add some viral traffic and stuff. The first thing that I did was just look at, okay if we are starting from scratch, do some analysis in the organic traffic side, what are people searching for, what’s there?
Okay there’s a lot of traffic that we can get. A lot more than the proposal category. Then look at what the competitors are doing, not just look at what where they’re getting traffic, where’s it coming from, but I also did interviews with a bunch of DocuSign and HelloSign customers and this was targeting them with Twitter ads, sending them to a survey. If they were a recent paying customer, bribing them with an Amazon gift card.
Also, going to review sites and just analyzing everything that people liked and didn’t like about each of the competitors, creating a document with all that information, trying to figure out where are the gaps, what type of product would we need to build to position ourselves favorably in this market, and how can we do it in a way where some of the traffic that opportunities that I see, we can flow into a product. That was the high level of the whole process.
Rob: A couple things that you touched there. I find it fascinating that you’re going on a free plan especially with one of the very popular essays on my website from August 2010, was a guest post from you called Why Free Plans Don’t Work. I just think it’s hilarious that nine years later, you are actually going all in on a free plan. You want to talk about how your thinking changed?
Ruben: Back then, I did freemium with Bidsketch for about a month. It was a very short amount of time and with freemium, that’s just too short to know whether it’s working. It wasn’t until later that I realized a bunch of these things. Then, I didn’t know how freemium worked and what types of products would be best for freemium products.
Looking back, some of the reasons why it didn’t work for Bidsketch and for many of the proposal apps that I’ve tried—it hasn’t worked until this day—is because the markets is okay, but it’s not that big. The time-to-value is too long. People have to create documents, set them up, design them, and copying content. That just takes way too long. Ideally, you would have a much shorter time-to-value, like with Docsketch, you upload people’s documents, add some fills, send them off, that’s it, you’re done. Big difference.
The market is really big with Docsketch. It’s perfect for that. You did have a bit some of the viral stuff going on with the proposals, but given that the market is small, that you would need a lot more volume for it that work, it didn’t make sense.
But looking at Docsketch, the electronic signature space just has a lot of the things that will help a freemium approach work. In the early days, really you will make more money not doing freemium. That’s another thing about Freemium. It’s oftentimes a longer-term bet and like content marketing, a lot of things build that up.
Rob: That makes a lot of sense. It’s an advanced distribution tool. It’s not a pricing strategy, it’s a marketing strategy as people say. It’s something that, in your early days, when you’re trying to bootstrap and get to $8000–$10,000 a month, you can quit your job. I do think freemium is detrimental. It’s a long-term play and you have the luxury now with having this other app that is funding you and your whole team, that you have a long-term horizon to play with.
Ruben: That makes a big difference. The situation I was in was totally different. That time, I needed revenue as fast as possible. Now, the strategy that I ended up going with free trials or getting people to pay up front first is really good; worth well for that. Being in that situation is not […] for trying out freemium.
Rob: Yeah, and you spent quite a bit of time getting pages out there with organic traffic to it and the product is quasi-launched now. I feel like you’re soft-launched, but you’re not doing heavy marketing.
Ruben: Yeah. Officially, it’s open now. This was the deal, a couple months back we did an AppSumo deal. I wanted to leave it in early access when we did the deal, but they required that we open it up and let people sign-up and pay before we do the apps, which makes sense. They don’t want to be selling something that’s an early access. We did the deal. Lasted a long time, it was very different from when I’ve done it in the past. It was like three weeks.
Then I put it back into early access up until a couple of weeks ago to where I opened it back up. I felt like we have enough features at this point and we’re getting a lot more traffic. It’s just ridiculous to be an early access with the amount of traffic that we’re getting and not trying to take advantage of some of that. Last month, it’s getting more traffic than BitSketch. In a few more months, at that pace, it’ll double what we’re getting there. The strategy is different.
Rob: It’s such a larger market, right? That’s how I view it.
Ruben: It’s a much bigger market. There’s just a lot more opportunity there. I just know more now than I did back then. I’m having an easier time executing on that part.
Rob: Stair-step approach. Small SaaS up to a big one. I like it. Talk about the AppSumo deal. I actually get asked relatively frequently from folks who run a SaaS app and are considering an AppSumo deal but don’t know how to think about it and don’t know if they should do it or not. The revenue share is not huge. I believe it’s 70-30 or 80-20, where you as the founder get 30%; you get the smaller of the two. It’s really quite a cut that they take. How did you think through that because it sounds like from what you’ve told me it was the right choice for you. Why was that?
Ruben: I feel like it was a really good choice for me. Given my context of doing freemium right now and still being from a positioning standpoint, we’re not focusing on any one segment yet, even for marketing. Leaving it open, trying to learn, and see where are the most valuable customers, so that we can focus on that. The more volume we get, the more different types of companies we can get using the products, the more learning we can do the better. Then we’ll just figure out who the best types of customers we should go after are, and maybe chain positioning or maybe just put our marketing efforts in there.
AppSumo, I just saw it as a way to get a lot of different companies using the product and a lot of them that were using existing products, like DocuSign in getting a lot of feedback from them. There’s a tricky part to it when it comes to getting customers from these deal sites because a lot of the feedback that you get is just not good. You have to be very selective as far as who you’re listening to.
The framework that I use for this was anybody who’s seriously using another product and is paying a decent amount of money for the other product—they have a team of 10 people and they’re paying a couple of hundred dollars a month to use an existing product, and they’re very motivated to switch—those are the people that I’m going to listen to a lot more.
We found out that there’s some really very valuable segments that we hadn’t encountered yet through the deals. That was helpful. We got some very good feedback. Since they were highly motivated to switch because they got such a good deal and they were spending a lot of money with the existing tools, they were willing to tell us what’s really important to them before they switch, like, “Okay. We want this snap. This one thing as the thing that we really need to switch.” That helped.
Rob: Super important to have that. Those learnings are valuable and they’re hard to get in the early days of the product.
Ruben: They are very, very hard to get. Also, I almost think of them as freemium users because just looking at the stats for the amount of documents that they’re sending. They’re sending a lot of documents a month because people who get documents see that they’re sent through Docsketch, there’s some of that viral stuff going on that helps us. That helps us with word of mouth, that helps us in a lot of different ways.
It doesn’t work too well with companies that have really high support per customer. That was another thing. With Docsketch, it’s just a low support app. We can get a bunch of people here, that’s another reason why we could do freemium and it’s not that big of a deal. I know a lot of other SaaS founders that they’re in the hundreds of customers and they need a full team of support people. Between Docsketch and BitSketch, we’re serving thousands each. One person’s fine when support person, not a problem for everybody.
Rob: I’m envious of that. Certainly with Drip, we were one of those where we need a lot of support people because it’s a big complicated product. It can do a lot, but as a result, people have a lot of questions.
Ruben: Right, and Drip is a really good example. I’m not sure I would do an app […] for that. I would have to design it very carefully, but I probably wouldn’t do it because you have expenses of how much it costs each email to get sent out there. It’s just not the right type of product for that.
Rob: Yeah, and that’s the thing. Just like with freemium, AppSumo is something that can work for you, but you need to know the criteria and you need to be smarter about making the decision. It’s not an always yes or an always no. It sounds like you got a lot of learnings from it, you got good feedback, certainly there’s some SEO help there because you’re going to link to from some places.
Ruben: Yeah. You get branded searches, they shoot up a lot, and that helps on the SEO front.
Rob: And some cash out of it. Typically, if you have a successful AppSumo deal, you can make tens of thousands of dollars that comes to you and that can be a game changer that allows you to hire that next developer or put more money into some type of spend.
Ruben: The average they said was somewhere like 2500 buys. Given the average payments and all that stuff that they do, that’s more likely above $30,000–$35,000 somewhere in there.
Rob: Dollars for a company that’s running the deal.
Ruben: Yeah, after AppSumo gets their cut and all that stuff. So, that helps. You can’t count on that. It’s just a one time thing. In my mind, there has to be a lot of other benefits besides the cash.
Rob: That’s right. To start closing us out here, someone might be listening to this thinking, “Wow, you’re nuts to go after such a competitive space.” It’s huge, but in terms of a lot of potential customers, I can throw a rock in hit an electronic signature app. One of the advantages that you have is you’re good at organic. Frankly, you’re just good at marketing. You’re good at copywriting, you’re good at testing and looking at all the things.
Let’s assume you can out market some of them, or all of them to a certain extent in different areas. You know you can get channelling, get people in. But there’s this other thing that you really looked at pretty carefully and I feel like you’ve been very deliberate about it and it’s figuring out a point or two of differentiation.
It’s something I find a lot of founders don’t think about enough, they either want to build something completely novel, in a completely new category which is very, very hard or they will exactly replicate another tool. I find that both of those are very hard ways to go. And if I were a beginner, for SaaS app, I would try to build a tool and figure out one or two key points of differentiation. Bill in an existing category in a sense like email marketing software or electronic signature which is what you’ve done.
How did you think through the differentiation? What are your one or two points where you think you’re really differentiated from HelloSign, DocuSign, and all the other myriad of tools?
Ruben: This evolved over time. We had a couple of pretty good ideas and things that some people are excited about, but then either the technical side just wasn’t going to work out and wasn’t going to be as smooth as we thought it was going to be. I had to look at building out features that wouldn’t help us stand out and change that about three times for different reasons. But we didn’t go too far into it. It was just like, “Okay, I think I found something. Let me run some screenshots, get some feedback, or things like that and then see if this is something we want to move forward to.” And then after just getting some feedback, doing a little bit of testing, realizing that, “Hmm. This is probably not the way to go.”
One of the ideas had to do with giving better guidance to people who are filling out the documents on the other side. It was fresh, new, and people got excited about it. Everything looked good about that, but then, when it came down to the sender would have to do a little bit of extra work, nobody wanted to do a little bit of extra work. The thing was just not going to work, that type of positioning.
Really, it just came from looking at all the products that are out there, the ones that people most know about and then finding out what don’t people like about these products. Some of that research took place in T-2 Crowd and all the other review sites that are out there where you can find just tons and tons of reviews. This is going through hundreds of reviews, putting them all on the spreadsheet, categorizing them, figuring out what the patterns are there, and beyond that interviews with people that are paying for these products.
Like I said, there are a lot of different ways of doing that. We leveraged the BitSketch email list a little bit for that, but then we also just did add some call to people that we didn’t know, bribed them with some Amazon gift cards and all that stuff, and just finding out where the opportunities were.
We found a few areas and the next step was, “Okay, what could a few solutions that are positioned a little bit differently, what could they look like?” Nowadays, our positioning is more focused. We’re not completely there, but we continue to move in that direction. A lot of attention is paid on the uploading and setting up document side for these electronic signature tools. Our focus, and where we continue to add features and make it better is on the recipient side, on the people that are receiving the documents, making sure that they are able to fill them out faster, and making sure that they have a better experience that what’s out there.
Rob: Yeah. Your headline is ‘Sales documents signing that cuts turnaround time in half.’
Ruben: Right. From a position […] standpoint, the benefit going back to the user is that because we’re focusing more on the recipient side, they’re going to get their documents back faster.
Rob: That’s good. When people are zigging, everyone’s zigging, and you’re going to zag. That is such a nice differentiator where it’s just not a single feature. We have this one feature that […], our whole focus is this other thing and as long as that resonates with enough people, you’ll own that positioning, you chew away at that corner of the market.
Ruben: Yeah, but at the same time we may learn that there’s something that’s more valuable for us to focus on and build out and position ourselves in a different way and if we learn that, we’ll change again.
You did a really good job of this with Drip. I remember when you start off with little widgets and you changed from that to just marketing automation which was way more valuable. This is a mistake I see a lot of people make is that they’ll get stuck on their initial thing. Right now, we’re positioning that way, but we’re losing the position that way. We’re open to seeing what’s more valuable.
I feel like a lot of people just stop listening. They just feel like, “Okay, this is what we are, this is what we do, and that’s it. If it doesn’t work, what’s wrong?” and they don’t revisit some of that fundamental stuff, some of the core stuff.
Rob: Something I really like and I’m impressed with as I watched your entrepreneurial journey in the past 10 or 11 years is you’re super meticulous and you’re disciplined. That’s what this whole story as we talk through it with the transition to Docsketch. You made hard decisions, but you did them with a bunch of research and you’re meticulous in figuring out that it was the right choice. Then, when it was the right choice, you had the discipline to make the hard call.
This is the same thing, this positioning. You have been meticulous about figuring out this is the right way, you’re going to be disciplined to stick with it until you get another answer and when you make that choice to change it, it would be the right call, at least given the information you have.
What that all leads to is, there are certain founders that I’ve watched become successful, that I question if they could do it again. Maybe they got a little lucky with something. You’re not one of them. You’re going to do it twice and you could do it five times if you wanted.
You look at David […], Jason Cohen, Heathen Shaw, Dharma, we could list the people who have done it over and over again and there is something about them. Maybe they’re not specifically meticulous and disciplined—that happened to be your trait—but those are the traits that mean that you could do this at will, you just figure out the space, you would experiment, you put in the time, you don’t look for trails, whether […], you use the data to make the best decision you can, and then you push forward. It means it’s just repeatable and you could do it over and over.
That’s what I hope folks listening to this interview take away.
Ruben: Thanks. That’s a big compliment. I do respect people a lot, that are able to do it multiple times. That’s one of my goals, is just to basically learn how to do that for myself. It’s important, or maybe not. Maybe if you get lucky and it’s a really big hit, who cares? You can make a lot of money and sell it, it’s not that big of a deal.
Rob: Yeah. Funny, when I say getting lucky, I’m not thinking of anyone in particular, honestly. I just know that there are folks where it’s like, yeah, I got really early to a space and then they struggle after that or whatever. In any case, we’re at about time. If folks want to keep up with you, aside from hitting docsketch.com to check out what you’re up to today, where they can keep up with you online?
Ruben: Probably Twitter. I know you love Twitter.
Rob: That’s my favorite.
Ruben: @earthlingworks on Twitter, just Ruben Gamez. That’s probably the other place to keep up with me.
Rob: Sounds great, man. Thanks again for coming on the show.
Ruben: Thanks for the invite.
Rob: It’s always a pleasure to talk with Ruben. He’s been on the show a few times. If you Google his name at our website, you’ll find those episodes. If you have any feedback for me, I’d appreciate if you leave a comment, send an email, the firstname.lastname@example.org or tweet it out because I’m investing more time into the podcast at this point, and I’m being very deliberate about trying to change things up a bit while Mike is on hiatus. I’m just curious to know if it’s working, if it’s impacting you, if it matters, if it makes a difference, because obviously, we’ve had a format for 449-ish episodes and that is something that we can go back to really easily and it takes a lot less time, but I’m curious if there is more value in the new approach that I’ve been taking with it.
If you have a question for the show, call our voicemail number at 1-888-801-9690 or email us at email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob talks with Tracy Osborn about things she would of done differently during the 9 years she ran WeddingLovely.
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Rob: In this episode of Startups for the Rest of Us, I talk with Tracy Osborn of WeddingLovely about things she would have done differently during the nine years she ran WeddingLovely. This is Startups for the Rest of Us Episode 455.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob, and today with Tracy Osborn, we’re going to share our experiences to help you avoid the same mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. On the show, we talk about building startups in an organic sustainable fashion and while we are ambitious founders who want to grow our companies, we don’t do it at the expense of our life.
We have many different show formats. Oftentimes, we will talk about tactics and teach things. We answer listener questions. We have some founder hot seats. Today, I’m doing an interview, but it’s more of a conversation with Tracy Osborn, founder of WeddingLovely which she ran from 2010 until late 2018. I believe she actually shut it down technically in early 2019.
Tracy and I now work together at TinySeed. She’s the program manager for the accelerator. We’ve known each other for several years now. She spoke at MicroConf in 2016, and I believe that was the first time we met in person. Obviously, we’ve gotten to know each other much better over the past three or four months as we’ve worked together on TinySeed.
What I like about Tracy’s story is that it really is a story of high highs and low lows, from teaching herself to code to bootstrapping the company in 2010 and then going through two accelerators—although one of them really didn’t put much money in—winding up going through 500 Startups. WeddingLovely was really hitting on all cylinders and then catastrophic stuff happens. It’s fascinating to hear her thought process of some regrets, things she would have done differently, and other things that didn’t turn out, but she made the best decision she could at the time.
I really appreciated Tracy’s honesty and transparency in the interview today. It makes for an interesting story, like several of the guests we’ve had on recently who were able to dig into decisions they made, things they might have done differently, as well as things that they did do right, and the learnings that they took away from running a startup.
As a quick background, WeddingLovely was a blog and a wedding marketplace that matched up wedding vendors with couples who were going to be married—the engaged couples. With that bit of background, we’ll take you right into the story. Thank you so much for listening. If you enjoy this interview, I’d really appreciate it if you’d reach out on Twitter. I’m @robwalling and Tracy is @tracymakes. Let’s dive in.
Tracy, thanks so much for joining me on the show this week.
Tracy: Thanks for having me.
Rob: Listeners already have some context about WeddingLovely and how you started it. I want to start by looking at the decision you made to move from bootstrapped to taking $50,000 in funding from 500 Startups. What led to that happening and how did you make that decision?
Tracy: That was a really tough decision because before 500 Startups happened, I was fully in the bootstrapped camp. This is 2011 so TinySeed didn’t exist. All these other alternate funding or different paths, they didn’t exist. It was like, “Are you going to do a full funding route or are you going to go bootstrapping?” That was it. There was no middle ground.
I was fully in the bootstrap camp. I was already following Patrick McKenzie’s (patio11) writings about this at the time. I joined the Designer Fund in San Francisco, which is totally different than how they are now, but at the time, it was a small accelerator-ish thing where we got a really small chunk of money and we just worked together for three months meeting up every week just to work on our projects together.
One of the Designer Fund founders was a mentor at 500 and he decided to set up interviews with 500 just in case for everyone who was in Designer Fund. For me, I was like, “Okay, this is a good practice. This is great for me to go in and practice pitching and whatnot.”
It was a really interesting experience because I met with Dave McClure and Paul Singh, who I don’t think is involved with 500 anymore, but I met with Paul first. Paul was like, “I’ve seen your articles. I’ve seen you talk about WeddingLovely and why you’re building. I think you’re awesome.” He called me a cockroach which I thought was awesome. He’s like, “You’ll never die, you’re persistent, you’re in there. You’re in.” I was like, “Wow, that was easy.”
Then I sat down with Dave McClure and I gave my presentation. He said, “All right, we’ll get back to you soon.” I was like, “Oh, Paul already said I’m in,” and that totally threw Dave McClure off because I didn’t talk about this. I totally threw everything off for Dave McClure and probably what they were planning.
At that time, I wasn’t sure I was going to take it yet, but it was a thing where it’s like, “Okay, cool. I have this opportunity to go through 500.” My husband had just gone through YC. I knew I was really into bootstrapping beforehand, but it was like, “Okay, I have this offer on the table. Let’s see what happens.” That was the thought process about it.
Not everyone gets this offer, this chunk of money. I wasn’t ready. Hindsight being 20/20, that’s where I hesitate right now because I look back at the decision and be like, “I should have thought more about this. I should know more about what goes into a funded company, the growth that’s required when you’re a funded company, when you have investors, what’s involved with raising a full series A,” that kind of stuff. But it was, “Okay, this is going to be a learning experience. I have this opportunity here. I watched my husband go through YC. Let’s do it.”
Rob: Yeah, the hard part that I see with the 500 Startups investment was that they only gave you $50,000, but it came with the expectation of, “Now, you’re on venture track.” It’s not enough money to act like a funded startup in my opinion, but it sounds like you wanted to, or felt the pressure to start acting like a funded startup.
Tracy: Yeah, for sure. There are so many other complicating factors. My time in 500 was I did not utilize it as well as I should have. I’m taking a lot of stuff I’ve learned, actually, from being in 500 to what we’re building at TinySeed. Some of it was, I was a solo founder and complicating factors, I funded another wedding company the same time in my batch. They also required you to get desks at their space and they’ve set us across from each other and we were not friends. I want to be friends with them, but the other people were very aggressive. That’s like a stereotypical startup, that bad stereotype you might think of a start-up founder. That’s how they were.
Rob: Something from HBO show Silicon Valley or something.
Tracy: Exactly. We are not friends. I just felt so awkward being there with a competitor and they actually pivoted more into my space during the batch. I didn’t show up to any of the networking stuff. I didn’t do anything like the evening stuff. I didn’t really connect with the other founders. I just decided to stay in my own little world, heads down, work on things, hired someone at that time, brought her on.
This is a time that I found a co-founder, which we can talk about later, but in terms of 500, I didn’t really involve myself in the program. I didn’t really utilize the mentors that were there. I didn’t use any of the help that 500 gave me and I look back at that time being like, “Wow, I wish I could redo that,” because my social anxiety just came into play there and I didn’t use it as well as I should have.
Rob: Right, because as we’ve heard from so many people in the TinySeed batch, the community and the mentorship is at least as valuable, if not more valuable than the money they invest. It sounds like you feel you squandered that opportunity a bit.
Tracy: Absolutely. That working is so important to one’s career and the connections I could’ve made during that time. Who knows where I could be right now? Maybe the same, but if I use those connections… There are some people in my batch that have gone up on to really big startups, really amazing things. Those are the kind of connections that would have been really awesome if I was trying to find a job somewhere, but I’ve completely lost contact with them. I wasn’t friends with them during the batch. Who knows what would have happened? I look back at that time. If I could have redone the accelerator program, absolutely being involved in using the opportunities that are available, it’s something I didn’t do and I regret that.
Rob: Do you regret the decision to take the funding?
Tracy: I would say no. We can do a whole podcast on how insane the wedding industry is. I talked to a lot of people who are jumping into the wedding industry because they look at it as this industry where a lot of people are spending a lot of money and therefore is going to be really easy for someone to build a startup and just take some of that money. If you’re spending $30,000 on a wedding, of course, they’ll pay $10 for an app. It gets way more complicated than that.
With wedding history, because there’s so much competition, there are so many startups, so many people are trying to compete for people’s attention, and you have a 100% churn after a year because all these people are dropping all of your platforms, it means that advertising is a really big thing. Advertising is really expensive and that chunk of money did help. I could apply it to things to help boost the business as absolutely necessary in the wedding industry if you’re targeting people who are getting married.
That money was used. I also used that to hire someone; that was great. I did learn a lot from being in the program. I look back on it being like, “Okay, that was a really good learning experience and I wish I could redo it, but I don’t wish I did something differently,” I guess is what I would say. It wasn’t perfect. It wasn’t a perfect experience, but I learned from it. For better or worse, that’s how I got to where I am right now.
Rob: At the end of the program, there’s a demo day and that’s where folks essentially raise their seed round or preseed round these days, I guess. You decided not to raise a round. I believe you had a co-founder by that point. Do you want to talk a little bit about the co-founder and then a decision you made to pause funding right as demo day approached?
Tracy: The roller coaster of WeddingLovely; this is the peak. I was in 500. Again, I wasn’t using the program as much as I could have, but at the time, I was like, “Cool, I’m doing everything right.” There’s this absolutely amazing awesome person, Julia Grace. I believe she’s the Director of Infrastructure at Slack now. She reached out to me asking me if she can become a co-founder. I was like, “This person is amazing. She’s an amazing engineer. She would be a great CTO,” I was like, “Absolutely, come join WeddingLovely.”
Julia joined, I was in 500, and at the time, I was traveling in New York and Kellan Elliott-McCrea was the CTO of Etsy and he invited me to come into Etsy for lunch. I was again, cloud nine. I’m kicking ass, everything’s going awesomely, CTOs of Etsy are inviting me to lunch. I go over to Etsy for lunch and he drops the bomb on me saying, “Hey, let’s talk about acquiring WeddingLovely,” and I was just like, again, cloud nine, “Oh, my God, I’m doing everything right.”
The demo day was right around the corner and Julia and I decided not to really pursue it because we wanted to focus on being acquired by Etsy because I loved Etsy. Etsy would be a great fit for WeddingLovely. What they were doing at the time were switching some focus into wedding so it would have been a really awesome fit for both of us.
I did do demo day through 500 and I got to say, I bombed the first two ones. I’m much better at presenting now, but I look back on my first two pitches at demo day. They gave us two minutes to be on stage. It’s really stressful, there’s an audience of people, and I did not do well for the first two. By the third one that we did in New York, I finally got my stride. But I was like, “Oh, it doesn’t matter because I’m going to get acquired by Etsy.” Long story short, that didn’t fall. That fell through, we can explore that in a second.
Rob: I was going to ask, you didn’t do well because you weren’t preparing, you weren’t focused on it because you were counting on Etsy acquiring you, is that right?
Rob: Do you have a regret around that of just knowing most acquisitions fall through? But it doesn’t feel like that when you’re in conversations with them. It feels like it’s going to happen. Do you feel like your judgment was clouded there or do you feel like you made the right call?
Tracy: Again, hindsight being 20/20, definitely judgment is clouded. I’m just not as good as a public speaker as I am now and I know that I didn’t prepare enough. It’s a silly thing to think about, but I was like, “Oh, just roll up,” and I just gave my little two-minute presentation.
Speaking of, two-minute presentations are the hardest thing in the world. It’s really hard to give a proper presentation in such a small amount of time. It’s really hard to hit all your marks and stress about making sure you remember every single moment in that presentation because you have such a small amount of time. There’s a lot of regrets for that.
Again, that’s also an opportunity. If I kicked it out of the park, even though I didn’t decide to raise money then, but the connections I could have made in that audience, of the VCs who were there, the people I could have met, the people I could have connected with is another thing that I regret not doing. I’m a huge fan of networking and meeting as many people as possible and becoming friends with as many people as possible because those are the things that are going to transform one’s career down the line.
A lot of the things that where I am right now is just because of connections I made beforehand. Like this TinySeed thing is probably because I met you at MicroConf and I spoke at MicroConf. Who knows what’s going to happen down the line? I regret not trying to pay attention during those demo days, making those friends, making those connections, and just being consumed by anxiety, making my presentation, and then running out.
Rob: I’ve done very similar things, especially early on. This is probably 10 years ago, but I would go to conferences. I’m an introvert and I don’t like meeting new people. I get stressed about it, I wouldn’t meet the other speakers, and I was anxious to go talk to people. I know how that feels.
I learned from that pretty quickly because I saw other people having those relationships and I saw what they did both for their sanity and well-being, but also for their businesses and just the opportunities that it affords. Saying yes to things that scare the […] out of you often will lead to things years down the line, as you’re saying, that you never could have predicted but that they changed the game for you.
I literally look back at my history. Not to go off on a tangent here, but I had a very similar experience where I had never met Jeff Atwood of Coding Horror. He and I blogged, we used to email back and forth, and we’d link to each other’s blog post. This was 2005–2007. I never met him in person.
He was running an event and I was super terrified, but I went up and I was just like, “Hey, man. I’m Rob Walling.” He’s like, “Hey, I love your blog,” and we were talking and he’s like, “You go into business of software?” I was like, “No, I’m not really good. It’s not my thing.” He’s like, “You should go. Let me just link you over to Joel Spolsky.” Just that step moving forward, these are the things of overcoming fears and taking risks is really what this is about, even though it’s hard.
Tracy: I have something similar. If we’re going to go even farther back in time, I feel like my career directly leads from my university graduation. I was graduating with an art degree, I was really into web design. All my classmates were into product design or physical mediums. Our keynote speaker at our commencement was a designer from Apple, came in and speak. I was like, “Whoa, a web person,” she’s talking about web and stuff. I talked to her afterwards—this was 2007—and she said, “If you want to get into the web industry, you need to go South by Southwest,” and again, I have so much anxiety. I could tell in our podcasts about how much social anxiety I have.
I did a keynote at DjangoCon US about it and it was the most terrifying thing. I took her advice and I booked myself a hotel room. I went to South by Southwest alone, didn’t know anyone there, and it’s so overwhelming. Most of the parties, I just walked in, panicked, and walked out, but on the flight back, I happened to be sitting near some attendees. Those people became my friends in the Bay Area, that introduced me to more people that I went to conferences with, and that’s a direct line to where I am right now.
Rob: There’s a concept that Jason Roberts on TekZing talks about what’s called your Luck Surface Area, increasing your luck surface area by doing a lot of things. I love the little quote from Thomas Jefferson, “The harder I work, the luckier I get,” but this is different. It’s not necessarily hard work unless you consider just getting over your own fears is hard work, which I guess I probably do, but it’s like taking risks often equates eventually. You take enough of them and it gets you to some “lucky outcomes” but they really aren’t luck.
Tracy: Right. On the anxiety topic, it still rears its head now, but 10 years of actively working on reducing it and making sure that I’m going out there and being open to these opportunities has been hard, but it’s been worth it. I’m glad that I’m a lot better now.
Rob: To resume this story, you were talking to Etsy. You weren’t putting much effort into the fundraising, into preparing for demo day, counting on that Etsy thing working out. They did ultimately make you an offer. What was that like when you received the offer? Was it via email? was it a phone conversation? Talk me through the emotion of that.
Tracy: They stepped back one step. It was funny because I had the final meeting in New York, and again, cloud nine, we’ve got flown into New York, put up in a really fancy hotel. I’d offered a non-fancy hotel and they’re like, “No, we’re going to put you up in a fancy hotel.” We had the whole day’s meetings, met with Chad Dickerson, went out to a fancy dinner afterwards with me and Julia and all the top level team. Again, I’m just like, “I am kicking butt.”
Throughout this time, I’m talking with 500, Dave McClure helped me out, getting me prepped for what happens in an acquisition, how to compose everything, and how to compose myself. I had other advisors in the Bay Area, they’re helping me figure out valuation, didn’t want to give the first number ourselves, but I wanted to have a good range of what a good valuation for my business would be so I don’t make bad decisions. I thought the prep work was great. I did everything right for that.
But it came in a call and it was the financial person. It’s not the CFO. It was actually a financial analyst or someone at Etsy. It was a call, sat down with me and Julia, and they gave us a number. The number was one-fourth of what the lowest valuation all of my advisors said that WeddingLovely was worth, especially considering that Etsy had told me that they were going to keep the website up. So, it wasn’t just going to be an acquire-hire or they were going to use the properties. I was like, “Okay, thank you.” Don’t say anything on the call, hung up. Julie and I are like, “Oh, crap.”
We went back and forth and like, “Okay, it’s a negotiation so we’ll just give another number and see if we can meet somewhere in the middle. We sent them back an email saying, “Thanks, that was not what we’re looking for. Here’s what we actually think the business is worth,” they responded with—completely unexpected; I did not expect this— “Okay, it does not look like a fit. Goodbye,” which is devastating because I expected this whole negotiation process and it was so weird. It’s so weird to me today that’s how it happened and all of my advisers in the Bay Area were like, “What is Etsy doing? This is not how an acquisition process is supposed to go.” We just went through all that effort and it just went away. It wasn’t my counter was outrageous.
So, that was weird and really devastating. Like I said, we didn’t do the full fundraising process when we had the best time for it, which was demo day, we didn’t follow up any of those meetings.
Now, this is two or three months afterwards. Our momentum has stalled. There’s no big 500 Startups demo day anymore. It was like, “Okay, what do we do? Do we launch a new product? At launch of that, do we then raise money?” Then it got really confusing, really weird, very depressing, and very crazy. That was around the time that Julia decided that she wanted to move on to other opportunities. This high that was on before just free-fell. It was horrible. It was the worst part of the business.
Rob: Just a couple months, it just went from the top top to the bottom bottom. Looking back, do you wish you’d taken Etsy’s offer? Have you ever thought about that? Even though it was low, it wouldn’t have made sense at the time. If you had, everyone would have been like, “You’re nuts.” But what if you had? Do you think that would have been a good thing?
Tracy: Oh, I go back and forth on that all the time. I can’t say numbers, it came out to being a hiring bonus essentially. If I’m going to be a proper startup founder, I’m glad I did not take it because that was a ridiculous number. Everyone agreed that was a ridiculous number and I shouldn’t take it. But having that stamp of approval, that, “Oh, I got acquired by Etsy,” on my resume, what doors would that have opened? Because people just look at those titles, that achievement, and then assume you’re so much more awesome than you actually are, which I wish I had that. I wish I had an acquisition on my record.
Working at Etsy probably would have been really great fun. I would have avoided that devastating drop of what happened afterwards with Julia leaving, I had to layoff someone. That’s when I switched the business back to bootstrapping because there was no way I was going to be fundraising at that point. I just gave up on it.
The way that WeddingLovely was built, I could just put it on autopilot. It’s at that point I was just like, “Okay, business, go do your thing and I’m just going to go over here in a corner, curl up, and be really sad.”
Rob: You’re at the highest point and within a couple of months, you have lost this acquisition offer that you really thought was going to come through. Etsy essentially walked away from the table which is surprising. In different acquisition talks that I’ve had, companies have walked away from the table, but they’ll come back a couple of weeks later. Did you expect them to do that or when they said they were gone, you were like, “This thing’s done”?
Tracy: It was a while ago. I’m trying to member exactly what happened, but I know that the feeling was this thing is done. We had an advocate at the company and we reached out to the advocate. He was like, “This is weird. I’ll get back to you.”
What happened in the end is it sounds like there was some weird miscommunication. Something happened on Etsy’s side that I am not privy to, but something happened on Etsy side where they’re like, “Wait, this is a bad decision. We’re not going to do it,” and it wasn’t how you do with WeddingLovely. Something with financials or something, but it’s just like, “No, we can’t do this right now.”
Rob: Wow. That falls apart and then Julia leaves shortly thereafter. What is that like? When Julia calls, or emails, or however that happened, how does that make you feel? Obviously, there’s got to be some despair and stress, but were you at that point thinking like, “This isn’t going to work, I should just shut this down, everything’s falling apart”?
Tracy: The day Julia sent me an email and saying, “I’m going to come to your house to work.” We didn’t have an office. We had an office for a little bit in Mountain View, but at the time, we shut it down also because everything was free-falling and she asked to come over to my house.
We sat down at my house and she was like, “Okay, I’m just going to open up with this.” I figured the exact words she said, but essentially it was like, “This has been a really interesting experience, but I’m going to move on to something else.” I was […] back, I did not expect that, and I think, “Okay, maybe you should go home now. I need time to process this. Thanks for driving all the way down to my house.” She left and I walked around the neighborhood with my dog just dying, just like, “Oh, my God, what just happened? I can’t believe this happened.”
I was really bad at Julia for a long time and I’m not mad at her now. But at the time, it felt very personal. It was very much she didn’t believe in me. A lot of it, a lot of the business, a lot of WeddingLovely, a lot of it’s my personal mistakes I’ve made as being the founder, the person who started as “CEO,” and that was never my title, which is weird. There’s a lot of mistakes I made, but I took it so personally and I did not like her, I was so mad at her for so long, but we’re friends now.
It was hard not to take it personally. It’s hard not to take the company failing personally. That’s a lot of the reason why I didn’t shut it down because I was clinging to this idea that I’m not a failure. If I shut down the business right now, then it’s me admitting that I’m a failure, that everything fell apart, and it’s all my fault. By keeping the business up, it was just like, “No, I’ll keep growing. I’ll keep building the business.” It’s still going on and it’s still making me money. I’m glad I built it in a way that I don’t have to continually spend marketing money on it because it was a marketplace. The marketplace part was pretty active at that point, so I had these businesses working with me. It was just me just trying to prove to the world that I can still make WeddingLovely a success.
Rob: I guess the question that comes to mind is, Julia was with you for eight months and she was a co-founder who came on two years after you started the company, It’s all hindsight again because you thought it would work out, but do you regret that decision of bringing a co-founder on? Not Julia. I mean, you’re friends with Julia, she’s a rock star so not for her in particular, but do you think this would have been better, easier, different if you had just not evaluated the idea of taking a co-founder on?
Tracy: Hindsight being 20/20, I wish that I was like, “Okay, I’m going to stay the founder, but you can be the CTO,” because that would have switched something in my brain. A lot of my being so offended about her quitting was like, “But you’re a founder. This is supposed to be your baby,” but no.
Because she started so late, it’s not her baby. It’s my baby. I built the first version of all the websites. I built everything from scratch myself. Of course, it’s my baby and she came in and she updated some things, she built some things herself, but she didn’t have that personal feeling like I did.
It was a disservice to everyone to call her a co-founder when it’s CTO or some of these other titles would have been a better fit. Then when she left, mentally, just like a weird logic thing, it would have felt a little better, I don’t know. That’s how I feel about it. You can’t bring a co-founder a couple years in. They’re no longer a “founder.”
Rob: I agree with that. The title is the issue here and I don’t think bringing Julia on was a mistake at all, especially at the time, it was a good move and even in retrospect, you made the best decision you could at the time. But it rings true to me that that title maybe wasn’t right because a co-founder wouldn’t have left. I shouldn’t say wouldn’t have, but there would have been more conversation and more consideration, because you’re right, having only been there eight months, she was less tied to it than you.
Tracy: Yeah. We didn’t have a lot of good conversations back and forth. I didn’t actually treat her like a co-founder and that’s my fault. I was running all the administration of the business. I was running all the vision for the business like where we’re going, what we’re doing, whatnot. I wasn’t really involving her in those conversations, which is absolutely a huge mistake because I wasn’t allowing her also to make it her baby as well.
When she left, I remember being gobsmacked. I had no idea she was unhappy, or that she wanted to leave, or if she was looking for other things. I had wished that she had told me that she was out there looking for another job because she told me she had another job lined up.
Years later, I looked back in that being like, I wasn’t involving her either and we should have had that personal connection if we’re going to be founders together of talking to each other, talking about things are going right or what’s wrong, involving her in how the business is going, and letting her be part of that planning. In those processes, I probably would’ve found out from her earlier on that she was unhappy, but I didn’t know that and that was a big failure on my part as being a founder of WeddingLovely.
Rob: You mentioned earlier that after Julia left, you went back to bootstrapping. Was that the point where you put it on autopilot? I have a blog post from you in 2016 where you talked about putting it on autopilot, but what was the timeline like there?
Tracy: This is where things get a little bit wavy. It was 2016 to now. There are points where I was like, “Okay, WeddingLovely’s running itself. I’m just going to spend a little bit of time on it.” I started working on my book business around then. It wasn’t really a business, it was like on my side, I’m going to start writing a book because I need something to bring me joy in my life and right now, WeddingLovely is not it.
Rob: This was 2016 or this was 2012?
Tracy: It’s been so long that some of these dates get mixed up, but after Julia left, I just started ignoring the business for a little bit, not really working on it. I don’t remember what I was doing, I spent a lot of time just in a depressed state.
Rob: How did that manifest itself with you? Were you just sitting at your computer, responding to email, and not actually working, but feeling like you were trying to work? Or were you just avoiding work altogether?
Tracy: I did the bare minimum to feel like, “Oh, I’m still running WeddingLovely.” I was still responding to support emails. I was still running the blog. That was a big part of WeddingLovely is that there was a weddings blog. A lot of WeddingLovely’s income came through that because we had affiliate revenue. I was so dedicated to at least doing a daily post everyday because one of my things I did well with WeddingLovely was by having this big group of businesses that WeddingLovely is representing and I tied them into our blogs. We got free content from them by sharing what the businesses were doing. It would be like photo post from our photographers, real wedding posts from our planners, or looking at invitation designs from our designers.
This allowed me to work with the companies that were on WeddingLovely and give them something of value and also encourage them to move to paid accounts by running this weddings blog. That was probably the largest piece of involvement I had was I continued to run this blog, grabbing the content from these people. I had a contractor I was working with so I didn’t actually have to move things to WordPress. I just took what the email said to her, she put onto WordPress for me, and then I came back in and set up on social media, set up the scheduled posts and stuff.
I ran all of that and it was like, “Oh, I’m still running a business.” I still told myself I was running a business, but I wasn’t looking at the numbers. I wasn’t looking at how many businesses were joining over time, was that number going up or down? What was my traffic like? It was complicated because I had 11 different properties I was running so looking at traffic for all 11 properties was terrible. That’s why I never looked at my analytics and I didn’t pay attention to any of the data that’s going on. I just ran the blog and accepted the money that came in that went straight to my bank account.
Rob: Ran it almost as a side business or like a true lifestyle business, that definition of it, it literally just is a salary and you weren’t more ambitious with it, it sounds like. At that point, you have a blog post from 2016 and I’ll quote yourself back to you, but you say, “The planning and marketplace sides of WeddingLovely would probably grow faster with dedicated marketing and sales work, but will grow naturally, slowly, but surely on their own. 2016 is already shaping up to be the biggest year yet even though I haven’t had much time to work on WeddingLovely. I’m not going to shut WeddingLovely down even though I’m looking for a full-time job since it does largely run and grow by itself. Ideally, I’ll be able to keep feature growth as well by eventually hiring a remote developer, that’s my baby WeddingLovely.” How does it feel to hear that?
Tracy: Oh, my God. I haven’t read those in a long time. I really should reread them because I have almost no memory of that. It’s so funny. Who is that person? WeddingLovely had this little peak. The marketplace was growing, like I said. It was growing and that was great because I didn’t have to worry about it.
Then the affiliate sales on the other side was growing pretty steadily. It’s one of those things I knew that would go away, but Google’s magic SEO turned in our favor and one of our blog posts got to the top of the results for a very big listing, and therefore there’s tons of money was coming in through affiliate revenue. At that time, I was like, “Oh, wow, I’m doing this lifestyle business right. Our income has doubled overnight. I can use this income.”
Around this time is when I decided to hire someone full-time to run everything for me, like a marketing person, but she also helped do emails. Ideally, it was supposed to be like she was going to help do vision and run the company and that ended up not happening which is fine. But I hired someone in Florida. I had a contractor, the same person doing WordPress, but she grew into more social media stuff in Washington, I also hired a full-time virtual assistant in the Philippines and she did all the nitty-gritty stuff. I was able to train her to help out with the social media stuff and do all the support emails and release me from doing a lot of those day-to-day things. So then I was only doing salary, taxes, bookkeeping, that kind of stuff.
That was like going back into, “Hey, I’m doing this right.” I’m doing it like a different way than when I was doing the whole Etsy stuff, but I was like, “Cool, I’m doing this lifestyle business the right way. I have people employed, the business is growing, I can start paying myself again at some point.” At that time I started paying myself, a $1000 a month was just peanuts, but it was cool to be able to employ all these people and pay myself.
Rob: Was that the right call?
Tracy: It was fun. I don’t know if it’s the right call. It’s so hard looking back on that, because…
Rob: You don’t know what’s going to happen, right?
Tracy: Yeah, but in terms of what I’ve learned in that time of having employees and running a remote business, I brought me so much joy, honestly, to have these employees and be able to, especially, Jenny, my marketing person, I reveled in being a good boss. I did everything correctly. She was engaged, she was working on things, I was hands-off, I directed her, I was able to pay for online classes to help improve what she was working on, and hopefully, now I hope she takes it to her current jobs. It was really fun.
I loved being like, “Okay, cool, I’m working on this book business that’s bringing enough money to run myself,” so I’m happy taking majority of the income of WeddingLovely and putting it towards these other people and giving them an okay lifestyle. They seem to be pretty happy. It was fun.
Rob: What happened between then and 2018? Because in October 2018, you wound up shutting it down.
Tracy: This whole time, for the last five or so years, it could be like, “I’d like to sell this business someday.” I’m just waiting for the right moment and that ended up not ever panning out and 2018 is when that Google magicalness just reversed itself. I knew that was going to happen. Google giveth, Google taketh away. One day you’re the number one on search results and then one day you’re not. I rescued this post a few times already by switching things around and returning the SEO juice back to where it was and this time, I wasn’t able to do it.
I knew that to fix the post or fix the affiliate income that was coming in, I would have to spend a lot of time on it, write a new post, or do something because instead of our income increasing by half overnight, it drops by two-thirds overnight and I was like the big panic moment. It was that moment where I was like, “Finally, I have to make a decision about this, because now it’s just not easy money anymore.”
Rob: It forced your hand. Was the majority of the income of the business coming from this one post?
Tracy: I leaned into it and that might be a regret. Because it started happening and I was like, “This is going really well. I’m going to start more posts. I’m going to do more things for affiliate revenue,” and that helped buffer everything and maybe worried less about the income that was coming on the business side, worried less about income that’s coming from other sources. When it dropped, I was not bad, I was just like, “Oh, look, it happened.” I was expecting this to happen someday.
If I wanted to continue working on WeddingLovely, at that point I could be like, “Okay, cool. Let’s switch our focus really quickly back over the business side,” because our metrics on the business was not great. The people we had almost 9000 businesses and maybe 100 paying customers—this is embarrassing to say—but I wasn’t really worried about it because I had those income coming from those sources and I wasn’t really looking for 10% month-over-month growth, I was just looking for just enough to keep things running and so when it drops, it’s like, “Okay, I can go back and spend time and work on the other side of this business or I can finally face the music and be like this is the time that it needs to go away.”
Rob: This is something that I hear people talk about and I don’t think that they totally understand how hard it is to “autopilot” a website, or a software company, or a start-up. I’ve heard people talk about a SaaS app should just be built to be profitable just like a dry cleaner or a car wash. The thing is, is (a) most dry cleaners and car washes don’t last 10, 20, 30 years, they do go out of business, and (b) it’s way more volatile with these types of businesses because as you said, Google can change overnight, another competitor can spring up.
Just the online marketing stuff changes so fast that truly having a business that is profitable and lasts for 10 years online without quite a bit of concerted effort every 12–18 months to just fight the fires, I’ve done it. I’ve owned at least 15 different software products and another probably 10–15 different websites that made money from every conceivable thing, from ecommerce to content, to Adwords, to selling software one time, to selling multiple software or subscription software, to info products. I’ve done them all and in the end, putting something on autopilot is so, so hard to actually last anything more than one, two, or three years.
That is why the multiples on a lot of these companies are so low. You’ll see a content site sell for two years of its net profit, it’s like, “That’s preposterous, that’s just crazy, that’s such a deal,” but then you get into it and you realize, “Oh, Google smacks it around every six months,” and you experience that in full force. It sounds like if you had been focused on WeddingLovely, you probably would have diversified the revenue streams, you would have had used the SEO because getting money from SEO is great from affiliate stuff. It’s a great way to do it, but to rely on it as a core focus and to build most of the company on it, it obviously isn’t going to last forever.
Tracy: Yeah, and ike I said, I was not mad when I went away. I knew that day was going to happen. It happened earlier than I thought it would. It’s funny listening to this time because I just like, “Ah, that was a lot of effort.” It was never like you said, it never was completely hands-off. My brain power, even when I hire people, I was playing so much brain power on it. After I shut it down, it was this whole process of laying off people I hired and shutting it down. After I shut down, any hackers article that I wrote at the peak which was great at the time, but now it’s like, “Oh, no,” because it’s talking about how amazing things are, like that blog post, it talked about how amazing things are and people are like, “Why don’t you just keep running it? Why don’t you just keep it off the background? Why don’t you put it back to its autopilot?”
I get this email pretty often and it’s because the brain power required just to even have something there and knowing it’s there, getting even a few emails every day or every week about it, having the deal when something changes in your server and you have to upgrade the server because everything broke or something like that, it takes a lot of time. It’s really hard to focus on doing something else appropriately when you’re split focus like that.
Rob: Yeah, focus. It’s such a huge thing and it’s undervalued in our space. In a blog post that you published in, I believe it was October 2018, about shutting it down, you look back and you talk about your decision to put it on autopilot and you said, “My passion has largely moved elsewhere to Hello Web Books, it’s been my focus for the last couple of years, but WeddingLovely largely ran itself and is making a good amount of revenue through affiliate and subscription accounts so I hired a team to keep it running a few years ago and stayed on as an advisor. It was the lazy way out. The business wasn’t evolving significantly, no new features were being launched, but the businesses and engaged couples that used our services seemed happy. I was able to employ a few folks who seemed happy as well so why not continue with it?”
It sounds like you still feel that putting it on autopilot probably wasn’t the best idea, but it was working for people. People were using it, you were employing people, and it was just the decision you made at the time.
Tracy: Yeah. The theme of this episode is always hindsight is 20/20, now that I’m working at TinySeed or just having a job. At the time, I was so hesitant to shut things down because I knew that I’d have to go in the process of actually finding something else. The book stuff wasn’t supporting me full-time and I had this decision whether I wanted to launch a new book, turn my book thing into a publishing platform, go all in on this other project that I was working on, or find an actual job. I was so scared of finding a job after working largely for myself for the last 10 years. The only other two places I’ve been employed were terrible, terrible experiences. I was dedicated working for myself because I thought that I could not have a boss.
Now that I have a job that I really enjoy, it could’ve been four years ago when I just run this business and I had employed people and it wasn’t really something I was interested in, but I was working on these other things. What if I made a decision four years ago to shut it down? Where would I be now? I don’t know what the answer is. I’m really happy again with the path that I had taken, but it is interesting to look back on that with the knowledge I have now and looking at my previous decisions and being like, “Oh, interesting.” It’s funny having those blog posts because I could see my thought process back then for better or for worse.
Rob: That’s the hard part. You said you had two jobs, you didn’t like them and therefore in your head jobs are bad. You’ll hear the same thing. You’ll hear people talk about venture capital, “Oh, I read two TechCrunch articles of a founder getting screwed by his VC, therefore venture capital is bad.” Or you’ll hear “Oh, a business built their revenue on organic search SEO and then Google smacked them around and now they went out of business.” It’s a common story. “I’ve had entire products just go under because of Google. Therefore, I’m never going to do organic search.” But no, these conclusions are too broad and they can shift, they frame your mindset in a way that you don’t even realize.
Often times, if you found the right job, then it would be good. If you find the right money under the right terms, it would be good. If you use Google for the right purposes, which is to get you enough money so that you can hire people to have other revenue streams so you’re diversified, then it’s a good thing. But it’s thinking about it in that way.
We’re all guilty of this and it’s not something that’s easy to do, but I think about some roles that I’ve hired for where I remember thinking there’s no way I can find someone to do this. We just can’t hire for this role, so I’m going to have to do it. Even program manager of TinySeed, it’s like, “This is my accelerator. Einar and I started this. Who can possibly run it in a way that it will work?”
I remember I kept telling myself, “But if we find the right person, then it’ll work.” That was what I had to tell myself to take that risk and of course, we found you and you’re the right person. It makes sense and I’m so glad that you have taken over so much of the role that I would be just bogged down with day-to-day and not able to do the other things that I need to do.
Tracy: Yeah. It’s funny about momentum, or maybe not momentum, but it’s just feeling I come on a certain path and it’s so hard to change that path. It’s so hard to consider the other paths that are available when you’re currently in a rut. I was in that rut for a really long time and it’s really hard for me to see over the edges of that rut to see what else was out there or to conceive of the work that would be required to jump out of the path I was on.
I just kept pushing it year over year over year and telling myself, “Okay, it’s great that I’m only making $30,000 or $40,000 a year because of this place that I’m working for myself. I got to travel a lot. I’ve got to work abroad for a long time. I got to do a lot of really great things. It allowed me to launch this book thing which also led to a whole other interesting set of experiences and learnings. But a lot of it is just I got into this rut and it was so hard to move myself out of it.
Now that I’m out of it, it’s interesting to look back on this experience. I’m glad I had that experience. I learned so much from it, I’ve done so much with it, but I wish that I shut down sooner. I wish I looked at the metrics. I wish I looked at how things were going. I wish that I considered that there are other things out there that could fulfill me the same way it would. I know that I’ll take those learnings to whatever I’m doing in the future. It’s all a really great learning experience. I learned so much from it. I wish I did some things differently, but I’m glad that I did it.
Rob: Final question as we wrap up. WeddingLovely could have worked. As an idea, it provided value and it could have provided you with a full-time income and employed people. Why didn’t it work?
Tracy: Wedding industry. I could talk for ages about this; I’ll try to keep it short. I actually don’t like the wedding industry myself, which is funny running a startup on the wedding industry, but I jumped into the wedding industry because I wanted to switch how it was done. I didn’t really like this focus on consumerism in the weddings and I wanted to have a place where instead of worrying about building this event where you have a to-do list of 500 to-dos long, what if you had a website that was more like a friend helping through the process, telling you the big things you have done like getting a photographer, why should you get a photographer, and what’s going on. I thought that was a good idea. I want to lead into this even better ideas.
In the wedding industry, I wish there was a place with an all-in-one booking platform like Airbnb. How great would it be if you’re getting married and you had this one platform to find people, read reviews, talk with them, do some messaging, and then do the payments and have everything under one area rather than juggling all these different vendors? That’s one of the reasons why weddings are really crazy. There’s such an opportunity here for that, but because it’s such an insanely high churn business where if you’re going to work with people who are getting married and these people are going to leave the platform in a year, you have to find a whole new set of customers that kills anyone jumping into this industry.
I did the best I could by working on the business side of things, but combining the fact that the wedding industry is really hard, it’s really hard to have repeat customers, it’s really hard to build a sustainable business on it, and then the fact that I am not interested in going to wedding fairs. I eloped in Vegas. I was not even going to touch a full wedding myself. It’s not something I’m really passionate about. I’m passionate about changing it and I always able to use that passion in that way. But a lot of that also went into why it was not good for me to run WeddingLovely as long as I did and also why WeddingLovely itself didn’t work.
Rob: Tough business, tough industry, and a little lack of product founder fit, it sounds like.
Tracy: Exactly. Again, fun process. I taught myself how to program. By building WeddingLovely, my design skills improved. I learned how to do all is crazy back-end stuff, build this crazy marketplace. I learned marketing and sales to an extent. It was a huge learning process and it was fun working in the industry. I made many amazing connections.
Would I ever do a wedding startup again? No. I liked advising wedding startups and telling them all the terrible stories I have. I won’t ever tell someone to change, but I try to tell all the problems that happens in the wedding industry when you’re building an app and why it’s not as easy as you might think. A lot of people I find think it’s easy, but I tried to be the person who is very clear about the problems I’ve had so other people can learn from it.
Rob: Thanks so much for coming on the show, Tracy. If folks want to keep up with you online, where would they do that?
Tracy: Personal website is tracyosborn.com. I’m also on Twitter as @tracymakes, Instagram, and other social media.
Rob: Sounds great. Thanks again.
Tracy: Thank you.
Rob: I want to thank Tracy again for coming on the show. I like her story because it’s not very often that someone runs a startup for nine years, puts it on autopilot, hires a team to run it, and just has these ups and downs. The experience she did and her willingness to relive that with me today is much appreciated.
That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob does a throwback episode. Almost 9 years to the day Rob and Mike published episode 14 about overcoming fear and taking risks which is a message that is still applicable today.
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. On this show, we talk about building startups in an organic, sustainable fashion, in a way that focuses more on your personal life and your lifestyle rather than focusing on building a billion dollar business.
We like to value freedom, purpose, and relationships on the show. You’ll notice that, while my co-host, Mike Taber, is on hiatus, I’ve been experimenting and dabbling in a few different show formats. If you’ve enjoyed the change-up and the focus on improving the podcast quality, including the recent interviews with Laura Roeder and Jeff Epstein, the Q&A sessions I’ve had with Tracy Osborn, Jordan Gal, as well as the hot seat with Matt Wensing, let me know. Reach out email@example.com or you can tweet it out. I appreciate any feedback you can provide. Of course, if you’re able to give a five-star rating in any of the podcast apps you use, it’s much appreciated.
Today on the show, I’m doing a different intro because I’m trying something I don’t know we’ve ever done before. It’s to do a throwback episode. What I did is I went back through the archive and I picked out one of the all-time most popular episodes of this podcast. It’s episode 14. It was published July 13th, 2010. It’s almost to the day. It was nine years ago. What’s also interesting is that when this episode went live, my second son was five days old. That’s just an interesting coincidence.
Now and again, I go back and listen to old shows. Typically, I don’t go back prior to where they are […] just because it’s so hard to do, but this episode sparked a lot of conversation when it happened and it’s one of those where the content itself holds up pretty well even nine years later.
Some funny things I’ve noticed relistening to this episode is we just sound so young and so naive. It’s so impressionable. The intro’s slightly different. I’m going to play the whole episode. There’s a Q&A section at the end. We did a whole episode of content and then two questions that I find are not that interesting, so I’m going to cut those out, but the intro and the outro is slightly different, which I think is funny.
The audio quality is not great, but for a 14th episode, for it being 2010, and for use just figuring this out, it’s not so bad, but it’s definitely a lot fuzzier than it is today. As well as the editing. You can hear the editing is really choppy because we didn’t really know what we were doing back then. Now we have a professional editor. And it’s hilarious. My book launch. I talk about my book about to come out. I think I threw out a URL, but this is pre-Start Small Stay Small.
Again, I wouldn’t go back to an episode if I didn’t really think the content is still so applicable. This is one of those evergreen timeless episodes that I listen to and still get something out of, and I think that you will, too, because this is about overcoming fear in your own head, whether it’s to launch that first blog post, launch that first podcast episode, launch an app, take a risk, and it just always applies. I find that the conversation is as applicable today as it was then. Even the examples we used are still strong even here in 2019. So, I hope you enjoy revisiting this topic, especially if you weren’t a listener back nine years ago.
This is Startups for the Rest of Us episode 14. Welcome to Startups for the Rest of Us, a podcast that helps developers be awesome at launching software products, whether you built your first product or just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experience to help you avoid the same mistakes we’ve made. What’s new this week, Mike?
Mike: I am having tons of fun getting a development box set up for a website. For those of you who don’t know, Rob and I run the Micropreneur Academy. It’s more or less to help developers learn how to do sales and marketing for their products. We’ve got tons and tons of content out there, but the problem that we have whenever we’re doing changes to the site, because it’s all built in WordPress, it’s very difficult.
One of the problems we have is being able to do development work on that box without bringing it down or crashing it because we’re making some changes and trying to see if they work. What I’ve been doing lately is we’re using a product called JumpBox to essentially bring up a development server very quickly so that I could dump all the content onto that JumpBox.
Essentially, what it is is if you go to jumpbox.com, they’ve got a couple of different pricing plans, but the one that I’m using is basically a LAMP stack. It allows you to download a virtual machine and it’s pre-configured with an OS and everything you need to just run a LAMP stack. All you do is you fire it up, it grabs an IP address, you specify a password for it, you can just log in, and you’re up and running in literally three minutes after you’ve downloaded this JumpBox. It’s really, really cool.
Rob: That’s awesome. How much time did you spend getting that going?
Mike: It probably took me more time to download it than anything else. The download really wasn’t very large. It was like 100–150 megs, something like that for the JumpBox itself that I downloaded. Like I said, they’ve got a couple of different pricing plans. The first one’s free, but then they’ve got a pro version and a business version. You can get a 15-day trial for free. It’s pretty cool.
Rob: It’s nice to have a dev environment. I know that’s something we’ve talked about for a long time. Good. Anything else?
Mike: No. That’s about it. What about you?
Rob: The hell I have been doing. Good grief.
Mike: Nothing. You slacker.
Rob: Yeah. I’ve been amazed at how much extra time this book has taken. The book’s done, the final proof arrived, I ordered copies, go to the printer, that whole thing. But like starting a company, you think that writing the actual code is going to be the bulk of that work? That’s 50%–60% tops.
The same thing with the book. I thought that putting together all the material and writing everything would be the bulk, but I had such a number of tasks to take care of, like building the website, getting the emails out to the list, and a number of other things. Getting an ISBN number and working with formatting. Of course, I’m not a designer, so it takes me a long time to do that stuff. It’s not as easy to outsource as, say, HTML work, or maybe it is. I just don’t have the right contacts. I’m out of my element with it. I chewed up a lot of time over the past week.
I actually made, what I consider in retrospect, an error in judgment. I basically had a four hour estimate to create the sales website, which is just a one-page thing—click here to buy the PDF, click here to buy the paperback. By the time I integrated with two payment processors, it took me 16 hours, which was just painful, and the integration is not an integration. It’s just a click an Amazon button and click a Google Pay button. That’s not even some fancy form that does it all. I was amazed at how long it took, so disappointed with it.
I wasn’t going to outsource it just because I literally thought it would take me two, I had estimated four just to be on the high side, and by the time I got everything the way I wanted, it was way high. In retrospect, definitely should have outsourced that.
Mike: I can think of two other mistakes off the top of my head that you have made. The first is, I don’t think we actually talked about the fact that you were writing a book on this podcast.
Rob: No, we did on episode 11.
Mike: Did we? All right.
Rob: Yeah. I edited it today.
Mike: My bad. All right. We’ll score that a point for you today, then. The other one, though, is that if you just asked me, my wife used to do print layout for a magazine.
Rob: That’s right. You’ve told me that like 10 times. How did I not do that. Yeah, it’s not going to look nearly as good if she give it 30 seconds of look, I’m sure. Well, that’s been my week. If you’re interested in the book, if you’re listening to this, startupbook.net. It will definitely be out and available in PDF and paperback format by the time this podcast goes live.
The other thing I wanted to mention this week is, I was talking to someone about a week ago and they listened to the podcast. I was like, “Yeah, you can stay up and tune in to what Mike and I do in our blogs.” He’s like, “Oh, you guys blog?” and I was like, “That’s it. We were doing this podcast for two months and we’ve been blogging for five years each.” I was like, “Oh, I thought the blog was our deal.”
Anyway, I realized we never mentioned our blog URLs, or maybe in passing we have, but if people are interested in hearing more about this type of micropreneur stuff, my blog is softwarebyrob.com and Mike’s blog is singlefounder.com. This is where we actually write original articles and new posts on starting a software company, launching products, being a micropreneur and such.
Mike: What are we discussing today? I think we actually had a listener comment from somebody on the startupsfortherestofus.com website, right?
Rob: That’s right. At startupsfortherestofus.com, that’s where you can download and listen to all of these episodes. In episode one, a guy named Scott Herbert made a text comment at the bottom and he said, “First, thanks for a podcast that doesn’t think I have $10 million of VC funding and want to tell me how to spend it. Secondly, I’d love to hear a cast on fear. Someone has offered to review my application for their blog—I’m scared by this—I said yes, of course, but does it get any easier?” That’s what we are going to be talking about today.
Mike: Cool. The short answer to that is you did the right thing and yes, it does get easier. The key to making it easier faster is to do it more often. We’ll obviously talk about that a little bit more. I think when it comes to fear, there are a couple of different options that you have and I boiled it down to four basic options.
When you’re faced with fear, these are your choices. You can either cave, which basically you give up. You can struggle with it and challenge it head on. Number three is you can accept it and do nothing about it, but you’ve accept it. You’re fearful of that and there’s just nothing you can do. The fourth one is you can try and work around the fear, try to avoid it. If you’re afraid of heights, you just never go into tall buildings or something like that. Some of those wok better than others, but obviously challenging your fear head on is going to help you get over those fears a lot quicker.
Rob, why don’t you talk a little bit about what sort of things people are typically afraid of? I think this pertains specifically to business. We could talk about arachnophobia and fear of all sorts of weird other things like short people, but I think this question relates more specifically to building your own business.
Rob: The things that I most commonly see software developers and people starting startups dealing with are thoughts like what if nobody likes my software? What if nobody buys my software? What if I fail and I invest all this time and it’s just wasted time? What if I can’t get any traffic to my site? What if I don’t get this right the first time? And what would other people think of me? Even if this does or doesn’t work out, what will people think of me while this is going on?
I think that’s a big part of fear is dealing with how other people view you. It almost takes me back to junior high in high school. I think it takes all of us back. Someone’s going to laugh at us or make fun of us or point something out publicly that is just going to really embarrass us. Those are the most common fears. I think everything stems from the fear of failure and the fear of other people seeing you fail.
Mike: I think that’s the biggest thing is people seem to think that whatever they do or say, people think of that as a reflection of themselves, especially when they’re writing software and they want to put it out there. I see people pushing off their software releases because they’re afraid of what people are going to think of their software. They always say, “I want to get it right. I want it to be perfect.” You know what? It’s not going to be perfect. You have to get over that.
Honestly, some people probably have a fear of launching a product. “What do I do when those support calls come in? What do I do when a customer’s irritated that this bug crashed and they lost all this data?” You know what? Those things can happen. Nobody’s perfect. That stuff is going to happen sooner or later and the only thing you can do is deal with it head on, accept that you made a mistake and move on.
If you sit there and try and live in the past or in the future, you’re not going to get anywhere. You can’t sit there and just worry all the time about, “What happens if this?” You know what? Why are you thinking about that now? Why don’t you continue living your life, moving on, doing your development, get past your launch? Then if that happens, then you worry about it.
I think maybe there’s a difference between doing that versus if you have critical bugs in your software that you know is going to cause somebody’s machine to crash and burn, yeah, you have to fix those before launch, but you can’t just let the fear of having bugs in your code or the fear of people running into problems with your code take that as a reflection upon you because it’s not a reflection on you.
Everybody is human, everybody makes mistakes, and when you create bugs in your software, those are mistakes and they’ve got to be fixed. Getting over those fears is just a matter of accepting that that’s going to happen and you can fix those bugs, you can move on, and version 2.0 is going to be better than version 1.0.
Rob: The two things that I think about when encountering fear like this is that the first time you do anything, you’re going to be scared. The first time you publish a single blog post, you’re going to be scared. The first time I did it, the first time I published an essay, a bunch of people read it, and people started ragging on it, I had anxiety about this. This is just natural. The first time you record a podcast, you’re going to have anxiety. The first time you speak at a user group, the first time you speak at a conference, anytime you do something publicly, you’re going to have some type of fear.
There’s some natural inclination in all of us that we feel like we’re going to be judged by everyone, and whether it’s realistic or not, knowing that the first time you do something, you are going to feel this anxiety and this fear, is really helpful because then you can identify very quickly and say, “Oh, this is that feeling again. It’s that same old thing that comes very naturally. I shouldn’t be scared of it and I shouldn’t let it talk me out of doing this thing.”
I’ve actually started following that fear, just a little bit like Seth Godin with a linchpin where he kept saying, “The lizard brain has its negative talk. If go towards the lizard brain, when the lizard brain talks to you and says, ‘Don’t do this thing,’ you typically stretching yourself and you’re actually doing something good. You’re actually moving in a direction that will grow who you are.”
The second thing is that as software developers, most of us have this natural anxiety of wanting to be perfectionists. I was talking to a developer today and he said, “I want my software to be perfect. I know it’s not going to be, but what if I launch it and there’s a bunch of bugs in it?”
There are two different types of people. There are the people who don’t care enough and those people don’t tend to be really good software developers they don’t tend to want to launch a software product. The ones who are doing this tend to be more of the perfectionists, tend to be more of the people who are stressing out about it, and that’s us. We have this anxiety that actually provides productivity.
If you’ve ever heard about Yerkes-Dodson curve, it’s a psychology theory that anxiety helps you—to a point—be productive. If you’re not anxious at all about a deadline, it’s very likely you’re going to miss that deadline and that you’re not going to be productive. Anxiety which translates into fear is actually a good thing to a certain extent and it actually will make you perform better and do more work quicker, to be more productive.
Mike: I know what you’re saying about being able to have a healthy dose of anxiety because I remember back in college, I used to feed off of deadlines. It was my job, it kind of just was. The fact is, if I had a deadline for a paper coming up or a project or something like that, as that deadline got closer and closer, I would just use it to energize myself and really focus in on what it was that I had to do and what I had to get done. Somehow it just helps me to meet a lot of the deadlines.
Don’t get me wrong. There was a certain amount of procrastination in there, but I’ve also seen studies where if you take three groups of people and you give one a deadline at the end of the quarter or semester, then you give another group of people regular deadlines throughout that time period, and then you tell the third group of people they can create any deadlines they want, people will tend to procrastinate until the end. I would just feed off that natural energy for those deadlines.
For me, the anxiety helped a little bit, but you also have to be a little bit realistic about in keeping in your head, “Am I actually going to meet this deadline or is it just a completely lost cause?”
Rob: That’s the thing with fear. I’m kind of equating fear with anxiety because when you say fear, you think a lion is attacking us. An anxiety is more of a realistic explanation or a realistic description of what we really feel when you’re going to go up and speak in front of people or we’re going to release a software product and maybe have someone say something bad about it or something. I think anxiety might be a better word for it.
There was a study—I wish I could quote it—done at UC Berkeley. It compared the anxiety levels, the stress levels of cops who were working in East Oakland versus students during finals week. The anxiety levels were actually higher in the students during finals week. What that shows is that anxiety, a lot of it if not all of it, is in your head. Some of it can be a chemical as well, it can be prone to be an anxious person, but a lot of it is in your head.
Ever since then, I have really learned to focus in on my anxiety and realize when it’s coming, identify it, then do something more productive with it, and allow it to motivate me rather than cause me to cave.
Mike: You bring up an interesting point about the difference in fear and anxiety, though. Personally, I have my own fears and my fears tend to be more long-term things that I’m afraid of happening. There are certain anxieties that I’ll go through. I’m a pretty good public speaker, but I think everybody gets at least a little bit nervous when they’re about to go up and do some big presentation.
In terms of fears and stuff, one of my own fears is, as the sole breadwinner of my family—my wife stays home with the kids so that I can go out and work—what if my income stream comes crashing to a halt and I’m not able to support my family? What if I’m on the road and something happens to me? Will my family be taken care of? How will that happen? How are they going to deal with that?
Honestly, I generally don’t worry about myself in terms of my health, but it doesn’t mean that I didn’t go out and buy a life insurance policy just to make sure that that sort of thing is taken cared of.
In terms of my income streams, I know that if it came down to it, I would do whatever needed to be done in order to make ends meet. If I had to go to Barnes & Noble and get a job stacking books or something like that, so be it. I’ll do what it takes to take care of my family. That’s one of the long-term fears that I have. I don’t really get anxious about those. I think about them, but I also think about how to deal with them and how to alleviate those things as concerns.
What about you?
Rob: The long-term fear that I have is the same thing. Being that we’re both self-employed, it’s a reality that our income could be majorly impacted very quickly. In fact, these last few months I talked about it, due to the recession there are several different income streams that I have that have substantially decreased 50% or more. I’ve been staring at it in the face, realizing if it continues like this, there’s going to be some issues down the line over the next few months. So, this is all happening. I’m about to have my second child. So, absolutely, any entrepreneur, the fear of just making ends meet and continuing to have a solvent business is a valid fear. It is for me as well.
Mike: That’s one of the things I’ve heard from people as well and I get to ask that question, “Aren’t you afraid of going out of business or this or that?” The way I see it, being self-employed actually gives me a certain amount of control over it because I am in control of my own destiny. I get to make the decisions that ultimately affect how I do in life. If I were working for some corporate employer someplace, they could decide to let everybody go on any given day and there’s literally nothing you can do about it.
You think about it in terms of job security, most people think of it that way, but you can also think of it in terms of financial security. You go to work for somebody, you’re complete at their mercy in terms of your income. Sure, they let you go and then you can go find another job, but right now, it’s hard to find jobs for most people. There’s tons of people out of work and the unemployment rate is really high.
I look at that and say, “Well, you know what? I could either work for somebody else where I’m completely at their mercy or I can work for myself where I’m at the mercy of my own bad decisions, so to speak.” Honestly, to make the choice between those two, I’d rather work for myself any day of the week. Now, granted that you have to be making money in order to be able to do that sort of thing, but it’s certainly an interesting way to look at it.
Rob: You make a good point there. No matter which avenue you choose, whether you work for an employer or start your own company, you’re going to have fear about something. You should have some fear that maybe you’ll get laid off, maybe the company will go out of business. You should have fear if you’re an entrepreneur that maybe you won’t make ends meet.
It’s not like you can escape it by choosing one route over the other. People can talk themselves into not having fear if they work for an employer. I think you’re kidding yourself by saying, “Oh, I’m not going to get laid off. This company’s never going out of business,” those kinds of things. There are fears in really any choice that you make. There’s no way to escape the realities of what might happen.
Mike: Right. One of the quotes that I keep, and it’s actually related to fear, this quote I keep actually on a Post-It note right next to my monitor and it reads, “It is possible to commit no mistakes and still lose.” It was actually in a Star Trek: The Next Generation episode from Patrick Stewart. It was in reference to Data was playing this game against somebody else and he ended up losing to this other person. He couldn’t figure it out how it was that he lost. That’s what Captain Picard told him. It’s like, “It’s possible to commit no mistakes and still lose.”
That true in life as well. You can do all the right things and still come out at the end of the pack. There are times when there’s absolutely nothing you can do and you’re going to lose. That’s just a fact.
I don’t want people to think that you’re going to lose every time, but there’s always a chance that you could lose and there’s always a chance that you could fail at whatever it is that you’re doing. But if you’re in control, you’re making those decisions.
Most people generally think they’re smart people. They’re going to make reasonably decent decisions and you have to keep that in mind when you’re going through those motions. You’re going to make the right decision with the information that you have at the time. If at the end of the day, you came out at the end of the pack, you have to accept that, move on, and say, “Okay, well that was a learning experience.” Take that forward and go on with the next task. You can’t let those things bother you.
I know people who let things bother them for years. I can think of one person in particular who let things bother him for years and years and years. And you know what? He’s never going to make it past it. It hasn’t happened yet. You can either let it get in your way of life or you can put it behind you and keep going.
Rob: The other thing I like about that quote is that it’s a good reminder that you have to take risks in order to do something worthwhile. You have to take risks in order to start a company or even to have a child or buy a house. Any of these things that I personally hold dear and that other people may as well. You can’t just stay in your safe zone all the time.
That’s what I really take away from that quote is you can make no mistakes and never do anything and still fail. If you decide, “Oh, I’ll never going to get married because I might get hurt, never going to have a child because it’s too hard, never going to buy a house because I don’t want to take on the risk, and never going to start a company.” In my life and my goals, I would consider myself that I would not have succeeded if I hadn’t done these things.
What I take away from that quote is that taking risks is a necessity if you are an ambitious person and if you have goals. You’re going to have to risk something to achieve those goals. And if you sit back and don’t do it, that I would consider that failure, not taking the risks.
Mike: And taking the risks doesn’t mean you’re guaranteed failure or success. It just means that you’re taking those risks. You’re gambling either way, but honestly, it’s not like the odds are in Vegas. I mean, your odds are a lot better when you’re putting that faith in yourself and your own decision-making powers as opposed to the dice or the roulette table in Vegas. It’s a completely different type of gambling, I’ll say. Calculated risk is what I’ll call it.
With that, why don’t we talk about six steps to dealing with that fear or anxiety?
Rob: Step number one is to take small steps. If you try to leap out too far, if you try to start a huge company or try to start two companies at once, it can be just too much and it can overwhelm you pretty easily. If you’re the type of person that fear tends to hold you back, take a small step.
Maybe instead of putting up a bunch of money or putting in a bunch of time in order to start a company, try to either start a smaller version of that or just do a little baby step of it, try to get that minimum viable product out, do some traffic testing, and see what’s going to happen. It’s a much smaller step but it can still help move you in the direction of, say, starting a company.
Mike: The other thing you can do is if you’re trying to get into, for example, product marketing. You don’t necessarily have a product yet. You can sign up for any number of affiliate programs. amazon.com’s got one where you can become an affiliate to sell their books and by referring traffic back to them, if those people buy things from Amazon, you get credits for those.
That’s a very small thing and I’ll be perfectly honest to say that I don’t think that you’re going to make a lot of money from it, but you will probably learn quite a bit from it. You can use that to help yourself as a baby step to become a better marketer, for example.
Step number two is to get some concrete motivation in the right direction. What this really means is that if you’re trying to do something, find somebody else who’s done that and pick their brain. Get some help from them. Ask them how they did it. Ask them how they dealt with their fear or their anxiety about it.
For example, public speaking, you can go talk to somebody who does public speaking for a living or join Toastmasters or something along those lines. You really need to find somebody else who can talk to you about it or you can talk to them about it, ask them questions, really get down to the bottom of what it is that you’re afraid of, and have them help motivate you in the right direction.
Rob: Step three is to look at failure and rejection in a new light. What we mean by that is instead of taking failure and rejection as a negative thing, realize that it does tend to be a valuable learning experience.
Mike and I already talked in a previous episode about whether failure is a learning experience or not, or you should only have successes, the whole discussion of that. Both of us believe pretty firmly that you will learn from your failures and that rejections will ultimately teach you to overcome these hurdles that you’re facing. I know that every time I faced rejection, it’s impacted me, but the more that I faced, the less each of them impact me.
Becoming aware of that, failure and rejection, are going to be inevitable as you do anything that has risk in it, but becoming aware of that is a big part of it because once it comes, you’re much less surprised by it.
Mike: And there’s obviously different levels of that failure and rejection. Rob and I have also talked about when we first started getting into AdWords and we blew an excess of $1000 apiece in the first month of doing our AdWords campaigns. Don’t get me wrong, $1000 is not pocket money or anything to be blowing out on AdWords, but I’ve made some much, much greater financial mistakes on that in the past. You just take them with a grain of salt and say, “Look. You know what? I understand what happened and it’s not something I would repeat,” but you learn from those things.
Number four is to not get too caught up in the past or in the future. You really need to keep your mind working in the here and now. What I mean by that is, if you’ve made mistakes in the past, don’t dwell on them because it’s certainly not going to help you. It’s just going to drag you down, it’s going to drag your morale down, and you’re going to be constantly thinking about them.
What that will do as a byproduct is basically distract you from the things that you have going on today. While you’re doing that, your basically dividing your mind with half of it saying, “Oh, my God. I can’t believe that thing that I did last Thursday or three years ago and it still haunts me to this day.” Everybody makes mistakes and how you deal with them is just as important as the things that you take from them.
Similarly, you can’t worry too much about what’s going on in the future. I’ll go back to the one I mentioned before. I travel a fair amount for my job. What happens if I’m on a flight and the plane goes down? Now, granted the chances of that happening is pretty slim to none, but it could happen. What do I do? I went out and I got a hefty life insurance policy. If something does happen to me, at least I know that my family is going to be taken care of. It’s all about mitigating those risks so that you can take your mind off of those fears, put them together, and focus on what it is that you’re doing today.
Rob: Step five is that things don’t happen overnight and that you need to keep working on it. The bottom line is that fear goes away the more times you do something. If you have a fear of public speaking, the more times you do it, it’s going to get better. If you have a fear of publishing a blog post, if it takes you 10 hours and 20 edits to get a 500-word post out, you need to do it more. You’ll get a little better at it, but you’ll get over the fear that it has to be perfect.
The bottom line is it’s not very complex. you’re going to be scared the first time you do something and you need to do it over and over if it’s worth it to you to actually get good at something.
Mike: And the sixth step to dealing with fear is to get a sanity check from someone else. Whenever you’re working on something, whether it’s software, a blog post, a piece of marketing collateral, or a press release, anything along those lines, anything related to your business, or even in your personal life, just get a sanity check from someone else. That can be a close friend, that can be someone who barely knows you.
I had somebody contact me who said, “Hey, I’d like to get your input on something because I don’t talk to you very much and you don’t know anybody that I know. It would be great to hear from you about what you think of this.” That’s a perfect scenario where you can get that sanity check from someone else with virtually no fear of anyone else being informed about what your fears are.
One of the things that Rob and I actually used to do probably 5–6 years ago, something like that, when we were first getting our blogs started, we actually started sending some of our blog post back and forth just to get a sanity check on it, to say, “Hey, what do you think of this article? What do you think of the wording of this? Does this strike a chord or is it just too bland?” et cetera.
We did that for—what was it—six months or something like that and we just went our separate ways. By that time, we have gotten over our fears about doing any sort of blog post and publicly voicin what our thoughts and opinions were.
Rob: I think we did it for a closer to a year, actually. It was certainly helpful for me. It improved the work that both of us produced as well as—at least from my perspective—reduced the anxiety I had when I went to publish something because I knew that someone had already looked at it pretty critically. If I sent over a new… kind of said, “No, this is not very good,” or there’s a big flaw in this logic, then I would rewrite that piece and then when I posted it, I knew that it essentially had a sanity check done to it and it really reduce the fear that I was going to get slammed online.
To recap, the six steps when dealing with fear are: (1) take small steps, (2) get some concrete motivation in the right direction, (3) see failure and rejection in a new light, (4) don’t get caught up in the past of the future; work in the here and now, (5) keep working at it; things don’t happen overnight, and (6) get a sanity check from someone else.
Mike: Thanks to both Jonna and Trey. If you have a question or comment, please call it in to our voicemail number at 1-888-801-9690 or you can email an MP3 or text format to firstname.lastname@example.org. If you enjoyed this podcast, please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. A full transcript to this podcast is available at our website at startupsfortherestofus.com. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob interviews Jeff Epstein, Founder of Ambassador, about building and selling his multi-million dollar startup as a non-technical founder. They dive deep into the details of the acquisition and the toll it took on him.
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Rob: In this episode of Startups for the Rest of Us, I talk with Jeff Epstein of Ambassador about how he, as a non-technical founder, built and sold a multi-million dollar SaaS startup. This is Startups for the Rest of Us Episode 453.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first one or you’re just thinking about it. I’m Rob, and today with Jeff Epstein, we’re here to share our experiences to help you avoid the same mistakes we’ve made.
Welcome back to Startups for the Rest of Us. On this show, we talk about building startups in an organic, sustainable fashion that allows you to focus on your personal freedom, purpose, and relationships. We have different show formats and this week, I sit down with an accomplished, impressive founder named Jeff Epstein. I’ve known Jeff for around eight years and watched in awe as he built Ambassador—it’s at getambassador.com—into a $5–$10 million ARR SaaS company, and all the trials, the tribulations, the struggles of what he went through to get there. He exited about seven or eight months ago.
What I like about Jeff is that at heart, he’s a bootstrapper. He bootstrapped Ambassador—which was, at the time called Zferral—for a year and he had to pay a developer essentially out of his own pocket. Then he raised a very, very small round between $25,000 and $50,000 just to basically keep the product moving forward. He’s a scrappy founder. He was doing sales calls constantly in the early days, really, a founder who was ambitious.
One of the interesting things we dig into today is how he has a kind of what a bootstrapper mindset had to raise funding to keep the company growing and we talked through his decision to do that. We also talked about the toll that the company took on him over the course of this time. He said he didn’t sleep very well, he did feel stress, he put on a lot of weight that this company took a toll on him, and we walk through any regrets he has. It’s really a fascinating story.
The latter half of the interview focuses on the acquisition because I find that level setting people’s mindsets of what a real acquisition looks like. The fact that Instagram was supposedly sold in a weekend for a billion dollars is like, (a) we don’t even know if that’s really true or if that’s just kind of a myth and the story around it, and (b) even if it is true, that’s like a once-in-five-year thing or once a year, once a decade, whatever, very, very, very rare.
The other thousands and thousands and thousands of companies and startups that are acquired happen much more like what you’ll hear Jeff talk about today. Again, the latter half of the interview focuses on that. Then it’s fun to talk through with Jeff to hear what he’s been doing for the seven months since he was able to leave the company. I always enjoy sitting down talking with Jeff, really enjoyed the conversation and digging into his victories, his struggles, his failures, and everything that came along with it.
Oh, and one side note before we dig in, it was an absolute comedy of errors trying to get this recorded so I’m actually impressed that we’re even able to ship it. I was in a Starbucks—which I normally don’t work from coffee shops—I especially don’t record interviews from coffee shops but due to extenuating circumstances, that’s where I was. Fire alarm started going off an hour before the interview then stopped, then went back on, then went off, then went back on.
Eventually, I went out to get my car and take off and fire trucks had blocked the driveway so I literally could not leave so I sat in my car, I hooked up my hotspot to my phone and this entire interview was recorded using that USB headset plugged into just a laptop sitting on the passenger seat so it was a funny moment. I couldn’t cancel the interview because the episode wouldn’t have gone live on time. But the show must go on, we ship every Tuesday morning. I hope you enjoy my conversation with Jeff Epstein.
Thanks so much for joining me on the show this week, Jeff.
Jeff: Yeah, great to be here, Rob. Thanks. I appreciate it.
Rob: We go way back. We were in a mastermind with Ruben Gomez for a couple years, if I recall back, when I was doing HitTail, 2011–2012 timeframe.
Jeff: Yeah. It seems like a long time ago but it was a lot of fun and I know, at least for myself, it was a really valuable time to chat with folks. Also, there wasn’t a huge community and we’re all in interesting areas where there weren’t startup communities and it was really important back then and, obviously, so today. It’s cool that we remained friends for so long.
Rob: I agree. I see you at MicroConf every so often. You made it this year. It is cool that we ran across each other. I remember you and I originally met. I came and spoke, I believe it was in Grand Rapids and you live in Detroit, Ruben was in Florida, and I was in Fresno, California so we were all in these places where there wasn’t a huge startup community around us and we found each other through these channels.
Today, I want to walk people through your story because, as I was saying right before I hit record, your story of growing Ambassador as a non-technical founder is so compelling, it almost writes itself. We just cover the points and it’s like, “Oh, man, that was amazing.” “Oh, man, that was brutal. How did you get over that?” These are the best kinds of stories where there’s a lot of adversity and struggle and it was probably pretty painful at the time, the different things that happened with co-founders and whatever, fundraising, and working 24/7 for a few years, but I do think the folks are in for a pretty good ride today so thanks again for sharing your story.
Jeff: My pleasure and I’m excited to tell it. It is interesting and there’s certainly a bunch of highs and lows, so hopefully I can help some people avoid some of the stresses and struggles that I had but definitely interesting for sure.
Rob: To summarize, so we don’t have to spend 10 minutes going through details, you started Ambassador in 2010, you exited, sold the company in 2018 to a company called West Corporation. Ambassador was originally called Zferral and you did raise a few rounds of funding, I believe. You started working on Zferral/Ambassador in 2010 and you raised a small angel round between $25,000 and $50,000 in 2011. You’ve been self-funding it since then.
You mentioned to me that your wife was making money and you were pumping the money out the back door into the app. What was the impetus to raise the angel round? Because I think of you more as a bootstrapper. You just have that capital-efficient, you’re not the Silicon Valley go-big-or-go-home billion dollar valuation, you’re ambitious, but you don’t fit the mold of, “I’m going to topple Salesforce and become the next Dropbox, Facebook, and Airbnb.” What was the impetus for taking outside money in 2011?
Jeff: Good question. For me, it was really in a sense kind of bad, but it was almost desperation mode. I didn’t act like that—I don’t think—at the time, but for me, I had done pretty well, I guess, for being an adult without having an actual job, I was investing in real estate, I was doing some odd things, I had just come out of law school, and I had sold a small business that helped me pay off my loans. I didn’t have that much money saved up or capital, and again, it was coming off of the 2008 financial situation, so there weren’t a lot of jobs.
I basically self-funded Zferral and it was maybe $4000 or $5000 a month to pay for developers to build the product. A couple of things led to me raising money. One was there wasn’t this playbook that exists today in terms of how to bootstrap even. Bootstrapping at the time, was just grinding it out and getting money wherever you could. I kind of exhausted all avenues. The problem for me—I mentioned this earlier to you—was I couldn’t stay up late and get the app done. I wasn’t able to just do the work because I couldn’t write code. I had to basically pay for it.
At the end of the day, I had an opportunity to raise $25,000 and I took it because I got married in 2010. So, right before this money came in 2011, I had to think about my wife in terms of, “Hey, it’s not just my money I’m risking now. It’s our partnership.” She was kind enough, she believed in me, and allowed me to do it but it was at a certain point, literally, the money was coming in and it was going right out. She wasn’t making, even maybe me, even more than what I was paying out. Our household was a net deficit, which is pretty tough to do when you’re just getting married and just bought a house.
She’s used to always joke, “I thought I was marrying an attorney and this isn’t what I signed up for.” She was a good sport. She’s joking about it, but I don’t know if she knew that was what she was getting into. It was a big relief at the time and $25,000 was probably six months of expenses. I was fine not getting paid, but money going out was tough when I wasn’t making anything.
Rob: And at that point, you had maybe a couple of grand in MRR, you think?
Jeff: Right. The other thing is, at that point, we probably just started getting customers. I don’t think the customers could fund the development and sustain the business. As that started happening, again, I probably didn’t take a salary until maybe after Techstars are around Techstars which was 2012, but again, just not losing money. I remember that was a big turning point in my family. It was like, “Alright, we’re not losing money anymore.” We’re just not making any money, but we’re not losing money. That was pretty big.
Rob: Getting back to break-even. It’s tough, man, in an early, I won’t say new relationship because you guys have known each other, but a new marriage and then trying to scramble and start a startup like that. Do you have any regrets around that, either raising the money initially or not learning to code at some point? Anything you would do differently? Or do you feel like no, you came to play, you showed up, and you made it happen?
Jeff: I don’t have any regrets about it. I do think it would have been smart for me to learn how to code. That would have saved a ton of stress and heartache. As you know, I’m willing to do the work so being able to do the work would have been hugely valuable for me instead of having to rely on somebody else. Even just being a control freak, which you think a lot of founders are, it would have been better if I could do it myself.
That being said, I think the value and what I was so lucky was that my wife was supportive and understanding about it, so as hard as it should have been, it wasn’t nearly as hard as it probably sounds. But overall, no regrets.
Rob: That makes sense, you look back today and you’ve had this successful exit. Everything worked out, but at the time, when you’re grinding it out for a year and you’re at $1000 or $2000 MRR, you just started taking customers, and you’ve spent tens of thousands of dollars, I’ll assume it’s hard. That’s not an easy place to be in, I can imagine.
Jeff: Absolutely. It was super tough. It was a perfect storm of being naive and young enough where it would be a lot harder for me to do that where I am in my life today in terms of age and expectations. Fortunately for me, I was willing to do it. It is hard and looking back, you’re like, “Wow, I can’t believe I did that.” But you also don’t know any better. That’s part of the beauty of it.
Rob: I know you’re under NDA for the acquisition terms, but I’ll ask it in a more vague way that I feel like people have asked me on the record about the Drip acquisition as well. You sold the company last year. Did you make enough money that you don’t have to work again if you don’t want to?
Jeff: Yeah. For the most part, we definitely can live a comfortable life based on how things went. We could survive and be pretty well-off. The reality is we both want to continue working. My goal is really just to focus on things that I’m passionate about and just have the cab of more fun. That’s a big change going forward and has been already.
Rob: That makes a lot of sense. I’ve done the same thing. The passion is like TinySeed’s what I’m excited about and it’s nice to have the luxury of basically not getting a paycheck for a year or two, or three or five. Einar and I got our first paycheck from TinySeed last month and it was like, “Yay,” but I couldn’t have done that 10 years ago. You can’t just not take a check for a long time, so it is nice to have the luxury.
I know how much of a hustler you are and when you find that next thing, while I hope you don’t go as all-in as you did on Ambassador—because you’re right, and I walked through a year or two of it with you when I saw the toll it was taken on you—I do think that you’ll find that spark again and you’ll go mostly in on something that you’ll be working on.
Jeff: Yeah, it’s funny you say that. It’s something that I’ve even talked to my wife about is that I’m concerned that I won’t be able to do 80% or whatever the number is. That’s a healthy amount of all in this because I always tell people, “I’m not all-or-nothing kind of guy.” I’m not good at, “Oh, yeah, I’ll just work for X hours a week.” Even if it’s 20, or 40, or whatever it’s supposed to be, or 60, if I say it’s that, I’m not realistically going to stop unless I feel like I did everything I could. It gets harder and you just get worn down. For me, it definitely had that happened.
I’m getting close to 40 years old so it’s like, “All right, I need to start reevaluating my life and looking at it a little bit differently than feeling like you’re a college kid,” which is what I felt like for the last 10 years, probably.
Rob: It seems like one of your goals with the next one should be to control your work, to work 35-hour weeks, or 40, or some reasonable amount.
Just to wrap up the intro story so that we can dig into some of the points, you mentioned you went through Techstars in Austin, that was mid 2011, that was back when Techstars wrote really small checks, so it was like $18,000. It was just a stipend. Then I think the next year, they started giving $100,000 notes which probably sucked for you to not get that. I’m imagining you could have used that money at the time.
Jeff: Definitely, and we were in New York so it was even more expensive to live. But yeah, it was during the class, they announced the $100,000 note and it was super big bummer for us because we were one of the few B2B companies, and at the time, 2011, that also meant we were completely unattractive to investors especially in New York. We had a really hard time raising money while all of our cohort, basically all the B2C apps, all the mobile apps, they easily raised money. I don’t think any of them are around now, but they had a much, much, much easier time raising money than we did. It was really tough.
Rob: Then you raised a couple of hundred grand in a note in 2012 and then you did raise a Series A in 2015. So total over the course of several years—that’s almost five years—you brought to about $2.75 million. I know you mentioned earlier, you needed that early money to fund development because you couldn’t write the code itself. In 2015, when you raised $2.4 million, what was the thought there? Was it that you’d hit product-market fit, you’re growing super fast, and you need money for bodies? Talk me through the logic.
Jeff: Yeah. It’s funny thinking about this. Someone asked me the other day and thinking about my thought process, I didn’t run a process, which is a little bit different than most people. It was an opportunistic fundraise. I had—and you probably know this personally—at the time, fundraising wasn’t on my radar.
We were mildly cash flow positive. I would say five figures cash flow positive and then maybe the team was 10 or 11 people. There were certainly people there. It was a ragtag group of folks. I would say most people weren’t experienced startup or tech people, it was like you’re hiring people that would be willing to work with you even though you could offer them almost nothing in terms of benefits or comps. That’s always tough.
One of the reasons why we raised money and one of the goals that I had before I even started Ambassador was I really wanted to help build the community in Michigan, I wanted to create an environment where these companies survived and thrived, and where people wanted to go to work every day. That was what I wanted to build. I realized that incrementally adding one person at a time and being really, really lean, I mean, I was super lean. I was paying myself $40,000 a year. Our office was all IKEA furniture. It was just really hard to create that environment with such a lack of resources.
When Arthur Ventures came along and pitched me on a partnership where they said, “We’re not going to make you step out of your comfort zone and try to grow at all costs. We do respect the way that you’ve built the company and that,” I think the director said, “you wouldn’t die. You should have died, but you didn’t because you were willing to just fight.” I just saw this alignment there and I said, “You know what? This could be really good.” We had great people and we got lucky that the people that we hired early all ended up being amazing and grew into amazing pieces and teammates. Even more awesome to begin with, but being able to spend ahead of where we were, it was a big accelerant for us that we needed. It allowed us, again, to give people benefits, to up comp, and do some of the things that I wanted to do. There was no money to be had before that, so really that was why I raised money.
Rob: It sounds like you found money on terms that made a lot of sense for you to raise and didn’t come, perhaps, with a lot of the strings attached that maybe a lot of the Silicon Valley money would come with. Whether it still does today, it’s still evolving, it’s becoming more founder-friendly. But is that accurate? You found someone willing to give you a couple of a million bucks in a way that made sense for how you wanted to grow the company and didn’t negatively impact your optionality down the line.
Jeff: Yeah. I have a ton of respect for Arthur Ventures and Pat. They were awesome and it was a really great fit. Did we want to build a $100 million company? The answer is yes. The expectation was we were going to try our hardest to do that, but what I always said to him is I don’t want to leverage the business to be successful. I don’t want to get to $100 million or die. I think that’s something that many VC’s, if they hear that answer, they’d be like, “This isn’t the person for me,” which is fair and in some cases, they want you to take that swing and if you miss, they’re okay with it and they can go to bed at night. I didn’t want to sleep at night and saying, “Everyone could have had a really great career and a really great experience,” but I selfishly went for it and we all went home and that was it.
I think there was an agreement there. I know for a fact we weren’t the best outcome for Arthur’s. I definitely do feel bad about that and I know that I tried my best to be both smart enough and calculated to maximize the outcome without killing the business. We got pretty low, to be honest, in cash multiple times, way lower than we agreed to get because we were trying everything we could to continue to grow as fast as possible to get to the next stage. But yeah, it was definitely founder-investor fit for sure and we have nothing but great things to say about Arthur and Pat who’s awesome. When they offered, we negotiated a little bit and that was what we did.
Rob: That makes a lot of sense. Something that I want to dig into is the fact that you said you got pretty low on cash multiple times. You and I both mentioned that you were all-in and you were basically working 24/7 for several years. This all sounds like not fun. That sounds very stressful. Was it that in the moment? When you were doing it, were you thinking to yourself, “Oh, my gosh this is brutal”? I would have been stressed, let me put it that way. There are people who just absorb that and they just don’t feel the stress about this stuff. Talk me through. It’s an eight-year period, so it’s hard to nail anything, but I’m just curious. Were there moments when you were like, “I don’t think I can keep doing this. I’m going to explode”?
Jeff: To be honest, not really. I like stress for the most part. I used to always tell people—maybe this is a bad advice—I would say if you care about something, there’ll be a level of stress. To me, that shows that you care. There was, looking back, more stress than I would have liked, but I’m also the kind of person who loves to dive in and obsess over something. When it doesn’t go exactly as you want, then it becomes what I would consider to be stress. Whether that, at one point in my life, was playing poker, or another time in my life, it was wondering to play sports or whatever, those things were, at a certain point, super stressful to me but in a way that it didn’t bother me that much.
To me, it manifested in things like gaining a lot of weight, not just being exhausted, not working out or not being able to sleep, things that I reasonably should have been able to do but I just couldn’t focus or prioritize for those things because I was so concerned about doing everything I could for the business.
There were very few times where I’m like, “Oh, my God I need a vacation.” I always thought like, “Man, I’m really stressed,” but day-to-day, I really enjoyed it, especially post-Series A when we had a little bit of money in the bank and I was surrounded by more people that felt like peers. Some of the early employees became good friends, so it’s not that but people that had experience.
For a long time I felt like I was doing everything myself. Of course, my CTO and co-founder, Chase, was an amazing help, but when we added a couple of more folks and we had a leadership team, so to speak, that took a lot of burden off of me. The problems became different problems. It never got less stressful, but it became a little bit more fun for me and allowed me to keep going despite some of those other challenges.
Rob: I know you applied to Techstars one year and you didn’t have a co-founder. You had an agency or was it an offshore developer and you got rejected. One of the things they said was, “We don’t really want a non-technical single-founder type of thing.” So, you came back the next year and you applied with a technical co-founder but he was almost like employee number one, is that right?
Jeff: Yeah. The next year I had applied to Techstars. I had done some networking in between the two applications. I had a reasonable feeling that I might be able to get in the next time in New York. I had known some people that were in the prior class and they’re like, “You need to have a technical person show up with you,” so I hired somebody who, again, technically we’d called him a co-founder and certainly he deserves that title, but he was basically hired a couple months before TechStars New York, to just basically help rewrite that code base from the original Zferral one, which was what I applied with into Ambassador, which we ended up leaving with, so to speak. So, we had rewritten the code base.
Rob: That was your first to rewrite of the code base. Didn’t you rewrite it again in 2012–2013?
Jeff: Yeah. We rewrote it again. Soon after when Chase joined—he’s still part of the team and actually onto bigger and better things at West now—one of his first projects was really to undertake start migrating the code base to something a bit more scalable and in a more modern technology. We were previously PHP and then we moved it over to Python and Angular, which became React eventually. It was a big undertaking. We probably started that 2013 and it may have taken a year or so, but we did it in a compartmentalized way. We didn’t really slow down the site too much, but there’s a lot of extra work probably to do it that way.
Rob: And the reason that you wound up leaving the mastermind is you, Ruben, and I were like, I had HitTail and maybe was just starting Drip, no employees, Ruben had two contractors or three—I don’t know—two employees, and you were hiring your 20th employee. You were putting out culture and vision documents, trying to get everybody on the same page. We’re like, “Look, we like each other, we’re all ambitious,” but you’re just at a different place. That’s what wound up happening.
But during that time, I remember, that rewrite was not super fun. You just had a team of developers trying to rewrite it and then you had folks trying to add more features. You were basically building the parachute after you jumped out of the plane. I don’t know what there is to say about that, but do you remember that as being super painful? Because that was my memory of it. Or do you remember it as, “No, we handled it and we got it done”? I guess the fact that you rewrote it twice was the real brutal thing.
I remember when we talked about it, I was like, “Gosh, do not rewrite this code base.” Coming from a developer, my own perspective whenever I come into a new code base, I’m always like, “Oh, this is a whole piece of crap. I’m going to rewrite this whole thing,” and then I eventually resist the urge and I push the business forward instead. But you made a very, very hard decision to do that.
Jeff: Yeah, it’s funny you say that. I remember even when Chase joined, when he was thinking about joining, and he had done some diligence, we agreed like, “Hey, let’s not rewrite it.” I think even you said something like, “The first thing he’s going to want to do is rewrite it.” So, one of the things we talked about was, “Okay, let’s try to keep it as is and we’ll go with PHP.” I remember we hired a PHP dev and we hired someone else who was competent in PHP but also knew Django and Python as well. After a couple of months he’s like, “Dude, we got to rewrite this. I’m sorry. There’s too many issues with it.” Like you said, it was building the parachute on the way down or he used to say it was like changing the tires on the highway while you’re going 70 miles an hour.
At that time we had $20,000 a month maybe in customers, so we made $250,000 ARR maybe. Your customers don’t care if you’re rewriting it until it’s done. At the time, we might have had even T-Mobile or we were getting a customer like T-Mobile, so it was super stressful. Knowing that you’re building something that’s going to get ripped out eventually was way more stressful for them than it was for me.
As you know, anything technical always takes a lot longer than you hope and that probably happened, but what went well and what I learned from Chase—I knew even then—was he was super money when he recommended we do something. It always seemed like it was the right move. It was one of those things where he was like, “We have to do it,” and I said, “Okay, let’s do it.” It wasn’t what I wanted to do because obviously, it doesn’t feel like you’re moving forward.
We were rewriting it this year, too. We rewrote a lot of the front end, we rewrote some of the back end in terms of scalability, going from a few hundred thousand or a few thousand people on your site to millions of people on your site, the growth in terms of requests was insane. They were 10X-ing the site every year just to maintain it. It was pretty insane.
Rob: Yeah. I’ve been a part of one of those. Insane is the right way to describe it. So, you grew it. I remember in the early days you had a lot of focus on sales. You were doing a lot of one-on-one demos and that’s how you’ve landed, or one of the ways you’ve landed to customers like T-Mobile and these big enterprise deals. I was super impressed with that.
At a certain point, you and I lost touch for a year or two. I was doing Drip and you were really digging into growing Ambassador. When you sold the company in 2018, how big were you, guys? I don’t think you’ve been public with revenues so I won’t ask that, but employee count or some other indication?
Jeff: I’ll tell you a couple things. We were between $5 million and $10 million in revenue and about 40 some-odd employees, give or take.
Rob: What was the acquisition process like? Were you getting approached by people who wanted to buy you? Did you have to go out looking for interest? How long did it take? Talk me through. There are folks listening to this who don’t get to hear a lot of inside stories about these because a lot of them are so opaque. “It’s a TechCrunch post of X company sold for Y million dollars.” “Wow, isn’t that great?” and you feel like it happened in three days. The Drip acquisition from first email to close was 13 months, and 6 of that was me working 20 hours a week on it. It was incredibly stressful for me, so I loved if you can walk me through bits of it so people can hear what it’s like on the inside of something like this.
Jeff: Sure. It was definitely intense and it was probably close to, like you said, a year of planning total at least. For me, because we were funded, because we had a board, the first part of the process really came about through board discussions of, again, when you have a board, you always have to look at multiple years out. One of the things that we were doing was trying to figure out how can we get to where we want to be and what are the strategic options, and that includes either fundraising or essentially selling or buying somebody.
Once you raise money, you’re on the clock. So, the worst thing you can do is grow slowly or decelerate. Not say that it was happening, but I think it was a concern. We were kind of in-between a Series B, it was possible we could raise to B and that was one option. Then all the factors you have to think about if you raise a B between dilution, and lots of times people want new leadership teams. That was one path potentially and another path was, of course, selling. Another path was going to stay in the course, but having to figure out a way to accelerate growth instead of decelerating, which happens to most companies that usually don’t grow faster the year after.
We came up with the idea that we’d kick the tires and see if it made sense to explore strategic partnership which really usually means a sale, but it could have been different kinds of investments, too. We’re pretty open and we’d also looked at other types of alternative financing. So, we were looking at all options.
As I mentioned, money was getting lower than we had planned. Again, we were with 40, 50 people, we weren’t burning a lot, and some years, we were cash flow positive, but the swings with 40 people, payroll was several hundred thousand dollars a month. So, the swings are pretty big. You need to have enough cash-on-hand and again, relying on checks from companies and things like that.
That was going to begin the process. We didn’t end up hiring a banker, which basically was much more work from my perspective, for me personally, to get ready for working with a banker than working for fundraising. It was like putting a whole fundraising deck together but then including everything, even things that you would normally maybe not tell or you wouldn’t want to advertise, but you need to be really open about and just get everything together so that you can share everything, and that they know everything so that things go well and they give you an accurate idea of the value of the business.
When working with a banker, one of the things is the process. First, of course, they speak directly with the companies, companies are interested. Then they reach out to the team and they have what’s called a management meeting. We probably had a couple of dozen management meetings which are basically calls with the entire management team, giving them an overview of the business. It’s extremely stressful. For us, we had to do them and keep them private.
I like the idea that we were talking to potential acquirers, couldn’t be that obvious to the company. It was really stressful and we did probably a dozen or more of those. Some companies were some of the biggest companies that everyone’s heard of, some of them were known, private equity companies, and range across the gamut. We did that for several months and then eventually you get IOIs and LOIs. Eventually, once the LOI is signed, there’s a lot of work to do, you actually meet with all the folks, and try to really talk about get down to brass tacks in terms of integration and real items.
It was incredibly stressful. For me, I played a point person on most of the stuff. Obviously, the banker did a lot, I did a lot, it’s a lot more stressful than I anticipated, and it’s a lot harder, like a few times investors be like, “Why don’t just wait like two years and just sell?” I was like, “Man, it’s not as easy as it sounds,” but people always say that.
Rob: But you’re eight years in it at this point and it’s like, “This is eight years and it’s been really hard.” I imagine you might have been feeling some burnout. There’s a certain point where I feel like you start to hear that there’s an opportunity to not have to continue doing what you’re doing. I don’t get the feeling that you hated what you were doing. I think you were still into it, but at a certain point, you start to think about the next phase as well as, “When is this going to pay off? All this hard work, my whole life’s work, and my net worth is tied up in this company.”
Jeff: Yeah. That was one of the things where I felt bad because truly, my investors, some of them would have been excited if we would have kept going. The business was in a good spot. It wasn’t the best deal ever. We did well and generally, everyone was pretty happy, but it also wasn’t a no-brainer. You always hope for a no-brainer and everyone’s on the same page. The reality is, investors are smart. If something’s going well or something’s going good enough, they want to keep going. They’re only making so many bets or investments per year and if it’s working and there’s a pretty clear path to the next milestone, they don’t want to sell, which makes sense.
We got mixed feedback. Lots of people were happy. No one was mad, but people were like, “Hey, have you considered continuing on and going?” Like you said, Rob, I got to the point where it was so close, you could taste it, you see the outcome, and a lot of us have worked hard for it. They knew a year before that we were going to try to do this. It was one of those conversations that I had with them was like, “Guys, I know we’ve been working hard, but I need you to work twice as hard this year. Hopefully, they’re going to pay off and here’s all the incentives and reasons why we should do that.” I think everyone was pretty burnt. I think we were fried. As what we used to say, “We were totally fried. It was tough.” From that perspective, it was really hard to just walk away.
Knowing that, it obviously makes it a little bit more stressful because at any point in my time in Ambassador, I always felt like I had a lot of optionality where I didn’t need a specific outcome. This was one of those situations where I was like, “Alright, if we don’t sell here, we’re going to have to start looking to replace people because I don’t know if they’re going to be able to handle it.” That’s my analysis of it and, of course, we never got to that point. I’m really good friends with everybody, so if I would have also said, “We need you,” they would have stayed, but I just felt I would have been doing everyone a disservice by pushing. We pushed really hard for a long time.
Rob: I know the deal closed last October of 2018. When did you tell your employees and how did they react?
Jeff: We told them that day that we signed the deal. We had done all the diligence up into that point and had not told them. The reason for it was, based on everything that I heard, you really don’t want to tell people. I know that with big companies, with really big transactions or public companies, as soon as the LOI is signed, they tell the companies.
For us, we had the LOI signed a lot earlier. It wasn’t 100% that it was going to get done. That was just like in bigger companies, there’s a lot of shareholder pressure and things, like when you make the announcement, the expectation is that you’re going to close the deal. We had a lot of deal points that were not ironed out yet. Actually, multiple times during that period, I thought we might not close.
We told the team early October. I would say 95% of the people were super pumped. A lot of them were way more pumped when they heard what they would get out of it. I like to say that I prided myself on really trying to build a great culture, especially over the last couple years. Really, that was my main focus.
I think a few people were sad that, that might be happening and the uncertainty with an acquisition is scary for a lot of people. We were super transparent and we immediately had like a town hall Q&A. Everyone felt good after, but there were some things that we couldn’t control.
Right after closing that, I think West didn’t do very well and that got everybody unsettled again. Luckily, things went as smooth as they could have been. Behind the scenes, it was a lot of scratching, clawing, and tough conversations. I’m really proud for the leadership team and for what we did to hopefully make things work out as well as they did, but I think I’m very happy with how things turned out.
Rob: I know you’re someone who takes a lot of personal ownership over things, obviously, over your company but over the culture and over the well-being of your employees and such. The deal closes, you’re obviously relieved, probably pretty happy that went through. It’s a life-changing moment for you, but I know, as you just mentioned, over the next several weeks or whatever, a month or two, West maybe fumbled the ball a little bit and you weren’t in charge anymore. These weren’t things that you could fix. How did that impact you? Was it really hard to see it? Was it something that you knew would iron itself out so it didn’t stress you out that much?
Jeff: It was really hard actually. There were multiple times after the fact where I was like, “I wish we wouldn’t have done this, wouldn’t have sold.” A couple deal points weren’t fully fleshed out because West Corporate wasn’t able to disclose the particulars because they were still fluid. We agreed, “Okay, we won’t agree to this in terms of we won’t specifically memorialize it in the agreement,” and that ended up being a big mistake for me. I don’t want to say anything harmful, but what we got in that particular agreement was a lot worse than what we expected and it was again, to me, directly affecting the people and culture, and it really was a gut punch.
I did a couple of things that cemented my place with West probably and wrote some really aggressive emails and took some pretty aggressive stands that I hope paid off and set the tone for my team. Luckily, only a few people ever saw or heard it, but I felt good that I took a stand. I felt it was the right thing to do. Luckily, I know the folks who were going to stay there after me, I needed them to see that we need to stand up for the folks. Everyone was in agreement that we did.
Rob: Yeah, that comes back to that ownership piece, that’s what I was pointing at. That’s your personality. I figured you would do something like that. You mentioned that during that post-acquisition, you were struggling with it and that there were days where you regretted selling.
I guess I was lucky or whatever, I never woke up a single day after the Drip acquisition and thought, “I wish that we hadn’t done that.” It just worked out. There were some hard days, but it never made me think, “Oh, I would go back on this.” That tells me a lot. That tells me that it was hard, that it was really hard knowing you and knowing your psyche and ability to take stress and deal with it.
You were with West for about a month or two after the acquisition, really the first of the year, you were able to move on. It’s been seven-ish months, seven and a half months. Have you had any regrets since that point about selling?
Jeff: No, definitely not. A couple of things have changed those, I should add, the team, I would say, has worked really well with West. West just recently has put Ambassador in a position to be successful and that took a lot longer than we hoped it would, but even just as recent as last week, I still talked to a bunch of folks there, everyone’s doing well, I actually played in the softball team yesterday so it’s a lot of fun and everyone’s really excited, which is really great and that’s what we wanted to do.
West has really done a great job of correcting course and working with Chase, specifically, but other folks at Ambassador to try to continue to allow it to flourish and be successful. From what I’ve heard, things are going really well and people are happy.
Rob: That’s great to hear, man. It’s easy to have no regrets when it did work out in the end for your team. It worked out financially for you and several folks on your team, and then obviously life is substantially better for you at this point. I’m happy to hear that things are a lot better.
I think that leads us to our final question. Do you know what’s next for yourself yet or is that just something that you’ll wait and see? Because there’s no rush. That’s what I would tell you. Jeff, don’t rush into the next thing. There is no need to rush into the next thing.
Jeff: Yeah, I know. It’s funny. I’ve even told my wife, “Let’s be super intentional about what we do going forward,” because we’re fortunate enough to have that flexibility. I’ve tried to be really intentional. I’ve spent a good amount of time just advising, not formally, but I wrote a couple blog posts and just said, “Hey, if you’re in the area or you want to chat, I’m happy to talk.”
Rob: You’re a TinySeed mentor, thanks for that.
Jeff: Yeah, hopefully I can even do more but I’m excited to be on the Slack group, answer some questions, and be available for when it’s my turn to […] folks. I’m staying busy a little bit, looking to maybe do some lightweight consulting where I’m still keeping a lot of flexibility. I’ll be honest, I’ve talked to a couple of business brokers, just looked at what’s available, and tried to see what piques my interest.
I’ve floated out a couple of offers for companies that were maybe not the best offer for the founder. No one’s accepted anything yet, but I’m kicking the tires on a few things. But as we talked about earlier, my biggest concern is can I do it in a way that’s not all in and that allows me to be flexible? If I were to do something, I would really focus on that work-life integration or balance or whatever you want to call it where it’s much more flexible than the traditional company. I think that’s the future.
Rob: Thanks again, man, for coming on the show. I really appreciate you taking the time.
Jeff: Absolutely. It was great catching up again, Rob, and always good to chat.
Rob: If folks want to keep up with you online, where’s the best place to do that?
Jeff: Best place is probably Twitter, it’s @jeff_epstein. I’m on Medium also, but Twitter, I’m pretty active. If you tweet at me or DM me or something, I’m sure to see it and I can follow-up and chat from there.
Rob: Sounds great. Thanks again, man.
Jeff: Of course. Yeah, my pleasure.
Rob: Thanks so much for listening. As you can tell, I’ve been changing up the format over the past four or five episodes. Mike is on a temporary hiatus and an update on him, he took some time completely off. He was on vacation and he’s interested in coming on the show in the next few weeks to talk about his thoughts and his progress. So, we’ll hear from Mike soon.
In the meantime, if you have a question for me or one of my guest hosts, call our voicemail number at 1-888-801-9690 or email them to us at email@example.com. Thank you for listening.
If you haven’t left a five-star review, would really appreciate it. If you liked the change-up in the format and the fresh voices, fresh perspective, even just the fresh show format, I’d really appreciate if you could lend a five-star review, even tweet out particular episodes that you’ve been impacted by. It really does help to show me that what I’m doing here matters.
I’m spending a lot more time on the show. I’m dedicating time to trying to raise the bar. If it doesn’t make a difference and I don’t hear anyone talking about it—I’ve heard two or three people compliment me on, that was super appreciated—if it doesn’t move the needle, then obviously, I have to invest my time in places where it really moves them forward. So, I would appreciate hearing your thoughts, sentiments on Twitter. You can email us directly, obviously, firstname.lastname@example.org or five-star review always helps as well. I appreciate it and I’ll talk to you next time.
In this episode of Startups For The Rest Of Us, Rob and Jordan Gal answer a number of listener questions on topics including LinkIn outreach, building features versus fixing bugs and more.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, Jordan Gal and I discuss the LinkedIn outreach, how to divide time between new features and fixing bugs, and we answer more listener questions. This is Startups for the Rest of Us episode 452.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob and today with Jordan, we’re going to share our experiences to help you avoid the same mistakes we made.
Welcome to this show. Each week, we talk about building startups in an organic, sustainable fashion that allows you to build yourself a better lifestyle, maintain freedom, purpose, and healthy relationships. Some weeks we talk through tactics, other weeks we do interviews, we have founder hot seats, and some weeks we answer your questions. This week, I was very pleased to be able to sit down with Jordan Gal and answer some listener questions. I hope you enjoy this episode.
Jordan, thank you so much for joining me on the show today.
Jordan: Thanks very much for having me, Rob. It’s post-4th of July Q&A session. I’m excited.
Rob: I’m stoked to have you. Folks will know you from Bootstrapped Web and you run CartHook. Before we dive into the questions, I’m curious what your take is on where you’ve come from and where you are with CartHook because CartHook is approaching 30 employees. It’s a fast-growing SaaS app. When you look back a few years ago, I think when you and I first started talking—I angel invested in CartHook for those who don’t know—I think you were like 5K MRR.
Jordan: I was going to say way back in the day.
Rob: Yeah. It was really early like what? What is that like? Did you pinch yourself? Is it surreal? Did you dream of one day having a SaaS app with 30 people? I can’t imagine what that feels like.
Jordan: I think it’s the opposite for me that before this, the struggle was like a nightmare, and this is like, “Oh, this is where I was supposed to be.” That’s how it feels to me. This was the plan and I always telegraphed in my mind, like, “This is how it’s going to feel like when it’s the way it’s supposed to be.” Before that was just this annoying nightmare to go through to finally be like, “There we go. This is how it’s supposed to feel.”
Rob: It’s such a trip. As you go through it, it’s these small changes. I remember thinking, “Wow. If I had a team of 10 or whatever, it would just be these huge thing and it would be so bazaar and it would be amazing.” When we got there, it was like this just feels normal now. You didn’t go from 0 to 10. I didn’t go from working alone having 10 people. We just hire them one at a time and you just build the team. Does this feel the same way to get to where you are?
Jordan: Yes. It feels incremental. In hindsight, it was fast. We worked from 4 people to 24 and we’re hiring a few now. That happened over the span of two years, I think that’s pretty fast for a 24 in two years. It was incremental along the way, weeks go by, months go by, new people get added. We have that additional element of having two offices, one inPortland, one in Slovenia. I would feel it in Portland when you hire a new employee. All of a sudden you have someone new in your day-to-day life, but we only have 11 people in Portland. Slovenia, I go back every 4 months. Everytime I go back, I have two new people to meet. That was more abrupt changes on the Slovenian side and the Portland growth felt more natural; it’s one by one.
Rob: Your role as CEO, I know in the early days, you do everything. You do anything that is falling through the cracks, basically. What’s your role like today with that many people? What are your top three high-level priorities over the course of six months or a year?
Jordan: It has changed and I’m happy with the change. I’m not very good at doing things day-to-day. I don’t have amazing work ethic, I don’t have good discipline, I can’t sit down and focus for many hours at a time. I’m just good at thinking and strategizing what should be done and I’m generally not that good at executing it. To have people now in positions where they are far better than I was in those positions feels good and right.
Now, the nature of the role is worrying about what’s going to happen externally, but mostly worrying about internal. Do people have what they need? Do they know what they need to do? Are they happy? Are they going to stick around? Are they happy with their interpersonal relationships inside the company? Does everyone know what we’re trying to accomplish? It’s a lot of like worrying and checking in on that worrying like looking under the hood a little bit to see, “Hey, is this functioning properly?” Every once in a while, something will pop out where it’s evident, “Ooh, this is wrong or broken.” I have to go to action mode for a week or two to fix it. That’s what it feels like.
Rob: I think it’s a venture capitalist that said that with venture-funded startups—which you are not, to be clear, you raised a couple of angel rounds but not taking institutional money—they view a CEO’s priorities as three things. One is hiring the high-level folks, not every individual when you hit the certain scale, but making sure that, basically the right people are getting on the bus, keeping enough money in bank so the company can make payroll.
Jordan: The money, the bank thing, that’s very clear. I used to think that relatively risk-loving in my personality, but what I have found in running this company and speaking to other founders is that I’m actually pretty conservative when it comes to the runway, to the cash on hand. Some people push it. They go 90 days, 60 days of cash and I’m always 12 months. I am very uncomfortable with less than 12 months of money in the bank.
For me, one of the driving forces is the mojo, for lack of a better term, the happiness that’s happening inside the company, how much people love their job, and that would get wrecked by layoffs. Not only do I want to avoid laying someone off because that just sucks all around, especially if it’s your fault, and that they have to pay the repercussions. At the same time, I really, really want to avoid what that would do to the energy in the team. So, I keep it pretty conservative.
Rob: It makes a lot of sense. It’s more like a bootstrapper mentality. That’s how a voice for you do is like a bootstrapper who happened to raise funding because he wanted to grow quickly and wanted to go into a space that was competitive, but still, you’re ethos has always been that. Much of the bootstrapper, that MicroConf ethos.
Jordan: Yes. That’s proving yourself out.
Rob: I remember the third thing the venture capitalist said. The reason I forgot it is because it’s just so fundamental, it almost doesn’t need to be stated, but it’s setting the vision for the company and the direction, the high level stuff. It’s obvious, right?
Jordan: Yes, but it’s surprisingly hard. Everyone tells you, the advice is always repeat yourself a hundred times more than you think. Once you’re sick of hearing yourself, that’s about right, all those things about repetition, but it is true that it is hard to keep everyone aligned on what you’re thinking. As the number of people grow, it becomes more and more challenging.
We, at this point, anyone that gets hired, I talk about that vision in the interview so they know where we want to go and the right fit person gets excited by that vision as opposed to, “Woah. This person is crazy.” Then, when someone joins and I do the first one-on-one with them a few days after they joined, I talked about the vision again and I always offer like, “I’ll go to the whiteboard right now.” It’s pretty much not their choice, I’d set them up in the white board anyway. Once a quarter, we also do it. Once a quarter, we talk about our roadmap, right back to the vision, right back to the core tenets. It’s becoming a lot of repetition and it’s still not enough.
Rob: I want to come back to the comment you made earlier. You said that you aren’t necessarily disciplined or get stuff done day-to-day. I question that reality. Maybe that’s the reality now when you have this big team, but back in the day when you were at 5K a month, I remember you were cold emailing, cold calling, doing sales calls, you were getting […] done. I wonder if it’s just the situation you’re in.
Jordan: You know what it is? It is the situation you’re in and I think I have some advantage in being a little older where I’ve gotten to myself more over time, so I’m able to fool myself or force myself into action. The cold email I would do and then I would outsource as soon as possible. Then, demo appointments would pop up in my calendar and it wouldn’t be my choice whether not to do them. It is just on my calendar. I’m doing it.
Rob: In code, we call that a forcing function. You just force yourself to do it. That’s funny.
Jordan: Yes. A lot of forced habits. Even if I don’t want to do this, I’m just going to commit to it anyway. Kind of like the first time you asked me to talk on stage at MicroConf. I was like, “No.” Just answer yes and then you’ll be forced to do it.
Rob: Then figure it out because, “I can’t back out of it once I told Rob yes.”
Rob: That’s funny. Cool man. Thanks again for coming on the show. Are you ready to dive and do some listener questions?
Jordan: Yeah. We’ll see if we can be helpful.
Rob: First question is a voicemail about setting up developers who are taking deferred compensation.
Chris: Hey, Mike and Rob. This is Chris Bowls, I’m calling from Kentucky. Working on a new SaaS concept involving the building industry. I’m early right now, but I’ve got three developers who have agreed to take deferred compensation and stock before we began receiving revenue for their compensation. My question is, for these three developers, they’re all in the US, is it best to set them up as an employee, or as a contractor plus investor, or as an employee who is awarded shares? Do you recommend these developers have Class A or Class B shares with voting rights? I’m currently a solo founder, but one of these developers could transition into a CTO. What do you recommend for that? Thank you.
Rob: Obviously, you and I are not lawyers. We can’t give legal advice. I’m curious if you have a gut feel if your face with this scenario, a gut feel of how you would approach it, or even you would find the right answer to this. It’s not a clear-cut solution, at least from my perspective.
Jordan: It doesn’t sound clear-cut, but I think what happens often with business people like us is we conjure up legal realities that are wrong, then we start making assumptions based on that wrong belief, and then we complicate everything. I think this requires a re-orientation and that is best with a conversation with a real lawyer.
I think a lot of this stuff is a little off-base like voting rights. You don’t need to talk about voting rights. It’s early for voting rights. If you’re the founder, you don’t want to talk about Class A and Class B shares. It’s way too early for a lot of these stuff. I think a lawyer would help orient the person toward just getting things set up easily and cleanly. Same thing with independent contractor versus employee, I think you go independent contractor. You keep everything simple as possible before it has to be complicated. It ends up complicated, so why complicate it off to that.
Rob: Right, why start there? I think that’s my take, too. This one does sound sufficiently complex that I really do think that he should talk to a lawyer because I just think you can easily make a misstep with something like this. And I agree, the Class A, Class B, the voting, it doesn’t seem like it’s relevant yet.
Jordan: In our company, the only time that came up is when investors come on board. That’s still a question of whether or not you want to create a different class. Not all investors will force you to create a separate class. The separate class is the thing to avoid because what that creates is a situation where investors have X voting rights and you have different voting rights. Deferred compensation, not ideal, but you can understand how it happens if the developers are saying, “Yes. I’m willing to work and you don’t have the cash flow yet to pay me, so let’s defer it.” The second you touch employment, you’re talking social security taxes, you’re talking employment taxes, benefits, and so on. An independent contractor would keep that much cleaner.
Rob: As long as they fit the definition. I mean, the IRS has a definition of that. If you’re managing them day-to-day, directing them what to do and when, controlling their schedule, then they’re not independent contractor. You don’t want to mess with that kind of stuff. My guess is when you’re in this early stage, you could just give them a block of work and say, “Here’s the deliverable, here’s the deadline.” They can get it to you.
The fact that you have multiple developers working on it, I feel it might be easy to actually make that reality. I hope that was helpful, Chris. Not sure if it was, but if I were in your shoes and you don’t have a lawyer, I would head to upcounsel.com and just have a 30-minute counsel with someone could be helpful.
Our next question comes from Marcelo Erthal. He says, “Hey guys. I’m a digital entrepreneur and a big fan of your show. I’m in Rio de Janeiro, Brazil. We have a web app for the B2B market where we need to contact a specific person in the enterprise that we are prospecting.” I assume that means a specific title. “We found LinkedIn a great tool for this kind of job, but the problem is that when one of my sales guy leaves, he leaves with all the contacts and connections in the space, forcing the new person to start over again from scratch. Do you have an opinion on this? Should I have a LinkedIn profile owned by the company?” What do you think about this?
Jordan: I’ve never even considered that, but it sounds like a reasonable problem. My default was, “Oh, just do it under your own account,” but maybe you’re trying to connect with someone, you’re trying to have one of your salespeople to connect to them directly and then have a conversation. It would be pretty awkward to switch in the middle. What do you do about this?
Rob: It’s a tough one. My gut is that the company account is going to just be so impersonal. When you get contacted by a company account, unless there’s a human being attached to it with a headshot, it’s just a logo contacting you gets no response. I don’t feel like that’s really a good answer.
Jordan: I’m going to say, LinkedIn itself, it’s impressive that they’re making it work.
Rob: Yeah. That they’re making sales on LinkedIn.
Jordan: Yes. LinkedIn is tough. Maybe for enterprise, it’s different.
Rob: I can’t help but wonder if you could start the prospecting on LinkedIn, but then basically, bring them into a CRM essentially, or bring them in to somewhere where, when the salesperson leaves, they don’t have all the connections. I think of it like the hub and spoke model of social media where you have your Twitter account, your Instagram, your Pinterest, whatever, but you’re really trying to get them on your email list because your email list is the core thing that you own and everything else you’re just a digital sharecropper. Twitter, Facebook, whatever, they can ban you at anytime, you don’t really own those followers the way you do with email list.
I wonder if he couldn’t approach it in the same way where you are using LinkedIn as a channel but it’s just the spoke, and you’re actually trying to get them into either a conversation with you team or you’re trying to get their email address or you’re getting them into a CRM where you can have data about the interactions and all that. That’s what the big companies do. Even they have people prospecting on LinkedIn or cold calling or whatever, their relationship is documented in a CRM somewhere so that when that salesperson leaves, they don’t take everything with them.
Jordan: Yes. I think the personal connection and conversations that had been had on LinkedIn sounds like you’re going to lose. But if you get them into a CRM, then the company actually has that asset and that value. If you want to do that as early as possible in the LinkedIn process, my guess is a lot of CRM these days have direct integrations with LinkedIn. If you think about something like SalesLoft, they’re deeply integrated with LinkedIn, and that’s how I would approach it. It’s not really a prospect, it’s not really a lead until they’re in your CRM.
Rob: And unless your sales cycles are really long, there shouldn’t be so many hanging relationships at any given time. You have people who have become customers, you have people that you’re reaching out to, and then you have people who I guess didn’t become customers, but then you have that in-between and there’s always so many in that in-between for now. Well, I may buy in the next month or two. I feel like keeping that number small is probably the way to go.
Thanks for the question, Marcelo. I hope that was helpful. Our next question is a voicemail about how to balance time between new features, refactoring, and fixing bugs.
Colin: Hey guys. Thanks very much for the show, really enjoying it just now. I am Colin Gray. I run a podcasting company in Scotland, thepodcasthost.com, so we people start podcast. We also created a SaaS product last year called Alitu which helps people to produce podcasts and there’s a lot of automation for them.
The thing I’ve been struggling with as we’ve been running for a year now, I have a team of four developers, two full-time, two part-time. I’m struggling to figure out how we should be balancing our time between brand new features, fixing bugs, maintenance, refactoring, that type of stuff. I’m really interested to hear what you guys think around how you balance a new development work with the reliability work because we still get bugs, we still get people that get in touch, it’s not very many. We must be in the less than 2% […] by now in terms of reliability, but what do you think is reliability to aim for in terms of support tickets, bugs, that kind of stuff, and how much time should you be spending on that versus new features? Thanks very much.
Rob: I like this question. Thanks for sending that over, Colin. I think it’s a pretty common thing that, as first time founder, you wouldn’t even think about this before starting an app but at a certain point you have to. I’m curious to hear your thoughts, Jordan.
Jordan: This is the ongoing struggle between making progress on the roadmap and how much time it needs sprint to give to fixes and how much should you have a few sprints in a row that are just features and then a sprint entirely devoted to bug fixes. Everyone has a different way of doing these. A lot of it ends up on gut feel on where your customers are and what you need to be doing.
Generally speaking, I have a few thoughts on it. The thing I like to keep in mind is to make sure we never go too long without giving customers new features. Yes, we have all known issues internally and we’re thinking about, but we need to keep the momentum going. Momentum in the product, momentum in sales, momentum in all the different things, and pushing out new features keeps that momentum going.
For some of the detail that Colin talked about their year in, which tells me, yes it’s starting to pile up and you’re starting to deal with things that are popping back up, but it’s still relatively early on. I assume the codebase isn’t a hot mess the way it gets into it after a few years. The other thing he said was that they get a few support tickets here and there. It sounded from the words he was using and the tone of his voice that it’s pretty minimal. I would say that the tolerance for bugs is a big issue. I know our product is a check out product so the tolerance is extremely low if we have bugs that costs people money, so our tolerance is very low.
Depending on the type of bugs and the type of customers, those bugs might be annoying or might be absolute deal breakers. I think that helps guide you on how far to push it, on how hot to let the fire get before you start throwing water on it. I would lean more toward new features even at the discomfort of the shame and embarrassment of people getting in touch with things that are broken. That’s my general take on it. It sounds like he’s in a pretty good spot. It’s an ongoing struggle to figure out, but I would lean toward being a little bit uncomfortable and a little bit embarrassed.
Rob: I think that’s pretty good advice. I categorize these in my head into two buckets where it’s like there’s user-impacting or customer-impacting bugs or cruft, or there’s UI cruft. It may not be a bug, but it’s all the stuff that is maintenance, like bugs plus an old-looking interface, plus a clunky interface you know needs to be revamped, that impacts the users in that they notice it. That’s one bucket.
The other one is the cruft, bugs, and other stuff that users don’t notice but are a pain in the […] for your dev team. It’s stuff that needs to be refactored or it’s that one the alert that dumps too much information once every few weeks. It just floods the Slack channel or floods your error logs with something. It’s one-off things and users don’t know it, but you know it’s getting on the dev nerves.
I agree with you. You are going to want to probably let some of these go longer than you want to, but I would encourage that you let your developers, give them some leeway to fix the things that are bugging them. What we did in the early days when you’re just shooting from the hip all the time and it’s like, “Hey, what’s the next feature we should work on?” We were literally planning one feature out and we were doing that. We had three developers full-time. We were probably doing 50K MRR and we were still doing that approach. It was super agile and we could make decisions very quickly as we respond to customer needs.
At that point, we would often say, “Let’s just look in the stack and if there’s stuff that we think is bothering people or is bothering devs, just pull the next one off, spend the day, fix it,” and then we all felt good about ourselves and like, “Ah. We got that done.” Then went back to features. Another few weeks later, we’ll be like, “You know? We haven’t really attacked something like that in a while,” and we go back to it.
When we started formalizing it, as the team got bigger, by the time we had 8 or 10 developers, that’s when we started saying, “One morning a week,” which winds up being about 10% of your time because it’s about 3 or 4 hours, “everyone would pull one thing out of the queue, whether it was user-facing,” because a lot of the designers would do user-facing stuff and a lot of the devs would do the cruft that they wanted to refactor, you basically have one morning to pick something and fix it.
That became a cool cadence.It sounds like it would be drudgery, but they actually really like it because it makes their lives better and makes their lives easier. I always felt like there’s something between 10% and 20%. 20% was a full day and that felt like too much to give up every week to just fixing these stuff. Codebase would have been immaculate, but as you said, it negatively impacts your feature velocity. I think that’s how we’ve approached it.
Jordan: I like that. It does end up being seen and felt as a little break. We’ve had entire weeks where we go by and it’s almost a break. We’ve been pushing really hard on this ramp. We just went six weeks straight, all out. The end of it was stressful. Everything went to QA at the same time like it shouldn’t and then everything got out the door. A week of refactoring, going back, and polishing things up is almost a little bit of a breather.
The thing that we had to watch out for is that some engineers have a tendency to refactor as they go. They’ll be in the part of the codebase working on a feature, they’ll be touching an adjacent part of the code, and it won’t be up to snuff compared to what they’re building now. It has some logic in it that we thought was right 12 months ago and then the tendency to want to refactor that before coming back to the feature that you’re working on is dangerous. That’s how things start floating and not being on time. We definitely had to figure out the engineer personalities and help guide people away from too much refactoring.
Rob: I agree. Like with anything, it’s good to know the personalities of the people that you’re working with and know if they err on the side of being much more, “Hey, I’m just a hacker. I’m going to throw stuff in,” and then you know that they need heavy code review to bulletproof their code, and then other people take a really long time to build their stuff, but it is super bulletproof. You often have to encourage them to maybe go a little faster, let’s have a little bit of risk in this to get it done 20%–30% faster. I hope that was helpful, Colin.
Our next question is a bit of a long one. It’s from Dragos. He says, “Hey guys. First of all, I want to thank you for doing the podcast and giving your thoughts on so many entrepreneurial things. Writing to you about my startup, it started as a dream and ended as a lack of motivation and a desire to sell it.
More than a year ago, I started working on an idea where I would change the way people build WordPress sites, make it easier and smoother. It began as my problem because everytime I had to create a WordPress site, I had to search for a theme, buy it, do a bunch of other stuff.
Even if I was a developer, I didn’t have the knowledge of the technology required to build the app nor the cash needed to make an MVP so I borrowed money from my sister and I hired a small agency from Eastern Europe. Seven months later, I had a rough MVP…” Wow, seven months. That’s a long time. “A theme builder that allows people to create one page WordPress sites in just a few minutes.
During the development, I tried to create anticipation and manage to build a list of around 200 people. The problem is the post-launch. I only got one customer. Since then, I’ve had a few thousand visitors, but I have not had any new customers. I blame the execution, the fact that I do not know who my customers are, and I don’t know what to do next.
I’m in a position where I don’t have the technical knowledge which is AngularJS to continue the project. I don’t have motivation, I don’t believe in the idea like I did in the beginning, and I’m afraid to invest any other money. It’s easy to quit as I have tons of other ideas but should I persevere on the initial plan? How do I decide when to do that, when to stop, and just consider the startup a failure?” What do you think, sir? This is a tough one.
Jordan: It sounded like it was going to be a tough one, but then when you get to his tone toward the end, you start to realize this is just a failure. There’s nothing wrong with that. It’s time to move on. That’s my gut feeling after hearing this. The amount of energy and probably money also to turn this from where it is right now into something that works and turns out to be a success, I don’t think it sounds like it’s worth it. I don’t think he has the motivation and drive to do it. I would just choke it up to a lesson and move on.
Rob: I think I would agree with you. It’s funny when I said this is a tough one. I didn’t mean it with a tough decision but that’s how it sounded but it’s a tough email to read because I’ve been there. We’ve all been there and it’s hard.
Jordan: What makes it tough is that pretty much everybody listens to this, including you and I, have been in this exact same situation. It’s tough when you’re in it, but it is one of those things that people from the outside that have a bit colder approach to it, just look at it and say, “I’ve been there too. There’s no shame in it. It’s just one of those things you should just move from if it didn’t work.”
Rob: Yeah. I think if he had the motivation, that’s the thing from me. When you’re a bootstrapper or doing stuff from the side, you never run out of money. Running out of money is what kills venture-backed startups because they burn through the cash and they shut down. Since he’s not a developer, I guess he has run out of funding that he wants to put into it.
Realistically, if he was super motivated to do it, he could learn Angular himself or he could take some of the money he’s making out of his day job and invest it in. If he had the motivation and really thought it’s going to work, but when you don’t have the motivation or the desire, it doesn’t matter. That’s what kills startups. You just get fed up with it at a certain point, you don’t believe it in anymore, and if you still believed it was going to work, you could totally try to make a verticalized version of this like, “I’m going to make this for pet groomers, or for designers, or for whoever.” Pick a niche and you can try to go after it, but it doesn’t sound like that’s that interesting and he wants to move on to the next thing.
It’s the hard balance. I feel like it does come back to knowing yourself like do you tend to just skip from one thing to the next, to the next? In which case, you should stick with things longer than you normally do. But if you are someone who tends to just grind it out and spend two, three, four years working on things that then fail, well maybe you should move on quicker from things in the future. It sounds like given that it took seven months to get that MVP, which is brutal, and that he has said thousands of visitors, this is a real tough one to turn around.
Jordan: Yes. It’s almost a blessing in disguise that it got so little reception. The really dangerous ones are that get just enough reception to keep you motivated to keep going, but will probably not lead you to where you want to go.
Rob: Yeah. That take years and years to get to 5K MRR, 10K MRR, whatever, right?
Jordan: Yes and then say, “Oh, man. I should just stop it,” and then that sunk cost is even more painful. It’s never seen as a sunk cost. It’s always look back at, “Well, I’m two years in. Should I really stop it at this point or should I keep going?”
Rob: Our last question for the day comes from Robert. He says, “So many products fail, but when does fail early not apply? It’s not like fail early can be a universal practice because almost everything seems to fail anyway. None of the advice that seems reasonable seems to work without getting hung up and never shipping. When is it a good idea to spend extra time getting it right from the get-go? Have you ever seen someone fail because the MVP was shoddy, only to see something similar succeed with a higher quality MVP and a more thorough team? Likewise, have you seen a really thorough product with thorough marketing and industry experienced co-founders fail miserably?” There’s a lot of questions here.
Jordan: Yes but it sounds like he’s searching for what is it that makes things successful and other things fail. That is so intangible. There are so many factors there. That mystery has no solution. Everyone has seen these things. Great team, great product rate, everything total failure, and the opposite of someone who doesn’t know what they’re doing and get lucky or looks like lucky and have spectacular success. I don’t know if you can expect to find that intangible thing that makes something successful while others aren’t. It’s tough to define.
Rob: I agree and some parts of his question, of his letter or his email, he said so many products fail. When this fail early not apply? He’s talking about building an MVP that’s thorough versus not. I think back to last episode where Laura Roeder was talking about launching a competitor to pager duty. That’s where you can’t build a shoddy MVP.
I think another one is like to compete against MailChimp, like what we did with Drip. You’re building an ESP, you can’t have a shoddy MVP and get that done. Now, you can go circuitous and you can build an addon to things and then slowly branch in, but I think what I’m getting to is like a mature market where there’s a lot of competitors who have mature products, that’s where just an early MVP that doesn’t have a huge differentiation is very unlikely to get traction.
I think of Josh with Baremetrics years ago, where he is first to market with this one-click analytics. Even with Peldi with Balsamiq where he was the first one to really build this mockup tool in the way that he did it, you can build a pretty basic version because no else was doing it and that basic version was good enough. People would put up with either bugs or just a lack of features because it was a novel new thing and you really couldn’t get it anywhere else.
Jordan: It’s like it requires practice to get a sense of whether or not something is on the right track. I hear you on the MVP, but I think the MVP is internal facing. We know that this is not quite good enough but we’re just getting it out there. The reaction from the market that external pieces is what tells you whether or not you’re on the right track and should keep going or should stop.
Our check out was an MVP when we launched it and it effectively tortured people and then they would cancel but not before the torture. They went through some torture first. The reaction from the market was so strong that we knew we were on the right track. We couldn’t have a shoddy MVP in a check out product, but we did. The reaction was so strong that we said, “Okay. We’re just going to have to bite the bullet here for six months and re-build this thing again, but we know we’re on the right track.”
MVP is one thing. The market is the other. Beyond that, it takes some practice. I went to see Jason Fried talk in New York a good 10 years ago. Basecamp was the hottest thing ever then. I went to go see him talk and at the end of the conversation, I asked him effectively something to the effect of, “Why are you guys so good at this? Why is this product making money when others aren’t?” His response was that they effectively have more practice making money. The more practice they get, the better they get at it. The sense of whether or not a product is working, or the MVP is good enough, or the market is responding properly, I think that stuff just takes practice.
Rob: Thanks for the question, Robert. I hope that was helpful. I realize ‘it depends’ is not always the answer we want to hear, but some of these are just difficult to answer.
Thanks again for coming on the show today, man.
Jordan: Rob, thank you. I appreciate it.
Rob: It’s great having you. If people want to catch up with you every week or two, they can go to bootstrappedweb.com which is where your podcast lives.
Jordan: Every week or two, that’s very kind of you.
Rob: You like that? You ship two or three episodes a month, right?
Jordan: Yes. It’s the summer that throws us off, with all the travels, Brian’s out there in the world, but we’ve got big plans, come back strong in the fall. I’ve taken real effort into this […] to be more open. It’s turning into the low light podcast and those are my favorite business podcasts these days, the super successful stories. Sure it’s entertaining, but the values of someone like your last episode with Laura Roeder, that’s it right there, man.
Rob: It’s the struggles, right?
Jordan: Struggle especially when you come across someone like Laura where she’s ridiculously good at what she does and you get the sense that everything she does works. You have a podcast episode like that and it helps you identify everyone struggles. It’s always just helpful to hear someone in her shoes be open about it.
Rob: There was one line in my MicroConf talk this year that I keep coming back to and it is there are no Cinderella stories. You can look at any startup, she got to seven figures in a year. That’s crazy, but you know that under the covers, that was probably very hard to manage. The things that we see from the outside, they just look amazing, and it’s like, “I wish my company was doing that.” Maybe you do, maybe you don’t.
Jordan: I think that line in your talk, sparkle a lot of conversations in MicroConf that went somewhere to the effect of, if you’re jealous or envious of some situation, just go ask them about it. As soon as they start talking, you’ll realize, “Oh okay. It’s not that amazing.” It’s nothing that you should be envious about. As soon as you actually get the details, you’ll realize how hard it is.
Rob: The growth might be envious but the challenges are not. If you have a question you would like to hear us answer on the show, call our voicemail at 888-801-9690 or email us at email@example.com. You can obviously attach an MP3 or a WAV file to that email. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes or any podcatcher of your choice by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.