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Show Notes
On today’s episode, Rob chats with Mike Ritchie about how they got their first paying customer in 30 days of launch, listening to your customers, and doing a massive pricing revamp.
SeekWell is looking for a freelance SEO marketer to help grow the top of their funnel. If you have experience in analytics and B2B SaaS marketing, please email Mike at mike@seekwell.io
The topics we cover
- 2:35 How Mike Ritchie and his co-founder, Thabo Fisher of Seekwell discovered the need for their product
- 5:57 Deciding to not go down the venture capital path
- 8:08 Seekwell’s typical customer profile
- 10:01 Getting the first paying customer within 30 days
- 14:26 Rewriting Seekwell’s codebase and doubling down on what customer’s love.
- 16:40 Applying for TinySeed
- 20:03 Raising prices and adjusting Seekwell’s value metric
- 25:53 Examples of creative use cases for Seekwell
- 29:02 Since Seekwell launched, have there been any low points?
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Rob: Welcome to this week’s episode of Startups For The Rest of Us. I’m your host, Rob Walling. This week I’m talking with Mike Ritchie from seekwell.io. They’re a TinySeed batch two company. We’re going to walk through their story, pull out the interesting tidbits, tactical, and inspirational—all the stuff you’re used to from this podcast.
Before we dive in, I want to let you know about a MicroConf Remote, which is our virtual summit coming here on September 1st. New announcement, Jason Fried is going to be answering questions about the process and the journey of building and launching hey.com, which you’ve probably heard about, needs no introduction. The theme behind MicroConf Remote is founder stories, all the keynotes, the advice, and the segments we have going. We have a bunch of creative stuff. I’m super excited about it. Each of them is a story of that app or that founder’s stories of launching and building. We’re going to pull out all the stuff you’ve come to expect from this podcast and from MicroConf. It’s the inspiration, the tactics, and the strategies that can help you continue growing your business.
If you’re interested in that, microconfremote.com. You can grab your ticket, and I’ll see you on September 1st for that live stream. I’m going to be broadcasting live from a studio here. We’re going to actually have a film crew, social distancing, of course. Have a few in-person guests here in Minneapolis as well as some remote folks like Jason Fried and others. Microconfremote.com for the full scoop. As we dive in with my conversation with Mike Ritchie, he is the co-founder of seekwell.io with his co-founder Thabo Fisher. As I’ve mentioned, they’re in TinySeed batch two. Some interesting things about SeekWell. They got their first paying customer within 30 days of launching the app. You’ll hear me ask him how they did that because it doesn’t always happen that way. And how they kept listening to their customers, both from motivation and to keep going, but also to realign the app.
There was a point where they were going to try to go to the venture path. Their thought process there and the experience is useful to founders who might be thinking about it or think it’s the only way to do it, and then have the realization of, we don’t actually need to do that. We don’t need to be a billion-dollar company. We can still build an amazing, life-changing business, even if it’s only a $5 million, $10 million, or $20 million company.
You’ll also get to hear about massive pricing revamp that they did just two or three months ago and hear the results of that. With that, let’s dive into my conversation with Mike Ritchie.
Mike Ritchie, thank you so much for joining me in the show today.
Mike: Hey, Rob. Honored to be here. Thanks for having me, man.
Rob: Absolutely. If folks want to go check out what you’re working on, it’s SeekWell. That’s seekwell.io. You were telling me that you were leading analytics in a FinTech startup, and you realized the need for this kind of tool. To give folks an idea, SeekWell SQL, it adds Structured Query Language to the apps your team already uses including Google Sheets, Excel, Slack, and email. I took that from your website. Do you want to give folks an idea of what are the two most common use cases that customers come to you to solve, and they get a lot of value out of SeekWell for?
Mike: Yeah, absolutely. The way I describe the product is in two ways. One, that we are the SQL app that I wished I had in my last startup. Two, that we’re really push-first analytics. Instead of having to remember the login to your monthly revenue dashboard or having to log in and check new users, we push data out of your team. If you’re a data junkie, you’re an SQL jockey, you can write a couple of SQL queries and get data pushed out to the rest of your team in the places that they’re already hanging out like Google Sheets, email, and Slack.
Rob: Cool. You started working on this in 2017, but you were able to go full time on it in July 2018, so about two years ago. Did you raise funding in order to do that? Or did you have enough money saved that you were able to focus full time?
Mike: Yeah. We actually raised a little bit of money, and that’s what convinced us to go full time. After that, we decided we wanted to raise a lot more money, so we can go really big with the product. We weren’t really able to convince people that it was a billion-dollar opportunity. We ended up wasting a lot of time iterating the product and trying to convince people that we fit that narrative of the billion-dollar story. What we realized when we took a step back was people really love what we had already built. We made a pivot to double down and really focus on things that we were afraid of and the things that differentiated us. That was our foray into raising funds.
Rob: That’s interesting. You go to raise funds, no one’s convinced that it’s a billion-dollar idea, but it’s working anyway. Is that right? People were signing up. People were getting value. You’re making money from this thing. Was there a realization of like, oh, maybe this doesn’t need to be a billion-dollar idea. We can turn it into a great business anyway.?
Mike: It was absolutely that. It was also our customers pulling us back in. We would release features that, again, we thought would pull us in that billion-dollar direction. Our customers say, hey, we don’t want this. We know there are already products that do these sorts of things—really fancy dashboards with maps and 1000 different features or 1000 different ways to look at charts. But what we realized is people really loved what we had built. Our intercom is completely filled with people saying, hey, I love this product. Thank you for building it. We’re thinking, why are we banging our heads against the wall trying to raise more money when we already have a product people love? Let’s just find more of those people.
Rob: Yeah. That’s really what MicroConf, Startups For The Rest of Us, and TinySeed are about. It’s like a billion-dollar opportunity is whatever. We can make up a number—it’s 1 in 1000 or 1 in 10,000. That means there are 999 or 9999 other businesses that can be amazing and life-changing for you as a founder, and frankly, solve a real pain point. Whether it becomes a $1 million, $10 million, or $50 million company, a lot of venture capitalists would look at $50 million in error as an abject failure. Whereas you can build a hell of a business with SeekWell if you get it into eight figures. Was there a mental shift then where you were like, okay, we’re not going to go the VC route. We are just going to focus on building a great product, serving customers, and essentially making it a profitable business?
Mike: Yeah, there was absolutely a shift towards laser-focus on profitability. There’s also a stress shift. We just became a lot less stressed out. I used to work extremely hard. We still all work extremely hard, but there was a lot less pressure of like, hey, you have to hit this one tiny home run of convincing 1 out of 1000 VCs to give you $1 million, give you $2 million. That went away, and we really just focused on making customers happy. That is a lot less stressful to me is one by one, making customers happy. They’re a lot easier to make happy, and that’s a lot more enjoyable.
Rob: Yeah. I often refer to that as asking permission to start a company. That’s how I have viewed venture capital for a decade or more. I see the same thing with filmmakers. If you’re a filmmaker, go make a […] film. Don’t wait around for a movie production company or studio to fund you. I believe it’s Robert Rodriguez, you look at Kevin Smith. There are these independent filmmakers that regrettably, put money on the credit cards, which is not something I would recommend. But Kevin Smith paid clerks for (I believe it was) $25,000 on his credit card. It’s a black and white movie. It’s kind of rough. It’s amateurish. But he went and made a film. He didn’t wait for permission. I think of writers as well. I need an agent. I need a publishing company to endorse me in order to publish a book. No, you don’t. If you’re a good writer, go write your book. Publish it on a blog like Andy Weir did. He wrote The Martian. He started publishing it, serializing it, and people we’re just like, this is amazing. Frankly, it’s a work of fiction, which is often hard to do. If you’re writing non-fiction, I’d say if you build an audience, it’s even easier. You don’t need permission to do this stuff. It sounds like you guys switched that up and said, hey, we don’t need permission if customers are banging at our door to use this tool.
Mike: Yeah. The Martian’s my favorite book, so that’s fitting, I guess.
Rob: Yeah, I love that book. My 14-year-old—who was probably 10 or 11 when we let him listen to it. I was like, It’s a really good book. There’s a lot of f-words in it. It’s funny. Did you see the movie as well?
Mike: Absolutely. I have the audiobook, I have the Kindle version. Kind of a Martian junkie, I guess.
Rob: We’re talking before I hit record. I was asking about your two customer avatars like who are your most common roles in a company that come to SeekWell and get value from it?
Mike: The first demographic we do extremely well with is technical product managers or just technical business people. They aren’t developers. They’re not planning to learn Python. They’re not planning to set up servers and web apps, but they do know SQL. They love it, and they like getting their hands dirty with it. That customer we do extremely well with, the product instantly clicks with them. The two things that click with them obviously is being able to push data out to the rest of their team. A lot of times, those technical product managers are the first data person at a company. They’re responsible for keeping the CEO informed, keeping the CFO informed, and everyone else. The second type of demographic we do really well with is the data person. Once you get into the 200-500 person company level, you generally have a heap of data and generally have a few data analysts. There, we also do really well. Especially those companies that don’t have really well-built out business intelligence. A company like Looker, they might come in and do a whole project to set up a pretty sophisticated data model and all of that type of work. The companies that haven’t done that yet, we also are extremely successful with. I mentioned too earlier, the third one we also do well with is even when that company goes past the point that they have really sophisticated data models. There’s a lot of edge cases that BI tools really do terribly with, especially some of the more traditional business intelligence platforms like Tableau. It’s really bad at pushing data out. It’s really bad at doing ad hoc analysis. It doesn’t have any ability at all to share SQL, with your team which is one of the core value props of SeekWell. You can store, tag, and search any SQL anyone in your team has ever written. It’s value props really resonate with those more scrappy data people.
Rob: I’m jumping around the timeline a bit, but I’d like you to take me back when you first launched. You told me you had your first paying customer within 30 days of launching, which is unusual (I will say). The first question I have is, you knew that you needed this tool at your previous job, did you do any validation? Did you have a conversation? Did you have a launch list? Did you have customers who said, yes, I want that? Or did you just go build it and launch it?
Mike: Yes. I think we did what was the best validation you can do is solve a problem you have yourself. I knew exactly what the solution needed to be. We built versions of it at my last company, but when we’ve really productized it and built it into an application, I already knew every single step that we needed to go through to build the product. I also knew exactly who the target user was and where they might find us. We launched on the G Suite Marketplace sometime in late 2017. From the time I pulled open Google Apps Script, which is what the original version of the product was written in, to the time we had our first paying customer was about 30 days.
Rob: Yeah, that’s crazy. There is a danger with just building for yourself because you can have a problem that is either so unique or maybe you can’t find any of your customers even though other people might need it. Did any of that enter your mind? Or was it, hey, I have this itch that needs scratching. I’m going to build it and I’m just going to expect that there are other people that I will find?
Mike: It definitely entered my mind. It also entered everyone we talked to when they were convinced it wasn’t a billion-dollar company because they just felt it was too small of a niche. I knew there were a lot of people and a lot of companies that were exactly like us out there. I did not know whether they would be interested in using a product like this, especially paying an amount that would make this profitable and great outcome for me and my co-founder. We did not know that going in. The validation was really like, hey, let’s throw this together, put it out there, and see what the response is. And the response was absolutely enough to keep us going.
Rob: Do you think that G Suite launch is still a viable approach today? It was almost three years ago. Because a lot of these things change and it gets too crowded. It becomes less viable over time. What’s your take on G Suite Marketplace?
Mike: Yeah. It was funny you said that. I was poking around in the Form’s marketplace—Google Forms—and there has been an explosion there. There are multiple applications that have millions of users. I think part of it is education. A lot of high schools, colleges, and even middle schools, use Google Sheets and Google Forms. It seemed like a lot of the products were tailored towards solving the problems that teachers, administrators, and schools might have. I think it’s absolutely still viable to build a business. We’ve had several copycats come on and launch similar products. I think we’ve been able to comfortably stay ahead of them. There are a lot of got yous when you’re building something, specifically in G Suite, and especially if you try to depend on Google’s architecture, sort of out of the box functionality of G Suite. The language is Google apps script. They let you pretty much build an entire application for free within the product, and it will run on its own. But the infrastructure has severe scalability and other limitations. There’s a lot of got yous in building one of those products. We’ve, again, been at this for a while and have found a way around all those issues.
Rob: You guys have been growing pretty well. Obviously, as a TinySeed company, I see your metrics. You guys have been growing pretty well over the past year or more. Is there a couple of lead sources or traffic sources? What’s working for you? Is it cold email? There are just so many ways to get new customers into B2B SaaS these days. I’m curious about what’s working for you guys.
Mike: It’s a little bit of everything. We’ve not tried cold emails, that’s on our to-do list. For anyone who hasn’t read it, the book Traction by […] founder is incredible. That’s the methodology we’re following is going through finding channels and running tests. Cold emails are tests we haven’t run yet. Honestly, most of the traffic to date just comes from either content of blog posts that we’ve put out there or just answers we’ve posted on places like Stack Overflow and Quora. It’s really just trying to be helpful on the internet and seeing who responds to that.
Rob: Yeah, overarching sounds like content marketing, but really you’ve focused some specific things on answering questions.
Mike: Absolutely.
Rob: At the end of 2019, which would’ve been around that time you applied for TinySeed, I believe our application was in the month of November 2019. You mentioned to me that you really double down on what customers love about SeekWell, and you completely rewrote your codebase, which is a big risk to do that. You want to walk me through what happened, how you made that decision to do it and did it go well? Was it worth it?
Mike: It goes back to what we’ve talked about before. We were adding features that our customer base, which was growing and happy, didn’t necessarily love. They weren’t things that they really wanted. We were adding those features to try to expand that base. We thought, hey, we might be too niche. What we’ve realized is that adding those features was making the application bloated. It was slowing things down. We weren’t getting those customers that we were going after with this new feature. At the end of 2019, we doubled down on what customers really loved about the application. Just made it blazing fast for the things they really cared about and made the app more stable, better performing, and really just focused on the features that they love.
Rob: Why did you have to rewrite your codebase? That’s something that I tend to discourage people unless something is really a nightmare because it often takes five times longer than you think, and it doesn’t solve as many problems as you think. But there, of course, are exceptions to these. I’m curious why you decided to do it and whether you thought in the end it was a worthwhile decision.
Mike: I’ll answer that last question first. It was absolutely worth it. I learned a lot on the job. I did not go to school for computer science. The first iteration of the application was a lot of googling, a lot of pasting things together, pasting things from Stack Overflow, and just trying to figure out—as we went along—how to build a web application. I learned a ton during that process and realized that there were some major flaws in the way application was designed that were ground level or base flow. We actually were able to launch that new version of the app extremely quickly because of everything that we had learned. We also finally implemented a front end framework that basically tripled, quadrupled the amount of time we’re able to launch the new features in.
Rob: It didn’t triple or quadrupled it, but you’re saying it dropped it dramatically—cut it down in half or more to launch features.
Mike: Absolutely, yeah.
Rob: Around that time—late 2019—you applied to TinySeed. I’m curious, you had already raised a small round, as you’ve mentioned before. You had some traction. You guys were rewriting the app, so I think you were doubling down on the bet. What motivated you to apply for TinySeed? What did you think you would get out of it?
Mike: The two biggest things were, one, we were really looking for a community. At the time, it was just me and my co-founder. Things get lonely as a founder, and there’s not a ton of great communities that are active. Since we were going into this direction of building a profitable company, that we wanted to really focus on profit, TinySeed popped on our radar. It felt like a great program to at least apply to. After talking to Einar, yourself, and Tracy, it just felt like a great place for us. Also, I spoke with a few founders from batch one, and after that conversation, it was already pretty obvious that if you were to accept those, we want to go in.
Rob: Cool. You said two things. You said you want a community, what was the other?
Mike: The cash obviously doesn’t hurt. When I said we raised a small round, it was a very, very, small round. We were digging into savings a bit to keep the company running. Obviously, financial stress was a distraction that we didn’t want. That bit of capital definitely helped alleviate that stress. With our trajectory, we felt pretty good that we wouldn’t need to dig into the cash too heavily. But it was just a good buffer and a good way for us to put some stress at ease.
Rob: Yeah, that makes sense. Folks listening may not know, but in the first month or two of the TinySeed program, we go to the TinySeed playbook where we’ve distilled a decade or more of SaaS knowledge. We start by looking really hard at funnels and different types of marketing funnels—high touch, low touch, and duo funnels (as I call them) that have a bit of both. We really dig in the pricing. We pound pricing into the ground pretty hard and bust everybody’s chops. Most SaaS are not priced correctly if you haven’t really dug into it. We talk about sales, lead generation, and hiring. We spend 5, 6 weeks going through pretty directive. We try to make it 101, but we also have pretty strong recommendations. Part of that is we find that most TinySeed companies adjust their pricing in some way. Maybe it’s a price increase, which is pretty common, but also, there’s the changing of value metric is another big one. For folks who aren’t familiar, if you run an email service provider where people add their subscribers to your system, then typically, you’re going to price based on how many subscribers they have. That’s what the Mailchimp model, the Drip model is. You call the number of subscribers the value metric. Oftentimes, that value metric, if you just take a guess at it, you’re wrong. You don’t know that until 6 or 12 months in. In fact, early Drip pricing, we didn’t charge based on subscriber count. We charged based on the number of new subscribers you received each month. That was a terrible way to go. People didn’t really understand it. We didn’t have expansion revenue. It was a mess. I had taken a guess. I was trying to zig, one other zagged, and it didn’t turn out correctly. Within six or eight months of launching, we switched the value metrics from a number of new subscribers to total subscriber count. That’s what made Drip a great business is the expansion revenue. All that said, there are a bunch of ways to tweak pricing. There are a bunch of ways to start to grow the business. I know that you guys adjusted your pricing value metric. You raised pricing. That was a pretty involved process. You want to talk us through your thought process there and the mental state of what that felt like to do something that could really accelerate growth or it can break your business.
Mike: You absolutely nailed it. We were completely misaligned—the value we were delivering with how we’re charging with pricing. We were pricing pretty much $49 or $99 a month based on a couple of different feature gates and then charging $19 more for each additional user. The fact was that people could get a tremendous amount of value out of the product but just having one user sign in. They might even sign in with a data@theirdomain.com, and then they can do an absolute ton of damage with the product. They can do a ton of automation, and we get a $49 monthly charge out of it. The strategy was to better align the value we’re delivering with the cost or the price of the product. The first thing we did was to try to base it on a sliding scale. In your example of an email provider, the analogy would be to charge based on the pure number of emails that you were sending and just factor it up by some cost per email.
After getting feedback both from our customers, some trusted advisors, TinySeed founders, yourself, and Einar as well, we’ve realized that was going to be way too confusing. Not enough people were going to understand how many (what we call) runs they were going to need coming into the product to really be able to pull the trigger and sign up for a trial with the product. We went back to the drawing board and decided to just make it tier, but based on that same metric so that if you have 10,000 runs, that feels like a lot. Customers were willing to at least try to start a trial there. What we really didn’t want to do is nickel and dime and have your price change for month-to-month and fluctuate every month. That strategy and that pricing model we launched in April. You said the emotional side of it, that was really stressful. We were really worried about whether or not existing customers would be confused like, hey, this is the way I paid today. Now you’re offering this pricing. Or whether or not we’re going to have a huge drop off in trial sign-ups. We don’t really have the volume that you can AB test something like this. We went ahead, launched it, and then tracked metrics closely.
The first thing that happened was that trials did drop. We had also, at the same time, removed our “free plan.” That was what we attributed most of the drop to. Relaunched with a continued free or basic plan, and saw trials tick back up to where we were before the pricing changed. Once we got to that point, we felt comfortable and confident to change. Two to three weeks later, when those trials started to invert, we felt great because we started seeing customers that would’ve been paying $49 a month were now in the $150 or higher plan, and they were all happy. They understood the pricing. They all got unlimited users, which I think used to cause angst. It’s that, should I go around the system? Create this data@mydomain.com to try to skirt the per-user pricing? Now that people have unlimited users, they sign up their entire team—so 12, 15. We have one company that has over 300 users now, and that never would’ve happened before without the unlimited pricing. We’re extremely happy with the results. We definitely have some work to do, but it honestly probably couldn’t have gone any better.
Rob: Yeah. That’s great to hear. It is always stressful to add or remove a credit card upfront, to launch your premium plan, to launch a lower-priced plan, to remove your lower price plan, to increase prices, to change value metrics, or any of these things. It’s terrifying as a founder because you know your numbers, and you know how many people should be converting at this rate. Suddenly, everything goes sideways. You really can damage your business, you can cut your business in half, or you can double it or triple it overnight. Obviously, the goal is to get to the point where you are doubling or tripling that with the same amount of effort. That’s the thing. I’ve been beating this drum. The number one, the biggest lever in SaaS—or in any business—is your pricing. Instead of having to build new features; instead of having to find more customers; instead of having to add more things, get them to invite more users, or whatever; you just change a number. You change numbers on a screen and then your stripe account. Obviously, there’s more to it than that. I’m exaggerating a little bit, but realistically, it’s the least amount of effort if you can optimize that price to accelerate growth. The other thing I want to touch on is you mentioned before you do per-user pricing or per-seat pricing—as I would typically talk about. For folks listening, the rule of thumb is if two people log into your app from the same team, and they see different things, then you can and probably should charge based on seats, based on user logins. But if people can log into Mailchimp—two people log in to Mailchimp—they see the same thing.
You don’t want to charge, as a rule, based on seats because people will do exactly what you said. They’ll just set up data at or support at. They share logins. At that point, they’re trying to work around it and it just doesn’t make sense. It makes a lot of sense that you’ve moved away from it.
So folks have an idea, you talked about your plans before. You do still have a free plan with some manual runs, but as soon as you start automating things, you have $50 a month, $150 a month, $300 a month, and $500 a month. When this works, it’s magical. It’s a massive lever. It’s been about two months since you changed pricing. Obviously, you said you still have work to do, but it sounds like that was a great choice for you.
Mike: Absolutely. Honestly, the only work is that $500 plan tapping it out or capping it there is where we might need to go next. We don’t really have that enterprise, call us type tier, and that’s probably where we need to add.
Rob: As we start to wrap up, I had this thought. Back before we sold Drip, there were certain things that we were trying to automate on a recurring basis. I remember always having to go to Derrick, my co-founder, to say, all right, I need our customer support person to have a button in our admin console that allows them to downgrade someone from this plan to that plan, or allows them to add… There were different add-ons that someone could do. I’m going to pay $30 a month then I get the Salesforce integration. Just little things like that. All it was was a SQL query. In essence, he would go to the Rails console. Before we had a button, he would have to type it in. Then that would get translated into an SQL query that would run against the Postgres database. Is that the kind of thing that you could plugin to SQL? Where hey, I’m going to write this SQL statement once, and then I could just come in and click it like a button. I could have my support person or customer success person come and click it once? This is a long question, but the second part of the question is there were also things that we want to run on a daily or weekly basis to notify our customer success person to be like, hey, we think that this big account might churn. Or here’s a list of accounts that are suddenly inactive and not logging in but pay as more than $300 or $400 a month. Are those use cases that a SaaS founder or a small SaaS team could integrate or could use?
Mike: Yeah, absolutely. I could give a concrete example of how we use it internally. We have a “DevOps” dashboard that just has, like you said, buttons. There are forms, buttons, and we even have a way to just edit an SQL table or the results of an SQL query as if it was a spreadsheet. We have this one dashboard that just has those items on it. Instead of a dashboard with a bunch of charts, it’s a dashboard with a bunch of actions that you can take.
For example, if you need to, on the fly, extend somebody trial or on the fly downgrade somebody for whatever reason, there’s a form that you can just enter the information. You can even have it pre-populate with the only values that are allowed to be entered for that field, and then submit the form or update the spreadsheet.
Again, it’s very much a spreadsheet fill where you just edit it and submit the edits. That’s sort of our solution or answer to that first problem. Again, that harkens back to the last company I was at. There were tons of operations things that we are constantly emailing our DevOps support for to just, like you said, write an SQL query. There might have been an hour-long or two hour-long turnarounds, whereas DevOps can write the query once and then expose it to the rest of their team. That’s kind of the first piece. The second piece is really exactly what the initial insight was around building SeekWell, which is push first. People want data and information pushed to them versus having to remember to go check it. Then, you can obviously schedule it to automate that. We have alerts for, hey, it looks like the usage for this really important account has dramatically dropped off the face of the Earth. We should possibly reach out to that customer, we should check if all of their automation is working, or check if the connection of their database is working. All of those types of alerts, we have to set up. They only send when you actually need to know about it. You can trust that it’s there if you need it, but you’re not distracted or bothered if you don’t need it.
Rob: Yeah, that makes a lot of sense. The last question for you is you’ve been working on this app now for three years (in essence), give or take. Has there been a moment where it just felt like a […] show? I’m basically asking for the low point. Over three years is a long time to ask. Has there been a time where you’ve been so discouraged that you didn’t want to do it or you didn’t think it was going to work? Or maybe when all the servers were done, you thought, we’ve had a good run?
Mike: Oh yeah, man. Every other day. Just kidding. Mid-2019, there were some times like that. We had, again, a product that wasn’t built by an engineer. It was built by someone that was learning as they went. We had issues with our server and scaling. We had issues financially—we’re running out of cash. That was probably the dark time in mid-2019. Again, what really saved us was just listening to customers. Like, hey, we love this thing. You have to fix these couple of items. This is something that will continue to pay for and we love paying for. That was both the low point, but also was when we came out of the trail. That was definitely the hardest point.
Rob: It’s so nice to have those voices because without those customers telling you that, it’s hard to keep going. It’s hard to convince yourself to keep pushing on something that feels like maybe it’s not working, or it’s really pushing against you. Customers that get that much value out of it and telling you to keep going, I have to imagine that was a big help for you.
Mike: Yeah. I had built things before that never got a customer. You can feel on top of the world before you get your first customer. We actually joked about this at my last company is everything runs smoothly until we had our first customers. It’s very easy to completely drop your database schema, make massive changes, and have your app down for hours or days. The other side of that was if you don’t have customers, you don’t know if you’re headed in the right direction. To me, now, that’s even scarier. If you’re building something, get it out there as quickly as you can to get feedback and make sure you’re headed in the right direction before you waste a ton of time.
Rob: Mike Ritchie, thank you so much for joining me on the show, sir. If folks want to check out what you’ve been working on, it’s seekwell.io, and on Twitter, you’re @seekwell_io. Thanks for joining me.
Mike: Thanks, Rob.
Rob: Thanks again to Mike for coming on the show. I haven’t done a listener question call in a while, and I think we’re going to have a listener question episode coming up soon. If you have a question for me or for a guest that I bring on my show, please email questions@startupsfortherestofus.com. The voicemails, if you attach an audio file or send me in Dropbox or Google Drive link, those go to the top of the stack but definitely running low on text questions as well. I would love any questions that you have about SaaS; about building, growing, and launching; and all of those things. Thanks again for joining me this week. I’ll be back in your earbuds next Tuesday morning.
Before we dive in, I want to let you know about a MicroConf Remote, which is our virtual summit coming here on September 1st. New announcement, Jason Fried is going to be answering questions about the process and the journey of building and launching hey.com, which you’ve probably heard about, needs no introduction. The theme behind MicroConf Remote is founder stories, all the keynotes, the advice, and the segments we have going. We have a bunch of creative stuff. I’m super excited about it. Each of them is a story of that app or that founder’s stories of launching and building. We’re going to pull out all the stuff you’ve come to expect from this podcast and from MicroConf. It’s the inspiration, the tactics, and the strategies that can help you continue growing your business.
If you’re interested in that, microconfremote.com. You can grab your ticket, and I’ll see you on September 1st for that live stream. I’m going to be broadcasting live from a studio here. We’re going to actually have a film crew, social distancing, of course. Have a few in-person guests here in Minneapolis as well as some remote folks like Jason Fried and others. Microconfremote.com for the full scoop. As we dive in with my conversation with Mike Ritchie, he is the co-founder of seekwell.io with his co-founder Thabo Fisher. As I’ve mentioned, they’re in TinySeed batch two. Some interesting things about SeekWell. They got their first paying customer within 30 days of launching the app. You’ll hear me ask him how they did that because it doesn’t always happen that way. And how they kept listening to their customers, both from motivation and to keep going, but also to realign the app.
There was a point where they were going to try to go to the venture path. Their thought process there and the experience is useful to founders who might be thinking about it or think it’s the only way to do it, and then have the realization of, we don’t actually need to do that. We don’t need to be a billion-dollar company. We can still build an amazing, life-changing business, even if it’s only a $5 million, $10 million, or $20 million company.
You’ll also get to hear about massive pricing revamp that they did just two or three months ago and hear the results of that. With that, let’s dive into my conversation with Mike Ritchie.
Mike Ritchie, thank you so much for joining me in the show today.
Mike: Hey, Rob. Honored to be here. Thanks for having me, man.
Rob: Absolutely. If folks want to go check out what you’re working on, it’s SeekWell. That’s seekwell.io. You were telling me that you were leading analytics in a FinTech startup, and you realized the need for this kind of tool. To give folks an idea, SeekWell SQL, it adds Structured Query Language to the apps your team already uses including Google Sheets, Excel, Slack, and email. I took that from your website. Do you want to give folks an idea of what are the two most common use cases that customers come to you to solve, and they get a lot of value out of SeekWell for?
Mike: Yeah, absolutely. The way I describe the product is in two ways. One, that we are the SQL app that I wished I had in my last startup. Two, that we’re really push-first analytics. Instead of having to remember the login to your monthly revenue dashboard or having to log in and check new users, we push data out of your team. If you’re a data junkie, you’re an SQL jockey, you can write a couple of SQL queries and get data pushed out to the rest of your team in the places that they’re already hanging out like Google Sheets, email, and Slack.
Rob: Cool. You started working on this in 2017, but you were able to go full time on it in July 2018, so about two years ago. Did you raise funding in order to do that? Or did you have enough money saved that you were able to focus full time?
Mike: Yeah. We actually raised a little bit of money, and that’s what convinced us to go full time. After that, we decided we wanted to raise a lot more money, so we can go really big with the product. We weren’t really able to convince people that it was a billion-dollar opportunity. We ended up wasting a lot of time iterating the product and trying to convince people that we fit that narrative of the billion-dollar story. What we realized when we took a step back was people really love what we had already built. We made a pivot to double down and really focus on things that we were afraid of and the things that differentiated us. That was our foray into raising funds.
Rob: That’s interesting. You go to raise funds, no one’s convinced that it’s a billion-dollar idea, but it’s working anyway. Is that right? People were signing up. People were getting value. You’re making money from this thing. Was there a realization of like, oh, maybe this doesn’t need to be a billion-dollar idea. We can turn it into a great business anyway.?
Mike: It was absolutely that. It was also our customers pulling us back in. We would release features that, again, we thought would pull us in that billion-dollar direction. Our customers say, hey, we don’t want this. We know there are already products that do these sorts of things—really fancy dashboards with maps and 1000 different features or 1000 different ways to look at charts. But what we realized is people really loved what we had built. Our intercom is completely filled with people saying, hey, I love this product. Thank you for building it. We’re thinking, why are we banging our heads against the wall trying to raise more money when we already have a product people love? Let’s just find more of those people.
Rob: Yeah. That’s really what MicroConf, Startups For The Rest of Us, and TinySeed are about. It’s like a billion-dollar opportunity is whatever. We can make up a number—it’s 1 in 1000 or 1 in 10,000. That means there are 999 or 9999 other businesses that can be amazing and life-changing for you as a founder, and frankly, solve a real pain point. Whether it becomes a $1 million, $10 million, or $50 million company, a lot of venture capitalists would look at $50 million in error as an abject failure. Whereas you can build a hell of a business with SeekWell if you get it into eight figures. Was there a mental shift then where you were like, okay, we’re not going to go the VC route. We are just going to focus on building a great product, serving customers, and essentially making it a profitable business?
Mike: Yeah, there was absolutely a shift towards laser-focus on profitability. There’s also a stress shift. We just became a lot less stressed out. I used to work extremely hard. We still all work extremely hard, but there was a lot less pressure of like, hey, you have to hit this one tiny home run of convincing 1 out of 1000 VCs to give you $1 million, give you $2 million. That went away, and we really just focused on making customers happy. That is a lot less stressful to me is one by one, making customers happy. They’re a lot easier to make happy, and that’s a lot more enjoyable.
Rob: Yeah. I often refer to that as asking permission to start a company. That’s how I have viewed venture capital for a decade or more. I see the same thing with filmmakers. If you’re a filmmaker, go make a […] film. Don’t wait around for a movie production company or studio to fund you. I believe it’s Robert Rodriguez, you look at Kevin Smith. There are these independent filmmakers that regrettably, put money on the credit cards, which is not something I would recommend. But Kevin Smith paid clerks for (I believe it was) $25,000 on his credit card. It’s a black and white movie. It’s kind of rough. It’s amateurish. But he went and made a film. He didn’t wait for permission. I think of writers as well. I need an agent. I need a publishing company to endorse me in order to publish a book. No, you don’t. If you’re a good writer, go write your book. Publish it on a blog like Andy Weir did. He wrote The Martian. He started publishing it, serializing it, and people we’re just like, this is amazing. Frankly, it’s a work of fiction, which is often hard to do. If you’re writing non-fiction, I’d say if you build an audience, it’s even easier. You don’t need permission to do this stuff. It sounds like you guys switched that up and said, hey, we don’t need permission if customers are banging at our door to use this tool.
Mike: Yeah. The Martian’s my favorite book, so that’s fitting, I guess.
Rob: Yeah, I love that book. My 14-year-old—who was probably 10 or 11 when we let him listen to it. I was like, It’s a really good book. There’s a lot of f-words in it. It’s funny. Did you see the movie as well?
Mike: Absolutely. I have the audiobook, I have the Kindle version. Kind of a Martian junkie, I guess.
Rob: We’re talking before I hit record. I was asking about your two customer avatars like who are your most common roles in a company that come to SeekWell and get value from it?
Mike: The first demographic we do extremely well with is technical product managers or just technical business people. They aren’t developers. They’re not planning to learn Python. They’re not planning to set up servers and web apps, but they do know SQL. They love it, and they like getting their hands dirty with it. That customer we do extremely well with, the product instantly clicks with them. The two things that click with them obviously is being able to push data out to the rest of their team. A lot of times, those technical product managers are the first data person at a company. They’re responsible for keeping the CEO informed, keeping the CFO informed, and everyone else. The second type of demographic we do really well with is the data person. Once you get into the 200-500 person company level, you generally have a heap of data and generally have a few data analysts. There, we also do really well. Especially those companies that don’t have really well-built out business intelligence. A company like Looker, they might come in and do a whole project to set up a pretty sophisticated data model and all of that type of work. The companies that haven’t done that yet, we also are extremely successful with. I mentioned too earlier, the third one we also do well with is even when that company goes past the point that they have really sophisticated data models. There’s a lot of edge cases that BI tools really do terribly with, especially some of the more traditional business intelligence platforms like Tableau. It’s really bad at pushing data out. It’s really bad at doing ad hoc analysis. It doesn’t have any ability at all to share SQL, with your team which is one of the core value props of SeekWell. You can store, tag, and search any SQL anyone in your team has ever written. It’s value props really resonate with those more scrappy data people.
Rob: I’m jumping around the timeline a bit, but I’d like you to take me back when you first launched. You told me you had your first paying customer within 30 days of launching, which is unusual (I will say). The first question I have is, you knew that you needed this tool at your previous job, did you do any validation? Did you have a conversation? Did you have a launch list? Did you have customers who said, yes, I want that? Or did you just go build it and launch it?
Mike: Yes. I think we did what was the best validation you can do is solve a problem you have yourself. I knew exactly what the solution needed to be. We built versions of it at my last company, but when we’ve really productized it and built it into an application, I already knew every single step that we needed to go through to build the product. I also knew exactly who the target user was and where they might find us. We launched on the G Suite Marketplace sometime in late 2017. From the time I pulled open Google Apps Script, which is what the original version of the product was written in, to the time we had our first paying customer was about 30 days.
Rob: Yeah, that’s crazy. There is a danger with just building for yourself because you can have a problem that is either so unique or maybe you can’t find any of your customers even though other people might need it. Did any of that enter your mind? Or was it, hey, I have this itch that needs scratching. I’m going to build it and I’m just going to expect that there are other people that I will find?
Mike: It definitely entered my mind. It also entered everyone we talked to when they were convinced it wasn’t a billion-dollar company because they just felt it was too small of a niche. I knew there were a lot of people and a lot of companies that were exactly like us out there. I did not know whether they would be interested in using a product like this, especially paying an amount that would make this profitable and great outcome for me and my co-founder. We did not know that going in. The validation was really like, hey, let’s throw this together, put it out there, and see what the response is. And the response was absolutely enough to keep us going.
Rob: Do you think that G Suite launch is still a viable approach today? It was almost three years ago. Because a lot of these things change and it gets too crowded. It becomes less viable over time. What’s your take on G Suite Marketplace?
Mike: Yeah. It was funny you said that. I was poking around in the Form’s marketplace—Google Forms—and there has been an explosion there. There are multiple applications that have millions of users. I think part of it is education. A lot of high schools, colleges, and even middle schools, use Google Sheets and Google Forms. It seemed like a lot of the products were tailored towards solving the problems that teachers, administrators, and schools might have. I think it’s absolutely still viable to build a business. We’ve had several copycats come on and launch similar products. I think we’ve been able to comfortably stay ahead of them. There are a lot of got yous when you’re building something, specifically in G Suite, and especially if you try to depend on Google’s architecture, sort of out of the box functionality of G Suite. The language is Google apps script. They let you pretty much build an entire application for free within the product, and it will run on its own. But the infrastructure has severe scalability and other limitations. There’s a lot of got yous in building one of those products. We’ve, again, been at this for a while and have found a way around all those issues.
Rob: You guys have been growing pretty well. Obviously, as a TinySeed company, I see your metrics. You guys have been growing pretty well over the past year or more. Is there a couple of lead sources or traffic sources? What’s working for you? Is it cold email? There are just so many ways to get new customers into B2B SaaS these days. I’m curious about what’s working for you guys.
Mike: It’s a little bit of everything. We’ve not tried cold emails, that’s on our to-do list. For anyone who hasn’t read it, the book Traction by […] founder is incredible. That’s the methodology we’re following is going through finding channels and running tests. Cold emails are tests we haven’t run yet. Honestly, most of the traffic to date just comes from either content of blog posts that we’ve put out there or just answers we’ve posted on places like Stack Overflow and Quora. It’s really just trying to be helpful on the internet and seeing who responds to that.
Rob: Yeah, overarching sounds like content marketing, but really you’ve focused some specific things on answering questions.
Mike: Absolutely.
Rob: At the end of 2019, which would’ve been around that time you applied for TinySeed, I believe our application was in the month of November 2019. You mentioned to me that you really double down on what customers love about SeekWell, and you completely rewrote your codebase, which is a big risk to do that. You want to walk me through what happened, how you made that decision to do it and did it go well? Was it worth it?
Mike: It goes back to what we’ve talked about before. We were adding features that our customer base, which was growing and happy, didn’t necessarily love. They weren’t things that they really wanted. We were adding those features to try to expand that base. We thought, hey, we might be too niche. What we’ve realized is that adding those features was making the application bloated. It was slowing things down. We weren’t getting those customers that we were going after with this new feature. At the end of 2019, we doubled down on what customers really loved about the application. Just made it blazing fast for the things they really cared about and made the app more stable, better performing, and really just focused on the features that they love.
Rob: Why did you have to rewrite your codebase? That’s something that I tend to discourage people unless something is really a nightmare because it often takes five times longer than you think, and it doesn’t solve as many problems as you think. But there, of course, are exceptions to these. I’m curious why you decided to do it and whether you thought in the end it was a worthwhile decision.
Mike: I’ll answer that last question first. It was absolutely worth it. I learned a lot on the job. I did not go to school for computer science. The first iteration of the application was a lot of googling, a lot of pasting things together, pasting things from Stack Overflow, and just trying to figure out—as we went along—how to build a web application. I learned a ton during that process and realized that there were some major flaws in the way application was designed that were ground level or base flow. We actually were able to launch that new version of the app extremely quickly because of everything that we had learned. We also finally implemented a front end framework that basically tripled, quadrupled the amount of time we’re able to launch the new features in.
Rob: It didn’t triple or quadrupled it, but you’re saying it dropped it dramatically—cut it down in half or more to launch features.
Mike: Absolutely, yeah.
Rob: Around that time—late 2019—you applied to TinySeed. I’m curious, you had already raised a small round, as you’ve mentioned before. You had some traction. You guys were rewriting the app, so I think you were doubling down on the bet. What motivated you to apply for TinySeed? What did you think you would get out of it?
Mike: The two biggest things were, one, we were really looking for a community. At the time, it was just me and my co-founder. Things get lonely as a founder, and there’s not a ton of great communities that are active. Since we were going into this direction of building a profitable company, that we wanted to really focus on profit, TinySeed popped on our radar. It felt like a great program to at least apply to. After talking to Einar, yourself, and Tracy, it just felt like a great place for us. Also, I spoke with a few founders from batch one, and after that conversation, it was already pretty obvious that if you were to accept those, we want to go in.
Rob: Cool. You said two things. You said you want a community, what was the other?
Mike: The cash obviously doesn’t hurt. When I said we raised a small round, it was a very, very, small round. We were digging into savings a bit to keep the company running. Obviously, financial stress was a distraction that we didn’t want. That bit of capital definitely helped alleviate that stress. With our trajectory, we felt pretty good that we wouldn’t need to dig into the cash too heavily. But it was just a good buffer and a good way for us to put some stress at ease.
Rob: Yeah, that makes sense. Folks listening may not know, but in the first month or two of the TinySeed program, we go to the TinySeed playbook where we’ve distilled a decade or more of SaaS knowledge. We start by looking really hard at funnels and different types of marketing funnels—high touch, low touch, and duo funnels (as I call them) that have a bit of both. We really dig in the pricing. We pound pricing into the ground pretty hard and bust everybody’s chops. Most SaaS are not priced correctly if you haven’t really dug into it. We talk about sales, lead generation, and hiring. We spend 5, 6 weeks going through pretty directive. We try to make it 101, but we also have pretty strong recommendations. Part of that is we find that most TinySeed companies adjust their pricing in some way. Maybe it’s a price increase, which is pretty common, but also, there’s the changing of value metric is another big one. For folks who aren’t familiar, if you run an email service provider where people add their subscribers to your system, then typically, you’re going to price based on how many subscribers they have. That’s what the Mailchimp model, the Drip model is. You call the number of subscribers the value metric. Oftentimes, that value metric, if you just take a guess at it, you’re wrong. You don’t know that until 6 or 12 months in. In fact, early Drip pricing, we didn’t charge based on subscriber count. We charged based on the number of new subscribers you received each month. That was a terrible way to go. People didn’t really understand it. We didn’t have expansion revenue. It was a mess. I had taken a guess. I was trying to zig, one other zagged, and it didn’t turn out correctly. Within six or eight months of launching, we switched the value metrics from a number of new subscribers to total subscriber count. That’s what made Drip a great business is the expansion revenue. All that said, there are a bunch of ways to tweak pricing. There are a bunch of ways to start to grow the business. I know that you guys adjusted your pricing value metric. You raised pricing. That was a pretty involved process. You want to talk us through your thought process there and the mental state of what that felt like to do something that could really accelerate growth or it can break your business.
Mike: You absolutely nailed it. We were completely misaligned—the value we were delivering with how we’re charging with pricing. We were pricing pretty much $49 or $99 a month based on a couple of different feature gates and then charging $19 more for each additional user. The fact was that people could get a tremendous amount of value out of the product but just having one user sign in. They might even sign in with a data@theirdomain.com, and then they can do an absolute ton of damage with the product. They can do a ton of automation, and we get a $49 monthly charge out of it. The strategy was to better align the value we’re delivering with the cost or the price of the product. The first thing we did was to try to base it on a sliding scale. In your example of an email provider, the analogy would be to charge based on the pure number of emails that you were sending and just factor it up by some cost per email.
After getting feedback both from our customers, some trusted advisors, TinySeed founders, yourself, and Einar as well, we’ve realized that was going to be way too confusing. Not enough people were going to understand how many (what we call) runs they were going to need coming into the product to really be able to pull the trigger and sign up for a trial with the product. We went back to the drawing board and decided to just make it tier, but based on that same metric so that if you have 10,000 runs, that feels like a lot. Customers were willing to at least try to start a trial there. What we really didn’t want to do is nickel and dime and have your price change for month-to-month and fluctuate every month. That strategy and that pricing model we launched in April. You said the emotional side of it, that was really stressful. We were really worried about whether or not existing customers would be confused like, hey, this is the way I paid today. Now you’re offering this pricing. Or whether or not we’re going to have a huge drop off in trial sign-ups. We don’t really have the volume that you can AB test something like this. We went ahead, launched it, and then tracked metrics closely.
The first thing that happened was that trials did drop. We had also, at the same time, removed our “free plan.” That was what we attributed most of the drop to. Relaunched with a continued free or basic plan, and saw trials tick back up to where we were before the pricing changed. Once we got to that point, we felt comfortable and confident to change. Two to three weeks later, when those trials started to invert, we felt great because we started seeing customers that would’ve been paying $49 a month were now in the $150 or higher plan, and they were all happy. They understood the pricing. They all got unlimited users, which I think used to cause angst. It’s that, should I go around the system? Create this data@mydomain.com to try to skirt the per-user pricing? Now that people have unlimited users, they sign up their entire team—so 12, 15. We have one company that has over 300 users now, and that never would’ve happened before without the unlimited pricing. We’re extremely happy with the results. We definitely have some work to do, but it honestly probably couldn’t have gone any better.
Rob: Yeah. That’s great to hear. It is always stressful to add or remove a credit card upfront, to launch your premium plan, to launch a lower-priced plan, to remove your lower price plan, to increase prices, to change value metrics, or any of these things. It’s terrifying as a founder because you know your numbers, and you know how many people should be converting at this rate. Suddenly, everything goes sideways. You really can damage your business, you can cut your business in half, or you can double it or triple it overnight. Obviously, the goal is to get to the point where you are doubling or tripling that with the same amount of effort. That’s the thing. I’ve been beating this drum. The number one, the biggest lever in SaaS—or in any business—is your pricing. Instead of having to build new features; instead of having to find more customers; instead of having to add more things, get them to invite more users, or whatever; you just change a number. You change numbers on a screen and then your stripe account. Obviously, there’s more to it than that. I’m exaggerating a little bit, but realistically, it’s the least amount of effort if you can optimize that price to accelerate growth. The other thing I want to touch on is you mentioned before you do per-user pricing or per-seat pricing—as I would typically talk about. For folks listening, the rule of thumb is if two people log into your app from the same team, and they see different things, then you can and probably should charge based on seats, based on user logins. But if people can log into Mailchimp—two people log in to Mailchimp—they see the same thing.
You don’t want to charge, as a rule, based on seats because people will do exactly what you said. They’ll just set up data at or support at. They share logins. At that point, they’re trying to work around it and it just doesn’t make sense. It makes a lot of sense that you’ve moved away from it.
So folks have an idea, you talked about your plans before. You do still have a free plan with some manual runs, but as soon as you start automating things, you have $50 a month, $150 a month, $300 a month, and $500 a month. When this works, it’s magical. It’s a massive lever. It’s been about two months since you changed pricing. Obviously, you said you still have work to do, but it sounds like that was a great choice for you.
Mike: Absolutely. Honestly, the only work is that $500 plan tapping it out or capping it there is where we might need to go next. We don’t really have that enterprise, call us type tier, and that’s probably where we need to add.
Rob: As we start to wrap up, I had this thought. Back before we sold Drip, there were certain things that we were trying to automate on a recurring basis. I remember always having to go to Derrick, my co-founder, to say, all right, I need our customer support person to have a button in our admin console that allows them to downgrade someone from this plan to that plan, or allows them to add… There were different add-ons that someone could do. I’m going to pay $30 a month then I get the Salesforce integration. Just little things like that. All it was was a SQL query. In essence, he would go to the Rails console. Before we had a button, he would have to type it in. Then that would get translated into an SQL query that would run against the Postgres database. Is that the kind of thing that you could plugin to SQL? Where hey, I’m going to write this SQL statement once, and then I could just come in and click it like a button. I could have my support person or customer success person come and click it once? This is a long question, but the second part of the question is there were also things that we want to run on a daily or weekly basis to notify our customer success person to be like, hey, we think that this big account might churn. Or here’s a list of accounts that are suddenly inactive and not logging in but pay as more than $300 or $400 a month. Are those use cases that a SaaS founder or a small SaaS team could integrate or could use?
Mike: Yeah, absolutely. I could give a concrete example of how we use it internally. We have a “DevOps” dashboard that just has, like you said, buttons. There are forms, buttons, and we even have a way to just edit an SQL table or the results of an SQL query as if it was a spreadsheet. We have this one dashboard that just has those items on it. Instead of a dashboard with a bunch of charts, it’s a dashboard with a bunch of actions that you can take.
For example, if you need to, on the fly, extend somebody trial or on the fly downgrade somebody for whatever reason, there’s a form that you can just enter the information. You can even have it pre-populate with the only values that are allowed to be entered for that field, and then submit the form or update the spreadsheet.
Again, it’s very much a spreadsheet fill where you just edit it and submit the edits. That’s sort of our solution or answer to that first problem. Again, that harkens back to the last company I was at. There were tons of operations things that we are constantly emailing our DevOps support for to just, like you said, write an SQL query. There might have been an hour-long or two hour-long turnarounds, whereas DevOps can write the query once and then expose it to the rest of their team. That’s kind of the first piece. The second piece is really exactly what the initial insight was around building SeekWell, which is push first. People want data and information pushed to them versus having to remember to go check it. Then, you can obviously schedule it to automate that. We have alerts for, hey, it looks like the usage for this really important account has dramatically dropped off the face of the Earth. We should possibly reach out to that customer, we should check if all of their automation is working, or check if the connection of their database is working. All of those types of alerts, we have to set up. They only send when you actually need to know about it. You can trust that it’s there if you need it, but you’re not distracted or bothered if you don’t need it.
Rob: Yeah, that makes a lot of sense. The last question for you is you’ve been working on this app now for three years (in essence), give or take. Has there been a moment where it just felt like a […] show? I’m basically asking for the low point. Over three years is a long time to ask. Has there been a time where you’ve been so discouraged that you didn’t want to do it or you didn’t think it was going to work? Or maybe when all the servers were done, you thought, we’ve had a good run?
Mike: Oh yeah, man. Every other day. Just kidding. Mid-2019, there were some times like that. We had, again, a product that wasn’t built by an engineer. It was built by someone that was learning as they went. We had issues with our server and scaling. We had issues financially—we’re running out of cash. That was probably the dark time in mid-2019. Again, what really saved us was just listening to customers. Like, hey, we love this thing. You have to fix these couple of items. This is something that will continue to pay for and we love paying for. That was both the low point, but also was when we came out of the trail. That was definitely the hardest point.
Rob: It’s so nice to have those voices because without those customers telling you that, it’s hard to keep going. It’s hard to convince yourself to keep pushing on something that feels like maybe it’s not working, or it’s really pushing against you. Customers that get that much value out of it and telling you to keep going, I have to imagine that was a big help for you.
Mike: Yeah. I had built things before that never got a customer. You can feel on top of the world before you get your first customer. We actually joked about this at my last company is everything runs smoothly until we had our first customers. It’s very easy to completely drop your database schema, make massive changes, and have your app down for hours or days. The other side of that was if you don’t have customers, you don’t know if you’re headed in the right direction. To me, now, that’s even scarier. If you’re building something, get it out there as quickly as you can to get feedback and make sure you’re headed in the right direction before you waste a ton of time.
Rob: Mike Ritchie, thank you so much for joining me on the show, sir. If folks want to check out what you’ve been working on, it’s seekwell.io, and on Twitter, you’re @seekwell_io. Thanks for joining me.
Mike: Thanks, Rob.
Rob: Thanks again to Mike for coming on the show. I haven’t done a listener question call in a while, and I think we’re going to have a listener question episode coming up soon. If you have a question for me or for a guest that I bring on my show, please email questions@startupsfortherestofus.com. The voicemails, if you attach an audio file or send me in Dropbox or Google Drive link, those go to the top of the stack but definitely running low on text questions as well. I would love any questions that you have about SaaS; about building, growing, and launching; and all of those things. Thanks again for joining me this week. I’ll be back in your earbuds next Tuesday morning.
Episode 510 | The Story of Startups.com
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On today’s episode, Rob chats Wil Schroter about the story behind Startups.com, the importance of output vs. hours, being specific about the kind of things you don’t want to do in life, choosing venture capital, and much more.
The topics we cover
- 2:43 How soon after first acquisition did Wil Schroter, CEO and founder of Startups.com, want to start the next thing?
- 5:42 Wil on building an incubator in the early days
- 8:55 History behind swapalease.com
- 11:22 On choosing if and when to take on venture funding and the origins for Startups.com
- 14:19 What is Startups.com and how much revenue does it generate?
- 19:41 Why Wil manages so many aspects of the business
- 23:41 The hardest part of building Startups.com
- 29:58 Wil’s thought process on acquiring companies
Links from the show
- Startups.com
- The Shocking Collapse of Zirtual and Maren Kate’s Next Act (plus How to Hire Well) | Episode 486
- Swapalease.com
- Virtucon Ventures
- Clarity.FM
- Launchrock.com
- Zirtual.com
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob: Welcome to this week’s episode of Startups For The Rest of Us. I’m your host, Rob Walling. Every week on this show, we cover topics relating to building and growing startups using an ambitious and sustainable approach. An approach where we’re not willing to sacrifice our health or our relationships to grow our company. This week, I spoke with Wil Schroter. He’s the founder of startups.com which you may have heard of. Startups.com has acquired a number of products that I’m familiar with.
He acquired clarity.fm from Dan Martell. He acquired Zirtual from Maren Kate, who I spoke with 12 or 18 months ago about the crashing and burning and then, the acquisition of that. Wil and his team were the acquirers. Wil’s story is incredible. He started his first company—it was an agency at age 19—while he was at Ohio State, and he went on to exit that in 2003. After that, he started an incubator. Again, this is the 2003-2005 timeframe. It was called Virtucon Ventures. He called it an idea-stage incubator for web startups where he helped conceived and launch companies including swapalease.com and unsubscribe.com.
He thinks venture capital is a poor use of capital. He has liked being the second buyer of a lot of companies. Fascinating story. In 2012, he started startups.com, which he calls the world’s largest startup launch platform based in Columbus, Ohio. Although they are 200 people strong, fully self-funded, and eight figures of revenue, Wil is still involved in doing UX copy work. He said he’s a CFO, the CEO, and he works on the products. Fascinating story from (I would say) kind of a Renaissance man who just has this massive skill set, who’s been doing this for 20 something years, and just has a deep well of knowledge.
Before we dive into our conversation, I want to remind you again of MicroConf remote, which is happening on September 1. It is a virtual event. If you head to microconfremote.com, you can get a ticket and reserve your spot. It is not going to be the typical virtual summit that you are seeing online. Producer Xander and I have put a lot of thought into making this creative, and it’s shaping up to be a great event. I hope you will join us, that’s in microconfremote.com. With that, let’s dive into my conversation with Wil Schroter. Will Schroter, thank you so much for joining me in the podcast today.
Will: Thanks for having me.
Rob: You started your first company at age 19 in college. It’s the story that we see in the films or we see glorified. But you built it into a massive agency—$700 million in revenue, and you exited in 2003. I don’t want to spend too much time diving into that because building an agency is not necessarily in line with what folks want to listen to here. But I’m curious, you sell your company and you obviously walk away with—I’m just going to assume at that revenue level—life-changing money, in a big way. Did you know at that point that you wanted to start the next one? Or did you take a time off, give it a thought, and check out your options?
Will: I was already starting the next thing long before it sold.
Rob: Wow.
Will: I mean you got to figure. I was 27. My career hadn’t even started yet. From my standpoint, life-changing for me was the first time I made over $100,000. I’m not trying to discount making more money, it’s wonderful, but I grew up in a really challenging childhood. I got to tell you, having enough money to know that I can pay my rent next month, it blew my mind the first time I had enough in my bank account. Just being able to pay my bills, it was such a huge departure from what I’ve been used to.
Rob: Yeah. I remember that moment for myself as well. There were a few stages. It was getting to $100,000 where I was like, oh, man, we’re pretty comfortable. Living in California with $100,000 is different than living in the Midwest where I live now. But then there was that moment when there was a next level up. The numbers are going to vary based on your lifestyle and stuff, but it was about $250,000 or $300,000 a year. I remember that being life-changing as well. I appreciate that.
Will: Yeah. People always think that the big cash outnumbers, I tend to tell people and I really, really, try to emphasize that if you can ever take a $250,000 check off the table, it may be the most life-changing money you’ll ever have. Because it’s all the money you need to do all the things that you haven’t been able to do for a very long time. For most people, it won’t be able to. Most people live paycheck to paycheck. Being able to have a little bit of cash can reset the baseline—it’s extraordinary. I don’t think a lot of people think about that.
Rob: Yeah, that’s the thing. It’s such a trip. I hear founders use the phrase life-changing money. Life-changing money, as we’re saying here, is different from what I call sunset money or a lot of people call FU money. FU money is where you don’t ever have to work again, don’t ever have to have a boss again. But life-changing money can literally be $250,000 as you’re saying.
Will: Here’s why. It’s because $250,000, again, let’s calibrate to what area in the world you’re in, not just part of the US you’re at. In most places, it will get you at least close to a down payment on a home. It will allow you to pay off debts you’ve assuredly racked up—your credit card debts, et cetera. It puts some extra cash in the bank. The first time something pops up—I don’t care if it’s a car repair or a doctor issue—you can cover it. If you think about it, most people spend most of their lives just trying to get through a handful of milestones that are massive cost milestones. The purchase of the car, paying off college debt, getting married, you name it. Those were often tens of thousands of dollars problems. Sometimes, $50,000-$100,000 problems, but they’re never million-dollar problems. Really, most of the things that we spend the first 20 years of our career trying to overcome all fall within $250,000.
Rob: Yeah, wise words, sir. You came off of this exit and you started an incubator, which is different than I think. People use incubators or accelerators these days interchangeably, but back then, it was more of folks heard of Idealab in Pasadena. It’s the prototypical one that I remember. Bill Gross started it. It’s where someone—in this case you—comes up with company ideas, startup ideas, and then, it brings people to build them and tries to launch a bunch of different ideas. Does that accurately describe what you were doing?
Will: Yeah. What happened was at the agency, we were one of the first web development agencies, and got paid lots of money to build websites on the internet. It was a combination of me walking in big companies like BMW and Best Buy saying, here’s how to use the internet. Here’s how to use the technology. After a while, I started thinking, I’m the one with the know-how to do this stuff, and I’m the one with the ideas that I’m pitching to these clients. Why keep going to clients? Why not just build this stuff for me, get my own output, and take clients out of the […] together? I started working on building web properties. It was right at the dawn of performance marketing—this was in the early 2000s. A lot of people came in their careers when this was all well-established, whether it’s SEO, PPC, affiliate marketing, et cetera. But right around the turn of the century, all of those things were just getting invented (ironically) from Bill Gross. If you’ve recalled, Bill Gross invented PPC. What was really interesting about all of that is for the first time in history, you could build a company on tens of thousands of dollars because you could pay for your customer acquisition as you did it. Whereas before, you have to dole up tons of money and hope that somebody might show up in non trackable media. I saw that trend—again, I was coming from the agency world—as a different way to be able to build a company. That’s where Virtucon and the companies we built out of that were spawned.
Rob: So many folks who are agencies or freelancers want to get into products. It sounds like—
Will: They should.
Rob: Yeah, exactly. That’s where I came from. I was a software developer, became a consultant, started a micro-agency where I had a few contractors. And I had a few full-time jobs there too, but I have a similar experience as you were. It’s like, I don’t want to build stuff for other people. I want to be creative and build equity. I never felt like I was building much long term value. I didn’t build an agency nearly as large as yours.
Will: By definition, you’re not building long term value. You know, what’s really interesting about all of these is if all you’re doing is charging for your time, you’re always going to be on a treadmill because the time is the treadmill. At some point, you got to be charging for your output, not your time. It’s such a tough transition to make. Client services, professional services, is always the easiest business to get into and the hardest business to get out of. For a lot of folks, we get into it, we get used to getting paid good money, and then like, wow, we want to take a portion of our time, and we want to go build something that will make money while we sleep. The challenge in the delta everybody has is trying to do both—trying to get that other thing off the ground. But it’s a worthy pursuit. Whenever I talk to folks and say, hey, I’m trying to figure out how to get into the product. I’m like that is always the […] evolution.
Rob: Yup. I have some notes here that you’ve launched out of Virtucon, which was the name of the incubator. You launched swapalease.com, which I’ve actually checked out. I browsed looking at people trying to get out of their leases and then like, wow, what would it be like to have a Maserati for four months?
Will: It was interesting. When I was first getting started with the incubator concept, the guys at Swapalease had already started the business. That was the first one. They had an idea of a prototype—in today’s terms, an MVP—but they hadn’t really scaled it. I said, look, I’ve got this model that I’m working at. Let me take that and grow it. That was the first client (if you will) of our incubator. We ended up scaling that pretty quickly. It was doing almost no revenue. And then within the first year or two, we’re doing about $3 million in revenue but on a $1.5 million EBITA. That was all through performance marketing. Remember, this is a long time ago. It’s funny because I haven’t […] the website in years. But I think the design that’s in there was the same one that we used back in 2003. It has not evolved much, but it’s a great business. I started to realize that you could build these small businesses that could start small and either succeed or fail small—which again, at that time, was not the case—and figure out which ones might have some legs. After that, I started five more companies. What was interesting about it is I wasn’t just starting them and saying, hey, let’s see how it goes and somebody else runs them like an angel investor does. I was actually running them, and I mean really running them. Talk about running payroll, doing marketing, and doing finance—you name it. Within five years, I basically had five full-time jobs. Just a side note, not the healthiest way to live.
Rob: It’s such a trip because you and I had traveled very similar paths, although, at that time, I guess you were there from about 2003, or not there. You have started it and worked on Virtucon and these companies from 2003 to about 2011-2012. In that 2000-2005 timeframe, I was launching super small, single founder software products. As pay-per-click, SEO, and affiliate stuff started, I had learned those spaces. That’s how I built these little, micro-companies. If you remove two zeros from a lot of your numbers, I had a collection of about eight or nine web properties. Some were websites, the […] revenue, others were actual downloadable software—people paid a few hundred dollars for it, and I cobbled together a fulltime in income. I was able to escape freelancing, in essence. You were doing it on a much larger scale at that time. It sounds like Virtucon—you self-funded that, correct? There was no venture capital involved.
Will: Correct.
Rob: Okay. You mentioned to me offline that some of the companies that you spawned out of there did wind up taking venture?
Will: Yeah. We just fell into it. We were running one company that was based in Los Angeles. I started spending more and more time in Los Angeles. That’s essentially what got me to move out to California for about 10 years. While I was there, I started to meet some of the local entrepreneurs. This was probably circa 2007, give or take. One of the entrepreneurs I’ve met, an investor, was the guy that just got their name, Mark Suster. Mark blogs a lot over at Upfront Ventures. Mark and Mike Jones, who runs Science, the incubator in Santa Monica as well as he used to be the CEO (for a minute) of Myspace, did a bunch of other things—great guy. Both of them in the same week offered to invest their personal money in one of the projects I was working on, and I hadn’t thought about taking on investors. It just didn’t occur to me. But then, I thought about it and I said, hey, for every one of these companies, as they grow, they’re just going to need exponentially more money, and every dollar I invest in growing one of them is another dollar I can invest in starting another, so sure. That’s a very small amount of money for quite a few people. In all those connections, I started to meet lots of investors. Investors said, hey, what are you going to do next? What are you going to do next? It got really interesting. The last company we did, a company called unsubscribe.com, we were able to raise money for that in about 24 hours. It was just easy. Compare that to the pain and heartache that I went through constantly topping off the bank accounts for all these different companies is hard to turn away. Even during a tough time—2007, 2008 financial crisis—not exactly the easiest time when you’re raising money.
Rob: Yeah. Have you raised money before this?
Will: Never. I was in Columbus, Ohio. At that time, we didn’t have any money. You do things the old fashion way. You just found revenue.
Rob: Right. This landscape is so different today.
Will: Yeah, so different. So different. Now, there’s a $500 million fund in Columbus. I wouldn’t say I necessarily had a bad experience, but I can say this, I had a lot of experience because I had three venture-funded companies at that point. I was running all of them all the same time. I just had this really unusual life experience where I was running five companies at exactly the same time. While one company was practically going bankrupt, the next company was getting an amazing term sheet. While one company was losing its biggest customer, the next company was winning its biggest customer. Five different staff, very different dynamics with each, and I just got all these incredible experiences. I also nearly killed myself, but that’s a separate issue. After a while, I started to spend a lot of time with a lot of founders, coaching them through the process. People would say, hey, I understand you know a lot about starting companies, can you help me understand funding or customer acquisition? I realized what I was particularly good at was teaching people how to build startups. I said, why don’t I figure out how to do that for a little bit? That’s where startups.com came from.
Rob: Right. In 2012, you founded it as startups.co, since you’ve obviously got the killer domain named startups.com. That is so cool.
Will: Very expensive consonant but yeah.
Rob: I’m sure. It’s a good way to put it, man. For folks who aren’t familiar with startups.com, how do you explain it? What’s the elevator pitch?
Will: We teach people how to get ideas out of their heads and into a launch mode. The average person watches Shark Tank, and they say, I want to do something just like what that person said they want to do. They go to start it and they realize they have no idea what they’re doing. There are so many different types of advice out there. There are so many different tools out there. It’s fairly confusing. Some of it is good. Some of it is bad. But what I wanted to do is to create a simple place where people could get the education they needed, a community of people that could actually help them—we’ve got over 20,000 mentors at the ready— and the tools they need to get through the hard parts like raising money, finding your first customer, or putting your plan together, things like that.
Rob: Nice. Yeah, we have a lot of overlap actually. With MicroConf, we do a chunk of that, and then we do in-person events. There’s a Venn diagram. We have education, community, and in-person events, but we don’t have actual software products versus you have actually built yourself up a nice little cache of businesses. You first came on my radar, I believe, when you bought clarity.fm, which I think is now clarity.com. You bought that from Dan Martell several years ago. Folks who listen to this podcast will remember that Maren Kate was on a few months back talking about Zirtual—raising funding, growing that, and unfortunately having it implode on her. You also acquired that from her as well as Launchrock, Fundable, which is a crowdfunding platform, and Bizplan. When you first came up with the idea of startups.com or as you were building it in the early days, were you just planning to do education and community? Or were you thinking from the start, No, I also want to buy other companies, build other products, and bring them under the umbrella?
Will: That was the trick if we want to help people through the startup process, through the launch process, where do you start and where do you end? I’m sure you deal with this exactly in your own business. Do you just give education and say go figure it out from there? Do you just connect them with mentors and say go figure it out from there? Do you just provide one dimension of the problem of the software, which is funding or customer acquisition and say, figure it out from there? We realized that we just couldn’t find a really logical start and a stop point to help people scale. To give you a sense of it, there are 1.2 million companies on the platform. Not everybody’s going through the whole process sequentially either. Not everybody wants to help the moment they have an idea. Just many people come to us and they’ve already got the idea. They’ve incorporated, they’ve got a team together, et cetera. They’re working on first customers. They’re working on funding. Where we fit best, where our sweet spot is—we’re at the point where you either had the idea or just about to launch and just barely launch. We do some things post-launch, but generally, that’s where we fit best. Once you’ve launched, once you’re in the market, it kind of becomes a different path, and it becomes highly segmented—depending on what business you’re in. But getting up to the launch point is pretty uniform. We figured we want to cover every aspect of that part of the journey.
Rob: You’ve acquired these products and built quite a team. You were mentioning you have 200 people. You’re still fully self-funded. Can you give folks an idea of the revenue you were doing here?
Will: Yeah. We don’t get specific. We say it’s eight figures, so you can figure. It’s at least that. But we’re debt-free and profitable. An interesting part of that, if you don’t mind me just jumping in as to why the debt-free and profitable thing is so important to us. Everybody understands the value but I just want to unpack that just a little bit more. Debt-free and profitable was our goal. A lot of people talk about growth goals. They say we want to hit $1 million, or we want to hit $10 million, $100 million, or whatever. Our only goal was to become debt-free and profitable because all we cared about when we formed the company were two very specific things. Number one is, don’t have a boss, which often comes from being in debt in some way. Whether you raised money or whether you take on a traditional debt, et cetera. The second was to be able to do this first as long as we need to make it work, which means give yourself an unlimited runway. We don’t want to be in a rush. Not that we don’t want to get things done quickly but that’s not the same thing. I like to move quickly, but I’m not in a rush. In a rush means there’s some artificial deadline that’s being imposed upon me that I have to hit, and I didn’t want that. I want things to take as long as they need to take to get them right. That goal has served us so incredibly well, and it’s the first time I’ve been able to operate under that after doing nine companies.
Rob: Yeah. Are debt-free and profitable a big part of that in essence the funding you brought to it from the exits and just prior companies?
Will: Not really. It didn’t hurt, but people tend to think of it as there was this big pot of cash that we use that we could just burn through without thinking about it. It’s worth noting I’m also our CFO, so the finances are incredibly important. I said let’s make every single decision based on will it get us to profitability faster? We did a lot of things that are nontraditional. In other words, when we’re building the first parts of the business, we built a professional services business. The part that we said let’s try to get out of. In the professional services business, it was helping people write business plans, or go through capital-raising processes, et cetera. We did that because that revenue would scale faster in order to get us to profitability so we can start to build a SaaS business faster. But not because that’s what we’ve wanted to get into, per se like we like providing service, but we did that as a means to an end. There are lots of decisions based on, will this get us to profitability faster?
Rob: You just mentioned that you are the CFO, I’m assuming you’re the CEO. You said you write most of the copy. You do UX work. In a 200-person team to have one person doing all of those roles is highly unusual. Do you want to talk a little about that?
Will: Yeah. I also manage our social media. I have a lot of jobs.
Rob: How many hours do you work in a week?
Will: Not that many. I would probably say I’m available for about 50 hours a week. I would say my core focus hours where I get productive things done are about three hours a day.
Rob: Fascinating.
Will: I can go on forever about this but to give you the TLDR version, what I learned early on is I spent most of my career working 80-100 hours weeks for decades. It had huge impacts on my health, but more importantly, I worked all those hours because I could, not because I should. Once I started to become more militant about my time because I have kids, and now it’s a one for one—time I was at work, I wasn’t with my kids. And I just wasn’t really willing to make that trade-off. I realized that I just had to make the fishbowl of my time smaller. Lo and behold, I actually got more done. A huge proponent of focusing more on output than hours, I’m just so thankful for it.
Rob: You and I have a lot in common because the same thing happened to me. I worked a day job, then I came home at night and I would work four, five, six, seven, hours. I would work 4-6 hours every night. My wife and I were married, but she knew I was building something bigger than us. We both grew up a pretty working class and our futures were just working jobs. I was like, no. I think I can do something bigger than that. Once we had kids, I have to have enough good fortune/hard work. I did have businesses on my own, and I have already backed off. There was a time where I was working 10-12 hours a week for almost 10 months with no full-time income. It was the 4-Hour Workweek. I read that in 2007 and I was like, that’s my goal. I achieved it in about 2010. I really enjoyed that time, but I got very bored. I realized I needed to challenge myself. I’ve never gone back to working long hours after that. It’s a level of efficiency, I believe, effectiveness, wisdom, and experience. There’s something that comes with this, and I love the idea you’ve talked about of time boxing. My wife had our second child in 2010. That was another change. Our first child was 2006, the second one was 2010. That was a big shift for me mentally. It allows me to be like you—more productive than I probably ever was in my 20s.
Will: Yeah. Again, I think you touched on a couple of interesting points. One is that if you have the experience, you can work a little bit less because you know what’s around the corner, whereas if you didn’t before. Another aspect of it is if you have the hour available—I don’t think we realized this when we’re younger—you’ll just use them because they don’t cost you anything. Later on in life, as you get older and as your priorities change, there’s a real cost to it. For almost 20 years, I never went home during daylight. It didn’t occur to me that you were allowed to. I just assumed when you go home, when you’re in your car, it’s always nighttime. When you leave and go to the parking lot, there’s never another car there. Twenty years is a long time to feel that way. Now, I look back thinking I was an idiot. I should have looked at that as a massive failure on my time management and output. But instead, I looked at it as a source of pride because I was “working hard.” There’s nothing wrong with working hard, but I got to tell you, anybody who’s working 80-100 hours and says they can’t work less, I would highly challenge that. Maybe it’s possible. I’m not saying there’s one-size that fits every schedule, but I got to tell you, as a guy who worked awfully hard for a long time, I look back now and realize I could have managed my time so much differently.
Rob: As you said, it takes a toll on your health and on your body.
Will: It does.
Rob: It’s not good. I’m curious on that note. I like to touch on with founders kind of high and low. Oftentimes, we time-box it. Because you’ve done so much it would be hard to go through highs and lows of all of it. But I’m curious, what’s been the hardest part of building startups.com?
Will: It was right before it started. The epilogue to me starting all those companies and doing the incubator is I mentioned it was taking a toll on me. In 2011, right around the time—2012 specifically—we started startups. We were getting married—my wife and I. We’re having our first child. All these things were happening—these life events. I was 37 years old, and I always point out the age because I’m going to tell you there’s just somebody who’s listening to this, there is a freak anomaly about the age of 37. I can’t tell you how many founders—at the age of 37 specifically—have hit this bizarre life-changing event. The life of events are all different, but it’s always at 37. I can’t figure out why. Anyway, I’m sitting with my friends at lunch. I just said to myself, boy, I don’t feel right. I can’t quite explain what it is, but I think I was going to head home after lunch. After lunch, I got back to the office, hopped in my car, and drove up the highway back to my house. I was actually living pretty close. I get on the phone with my wife and I’m like, hey, I don’t feel right. Just as I said that, my whole world goes black. Mind you, I’m in my car on the highway. My heart stopped. Just for a fraction of a second. But if your heart ever stops, it’s hard not to notice. It was the scariest moment of my life because you’re dead for a fraction of a second. I fortunately didn’t go off the road or anything. It was just a brief but terrifying moment. I didn’t know what was happening. I just assumed I was having a heart attack. I was only a minute from my house, and I ended up making it back to my house. I probably shouldn’t have but whatever. My friends come and get me. Take me to the hospital. I’m in the ER, and they said, “You had a massive anxiety attack.” I said, “I never had anxiety in my life.” Not according to your heart. It turned out that for 20 years, running myself nonstop, pretending that all the things I was doing to myself didn’t exist, doctors said, “Look, eventually your body’s going to tell you, enough is enough. Your body just shutdown on you.” I didn’t even see it coming. Now, in retrospect, I should’ve. All the signs were there. I had as much stress than you could possibly have. But at that moment, that was one of those life moments where you just have to rethink everything. At that point, I just stopped everything that I was doing. I did a hard stop and I said, look, everything I was involved with, I can’t do it, which was so out of the ordinary for me. I spent, what I thought was going to be a couple of days, wind up being a couple of months just figuring out what I was going to do next. There was a long story about it that I wouldn’t get into, but that was one of the toughest parts of my life because I had no idea what to do next. I just knew that the pace I was running and the things I was doing just couldn’t work anymore. It’s rare that you get that binary stop switch, especially at a fairly young age.
Rob: Yeah. It’s obviously terrifying and must’ve been extremely stressful. But it sounds like almost a blessing in disguise because it seems like you—
Will: Yeah. A whole bunch of things. The top ones that a lot of folks will appreciate. One of the things is you try to say, hey, if I’m going to focus all my time and energy on something, what’s the biggest thing that I can do? I found for myself that that was a bad question because it’s too ambitious. It’s too hard to ever come up with that answer. What I found was really helpful was I made a list of all the things that I don’t ever want to do again, which wound up being the most life-changing I ever did. I sat down and said, look, I’m 37. I’ve been doing this for 20 years. I said I’m not that old but I’m not that young. I know enough to know what I don’t want to do anymore. I started to make a list. I said, here are all the things I’m just never going to do no matter what. Number one, I’m never going to work for somebody else in any capacity. Up until that time, I’ve always been a founder. Depending on what you choose to do, you have bosses. You take on investors, you have bosses. You take on certain clients—in professional service work—you have bosses. I was like, I don’t ever want to have a boss. Another thing, I don’t want to work with people I don’t like. In any capacity for one second, I don’t ever want to be in a position where I have to. No matter how good the deal is, good the opportunity is, or this or that, I just don’t ever want to go home with my stomach turning and be forced to work with somebody. I just stopped. All the people I just didn’t want to work with—for whatever reason, I’m not that hard to get along with, by the way—I just didn’t ever again. The list goes on, I won’t bore you with it. The point is, I made a hard commitment to just avoid the things I never wanted to do. Lo and behold, my life became 100x better because it turns out, doing the things you don’t want to do is typically what people are trying to be successful for in the first place.
Rob: It’s shocking to me because I have a very similar list that I put together after I sold Drip. I’ve just pulled it up. I literally wrote this out. I don’t want to experience longstanding or ongoing stress that I can’t escape. I never want to negotiate a raise again. I shifted that one after I quit a job. Never want to have to commute again. Never want to ask permission to take a day off. Never want to only take two weeks of vacation a year. Never want to work with people I dislike. I’ve had a few of those, and the overlap is crazy.
Will: They’re also logical conclusions. We all hit a point in our life where enough is enough. What I tell founders—particularly young founders, it’s not specific to them, but the earlier you can get started on this list, the better—is make that list first. Over time, you’ll add to that list because some of the stuff that’s on your list or my list is there because we’ve been around long enough to know why that one is so important. For example, when I was younger, if somebody said, I don’t want to work with people I don’t like. I’m like, well, you really don’t have a choice. This client’s going to pay our bills. Yeah, they’re a jerk, but I need it. I need the money. Or hey, this investor’s a blowhard, but I need his money. I’d be willing to compromise those. Sometimes you just have to take it on the chin. After a while, as you get further in your career, you start to understand the cost of those compromises. By way of that, you start to truly understand the benefit of not compromising. For younger founders, maybe you don’t quite see it yet, but if you put that idea in folk’s head, they’ll start to develop that over time and start to say, okay, I get it now. People are jerks and I don’t want to work with them. Check.
Rob: I want to switch it up a little bit because I have this topic. You mentioned it offline and it resonated with something I have written about and talked about before. As I was coming up 2005-2010, say, I had previously—since I was a software developer—built a lot of products. I would start them and it would take me months of nights and weekends because I was working a fulltime job. At a certain point, I realized I could acquire products for not that much money. All I needed to do was add a feature to it and market them. It was a huge shortcut for me. Instead of spending six months of nights and weekends development time, I could spend $5000 or $10,000, which is not nothing, but I was making that as a consultant. I had stuff on this side going. I talked about how being the second buyer of something was super advantageous because oftentimes, someone would either spend their 500 hours building it. I guess in that case, I was the first buyer. In other instances, someone would acquire, couldn’t grow it, and then I would be the second buyer. I just wasn’t paying that much money for these things that I had previously thought were really valuable. I was billing $150 an hour. If I spent 400 hours, which is not an outrageous amount of time to build a full software product, that’s $60,000 of my time that I could’ve literally been billing. To me, that 400-hour product was worth, in my head, $60,000. Turns out, I bought a product that took about 400 hours to build for less than $10,000. To me, that was a deal. You mentioned that you have been to be the second founder or second buyer of some of these tools that were funded by venture capital. You want to talk through that top process and how it played out?
Will: Yeah. My thought process started when I was the company being funded by venture capital. I thought to myself, the first year to two years of spend with a VC money is so wildly inefficient by definition because you’re experimenting like crazy. You have this massive amount of inefficiency between validating the idea, getting the right team, trying all these different marketing channels, figuring out what works, et cetera. Most of that gets pissed away no matter how good you are. I’ve been doing this a long time and I can’t do it any more efficiently than you can. That said, I started to think about, boy, whoever gets to show up second on this idea—just like you did, just like I did—doesn’t have any of that cost. All of those things have been figured out. Remember, it’s not just dollars. It’s also time. When we bought a product called clarity.fm, which you mentioned Dan Martell had built, Dan had raised millions of dollars from great investors. But more importantly, Dan—who’s super smart—spent years and years and years trying every combination to see what worked and figured it out. He did all the customer acquisition, he did all the scaling, he tried all the pricing models, et cetera. We were fortunate—when we did the acquisition, Dan called us and asked if we were interested in it—to be able to stay cool. Dan’s got it all figured it out. We need to pick it up with all that stuff already done. Yeah, maybe we need to make some changes or additions or maybe we don’t. But the point is, it’s already been figured out. We don’t have to spend all that time to do it again. If I could spend $250,000 to build my own product or $250,000 to acquire somebody else’s product that probably spends, even more, trying to get into it, in most cases, I’d take the latter every single time. Because the one thing that money doesn’t account for is all the time and effort it took to get into that product.
Rob: Awesome, Wil. Thank you so much again for coming on the show. I feel like it’s been a really insightful conversation. You have tons of knowledge. I know we can talk for hours. If folks do want to hear you, think through this kind of stuff on a weekly basis, they can head to the Startup Therapy Podcast where you and someone you work with at startups.com, you guys chat through these kinds of stuff. How long ago did you say you started? About a year?
Will: About a year ago. We just recorded episode 60. We just sit and talk about stuff that we know is keeping founders up at night, and we walk through the issues detail by detail and show them how we get through.
Rob: Awesome. Obviously, if folks want to see what you’re up to on a day to day basis, startups.com. Pretty easy to remember.
Will: Yeah.
Rob: Thanks again, Wil.
Will: Thanks for having me.
Rob: Thanks again to Wil for coming on the show today. If you haven’t left a review for Startups For The Rest of Us, even if it’s just a five star. Click the five stars without having to type anything in. I would really appreciate that in whatever podcast catcher you use. If you’re not on our email list, you’re missing out on two exclusive episodes that have never appeared in this podcast feed. The first one is about things you should know when you launch a SaaS app. The second one is things you should know as you scale your SaaS app. I recorded those solo. Again, they’ve never been released. You will get it in our email, you get those episodes as well as the PDF guides that summarize them. Thanks for joining me this week. I’ll be back in your earbuds next Tuesday morning.
He acquired clarity.fm from Dan Martell. He acquired Zirtual from Maren Kate, who I spoke with 12 or 18 months ago about the crashing and burning and then, the acquisition of that. Wil and his team were the acquirers. Wil’s story is incredible. He started his first company—it was an agency at age 19—while he was at Ohio State, and he went on to exit that in 2003. After that, he started an incubator. Again, this is the 2003-2005 timeframe. It was called Virtucon Ventures. He called it an idea-stage incubator for web startups where he helped conceived and launch companies including swapalease.com and unsubscribe.com.
He thinks venture capital is a poor use of capital. He has liked being the second buyer of a lot of companies. Fascinating story. In 2012, he started startups.com, which he calls the world’s largest startup launch platform based in Columbus, Ohio. Although they are 200 people strong, fully self-funded, and eight figures of revenue, Wil is still involved in doing UX copy work. He said he’s a CFO, the CEO, and he works on the products. Fascinating story from (I would say) kind of a Renaissance man who just has this massive skill set, who’s been doing this for 20 something years, and just has a deep well of knowledge.
Before we dive into our conversation, I want to remind you again of MicroConf remote, which is happening on September 1. It is a virtual event. If you head to microconfremote.com, you can get a ticket and reserve your spot. It is not going to be the typical virtual summit that you are seeing online. Producer Xander and I have put a lot of thought into making this creative, and it’s shaping up to be a great event. I hope you will join us, that’s in microconfremote.com. With that, let’s dive into my conversation with Wil Schroter. Will Schroter, thank you so much for joining me in the podcast today.
Will: Thanks for having me.
Rob: You started your first company at age 19 in college. It’s the story that we see in the films or we see glorified. But you built it into a massive agency—$700 million in revenue, and you exited in 2003. I don’t want to spend too much time diving into that because building an agency is not necessarily in line with what folks want to listen to here. But I’m curious, you sell your company and you obviously walk away with—I’m just going to assume at that revenue level—life-changing money, in a big way. Did you know at that point that you wanted to start the next one? Or did you take a time off, give it a thought, and check out your options?
Will: I was already starting the next thing long before it sold.
Rob: Wow.
Will: I mean you got to figure. I was 27. My career hadn’t even started yet. From my standpoint, life-changing for me was the first time I made over $100,000. I’m not trying to discount making more money, it’s wonderful, but I grew up in a really challenging childhood. I got to tell you, having enough money to know that I can pay my rent next month, it blew my mind the first time I had enough in my bank account. Just being able to pay my bills, it was such a huge departure from what I’ve been used to.
Rob: Yeah. I remember that moment for myself as well. There were a few stages. It was getting to $100,000 where I was like, oh, man, we’re pretty comfortable. Living in California with $100,000 is different than living in the Midwest where I live now. But then there was that moment when there was a next level up. The numbers are going to vary based on your lifestyle and stuff, but it was about $250,000 or $300,000 a year. I remember that being life-changing as well. I appreciate that.
Will: Yeah. People always think that the big cash outnumbers, I tend to tell people and I really, really, try to emphasize that if you can ever take a $250,000 check off the table, it may be the most life-changing money you’ll ever have. Because it’s all the money you need to do all the things that you haven’t been able to do for a very long time. For most people, it won’t be able to. Most people live paycheck to paycheck. Being able to have a little bit of cash can reset the baseline—it’s extraordinary. I don’t think a lot of people think about that.
Rob: Yeah, that’s the thing. It’s such a trip. I hear founders use the phrase life-changing money. Life-changing money, as we’re saying here, is different from what I call sunset money or a lot of people call FU money. FU money is where you don’t ever have to work again, don’t ever have to have a boss again. But life-changing money can literally be $250,000 as you’re saying.
Will: Here’s why. It’s because $250,000, again, let’s calibrate to what area in the world you’re in, not just part of the US you’re at. In most places, it will get you at least close to a down payment on a home. It will allow you to pay off debts you’ve assuredly racked up—your credit card debts, et cetera. It puts some extra cash in the bank. The first time something pops up—I don’t care if it’s a car repair or a doctor issue—you can cover it. If you think about it, most people spend most of their lives just trying to get through a handful of milestones that are massive cost milestones. The purchase of the car, paying off college debt, getting married, you name it. Those were often tens of thousands of dollars problems. Sometimes, $50,000-$100,000 problems, but they’re never million-dollar problems. Really, most of the things that we spend the first 20 years of our career trying to overcome all fall within $250,000.
Rob: Yeah, wise words, sir. You came off of this exit and you started an incubator, which is different than I think. People use incubators or accelerators these days interchangeably, but back then, it was more of folks heard of Idealab in Pasadena. It’s the prototypical one that I remember. Bill Gross started it. It’s where someone—in this case you—comes up with company ideas, startup ideas, and then, it brings people to build them and tries to launch a bunch of different ideas. Does that accurately describe what you were doing?
Will: Yeah. What happened was at the agency, we were one of the first web development agencies, and got paid lots of money to build websites on the internet. It was a combination of me walking in big companies like BMW and Best Buy saying, here’s how to use the internet. Here’s how to use the technology. After a while, I started thinking, I’m the one with the know-how to do this stuff, and I’m the one with the ideas that I’m pitching to these clients. Why keep going to clients? Why not just build this stuff for me, get my own output, and take clients out of the […] together? I started working on building web properties. It was right at the dawn of performance marketing—this was in the early 2000s. A lot of people came in their careers when this was all well-established, whether it’s SEO, PPC, affiliate marketing, et cetera. But right around the turn of the century, all of those things were just getting invented (ironically) from Bill Gross. If you’ve recalled, Bill Gross invented PPC. What was really interesting about all of that is for the first time in history, you could build a company on tens of thousands of dollars because you could pay for your customer acquisition as you did it. Whereas before, you have to dole up tons of money and hope that somebody might show up in non trackable media. I saw that trend—again, I was coming from the agency world—as a different way to be able to build a company. That’s where Virtucon and the companies we built out of that were spawned.
Rob: So many folks who are agencies or freelancers want to get into products. It sounds like—
Will: They should.
Rob: Yeah, exactly. That’s where I came from. I was a software developer, became a consultant, started a micro-agency where I had a few contractors. And I had a few full-time jobs there too, but I have a similar experience as you were. It’s like, I don’t want to build stuff for other people. I want to be creative and build equity. I never felt like I was building much long term value. I didn’t build an agency nearly as large as yours.
Will: By definition, you’re not building long term value. You know, what’s really interesting about all of these is if all you’re doing is charging for your time, you’re always going to be on a treadmill because the time is the treadmill. At some point, you got to be charging for your output, not your time. It’s such a tough transition to make. Client services, professional services, is always the easiest business to get into and the hardest business to get out of. For a lot of folks, we get into it, we get used to getting paid good money, and then like, wow, we want to take a portion of our time, and we want to go build something that will make money while we sleep. The challenge in the delta everybody has is trying to do both—trying to get that other thing off the ground. But it’s a worthy pursuit. Whenever I talk to folks and say, hey, I’m trying to figure out how to get into the product. I’m like that is always the […] evolution.
Rob: Yup. I have some notes here that you’ve launched out of Virtucon, which was the name of the incubator. You launched swapalease.com, which I’ve actually checked out. I browsed looking at people trying to get out of their leases and then like, wow, what would it be like to have a Maserati for four months?
Will: It was interesting. When I was first getting started with the incubator concept, the guys at Swapalease had already started the business. That was the first one. They had an idea of a prototype—in today’s terms, an MVP—but they hadn’t really scaled it. I said, look, I’ve got this model that I’m working at. Let me take that and grow it. That was the first client (if you will) of our incubator. We ended up scaling that pretty quickly. It was doing almost no revenue. And then within the first year or two, we’re doing about $3 million in revenue but on a $1.5 million EBITA. That was all through performance marketing. Remember, this is a long time ago. It’s funny because I haven’t […] the website in years. But I think the design that’s in there was the same one that we used back in 2003. It has not evolved much, but it’s a great business. I started to realize that you could build these small businesses that could start small and either succeed or fail small—which again, at that time, was not the case—and figure out which ones might have some legs. After that, I started five more companies. What was interesting about it is I wasn’t just starting them and saying, hey, let’s see how it goes and somebody else runs them like an angel investor does. I was actually running them, and I mean really running them. Talk about running payroll, doing marketing, and doing finance—you name it. Within five years, I basically had five full-time jobs. Just a side note, not the healthiest way to live.
Rob: It’s such a trip because you and I had traveled very similar paths, although, at that time, I guess you were there from about 2003, or not there. You have started it and worked on Virtucon and these companies from 2003 to about 2011-2012. In that 2000-2005 timeframe, I was launching super small, single founder software products. As pay-per-click, SEO, and affiliate stuff started, I had learned those spaces. That’s how I built these little, micro-companies. If you remove two zeros from a lot of your numbers, I had a collection of about eight or nine web properties. Some were websites, the […] revenue, others were actual downloadable software—people paid a few hundred dollars for it, and I cobbled together a fulltime in income. I was able to escape freelancing, in essence. You were doing it on a much larger scale at that time. It sounds like Virtucon—you self-funded that, correct? There was no venture capital involved.
Will: Correct.
Rob: Okay. You mentioned to me offline that some of the companies that you spawned out of there did wind up taking venture?
Will: Yeah. We just fell into it. We were running one company that was based in Los Angeles. I started spending more and more time in Los Angeles. That’s essentially what got me to move out to California for about 10 years. While I was there, I started to meet some of the local entrepreneurs. This was probably circa 2007, give or take. One of the entrepreneurs I’ve met, an investor, was the guy that just got their name, Mark Suster. Mark blogs a lot over at Upfront Ventures. Mark and Mike Jones, who runs Science, the incubator in Santa Monica as well as he used to be the CEO (for a minute) of Myspace, did a bunch of other things—great guy. Both of them in the same week offered to invest their personal money in one of the projects I was working on, and I hadn’t thought about taking on investors. It just didn’t occur to me. But then, I thought about it and I said, hey, for every one of these companies, as they grow, they’re just going to need exponentially more money, and every dollar I invest in growing one of them is another dollar I can invest in starting another, so sure. That’s a very small amount of money for quite a few people. In all those connections, I started to meet lots of investors. Investors said, hey, what are you going to do next? What are you going to do next? It got really interesting. The last company we did, a company called unsubscribe.com, we were able to raise money for that in about 24 hours. It was just easy. Compare that to the pain and heartache that I went through constantly topping off the bank accounts for all these different companies is hard to turn away. Even during a tough time—2007, 2008 financial crisis—not exactly the easiest time when you’re raising money.
Rob: Yeah. Have you raised money before this?
Will: Never. I was in Columbus, Ohio. At that time, we didn’t have any money. You do things the old fashion way. You just found revenue.
Rob: Right. This landscape is so different today.
Will: Yeah, so different. So different. Now, there’s a $500 million fund in Columbus. I wouldn’t say I necessarily had a bad experience, but I can say this, I had a lot of experience because I had three venture-funded companies at that point. I was running all of them all the same time. I just had this really unusual life experience where I was running five companies at exactly the same time. While one company was practically going bankrupt, the next company was getting an amazing term sheet. While one company was losing its biggest customer, the next company was winning its biggest customer. Five different staff, very different dynamics with each, and I just got all these incredible experiences. I also nearly killed myself, but that’s a separate issue. After a while, I started to spend a lot of time with a lot of founders, coaching them through the process. People would say, hey, I understand you know a lot about starting companies, can you help me understand funding or customer acquisition? I realized what I was particularly good at was teaching people how to build startups. I said, why don’t I figure out how to do that for a little bit? That’s where startups.com came from.
Rob: Right. In 2012, you founded it as startups.co, since you’ve obviously got the killer domain named startups.com. That is so cool.
Will: Very expensive consonant but yeah.
Rob: I’m sure. It’s a good way to put it, man. For folks who aren’t familiar with startups.com, how do you explain it? What’s the elevator pitch?
Will: We teach people how to get ideas out of their heads and into a launch mode. The average person watches Shark Tank, and they say, I want to do something just like what that person said they want to do. They go to start it and they realize they have no idea what they’re doing. There are so many different types of advice out there. There are so many different tools out there. It’s fairly confusing. Some of it is good. Some of it is bad. But what I wanted to do is to create a simple place where people could get the education they needed, a community of people that could actually help them—we’ve got over 20,000 mentors at the ready— and the tools they need to get through the hard parts like raising money, finding your first customer, or putting your plan together, things like that.
Rob: Nice. Yeah, we have a lot of overlap actually. With MicroConf, we do a chunk of that, and then we do in-person events. There’s a Venn diagram. We have education, community, and in-person events, but we don’t have actual software products versus you have actually built yourself up a nice little cache of businesses. You first came on my radar, I believe, when you bought clarity.fm, which I think is now clarity.com. You bought that from Dan Martell several years ago. Folks who listen to this podcast will remember that Maren Kate was on a few months back talking about Zirtual—raising funding, growing that, and unfortunately having it implode on her. You also acquired that from her as well as Launchrock, Fundable, which is a crowdfunding platform, and Bizplan. When you first came up with the idea of startups.com or as you were building it in the early days, were you just planning to do education and community? Or were you thinking from the start, No, I also want to buy other companies, build other products, and bring them under the umbrella?
Will: That was the trick if we want to help people through the startup process, through the launch process, where do you start and where do you end? I’m sure you deal with this exactly in your own business. Do you just give education and say go figure it out from there? Do you just connect them with mentors and say go figure it out from there? Do you just provide one dimension of the problem of the software, which is funding or customer acquisition and say, figure it out from there? We realized that we just couldn’t find a really logical start and a stop point to help people scale. To give you a sense of it, there are 1.2 million companies on the platform. Not everybody’s going through the whole process sequentially either. Not everybody wants to help the moment they have an idea. Just many people come to us and they’ve already got the idea. They’ve incorporated, they’ve got a team together, et cetera. They’re working on first customers. They’re working on funding. Where we fit best, where our sweet spot is—we’re at the point where you either had the idea or just about to launch and just barely launch. We do some things post-launch, but generally, that’s where we fit best. Once you’ve launched, once you’re in the market, it kind of becomes a different path, and it becomes highly segmented—depending on what business you’re in. But getting up to the launch point is pretty uniform. We figured we want to cover every aspect of that part of the journey.
Rob: You’ve acquired these products and built quite a team. You were mentioning you have 200 people. You’re still fully self-funded. Can you give folks an idea of the revenue you were doing here?
Will: Yeah. We don’t get specific. We say it’s eight figures, so you can figure. It’s at least that. But we’re debt-free and profitable. An interesting part of that, if you don’t mind me just jumping in as to why the debt-free and profitable thing is so important to us. Everybody understands the value but I just want to unpack that just a little bit more. Debt-free and profitable was our goal. A lot of people talk about growth goals. They say we want to hit $1 million, or we want to hit $10 million, $100 million, or whatever. Our only goal was to become debt-free and profitable because all we cared about when we formed the company were two very specific things. Number one is, don’t have a boss, which often comes from being in debt in some way. Whether you raised money or whether you take on a traditional debt, et cetera. The second was to be able to do this first as long as we need to make it work, which means give yourself an unlimited runway. We don’t want to be in a rush. Not that we don’t want to get things done quickly but that’s not the same thing. I like to move quickly, but I’m not in a rush. In a rush means there’s some artificial deadline that’s being imposed upon me that I have to hit, and I didn’t want that. I want things to take as long as they need to take to get them right. That goal has served us so incredibly well, and it’s the first time I’ve been able to operate under that after doing nine companies.
Rob: Yeah. Are debt-free and profitable a big part of that in essence the funding you brought to it from the exits and just prior companies?
Will: Not really. It didn’t hurt, but people tend to think of it as there was this big pot of cash that we use that we could just burn through without thinking about it. It’s worth noting I’m also our CFO, so the finances are incredibly important. I said let’s make every single decision based on will it get us to profitability faster? We did a lot of things that are nontraditional. In other words, when we’re building the first parts of the business, we built a professional services business. The part that we said let’s try to get out of. In the professional services business, it was helping people write business plans, or go through capital-raising processes, et cetera. We did that because that revenue would scale faster in order to get us to profitability so we can start to build a SaaS business faster. But not because that’s what we’ve wanted to get into, per se like we like providing service, but we did that as a means to an end. There are lots of decisions based on, will this get us to profitability faster?
Rob: You just mentioned that you are the CFO, I’m assuming you’re the CEO. You said you write most of the copy. You do UX work. In a 200-person team to have one person doing all of those roles is highly unusual. Do you want to talk a little about that?
Will: Yeah. I also manage our social media. I have a lot of jobs.
Rob: How many hours do you work in a week?
Will: Not that many. I would probably say I’m available for about 50 hours a week. I would say my core focus hours where I get productive things done are about three hours a day.
Rob: Fascinating.
Will: I can go on forever about this but to give you the TLDR version, what I learned early on is I spent most of my career working 80-100 hours weeks for decades. It had huge impacts on my health, but more importantly, I worked all those hours because I could, not because I should. Once I started to become more militant about my time because I have kids, and now it’s a one for one—time I was at work, I wasn’t with my kids. And I just wasn’t really willing to make that trade-off. I realized that I just had to make the fishbowl of my time smaller. Lo and behold, I actually got more done. A huge proponent of focusing more on output than hours, I’m just so thankful for it.
Rob: You and I have a lot in common because the same thing happened to me. I worked a day job, then I came home at night and I would work four, five, six, seven, hours. I would work 4-6 hours every night. My wife and I were married, but she knew I was building something bigger than us. We both grew up a pretty working class and our futures were just working jobs. I was like, no. I think I can do something bigger than that. Once we had kids, I have to have enough good fortune/hard work. I did have businesses on my own, and I have already backed off. There was a time where I was working 10-12 hours a week for almost 10 months with no full-time income. It was the 4-Hour Workweek. I read that in 2007 and I was like, that’s my goal. I achieved it in about 2010. I really enjoyed that time, but I got very bored. I realized I needed to challenge myself. I’ve never gone back to working long hours after that. It’s a level of efficiency, I believe, effectiveness, wisdom, and experience. There’s something that comes with this, and I love the idea you’ve talked about of time boxing. My wife had our second child in 2010. That was another change. Our first child was 2006, the second one was 2010. That was a big shift for me mentally. It allows me to be like you—more productive than I probably ever was in my 20s.
Will: Yeah. Again, I think you touched on a couple of interesting points. One is that if you have the experience, you can work a little bit less because you know what’s around the corner, whereas if you didn’t before. Another aspect of it is if you have the hour available—I don’t think we realized this when we’re younger—you’ll just use them because they don’t cost you anything. Later on in life, as you get older and as your priorities change, there’s a real cost to it. For almost 20 years, I never went home during daylight. It didn’t occur to me that you were allowed to. I just assumed when you go home, when you’re in your car, it’s always nighttime. When you leave and go to the parking lot, there’s never another car there. Twenty years is a long time to feel that way. Now, I look back thinking I was an idiot. I should have looked at that as a massive failure on my time management and output. But instead, I looked at it as a source of pride because I was “working hard.” There’s nothing wrong with working hard, but I got to tell you, anybody who’s working 80-100 hours and says they can’t work less, I would highly challenge that. Maybe it’s possible. I’m not saying there’s one-size that fits every schedule, but I got to tell you, as a guy who worked awfully hard for a long time, I look back now and realize I could have managed my time so much differently.
Rob: As you said, it takes a toll on your health and on your body.
Will: It does.
Rob: It’s not good. I’m curious on that note. I like to touch on with founders kind of high and low. Oftentimes, we time-box it. Because you’ve done so much it would be hard to go through highs and lows of all of it. But I’m curious, what’s been the hardest part of building startups.com?
Will: It was right before it started. The epilogue to me starting all those companies and doing the incubator is I mentioned it was taking a toll on me. In 2011, right around the time—2012 specifically—we started startups. We were getting married—my wife and I. We’re having our first child. All these things were happening—these life events. I was 37 years old, and I always point out the age because I’m going to tell you there’s just somebody who’s listening to this, there is a freak anomaly about the age of 37. I can’t tell you how many founders—at the age of 37 specifically—have hit this bizarre life-changing event. The life of events are all different, but it’s always at 37. I can’t figure out why. Anyway, I’m sitting with my friends at lunch. I just said to myself, boy, I don’t feel right. I can’t quite explain what it is, but I think I was going to head home after lunch. After lunch, I got back to the office, hopped in my car, and drove up the highway back to my house. I was actually living pretty close. I get on the phone with my wife and I’m like, hey, I don’t feel right. Just as I said that, my whole world goes black. Mind you, I’m in my car on the highway. My heart stopped. Just for a fraction of a second. But if your heart ever stops, it’s hard not to notice. It was the scariest moment of my life because you’re dead for a fraction of a second. I fortunately didn’t go off the road or anything. It was just a brief but terrifying moment. I didn’t know what was happening. I just assumed I was having a heart attack. I was only a minute from my house, and I ended up making it back to my house. I probably shouldn’t have but whatever. My friends come and get me. Take me to the hospital. I’m in the ER, and they said, “You had a massive anxiety attack.” I said, “I never had anxiety in my life.” Not according to your heart. It turned out that for 20 years, running myself nonstop, pretending that all the things I was doing to myself didn’t exist, doctors said, “Look, eventually your body’s going to tell you, enough is enough. Your body just shutdown on you.” I didn’t even see it coming. Now, in retrospect, I should’ve. All the signs were there. I had as much stress than you could possibly have. But at that moment, that was one of those life moments where you just have to rethink everything. At that point, I just stopped everything that I was doing. I did a hard stop and I said, look, everything I was involved with, I can’t do it, which was so out of the ordinary for me. I spent, what I thought was going to be a couple of days, wind up being a couple of months just figuring out what I was going to do next. There was a long story about it that I wouldn’t get into, but that was one of the toughest parts of my life because I had no idea what to do next. I just knew that the pace I was running and the things I was doing just couldn’t work anymore. It’s rare that you get that binary stop switch, especially at a fairly young age.
Rob: Yeah. It’s obviously terrifying and must’ve been extremely stressful. But it sounds like almost a blessing in disguise because it seems like you—
Will: Yeah. A whole bunch of things. The top ones that a lot of folks will appreciate. One of the things is you try to say, hey, if I’m going to focus all my time and energy on something, what’s the biggest thing that I can do? I found for myself that that was a bad question because it’s too ambitious. It’s too hard to ever come up with that answer. What I found was really helpful was I made a list of all the things that I don’t ever want to do again, which wound up being the most life-changing I ever did. I sat down and said, look, I’m 37. I’ve been doing this for 20 years. I said I’m not that old but I’m not that young. I know enough to know what I don’t want to do anymore. I started to make a list. I said, here are all the things I’m just never going to do no matter what. Number one, I’m never going to work for somebody else in any capacity. Up until that time, I’ve always been a founder. Depending on what you choose to do, you have bosses. You take on investors, you have bosses. You take on certain clients—in professional service work—you have bosses. I was like, I don’t ever want to have a boss. Another thing, I don’t want to work with people I don’t like. In any capacity for one second, I don’t ever want to be in a position where I have to. No matter how good the deal is, good the opportunity is, or this or that, I just don’t ever want to go home with my stomach turning and be forced to work with somebody. I just stopped. All the people I just didn’t want to work with—for whatever reason, I’m not that hard to get along with, by the way—I just didn’t ever again. The list goes on, I won’t bore you with it. The point is, I made a hard commitment to just avoid the things I never wanted to do. Lo and behold, my life became 100x better because it turns out, doing the things you don’t want to do is typically what people are trying to be successful for in the first place.
Rob: It’s shocking to me because I have a very similar list that I put together after I sold Drip. I’ve just pulled it up. I literally wrote this out. I don’t want to experience longstanding or ongoing stress that I can’t escape. I never want to negotiate a raise again. I shifted that one after I quit a job. Never want to have to commute again. Never want to ask permission to take a day off. Never want to only take two weeks of vacation a year. Never want to work with people I dislike. I’ve had a few of those, and the overlap is crazy.
Will: They’re also logical conclusions. We all hit a point in our life where enough is enough. What I tell founders—particularly young founders, it’s not specific to them, but the earlier you can get started on this list, the better—is make that list first. Over time, you’ll add to that list because some of the stuff that’s on your list or my list is there because we’ve been around long enough to know why that one is so important. For example, when I was younger, if somebody said, I don’t want to work with people I don’t like. I’m like, well, you really don’t have a choice. This client’s going to pay our bills. Yeah, they’re a jerk, but I need it. I need the money. Or hey, this investor’s a blowhard, but I need his money. I’d be willing to compromise those. Sometimes you just have to take it on the chin. After a while, as you get further in your career, you start to understand the cost of those compromises. By way of that, you start to truly understand the benefit of not compromising. For younger founders, maybe you don’t quite see it yet, but if you put that idea in folk’s head, they’ll start to develop that over time and start to say, okay, I get it now. People are jerks and I don’t want to work with them. Check.
Rob: I want to switch it up a little bit because I have this topic. You mentioned it offline and it resonated with something I have written about and talked about before. As I was coming up 2005-2010, say, I had previously—since I was a software developer—built a lot of products. I would start them and it would take me months of nights and weekends because I was working a fulltime job. At a certain point, I realized I could acquire products for not that much money. All I needed to do was add a feature to it and market them. It was a huge shortcut for me. Instead of spending six months of nights and weekends development time, I could spend $5000 or $10,000, which is not nothing, but I was making that as a consultant. I had stuff on this side going. I talked about how being the second buyer of something was super advantageous because oftentimes, someone would either spend their 500 hours building it. I guess in that case, I was the first buyer. In other instances, someone would acquire, couldn’t grow it, and then I would be the second buyer. I just wasn’t paying that much money for these things that I had previously thought were really valuable. I was billing $150 an hour. If I spent 400 hours, which is not an outrageous amount of time to build a full software product, that’s $60,000 of my time that I could’ve literally been billing. To me, that 400-hour product was worth, in my head, $60,000. Turns out, I bought a product that took about 400 hours to build for less than $10,000. To me, that was a deal. You mentioned that you have been to be the second founder or second buyer of some of these tools that were funded by venture capital. You want to talk through that top process and how it played out?
Will: Yeah. My thought process started when I was the company being funded by venture capital. I thought to myself, the first year to two years of spend with a VC money is so wildly inefficient by definition because you’re experimenting like crazy. You have this massive amount of inefficiency between validating the idea, getting the right team, trying all these different marketing channels, figuring out what works, et cetera. Most of that gets pissed away no matter how good you are. I’ve been doing this a long time and I can’t do it any more efficiently than you can. That said, I started to think about, boy, whoever gets to show up second on this idea—just like you did, just like I did—doesn’t have any of that cost. All of those things have been figured out. Remember, it’s not just dollars. It’s also time. When we bought a product called clarity.fm, which you mentioned Dan Martell had built, Dan had raised millions of dollars from great investors. But more importantly, Dan—who’s super smart—spent years and years and years trying every combination to see what worked and figured it out. He did all the customer acquisition, he did all the scaling, he tried all the pricing models, et cetera. We were fortunate—when we did the acquisition, Dan called us and asked if we were interested in it—to be able to stay cool. Dan’s got it all figured it out. We need to pick it up with all that stuff already done. Yeah, maybe we need to make some changes or additions or maybe we don’t. But the point is, it’s already been figured out. We don’t have to spend all that time to do it again. If I could spend $250,000 to build my own product or $250,000 to acquire somebody else’s product that probably spends, even more, trying to get into it, in most cases, I’d take the latter every single time. Because the one thing that money doesn’t account for is all the time and effort it took to get into that product.
Rob: Awesome, Wil. Thank you so much again for coming on the show. I feel like it’s been a really insightful conversation. You have tons of knowledge. I know we can talk for hours. If folks do want to hear you, think through this kind of stuff on a weekly basis, they can head to the Startup Therapy Podcast where you and someone you work with at startups.com, you guys chat through these kinds of stuff. How long ago did you say you started? About a year?
Will: About a year ago. We just recorded episode 60. We just sit and talk about stuff that we know is keeping founders up at night, and we walk through the issues detail by detail and show them how we get through.
Rob: Awesome. Obviously, if folks want to see what you’re up to on a day to day basis, startups.com. Pretty easy to remember.
Will: Yeah.
Rob: Thanks again, Wil.
Will: Thanks for having me.
Rob: Thanks again to Wil for coming on the show today. If you haven’t left a review for Startups For The Rest of Us, even if it’s just a five star. Click the five stars without having to type anything in. I would really appreciate that in whatever podcast catcher you use. If you’re not on our email list, you’re missing out on two exclusive episodes that have never appeared in this podcast feed. The first one is about things you should know when you launch a SaaS app. The second one is things you should know as you scale your SaaS app. I recorded those solo. Again, they’ve never been released. You will get it in our email, you get those episodes as well as the PDF guides that summarize them. Thanks for joining me this week. I’ll be back in your earbuds next Tuesday morning.
Episode 509 | Revisiting the Six Stages of SaaS Growth with DNSimple
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Show Notes
Today, we have a conversation between Rob and Anthony Eden from DNSimple as they revisit the six stages of SaaS growth starting with pre-launch and pre product-market fit to scaling and company building. Be sure to listen in until the end of the podcast as they talk about what lies beyond company building, the sixth stage of SaaS growth.
The topics we cover
- 5:10 Stage 1 – Prelaunch
- 10:08 Stage 2: Pre Product-Market Fit
- 13:40 Stage 3: Product Market Fit
- 16:38 Stage 4: Escape Velocity
- 21:08 Stage 5: Scale
- 33:48 Stage 6: Company Building (and Beyond)
- 38:13 DNSimple and Acquisition Offers
Links from the show
- MicroConf Remote
- MicroConf On Air: Connect Founder Spotlight with Anthony Eden
- Episode 35: When Co-Founders Fall Apart | Zen Founder
- Episode 499 | The (First) Six Stages of SaaS Growth – Part 1 | Startups for the Rest of Us
- Episode 499.5 | The (First) Six Stages of SaaS Growth – Part 2 | Startups for the Rest of Us
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob: It’s this week’s episode of Startups For The Rest Of Us. I am your host, Rob Walling. Today I revisit the Six Stages of SaaS Growth. These are the stages that I talked through with Jordan Gal about 10 episodes ago with 499 and 499.5 where I compared the stages of Drip with his stages of CartHook. And today, I bring a third founder on. His name is Anthony Eden. He runs DNSimple. DNSimple is a self-funded startup for 10 years, and he has a team size of 19 people. They’re fully remote. It’s domain management, and they are a DNS provider as well. They compete with GoDaddy, Namecheap, et cetera.
I’ve spoken with Anthony before. He’s been to at least a couple of MicroConf Europe. He was on MicroConf On Air just a couple of weeks ago, if you want to hear more from him, and he told a really good founder origin story on ZenFounder. You can Google that. We’ll actually link it up in the show notes, but a couple of hundred episodes ago. A few years back, he had a really bad co-founder breakup with his brother. And that’s a pretty heart-wrenching story that he goes through.
But before we dive into our conversation, I want to let you know about MicroConf Remote. This is something that we planned more than a year ago before all the COVID stuff happened. We were going to do seven in-person events and one virtual event called MicroConf Remote. We announced this, I believe it was November, December 2019. And here it is, it’s time to get that going.
For now, mark your calendar for August 26, and it’s 11:00 AM Eastern to 4:00 PM Eastern. Obviously, if you can’t make the entire time, you can drop in and drop out. But you can head to microconfremote.com to reserve your stop, get a ticket, and find out a little more about some of the cookie, wild, and frankly pretty novel innovative stuff that we’re working on for this.
This is not going to be your typical virtual summit. We’ve all been to too many of them in the past six months, and we’ve been working really hard. Let me put it this way, Producer Xander has been working really hard to make this a unique event. There are going to be some in-person elements here in Minneapolis that are creative, different, and visually appealing—just visually interesting. There’s going to be some aspects of it that are remote, but it really is going to be essentially a five-hour live broadcast, and we are going to bring the MicroConf thunder.
We’re not sitting on our laurels and having a bunch of people record some things on some webcams and stitching them together. We want to make it a MicroConf event. We want to put the MicroConf fingerprint on it, which is a unique thing. We build the events that we want to attend, and that’s one of the reasons that MicroConf has resonated with so many people. The community is so strong and such successful entrepreneurs and aspiring entrepreneurs are really people that want to help one another come to these events because there’s something special about it. And MicroConf Remote will be that as well. We will have a hallway track.
Again, we’re innovating. I don’t want to give away all the stuff. But just trust me on this—microconfremote.com to get your ticket. And with that, let’s dive in to my conversation with Anthony Eden where I revisit the Six Stages of SaaS Growth and how they applied or didn’t apply to his SaaS company, DNSimple. Anthony Eden, thank you so much for joining me on the show today.
Anthony: Thanks for having me. Appreciate it.
Rob: Calling in all the way from France. How are things out there?
Anthony: We’re doing well so far. Happy to be just relaxing a little bit here down in the South of France.
Rob: Excellent. Today, you and I have talked about offline, I wanted to bring you on the show to talk through the Six Stages of SaaS Growth similar to what Jordan Gal and I did in 499 and 499.5, about 10 episodes ago. Where I sat down and I looked at my experience with Drip going from stage one, prelaunch to pre-product market fit, to stage three product-market fit, to escape velocity, to scale, and to company building. Those are the six stages. And then compared the revenue milestones that we hit with Drip and where we were at with each stage to Jordan’s journey with CartHook.
You and I had a chat maybe two weeks ago on MicroConf On Air and it occurred to me, your 10 years into building DNSimple, you have a team size of 19, and it became pretty apparent, your take on this could be interesting as well. To find out where has your journey varied or lined up really well with what Jordan and I have encountered in our journeys. I know that you went back and listened to those two episodes. I’m curious right off the cuff, were there any big shocks as you were listening? Like, oh yeah, that’s totally different from DNSimple? Or did you feel like quite a few of the things lined up?
Anthony: I felt—when I listened to it—a lot of the stuff lined up. I was actually surprised that Jordan’s path—considering that he actually took some funding along the way—was still similar in terms of timing and revenue growth. That was actually the only surprise that I got out of it. Everything else was pretty spot on with the growth of DNSimple with their side differences and how long it took to get from one stage to the next. Generally, I feel that it tracts pretty well with that.
Rob: That’s awesome. That’s what I’m trying to do. Now there’s going to be three of us having weighed on this. I think it’ll be an interesting experiment moving forward, to have a fourth and fifth person weigh-in and just to see the varying degrees of experience. Jordan raising money—he didn’t raise so much that it changed their trajectory in a meaningful way. He didn’t take a huge venture round. And he runs it like bootstrapper, like a self-funded startup even though he had a couple of hundred grand in the bank as they were getting up.
I’m excited to dive in with you today. And I’m curious, if we start with stage one, this is pre-launch. Let’s talk through how long that was, what that looked like for you, was it just you working on it, did you have a co-founder at the time? And just talk us through, set the stage for the pre-launch before we get to stage two.
Anthony: Sure. When we started in 2010, I started this with my brother. My brother is more involved in the network engineering side, and he was the one that was setting up the initial infrastructure for resolving DNS entries and things like that. I spent my time working completely on the Rails application—which is going to be the front end. We went from April until July basically just cranking away on getting everything ready.
My goal was to launch at RailsConf that year and I just, just missed it, but surely thereafter, I was able to start announcing it and getting people on board. It took about three months during that pre-launch phase to go from nothing to a working product. That’s working including taking money from people with credit card payments, subscription, and all that. We relied heavily on using outside SaaS services, what was available at the time to minimize what we have to build internally.
It worked out pretty well. We just got to that first launch. I didn’t come in with any audience. I guess I have my developer audience—the people that I would go to and speak with at conferences and things like that. But generally speaking, I didn’t have a mailing list, I didn’t have anything. I put it together and then I started going to some friends. I went on Twitter and I said, hey, I’m doing this. Is anybody interested in trying it out? Three months from nothing to initial launch.
Rob: Wow. That’s super fast, man. What gave you the crazy idea to think that you could compete with GoDaddy, Namecheap, and all these massive companies. It feels to me, in 2010, domain management and DNS was a solved problem, but obviously it wasn’t because you’ve built this great company. What were you thinking at that point?
Anthony: I was mostly focused on the terrible experience that was the majority of domain and DNS providers at that time. There was just an opportunity in the market because the tooling was so bad. A lot of the companies that you’re talking about—the big ones—they grew up at the end of the last century, in the late ‘90s and then the early ‘00s. It just seems like their websites were stuck back in that time period.
I saw this is an opportunity to do two things. One is to greatly simplify how these interactions work. Removing a lot of the excess steps those sites have in them, and really just focus on making a good system for registering domains and then managing the DNS around them. And then I also knew that we wanted to have an API for a lot of this stuff.
I focused heavily, after the initial launch, into getting a workable API that I could have people develop other things on top of. I think those were really the key things that I was focusing on to differentiate from those big providers at the time.
Rob: I love big markets with hated competitors, or hated incumbents where people despise them. Back in the day it was PayPal or QuickBooks. Certainly, a lot of people don’t like GoDaddy. And then when I was onto Drip, it was Infusionsoft, Marketo, and Pardot—these big clunky competitors. Those are spaces where if you are able to get to some feature parity, there’s a huge amount of work. Although when you did it 90 days, it sounds like.
But oftentimes, there’s a lot of work to get there. But if you can do that and build a better experience and then just not be a […] company that charges people too much, it makes it really easy to compete when your competitors are just widely despised.
Anthony: Definitely. There’s a marketing angle where you essentially pick a fight. You pick a fight with the biggest guy out there. You turn that fight into a David versus Goliath showdown (if you will). In my case, what I focused on was doing what was right for the people that were using DNSimple. Focusing on taking their feedback, applying in a timely fashion, and adding functionality as they needed. That really took us into the post-launch phase.
The initial launch was really minimal. But then as soon as people started using, they say, hey, this would be great to have. In fact, there was no domain registration in the first version. People said, this is really cool, but I really love it if I didn’t have to go somewhere else to register my domains. That functionality didn’t come until about four or five months later, just to put things into perspective.
Rob: Yeah, very good. That kind of gives us a good idea, three months, two of you working on it, that was your pre-launch phase. Stage two, I have called a pre-product market fit where you’ve launched and you’re just trying to sort out, have I built something people want? And you’re getting to that point of really locking that in. For Jordan, if I recall, it was 0 to about 5000 of MRR. And for Drip it was about 0–10,000 or 11,000 MRR.
It took us about eight months. It might have been nine months from that launch day until I felt like we really started having product-market fit. Jordan said his was 12 or 18 months. It was a really long time. Talk to us about DNSimple. At what revenue number did you feel like you did have some modicum of product-market fit, and how long did it take you to get there? What was the process like?
Anthony: By the end of the first year, we were already doing about 10,000 in MRR a month. We hit it pretty quickly. After the launch, I was out there. I was doing the conferences, adding functionality, trying to pull people in, and seeing what we could do. I wrote down that I think it went all the way into 2011 because we were still adding a lot of functionality. As I mentioned, the registration functionality, the API, that all came within the next 6–9 months after that initial launch and slowly trying to grow it.
Sometime in 2011, we really started to hit our stride and had found a good market fit. But even through 2011, the MRR was still right around that relatively low number. I capped the year an average between 10,000 and 12,000 in MRR.
Rob: What were the signs to you when you thought, boy I really have built something people want? What did product-market fit look like for DNSimple?
Anthony: For us, there were a couple of triggers that made me think, wow we’ve actually accomplished something. The first was we started getting people in who I didn’t know. I didn’t know where they came from even. The first customers were either friends of mine, friends of friends, friends of my brothers, or whoever, and they started coming in. But once we got some point where we had legitimate businesses using us that I had no idea where they were coming from, I said, okay, this is really interesting.
And then the second bit was when people just started sharing about wow, this is really great. This is so much better than anything that I’ve used out there before. I’m really happy with it. We think that positive sharing in the community—that really is largely on Twitter—was another indicator that showed that we were doing well, and we have a product that was going to be successful. And it has been successful.
Rob: Yeah, cool. At the time, was it still just you and your brother?
Anthony: Yes. We stayed with two people all the way through 2011. In fact, only added on who was really the first employee of DNSimple in 2012. That came through an acquisition, and that person was Simone Carletti. He’s the CTO of DNSimple, still with us today, and I acquired his RoboDomains business to bring him on board. And that was what brought the third person in.
Rob: Very interesting. In terms of revenue here, I’d love to cover that when we get there. Which stage did you acquire him in?
Anthony: He was early revenue. He had the product out for a little while. He was getting minimal revenue. At that point, we probably gone up to 20,000 MRR at that point.
Rob: Got it. Let’s dive in right there then. Stage three is product-market fit. For Drip, it was on that around that 10,000 mark until right around 25,000 where we entered stage four, which I’m calling escape velocity, which is where we really had figured out one or two marketing channels where growth started picking up even faster.
These product-market fit stages have built something people want and are willing to pay for, but maybe I don’t have a repeatable sustainable marketing channel yet. Growth is good and retention is good, but it’s not blowing me away yet. Was there a time period like that with DNSimple? I’m curious, similar questions, what was the revenue range (if you recall), and how long did it take?
Anthony: I actually went back and looked. In the first couple of years, by the year-end, we were around 150,000 for the entire year. And then in 2012, we went up by the end of the year 200%+ in growth. That was really when things started to take off. If I recall correctly, that was right around the time that there was a whole bunch of fiascos around GoDaddy. People were just like, I am done with this. It was the elephant shooting, and it was sexist ads on TV for the Super Bowl.
In fact, I distinctly remember I was watching the Super Bowl and the ad came out. I was like, I cannot believe this ad is just so gross. I went on Twitter and I said, if you’ve seen the ad and you dislike it, then take your wallet and walk. The idea is to take your money to somebody that will not put up ads like this. That really kicked off that faster growth at that point. In a lot of ways, it was a lot of luck in terms of the timing and a misstep by some of the biggest players in the market.
Rob: Yeah. If you’ve listened to the podcast recently, I certainly have talked about the three things that I think contribute to success is hard work, luck, and skill. It is luck, but you were at the right place at the right time. You had already built a register on DNS provider, you have this app, you happen to see the commercial, and you went on Twitter. There’s all this stuff that comes through, but you also had the skill to then handle the incoming traffic. You had this skill to take advantage of it when it came. It’s a bunch of factors.
In so many entrepreneurial stories, there almost always is some element of fortuitous timing. But if you weren’t at the right place at the right time with the right app and you didn’t take that leap or you didn’t take the risk of hey, I’m going to go on Twitter and maybe talk a little smack about a competitor—which some people wouldn’t do or some people would be scared of doing—it probably wouldn’t have happened the same way.
Anthony: Absolutely, absolutely. I agree 100%. You don’t just get struck by luck. Put yourself in situations where you can take advantage of some opportunity. I’m a huge believer in setting up as many of these opportunities around you as you can. Not all of them are going pan out. The vast majority of them are never going to show up. But for the ones that do, if you’re there and ready, that’s because you prepared. It just doesn’t drop out of the sky.
Rob: You found product-market fit, and do you remember how long it was before that growth really started ticking up for you before you hit escape velocity?
Anthony: Throughout 2011, 2012 era, we pretty much stayed. And in fact, going into 2013, we stayed with three people. I would say that by the end of 2012, we were hitting that escape velocity phase and then all the way through 2013. Because at that point, our growths were triple-digit year over year growth. But it very quickly starts slowing down because when you’re small, those big leaps look huge. By the end of 2013, we were still growing fast, but we weren’t rocket to the moon type of growth anymore. Things started to just be stable and become a nice steady growth trajectory.
Rob: Yeah. That’s cool. That’s what I call stage four, escape velocity. With Drip and CartHook, they lined up quite well. It was from about 25,000 MRR up to about 80,000 MRR, which is obviously right around the $1 million mark. With escape velocity, before we get to scale, where you have to start scaling the team and doing all that, you can ride the escape velocity for a while without ballooning the team.
In your experience with DNSimple, was it similar revenue ranges there—25,000–80,000 before you felt like you had to start scaling? I’m also curious how long you felt like you were in escape velocity before you transitioned to scaling?
Anthony: I intended on sticking to the escape velocity part for as long as I could. I think actually, one of the more interesting things, I recall listening to Jordan’s interview with you, is the triggers that move you from one phase to the next. And for DNSimple, there was a very, very specific trigger that switched us from escape velocity to scale. It actually wasn’t revenue. I don’t think directly it was revenue.
We could’ve continued operating fairly well in escape velocity with a very small number of people for longer than we did. But in our case, in 2014, that was the year from hell for me. That was a really tough year. Early in the year, my co-founder, my brother, decided he was done, and it was not a clean break. That was the start of a really bad year.
When he decided he had to go, he basically took a lot of his operations knowledge with him and I had nobody else to lean on. Both Simone and I were more on the application development side. It left a big gaping hole, and to me, that really quickly made me understand, oh my goodness, I need to do a better job to prepare and not have this gap here. Because we’re an operational company, we really need to have a good network operator who’s on the team.
That was the next time that we wanted and started looking to hire. I hired two people immediately and I had a contractor as well during that time right at the beginning of 2014, to fill that gap. In 2014, things started to slow down. But then by the end of the year, we were doing well, and then we got DDoS. It capped the end of a pretty horrible year.
By the end of the year though, we had continued growing a little bit more, added on a couple more people, and got to the point where we were eight people by the end of 2014. The trigger really, to get us from escape velocity into scaling was an event for us, was the loss of a key person that triggered a better understanding that I needed to make some adjustments to the team and grow the team a bit.
Rob: Yeah. Have that redundancy. I remember that break up because you talked about it on ZenFounder years ago. We did a founder origin story where Sherry interviewed you. We’ll link that up in the show notes. It’s a pretty devastating story. We don’t necessarily have time to dig into it here. You already told the full one over there.
What’s interesting is in 2014, perhaps by coincidence, was a really […] year for me too with Drip. There is just a bunch of stuff that went sideways. And I remember it being really hard, and I made a cash flow mistake where I had a big tax bill come because I had made a bunch of money the year before. I remember that just being a tough year. I feel your pain, perhaps not in the same ways.
At the end of escape velocity then, is that when you were at eight people? Do you feel like you are in escape velocity during 2014? And that’s where you had to make the transition from essentially three people up to eight?
Anthony: Yeah. I would say we started 2014 at the tail end of escape velocity. And then the triggering event with the loss of Darren from the team forced us into that next phase, which was the scale phase. We had done really well in terms of revenue per person, obviously. Because the fewer people you have, you’re growing your revenue. It’s amazing.
At the time I didn’t really think how important that number was. But I should’ve, in retrospect, understood there is probably a limit that most companies can go to where the revenue per person starts to become actually painful for the team, because there is just so much happening, and I missed that. Now, I understand a little bit better at what we can do.
Ironically, I still made the same mistake again. Later on, we’ll go over that. In terms of not seeing that that number hits a threshold where it’s really hard to operate a business at these types of numbers. But it’s actually a really interesting number to watch. By the end of 2014, we had added on numerous people and reduced that revenue per person. It became more comfortable again. Even though we did get DDoS, that was a really hard time. But coming out the other end of that, we had an epiphany going into 2015 that if we’re going to do this, we need to do this business so that there are enough team members to continue operating even if one person goes away.
Rob: Yeah. You need that. Like I said earlier, you have to have that redundancy at a certain point. You start to scale up to a million a year, you pass that, and you just have to think about it. You’ve mentioned this revenue per employee number, which I have heard several people talk about. And obviously, Basecamp is known for having 50 employees. What we think they’re doing is 100 million ARR or north of that. They have this outrageously high number. Probably one of the highest of any SaaS.
But I’m curious, where you feel like a healthy number is. Because as you said, when you go too high, there’s too much pain on your team. And when you go too low, the business isn’t profitable. But in your experience, where’s a healthy range?
Anthony: It depends largely on the business. In a SaaS business, your healthy range is probably 250,000–300,000 per employee is what I would be aiming for. I wrote down each of the years and looked at what our revenue per team member would be because I would count contractors as well. Looked at that and said, okay, at what point did things really start to hurt?
We were pretty comfortable in the 250,000–250,000–300,000 range. When it gets over the 300,000, when you get to the300,000,whenyougettothe350,000, $400,000 range, it starts to get hard, which makes me appreciate it. If you have a company like Basecamp that can do so much with such a small team, it really is an impressive feat. I can’t even imagine scaling that up to say Apple-sized company where they’re doing huge amounts of revenue per employee. It’s mind-boggling.
Rob: I bet Mailchimp is similar. Because I believe they have to be approaching (if they haven’t passed) a billion revenue. I think that it’s 700 million, maybe it was last year. Given their growth rate, I’m sure they’re up there. Their headcount is not as big as you would think for a company doing that much bootstrap company (in essence) doing that much revenue.
I want to give more thought to it. Again, it does depend on the business how support intensive is it. You can have a super simple tool that maybe you only need one or two support people for the support 1000 customers versus you have a really complicated marketing automation suite or whatever and you need a lot of customer success people just to get people onboarded. I think the number varies. But I do like that range.
I’ve always thought of it between 250,000 and 500,000 is the number in my head, but I know that there are people doing north of that. Really, the slower you grow, the less support you need, the less customer success, the less sales, the less a lot of things. You can have higher profit margins, or at least higher revenue per employee—if you’re on this really slow growth. Although the Basecamp is doing an enormous amount of revenue, they’re 15, 16 years in. I think they had a bit of a luxury. If they are at 100 million and they are 55 employees, that’s almost 2 million per employee. That’s just astronomical.
But that wouldn’t be something I would personally strive for in my company. It’s perhaps unrealistic. Much like a lot of the stuff Basecamp does is just unrealistic for most of us. They hit a lot of retakes, they did a great job and built an incredible business. But it can be hard to model our own companies after the outliers, like the Mailchimps and the Basecamps.
Anthony: Sure. Other factors you mentioned is the sales and the number of people you have. Are you doing enterprise type sales, or you’re doing hands-off style service? There are so many factors involved. It’s impressive, but I’m with you. I don’t think I would be in the position where I would want to operate a company at that type of size. If it happened, then so be it.
I never designed this to work this way. This is all looking back at the numbers and applying the feelings that I felt that each point along the way, when those numbers hit a certain point and how the team interacted with each other. It’s more looking back rather than saying, oh, I would plan to try to do 500,000 to 1 million revenue per employee.
Rob: Speaking of milestones, do you remember celebrating any of these? When you hit 1 million ARR, 100,000 MRR, whatever—did you go out to dinner with the wife or pop champagne with the employees? How were you at doing that?
Anthony: I feel like I’m more on your side. I didn’t celebrate very well. But at the same time, the team would get together, we would do meetups three times a year. We would always make those meetups an enjoyable time to be together. We would open some bottles of wine or of champagne—depends on where we were in the world. But we would spend part of the time just being together and celebrating the fact that we have this business that we can operate, and at the same time, live our lives.
We didn’t celebrate necessarily the milestones per se, but we still celebrate it regularly just for the existence of this. The sheer fact that we have such a wonderful opportunity to continue working on something that’s both mostly enjoyable and profitable.
Rob: I call those pinch myself moments. Do you ever pinch yourself and just say, we did this. This is incredible. This was a goal, a dream that I had, 5, 10, 15 years ago to own a company. I really never thought I would be able to do it. And then you look around and you run a company of 19 people doing millions of dollars, presumably, in revenue a year, 10 years in. It’s just incredible.
Anthony: Yup. Definitely have my moments like that. And then the next day something goes south and I say, why do I do this to myself?
Rob: Right, exactly. Why don’t I just go get a job? We’ve covered escape velocity—stage four. Stage five is scale. You kind of talked about where your brother left and you were forced to scale up to 8 people, 80,000 to about 200,000 MRR. Does that ring true with you? How long do you feel you were in the scale phase?
Anthony: This is interesting. When I went back and looked, we got to about 12 people, and we stayed in the scale phase for four years. The revenue numbers kept going up, but we had some turnover in the team. But we would get other people in. We had a pretty good dynamic in the team, and we were able to pretty much stabilize at a good point where we were comfortable. Revenues would grow, but our headcount wouldn’t. We stayed there pretty much all the way up through 2018.
Again, I look at the revenue per employee, and I would see this number just keep going up, up, and up. We were doing well, but at the same time, at the end of 2018 and 2019, we said, okay, there are certain things that are getting challenging. What are the things that we do at DNSimple is everybody does support, every team member, including myself. We all keep trying to support the queue, we all answer support. But we started to get the feeling we can do this, but we’re actually doing our customers a disservice because not all of them need the technical support. They need somebody there who’s maybe an advocate for them.
We started thinking about customer success as an independent thing inside of DNSimple. That was the start of us looking to move from the scale phase into the building a company phase. In an engineering organization, you could just keep adding engineers, and you can scale pretty well if you can do a lot of automation. You can automate, you can have a knowledge basis, you can outsource first-tier support that is backed up by your engineers.
You could do all kinds of things to grow, but at the same time, you start to sacrifice the quality of specific areas. Whether it’s the quality of bringing on a contract that is not your typical self-service contract, more of an enterprise contract. If you don’t have somebody there to handle that, then they get […] of a weak experience. If you don’t have somebody to take care of customer success—that’s support and also account management and things like that—well then, they have a bad experience. The people that fit into that bucket.
In 2018, we started looking at this at the tail end and said maybe it’s time to start looking for some people and putting them in roles outside of engineering. I think that was the next trigger that moved us into the company building phase where we started actually saying, you know, we should probably write down what we do here. We should probably start to look at who does what and what roles are being under-serviced because we don’t have an expert in that role.
Rob: Yeah. That to me is a mark of starting to think about a company building it. There’s mission, vision, values type of stuff where hey, you need to communicate the culture to new people. We are getting past that phrase, two pizza teams. When your team gets larger, then can eat two pizzas. You’re going to need three or four pizzas just a way to measure team size. When you start getting past that, you have to have some structure in place or else stuff goes haywire. And it sounds like you were pretty deliberate about recognizing that.
A lot of founders—especially first time founders—get to the 15 or the 20 employee mark before they realize that they’ve created a big hairball, a big mass, no titles, and people have overlapping responsibilities and all that. I’m curious how you detected that and why you were ahead of the game there as you switched into this phase six of company building.
Anthony: I would credit it a lot to the team and the ability to openly discuss these items. When we get together to do our meetups, it’s a very open forum. It’s not me telling the team what we’re going to do. It’s active discussions about the strategy and direction of the company. The things that work, and the things that don’t. What we do well, and what we can do better.
It’s a credit to the team. It came from different people and different fashion, but they brought it to my attention that hey, we could probably do better here if we put somebody in this role. And then it’s just me listening to them and accepting that, oh yeah, okay, I can’t continue running this as an engineering only company, but I can continue with the set of values that built DNSimple from the ground up. Which is focusing on automation, focusing on customers, and focusing on the team working well together.
Rob: Yeah. That’s nice. You’ve hired well to have people who are in tune with the org. That they’re able to give you candid feedback.
Anthony: I hope that my attitude towards them has helped encourage that as well by not shutting them down. Even though there are some ideas that maybe don’t fit right away, I try to hear it out. I couldn’t do this. If you asked Anthony from 20 years ago to do this, there’s no way he would have been able to do this. He was way too thick in his head, way too stubborn, and would’ve immediately cut off anybody who tried to give a suggestion.
That is the one thing I’ve had the luxury of developing over the 10 years is pushing that down and listening to the people around me. Whether that’s the team, the customers, or advisers as well.
Rob: Perhaps the spoiler question is, stage six company building. I think that’s maybe the stage you’re in now. Do you think there’s a stage seven? There must be. But I just wonder what that transition looks like.
Anthony: One of the things that I’m seeing here, and what I’ve seen with other companies is that you hit that seven-figure mark. There’s a big difference between 1 million in revenue in a year and1millioninrevenueinayearand10 million. The steps to get from the 1 million a year to the1millionayeartothe10 million are actually very significant, and they require a change in mindset. I think that’s the company building phase.
Building a company at that point, is when you’re really thinking about the company. My guess is—and I still am testing the waters here and seeing if I understand this—but it’s when you start to look beyond being a single product or a single service and you start to think of the company as an umbrella for accomplishing things that work well together but maybe are in the original line of the product.
You start to think—not a second product that’s completely different—can I do something that is another line of revenue that works well with what I have, but is still able to be independent and use independently. Because to date, all the revenue in DNSimple, all comes from services built in to the DNSimple application. Whether that’s email forwarding, domain registration, or SSL certificates. These are all built into the application.
Now I’m starting to think if we want to go to that next step, what is another source of revenue that maybe is able to integrate well with DNSimple but operate independently.
Rob: Yeah. I like that. Stage seven, empire building. I’m just going to throw it out there.
Anthony: There you go. Exactly. I like it.
Rob: It’s interesting because you look at Intercom and how they expanded. You look at Basecamp, they’ve launched a bunch of different products. But then I see others that haven’t gone down that road. Like Zappier, I really think of them still as a single product and segment. It’s certainly a possibility of one possible avenue to start adding on and expanding outside that core competency. Have you started thinking about that then for DNSimple?
Anthony: Yes. It’s one of the things that we’ve been talking about recently is we still want to have innovation in the world of domain in DNS. We still want to continue working hard on growing our place in the market and in delivering really high-quality service to our customers. We continue to invest in infrastructure and continue to invest in people. For the foreseeable future, that’s where our growth will come from. But at the same time, we’re starting to look and say what types of things we like to give to our customers where there are gaps in the marketplace right now.
Similar to what we experienced in the very early days of DNSimple where you had some big key players and they were well-established, but they had lost some of their traction or lost some of their mojo because they got too comfortable. That to me is the next thing that I can look at and say, okay, where else is close to DNSimple but can be an area of revenue growth because we can innovate there.
There are a lot of companies doing a lot of different ways. Some do it through acquisitions. One path into empire building (if you will) is through acquiring smaller businesses that have something innovative, but where you can actually work better with them. That’s a path.
Another path is independent product development where you set a tiger team off to the side and say, okay, put together several things and let’s test the waters with them and see what works and what doesn’t. The other option is that a lot of companies start to hit this size and say, I don’t want to do this alone. I’m okay with being part of somebody else’s empire. That’s the other direction that we see where the founders say, okay, we can keep doing this, and we want to keep doing this, but we want to do it with another partner who has already achieved the larger scale and already has a foothold in areas that we want to go into. There are lots of angles.
Rob: Yeah. Speaking of acquisitions, you have to imagine that you had people approach you about acquiring DNSimple over the years. A) is that true, and B) has that ever been you’ve considered?
Anthony: Yes. It’s been true over the years different companies have come in and said, hey, you’re interesting. What you’re doing is really interesting, would you like to talk? I usually will talk to them, nothing has ever gone any further than just initial conversations. Part of that is just because I really love what I do and I love the ethos inside of DNSimple. I love the way the team works together, I love the product and how it works. I feel like there’s more to do within this space, so I’m not quite ready to get out of it yet. I feel like I have more energy to put back into it. I have a longer-term vision that we still haven’t achieved.
For me, I have a lot of energy still to just keep going. I’m happy to stick with making this thing keep growing and keep on making the product better for our customers. That satisfies me for the moment. But yeah, we’ve had people come in over the years at different levels. Nothing to the point where it was, hey, let’s go into due diligence. No letter of intent or anything like that. The right thing hasn’t shown up for that yet.
Rob: Yeah. That’s the norm. When you build a business in the seven figures or eight figures, you will absolutely get a bunch of funding offers and a bunch of acquisition conversations start, and most of them go nowhere. Taking the first call is a good rule of thumb to do. If you feel like they might have the cash to actually do it, and they’re not wasting time, but to not get distracted by it. That’s the worst part is somebody comes in and wants to do an acquihire and you waste a bunch of time on phone calls with them in the early days when it’s just a distraction. And it’s pulling you away from doing product-market fit, escape velocity, and all that stuff.
Anthony: Yeah. Generally, what I do is I try to stay as honest as I can in those conversations—brutally honest at some point where I say, this is the situation, I love what I do, we make good money. If you’re going to come in, you’re going to have an offer that’s too good for me to turn down. That usually ends the conversation. Because most buyers are going to be private equity, they’re going to be independently funded, or yes, I’ve had like you, I also have a lot of venture capitalist interest over the years. It’s never felt right for this business.
This business is a steady growth business. It’s not one where I’ve ever felt we’ve had something that is oh let’s shoot for the moon type situation and try to become a $100 million or more company quickly. That’s what a venture capitalist is looking to fund. They’re looking to fund somebody who really wants to put fuel into the rocket and try to take off. That hasn’t interested me. We’ll have the conversations, but it usually ends pretty quickly when I’m brutally honest about my situation.
Rob: Sir, thank you so much for joining me on the show today. Folks want to connect with you, you are @aeden on Twitter. You are really active in MicroConf Connect, and I appreciate that because you’re a more experienced founder and then a lot of folks and I feel like you lend a lot of knowledge and insights. If folks want to be around and glean from your knowledgeable aura, they can hit microconfconnect.com and connect with you there. And of course, dnsimple.com if folks want to check out what you’ve been working on for the past decade.
Anthony: Yup. Absolutely. Thanks for having me on. And definitely love the MicroConf Connect community. Love being able to get in there and talk with other people both that are in earlier phases and also people that are in a similar situation that I’m in. It’s been really helpful just to follow along with what other people do. It’s a great community, so I’m very, very happy about that.
Rob: Thanks, sir. Appreciate it. Have a good one.
Anthony: All right. You too.
Rob: Thank you again to Anthony for coming on the show, and thank you for listening to Startups For The Rest Of Us every week. If you’re not already subscribed—I’m not sure how you’re listening to this episode, but please head into a podcatcher, click the subscribe button, share this with a friend, and would love a tweet. We are @startupspod on Twitter. You can follow us, you can @ mention us. I’ll take any help you can lend in terms of helping us spread the word about this message that you can build a startup. You can build a SaaS company without venture funding, and you can be ambitious without having to put your relationships and your family life and potentially your health on the line in order to build a company.
That’s really what MicroConf, Startups For The Rest Of Us, Tiny Seed, and my blog. All of my writing, just everything that we’ve done is aimed towards telling more people that this path is out there because so many people just don’t know it exists, they don’t know it’s viable, and we want to be the people to show them that it is. Anything you can do to help us get the message out, I’d appreciate it. I will be in your earbuds next Tuesday morning.
I’ve spoken with Anthony before. He’s been to at least a couple of MicroConf Europe. He was on MicroConf On Air just a couple of weeks ago, if you want to hear more from him, and he told a really good founder origin story on ZenFounder. You can Google that. We’ll actually link it up in the show notes, but a couple of hundred episodes ago. A few years back, he had a really bad co-founder breakup with his brother. And that’s a pretty heart-wrenching story that he goes through.
But before we dive into our conversation, I want to let you know about MicroConf Remote. This is something that we planned more than a year ago before all the COVID stuff happened. We were going to do seven in-person events and one virtual event called MicroConf Remote. We announced this, I believe it was November, December 2019. And here it is, it’s time to get that going.
For now, mark your calendar for August 26, and it’s 11:00 AM Eastern to 4:00 PM Eastern. Obviously, if you can’t make the entire time, you can drop in and drop out. But you can head to microconfremote.com to reserve your stop, get a ticket, and find out a little more about some of the cookie, wild, and frankly pretty novel innovative stuff that we’re working on for this.
This is not going to be your typical virtual summit. We’ve all been to too many of them in the past six months, and we’ve been working really hard. Let me put it this way, Producer Xander has been working really hard to make this a unique event. There are going to be some in-person elements here in Minneapolis that are creative, different, and visually appealing—just visually interesting. There’s going to be some aspects of it that are remote, but it really is going to be essentially a five-hour live broadcast, and we are going to bring the MicroConf thunder.
We’re not sitting on our laurels and having a bunch of people record some things on some webcams and stitching them together. We want to make it a MicroConf event. We want to put the MicroConf fingerprint on it, which is a unique thing. We build the events that we want to attend, and that’s one of the reasons that MicroConf has resonated with so many people. The community is so strong and such successful entrepreneurs and aspiring entrepreneurs are really people that want to help one another come to these events because there’s something special about it. And MicroConf Remote will be that as well. We will have a hallway track.
Again, we’re innovating. I don’t want to give away all the stuff. But just trust me on this—microconfremote.com to get your ticket. And with that, let’s dive in to my conversation with Anthony Eden where I revisit the Six Stages of SaaS Growth and how they applied or didn’t apply to his SaaS company, DNSimple. Anthony Eden, thank you so much for joining me on the show today.
Anthony: Thanks for having me. Appreciate it.
Rob: Calling in all the way from France. How are things out there?
Anthony: We’re doing well so far. Happy to be just relaxing a little bit here down in the South of France.
Rob: Excellent. Today, you and I have talked about offline, I wanted to bring you on the show to talk through the Six Stages of SaaS Growth similar to what Jordan Gal and I did in 499 and 499.5, about 10 episodes ago. Where I sat down and I looked at my experience with Drip going from stage one, prelaunch to pre-product market fit, to stage three product-market fit, to escape velocity, to scale, and to company building. Those are the six stages. And then compared the revenue milestones that we hit with Drip and where we were at with each stage to Jordan’s journey with CartHook.
You and I had a chat maybe two weeks ago on MicroConf On Air and it occurred to me, your 10 years into building DNSimple, you have a team size of 19, and it became pretty apparent, your take on this could be interesting as well. To find out where has your journey varied or lined up really well with what Jordan and I have encountered in our journeys. I know that you went back and listened to those two episodes. I’m curious right off the cuff, were there any big shocks as you were listening? Like, oh yeah, that’s totally different from DNSimple? Or did you feel like quite a few of the things lined up?
Anthony: I felt—when I listened to it—a lot of the stuff lined up. I was actually surprised that Jordan’s path—considering that he actually took some funding along the way—was still similar in terms of timing and revenue growth. That was actually the only surprise that I got out of it. Everything else was pretty spot on with the growth of DNSimple with their side differences and how long it took to get from one stage to the next. Generally, I feel that it tracts pretty well with that.
Rob: That’s awesome. That’s what I’m trying to do. Now there’s going to be three of us having weighed on this. I think it’ll be an interesting experiment moving forward, to have a fourth and fifth person weigh-in and just to see the varying degrees of experience. Jordan raising money—he didn’t raise so much that it changed their trajectory in a meaningful way. He didn’t take a huge venture round. And he runs it like bootstrapper, like a self-funded startup even though he had a couple of hundred grand in the bank as they were getting up.
I’m excited to dive in with you today. And I’m curious, if we start with stage one, this is pre-launch. Let’s talk through how long that was, what that looked like for you, was it just you working on it, did you have a co-founder at the time? And just talk us through, set the stage for the pre-launch before we get to stage two.
Anthony: Sure. When we started in 2010, I started this with my brother. My brother is more involved in the network engineering side, and he was the one that was setting up the initial infrastructure for resolving DNS entries and things like that. I spent my time working completely on the Rails application—which is going to be the front end. We went from April until July basically just cranking away on getting everything ready.
My goal was to launch at RailsConf that year and I just, just missed it, but surely thereafter, I was able to start announcing it and getting people on board. It took about three months during that pre-launch phase to go from nothing to a working product. That’s working including taking money from people with credit card payments, subscription, and all that. We relied heavily on using outside SaaS services, what was available at the time to minimize what we have to build internally.
It worked out pretty well. We just got to that first launch. I didn’t come in with any audience. I guess I have my developer audience—the people that I would go to and speak with at conferences and things like that. But generally speaking, I didn’t have a mailing list, I didn’t have anything. I put it together and then I started going to some friends. I went on Twitter and I said, hey, I’m doing this. Is anybody interested in trying it out? Three months from nothing to initial launch.
Rob: Wow. That’s super fast, man. What gave you the crazy idea to think that you could compete with GoDaddy, Namecheap, and all these massive companies. It feels to me, in 2010, domain management and DNS was a solved problem, but obviously it wasn’t because you’ve built this great company. What were you thinking at that point?
Anthony: I was mostly focused on the terrible experience that was the majority of domain and DNS providers at that time. There was just an opportunity in the market because the tooling was so bad. A lot of the companies that you’re talking about—the big ones—they grew up at the end of the last century, in the late ‘90s and then the early ‘00s. It just seems like their websites were stuck back in that time period.
I saw this is an opportunity to do two things. One is to greatly simplify how these interactions work. Removing a lot of the excess steps those sites have in them, and really just focus on making a good system for registering domains and then managing the DNS around them. And then I also knew that we wanted to have an API for a lot of this stuff.
I focused heavily, after the initial launch, into getting a workable API that I could have people develop other things on top of. I think those were really the key things that I was focusing on to differentiate from those big providers at the time.
Rob: I love big markets with hated competitors, or hated incumbents where people despise them. Back in the day it was PayPal or QuickBooks. Certainly, a lot of people don’t like GoDaddy. And then when I was onto Drip, it was Infusionsoft, Marketo, and Pardot—these big clunky competitors. Those are spaces where if you are able to get to some feature parity, there’s a huge amount of work. Although when you did it 90 days, it sounds like.
But oftentimes, there’s a lot of work to get there. But if you can do that and build a better experience and then just not be a […] company that charges people too much, it makes it really easy to compete when your competitors are just widely despised.
Anthony: Definitely. There’s a marketing angle where you essentially pick a fight. You pick a fight with the biggest guy out there. You turn that fight into a David versus Goliath showdown (if you will). In my case, what I focused on was doing what was right for the people that were using DNSimple. Focusing on taking their feedback, applying in a timely fashion, and adding functionality as they needed. That really took us into the post-launch phase.
The initial launch was really minimal. But then as soon as people started using, they say, hey, this would be great to have. In fact, there was no domain registration in the first version. People said, this is really cool, but I really love it if I didn’t have to go somewhere else to register my domains. That functionality didn’t come until about four or five months later, just to put things into perspective.
Rob: Yeah, very good. That kind of gives us a good idea, three months, two of you working on it, that was your pre-launch phase. Stage two, I have called a pre-product market fit where you’ve launched and you’re just trying to sort out, have I built something people want? And you’re getting to that point of really locking that in. For Jordan, if I recall, it was 0 to about 5000 of MRR. And for Drip it was about 0–10,000 or 11,000 MRR.
It took us about eight months. It might have been nine months from that launch day until I felt like we really started having product-market fit. Jordan said his was 12 or 18 months. It was a really long time. Talk to us about DNSimple. At what revenue number did you feel like you did have some modicum of product-market fit, and how long did it take you to get there? What was the process like?
Anthony: By the end of the first year, we were already doing about 10,000 in MRR a month. We hit it pretty quickly. After the launch, I was out there. I was doing the conferences, adding functionality, trying to pull people in, and seeing what we could do. I wrote down that I think it went all the way into 2011 because we were still adding a lot of functionality. As I mentioned, the registration functionality, the API, that all came within the next 6–9 months after that initial launch and slowly trying to grow it.
Sometime in 2011, we really started to hit our stride and had found a good market fit. But even through 2011, the MRR was still right around that relatively low number. I capped the year an average between 10,000 and 12,000 in MRR.
Rob: What were the signs to you when you thought, boy I really have built something people want? What did product-market fit look like for DNSimple?
Anthony: For us, there were a couple of triggers that made me think, wow we’ve actually accomplished something. The first was we started getting people in who I didn’t know. I didn’t know where they came from even. The first customers were either friends of mine, friends of friends, friends of my brothers, or whoever, and they started coming in. But once we got some point where we had legitimate businesses using us that I had no idea where they were coming from, I said, okay, this is really interesting.
And then the second bit was when people just started sharing about wow, this is really great. This is so much better than anything that I’ve used out there before. I’m really happy with it. We think that positive sharing in the community—that really is largely on Twitter—was another indicator that showed that we were doing well, and we have a product that was going to be successful. And it has been successful.
Rob: Yeah, cool. At the time, was it still just you and your brother?
Anthony: Yes. We stayed with two people all the way through 2011. In fact, only added on who was really the first employee of DNSimple in 2012. That came through an acquisition, and that person was Simone Carletti. He’s the CTO of DNSimple, still with us today, and I acquired his RoboDomains business to bring him on board. And that was what brought the third person in.
Rob: Very interesting. In terms of revenue here, I’d love to cover that when we get there. Which stage did you acquire him in?
Anthony: He was early revenue. He had the product out for a little while. He was getting minimal revenue. At that point, we probably gone up to 20,000 MRR at that point.
Rob: Got it. Let’s dive in right there then. Stage three is product-market fit. For Drip, it was on that around that 10,000 mark until right around 25,000 where we entered stage four, which I’m calling escape velocity, which is where we really had figured out one or two marketing channels where growth started picking up even faster.
These product-market fit stages have built something people want and are willing to pay for, but maybe I don’t have a repeatable sustainable marketing channel yet. Growth is good and retention is good, but it’s not blowing me away yet. Was there a time period like that with DNSimple? I’m curious, similar questions, what was the revenue range (if you recall), and how long did it take?
Anthony: I actually went back and looked. In the first couple of years, by the year-end, we were around 150,000 for the entire year. And then in 2012, we went up by the end of the year 200%+ in growth. That was really when things started to take off. If I recall correctly, that was right around the time that there was a whole bunch of fiascos around GoDaddy. People were just like, I am done with this. It was the elephant shooting, and it was sexist ads on TV for the Super Bowl.
In fact, I distinctly remember I was watching the Super Bowl and the ad came out. I was like, I cannot believe this ad is just so gross. I went on Twitter and I said, if you’ve seen the ad and you dislike it, then take your wallet and walk. The idea is to take your money to somebody that will not put up ads like this. That really kicked off that faster growth at that point. In a lot of ways, it was a lot of luck in terms of the timing and a misstep by some of the biggest players in the market.
Rob: Yeah. If you’ve listened to the podcast recently, I certainly have talked about the three things that I think contribute to success is hard work, luck, and skill. It is luck, but you were at the right place at the right time. You had already built a register on DNS provider, you have this app, you happen to see the commercial, and you went on Twitter. There’s all this stuff that comes through, but you also had the skill to then handle the incoming traffic. You had this skill to take advantage of it when it came. It’s a bunch of factors.
In so many entrepreneurial stories, there almost always is some element of fortuitous timing. But if you weren’t at the right place at the right time with the right app and you didn’t take that leap or you didn’t take the risk of hey, I’m going to go on Twitter and maybe talk a little smack about a competitor—which some people wouldn’t do or some people would be scared of doing—it probably wouldn’t have happened the same way.
Anthony: Absolutely, absolutely. I agree 100%. You don’t just get struck by luck. Put yourself in situations where you can take advantage of some opportunity. I’m a huge believer in setting up as many of these opportunities around you as you can. Not all of them are going pan out. The vast majority of them are never going to show up. But for the ones that do, if you’re there and ready, that’s because you prepared. It just doesn’t drop out of the sky.
Rob: You found product-market fit, and do you remember how long it was before that growth really started ticking up for you before you hit escape velocity?
Anthony: Throughout 2011, 2012 era, we pretty much stayed. And in fact, going into 2013, we stayed with three people. I would say that by the end of 2012, we were hitting that escape velocity phase and then all the way through 2013. Because at that point, our growths were triple-digit year over year growth. But it very quickly starts slowing down because when you’re small, those big leaps look huge. By the end of 2013, we were still growing fast, but we weren’t rocket to the moon type of growth anymore. Things started to just be stable and become a nice steady growth trajectory.
Rob: Yeah. That’s cool. That’s what I call stage four, escape velocity. With Drip and CartHook, they lined up quite well. It was from about 25,000 MRR up to about 80,000 MRR, which is obviously right around the $1 million mark. With escape velocity, before we get to scale, where you have to start scaling the team and doing all that, you can ride the escape velocity for a while without ballooning the team.
In your experience with DNSimple, was it similar revenue ranges there—25,000–80,000 before you felt like you had to start scaling? I’m also curious how long you felt like you were in escape velocity before you transitioned to scaling?
Anthony: I intended on sticking to the escape velocity part for as long as I could. I think actually, one of the more interesting things, I recall listening to Jordan’s interview with you, is the triggers that move you from one phase to the next. And for DNSimple, there was a very, very specific trigger that switched us from escape velocity to scale. It actually wasn’t revenue. I don’t think directly it was revenue.
We could’ve continued operating fairly well in escape velocity with a very small number of people for longer than we did. But in our case, in 2014, that was the year from hell for me. That was a really tough year. Early in the year, my co-founder, my brother, decided he was done, and it was not a clean break. That was the start of a really bad year.
When he decided he had to go, he basically took a lot of his operations knowledge with him and I had nobody else to lean on. Both Simone and I were more on the application development side. It left a big gaping hole, and to me, that really quickly made me understand, oh my goodness, I need to do a better job to prepare and not have this gap here. Because we’re an operational company, we really need to have a good network operator who’s on the team.
That was the next time that we wanted and started looking to hire. I hired two people immediately and I had a contractor as well during that time right at the beginning of 2014, to fill that gap. In 2014, things started to slow down. But then by the end of the year, we were doing well, and then we got DDoS. It capped the end of a pretty horrible year.
By the end of the year though, we had continued growing a little bit more, added on a couple more people, and got to the point where we were eight people by the end of 2014. The trigger really, to get us from escape velocity into scaling was an event for us, was the loss of a key person that triggered a better understanding that I needed to make some adjustments to the team and grow the team a bit.
Rob: Yeah. Have that redundancy. I remember that break up because you talked about it on ZenFounder years ago. We did a founder origin story where Sherry interviewed you. We’ll link that up in the show notes. It’s a pretty devastating story. We don’t necessarily have time to dig into it here. You already told the full one over there.
What’s interesting is in 2014, perhaps by coincidence, was a really […] year for me too with Drip. There is just a bunch of stuff that went sideways. And I remember it being really hard, and I made a cash flow mistake where I had a big tax bill come because I had made a bunch of money the year before. I remember that just being a tough year. I feel your pain, perhaps not in the same ways.
At the end of escape velocity then, is that when you were at eight people? Do you feel like you are in escape velocity during 2014? And that’s where you had to make the transition from essentially three people up to eight?
Anthony: Yeah. I would say we started 2014 at the tail end of escape velocity. And then the triggering event with the loss of Darren from the team forced us into that next phase, which was the scale phase. We had done really well in terms of revenue per person, obviously. Because the fewer people you have, you’re growing your revenue. It’s amazing.
At the time I didn’t really think how important that number was. But I should’ve, in retrospect, understood there is probably a limit that most companies can go to where the revenue per person starts to become actually painful for the team, because there is just so much happening, and I missed that. Now, I understand a little bit better at what we can do.
Ironically, I still made the same mistake again. Later on, we’ll go over that. In terms of not seeing that that number hits a threshold where it’s really hard to operate a business at these types of numbers. But it’s actually a really interesting number to watch. By the end of 2014, we had added on numerous people and reduced that revenue per person. It became more comfortable again. Even though we did get DDoS, that was a really hard time. But coming out the other end of that, we had an epiphany going into 2015 that if we’re going to do this, we need to do this business so that there are enough team members to continue operating even if one person goes away.
Rob: Yeah. You need that. Like I said earlier, you have to have that redundancy at a certain point. You start to scale up to a million a year, you pass that, and you just have to think about it. You’ve mentioned this revenue per employee number, which I have heard several people talk about. And obviously, Basecamp is known for having 50 employees. What we think they’re doing is 100 million ARR or north of that. They have this outrageously high number. Probably one of the highest of any SaaS.
But I’m curious, where you feel like a healthy number is. Because as you said, when you go too high, there’s too much pain on your team. And when you go too low, the business isn’t profitable. But in your experience, where’s a healthy range?
Anthony: It depends largely on the business. In a SaaS business, your healthy range is probably 250,000–300,000 per employee is what I would be aiming for. I wrote down each of the years and looked at what our revenue per team member would be because I would count contractors as well. Looked at that and said, okay, at what point did things really start to hurt?
We were pretty comfortable in the 250,000–250,000–300,000 range. When it gets over the 300,000, when you get to the300,000,whenyougettothe350,000, $400,000 range, it starts to get hard, which makes me appreciate it. If you have a company like Basecamp that can do so much with such a small team, it really is an impressive feat. I can’t even imagine scaling that up to say Apple-sized company where they’re doing huge amounts of revenue per employee. It’s mind-boggling.
Rob: I bet Mailchimp is similar. Because I believe they have to be approaching (if they haven’t passed) a billion revenue. I think that it’s 700 million, maybe it was last year. Given their growth rate, I’m sure they’re up there. Their headcount is not as big as you would think for a company doing that much bootstrap company (in essence) doing that much revenue.
I want to give more thought to it. Again, it does depend on the business how support intensive is it. You can have a super simple tool that maybe you only need one or two support people for the support 1000 customers versus you have a really complicated marketing automation suite or whatever and you need a lot of customer success people just to get people onboarded. I think the number varies. But I do like that range.
I’ve always thought of it between 250,000 and 500,000 is the number in my head, but I know that there are people doing north of that. Really, the slower you grow, the less support you need, the less customer success, the less sales, the less a lot of things. You can have higher profit margins, or at least higher revenue per employee—if you’re on this really slow growth. Although the Basecamp is doing an enormous amount of revenue, they’re 15, 16 years in. I think they had a bit of a luxury. If they are at 100 million and they are 55 employees, that’s almost 2 million per employee. That’s just astronomical.
But that wouldn’t be something I would personally strive for in my company. It’s perhaps unrealistic. Much like a lot of the stuff Basecamp does is just unrealistic for most of us. They hit a lot of retakes, they did a great job and built an incredible business. But it can be hard to model our own companies after the outliers, like the Mailchimps and the Basecamps.
Anthony: Sure. Other factors you mentioned is the sales and the number of people you have. Are you doing enterprise type sales, or you’re doing hands-off style service? There are so many factors involved. It’s impressive, but I’m with you. I don’t think I would be in the position where I would want to operate a company at that type of size. If it happened, then so be it.
I never designed this to work this way. This is all looking back at the numbers and applying the feelings that I felt that each point along the way, when those numbers hit a certain point and how the team interacted with each other. It’s more looking back rather than saying, oh, I would plan to try to do 500,000 to 1 million revenue per employee.
Rob: Speaking of milestones, do you remember celebrating any of these? When you hit 1 million ARR, 100,000 MRR, whatever—did you go out to dinner with the wife or pop champagne with the employees? How were you at doing that?
Anthony: I feel like I’m more on your side. I didn’t celebrate very well. But at the same time, the team would get together, we would do meetups three times a year. We would always make those meetups an enjoyable time to be together. We would open some bottles of wine or of champagne—depends on where we were in the world. But we would spend part of the time just being together and celebrating the fact that we have this business that we can operate, and at the same time, live our lives.
We didn’t celebrate necessarily the milestones per se, but we still celebrate it regularly just for the existence of this. The sheer fact that we have such a wonderful opportunity to continue working on something that’s both mostly enjoyable and profitable.
Rob: I call those pinch myself moments. Do you ever pinch yourself and just say, we did this. This is incredible. This was a goal, a dream that I had, 5, 10, 15 years ago to own a company. I really never thought I would be able to do it. And then you look around and you run a company of 19 people doing millions of dollars, presumably, in revenue a year, 10 years in. It’s just incredible.
Anthony: Yup. Definitely have my moments like that. And then the next day something goes south and I say, why do I do this to myself?
Rob: Right, exactly. Why don’t I just go get a job? We’ve covered escape velocity—stage four. Stage five is scale. You kind of talked about where your brother left and you were forced to scale up to 8 people, 80,000 to about 200,000 MRR. Does that ring true with you? How long do you feel you were in the scale phase?
Anthony: This is interesting. When I went back and looked, we got to about 12 people, and we stayed in the scale phase for four years. The revenue numbers kept going up, but we had some turnover in the team. But we would get other people in. We had a pretty good dynamic in the team, and we were able to pretty much stabilize at a good point where we were comfortable. Revenues would grow, but our headcount wouldn’t. We stayed there pretty much all the way up through 2018.
Again, I look at the revenue per employee, and I would see this number just keep going up, up, and up. We were doing well, but at the same time, at the end of 2018 and 2019, we said, okay, there are certain things that are getting challenging. What are the things that we do at DNSimple is everybody does support, every team member, including myself. We all keep trying to support the queue, we all answer support. But we started to get the feeling we can do this, but we’re actually doing our customers a disservice because not all of them need the technical support. They need somebody there who’s maybe an advocate for them.
We started thinking about customer success as an independent thing inside of DNSimple. That was the start of us looking to move from the scale phase into the building a company phase. In an engineering organization, you could just keep adding engineers, and you can scale pretty well if you can do a lot of automation. You can automate, you can have a knowledge basis, you can outsource first-tier support that is backed up by your engineers.
You could do all kinds of things to grow, but at the same time, you start to sacrifice the quality of specific areas. Whether it’s the quality of bringing on a contract that is not your typical self-service contract, more of an enterprise contract. If you don’t have somebody there to handle that, then they get […] of a weak experience. If you don’t have somebody to take care of customer success—that’s support and also account management and things like that—well then, they have a bad experience. The people that fit into that bucket.
In 2018, we started looking at this at the tail end and said maybe it’s time to start looking for some people and putting them in roles outside of engineering. I think that was the next trigger that moved us into the company building phase where we started actually saying, you know, we should probably write down what we do here. We should probably start to look at who does what and what roles are being under-serviced because we don’t have an expert in that role.
Rob: Yeah. That to me is a mark of starting to think about a company building it. There’s mission, vision, values type of stuff where hey, you need to communicate the culture to new people. We are getting past that phrase, two pizza teams. When your team gets larger, then can eat two pizzas. You’re going to need three or four pizzas just a way to measure team size. When you start getting past that, you have to have some structure in place or else stuff goes haywire. And it sounds like you were pretty deliberate about recognizing that.
A lot of founders—especially first time founders—get to the 15 or the 20 employee mark before they realize that they’ve created a big hairball, a big mass, no titles, and people have overlapping responsibilities and all that. I’m curious how you detected that and why you were ahead of the game there as you switched into this phase six of company building.
Anthony: I would credit it a lot to the team and the ability to openly discuss these items. When we get together to do our meetups, it’s a very open forum. It’s not me telling the team what we’re going to do. It’s active discussions about the strategy and direction of the company. The things that work, and the things that don’t. What we do well, and what we can do better.
It’s a credit to the team. It came from different people and different fashion, but they brought it to my attention that hey, we could probably do better here if we put somebody in this role. And then it’s just me listening to them and accepting that, oh yeah, okay, I can’t continue running this as an engineering only company, but I can continue with the set of values that built DNSimple from the ground up. Which is focusing on automation, focusing on customers, and focusing on the team working well together.
Rob: Yeah. That’s nice. You’ve hired well to have people who are in tune with the org. That they’re able to give you candid feedback.
Anthony: I hope that my attitude towards them has helped encourage that as well by not shutting them down. Even though there are some ideas that maybe don’t fit right away, I try to hear it out. I couldn’t do this. If you asked Anthony from 20 years ago to do this, there’s no way he would have been able to do this. He was way too thick in his head, way too stubborn, and would’ve immediately cut off anybody who tried to give a suggestion.
That is the one thing I’ve had the luxury of developing over the 10 years is pushing that down and listening to the people around me. Whether that’s the team, the customers, or advisers as well.
Rob: Perhaps the spoiler question is, stage six company building. I think that’s maybe the stage you’re in now. Do you think there’s a stage seven? There must be. But I just wonder what that transition looks like.
Anthony: One of the things that I’m seeing here, and what I’ve seen with other companies is that you hit that seven-figure mark. There’s a big difference between 1 million in revenue in a year and1millioninrevenueinayearand10 million. The steps to get from the 1 million a year to the1millionayeartothe10 million are actually very significant, and they require a change in mindset. I think that’s the company building phase.
Building a company at that point, is when you’re really thinking about the company. My guess is—and I still am testing the waters here and seeing if I understand this—but it’s when you start to look beyond being a single product or a single service and you start to think of the company as an umbrella for accomplishing things that work well together but maybe are in the original line of the product.
You start to think—not a second product that’s completely different—can I do something that is another line of revenue that works well with what I have, but is still able to be independent and use independently. Because to date, all the revenue in DNSimple, all comes from services built in to the DNSimple application. Whether that’s email forwarding, domain registration, or SSL certificates. These are all built into the application.
Now I’m starting to think if we want to go to that next step, what is another source of revenue that maybe is able to integrate well with DNSimple but operate independently.
Rob: Yeah. I like that. Stage seven, empire building. I’m just going to throw it out there.
Anthony: There you go. Exactly. I like it.
Rob: It’s interesting because you look at Intercom and how they expanded. You look at Basecamp, they’ve launched a bunch of different products. But then I see others that haven’t gone down that road. Like Zappier, I really think of them still as a single product and segment. It’s certainly a possibility of one possible avenue to start adding on and expanding outside that core competency. Have you started thinking about that then for DNSimple?
Anthony: Yes. It’s one of the things that we’ve been talking about recently is we still want to have innovation in the world of domain in DNS. We still want to continue working hard on growing our place in the market and in delivering really high-quality service to our customers. We continue to invest in infrastructure and continue to invest in people. For the foreseeable future, that’s where our growth will come from. But at the same time, we’re starting to look and say what types of things we like to give to our customers where there are gaps in the marketplace right now.
Similar to what we experienced in the very early days of DNSimple where you had some big key players and they were well-established, but they had lost some of their traction or lost some of their mojo because they got too comfortable. That to me is the next thing that I can look at and say, okay, where else is close to DNSimple but can be an area of revenue growth because we can innovate there.
There are a lot of companies doing a lot of different ways. Some do it through acquisitions. One path into empire building (if you will) is through acquiring smaller businesses that have something innovative, but where you can actually work better with them. That’s a path.
Another path is independent product development where you set a tiger team off to the side and say, okay, put together several things and let’s test the waters with them and see what works and what doesn’t. The other option is that a lot of companies start to hit this size and say, I don’t want to do this alone. I’m okay with being part of somebody else’s empire. That’s the other direction that we see where the founders say, okay, we can keep doing this, and we want to keep doing this, but we want to do it with another partner who has already achieved the larger scale and already has a foothold in areas that we want to go into. There are lots of angles.
Rob: Yeah. Speaking of acquisitions, you have to imagine that you had people approach you about acquiring DNSimple over the years. A) is that true, and B) has that ever been you’ve considered?
Anthony: Yes. It’s been true over the years different companies have come in and said, hey, you’re interesting. What you’re doing is really interesting, would you like to talk? I usually will talk to them, nothing has ever gone any further than just initial conversations. Part of that is just because I really love what I do and I love the ethos inside of DNSimple. I love the way the team works together, I love the product and how it works. I feel like there’s more to do within this space, so I’m not quite ready to get out of it yet. I feel like I have more energy to put back into it. I have a longer-term vision that we still haven’t achieved.
For me, I have a lot of energy still to just keep going. I’m happy to stick with making this thing keep growing and keep on making the product better for our customers. That satisfies me for the moment. But yeah, we’ve had people come in over the years at different levels. Nothing to the point where it was, hey, let’s go into due diligence. No letter of intent or anything like that. The right thing hasn’t shown up for that yet.
Rob: Yeah. That’s the norm. When you build a business in the seven figures or eight figures, you will absolutely get a bunch of funding offers and a bunch of acquisition conversations start, and most of them go nowhere. Taking the first call is a good rule of thumb to do. If you feel like they might have the cash to actually do it, and they’re not wasting time, but to not get distracted by it. That’s the worst part is somebody comes in and wants to do an acquihire and you waste a bunch of time on phone calls with them in the early days when it’s just a distraction. And it’s pulling you away from doing product-market fit, escape velocity, and all that stuff.
Anthony: Yeah. Generally, what I do is I try to stay as honest as I can in those conversations—brutally honest at some point where I say, this is the situation, I love what I do, we make good money. If you’re going to come in, you’re going to have an offer that’s too good for me to turn down. That usually ends the conversation. Because most buyers are going to be private equity, they’re going to be independently funded, or yes, I’ve had like you, I also have a lot of venture capitalist interest over the years. It’s never felt right for this business.
This business is a steady growth business. It’s not one where I’ve ever felt we’ve had something that is oh let’s shoot for the moon type situation and try to become a $100 million or more company quickly. That’s what a venture capitalist is looking to fund. They’re looking to fund somebody who really wants to put fuel into the rocket and try to take off. That hasn’t interested me. We’ll have the conversations, but it usually ends pretty quickly when I’m brutally honest about my situation.
Rob: Sir, thank you so much for joining me on the show today. Folks want to connect with you, you are @aeden on Twitter. You are really active in MicroConf Connect, and I appreciate that because you’re a more experienced founder and then a lot of folks and I feel like you lend a lot of knowledge and insights. If folks want to be around and glean from your knowledgeable aura, they can hit microconfconnect.com and connect with you there. And of course, dnsimple.com if folks want to check out what you’ve been working on for the past decade.
Anthony: Yup. Absolutely. Thanks for having me on. And definitely love the MicroConf Connect community. Love being able to get in there and talk with other people both that are in earlier phases and also people that are in a similar situation that I’m in. It’s been really helpful just to follow along with what other people do. It’s a great community, so I’m very, very happy about that.
Rob: Thanks, sir. Appreciate it. Have a good one.
Anthony: All right. You too.
Rob: Thank you again to Anthony for coming on the show, and thank you for listening to Startups For The Rest Of Us every week. If you’re not already subscribed—I’m not sure how you’re listening to this episode, but please head into a podcatcher, click the subscribe button, share this with a friend, and would love a tweet. We are @startupspod on Twitter. You can follow us, you can @ mention us. I’ll take any help you can lend in terms of helping us spread the word about this message that you can build a startup. You can build a SaaS company without venture funding, and you can be ambitious without having to put your relationships and your family life and potentially your health on the line in order to build a company.
That’s really what MicroConf, Startups For The Rest Of Us, Tiny Seed, and my blog. All of my writing, just everything that we’ve done is aimed towards telling more people that this path is out there because so many people just don’t know it exists, they don’t know it’s viable, and we want to be the people to show them that it is. Anything you can do to help us get the message out, I’d appreciate it. I will be in your earbuds next Tuesday morning.
Episode 508 | Finding Marketing Channels, Seat-Limited Trials, Building a Brand, and More Listener Questions
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Show Notes
On today’s episode, Rob is joined by Asia Orangio as they answer listener questions ranging from how to find the right marketing channel, how to build a brand for your business, as well as how to decide whether to start or join a startup.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for the next episode. We’d love to hear from you!
The questions we cover
- 3:13 Mike Lollar – How to find the right marketing channel
- 10:47 Cole Hooey – Feedback on freemium pricing model for an HR app
- 16:18 Robert Brandl – Should I invest in branding?
- 26:25 Etan Efrati – Decision framework for choosing whether to start or join a startup
Links from the show
- Asia Orangio | Twitter
- DemandMaven.io
- In Demand | Podcast
- How to Acquire Your First 100 Customers – Asia Matos | MicroConf Talk
- MicroConf On Air: How to Earn Your First 100 Customers | MicroCon On Air
- Moz
- Ahref
- WebsiteToolTester.com
- Regret Minimization Framework | Jeff Bezos
- Decisive: How to Make Better Choices in Life and Work | Book
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob: In this week’s episode of Startups to the Rest of Us, I’m joined by Asia Orangio. She and I answer listener questions on finding marketing channels, seat-limited trials, building a brand, and a bunch of other topics. We had a great time doing it.
Before I dive into that, I want to read a snippet from an email from a long time listener, Josh. He said, “Hey Rob, congrats on the 500th episode. Truly an epic accomplishment. I want to say I enjoyed the new format. The recent two-part episode with you and Jordan was epic. It could just be recency bias, but I don’t recall an episode that went so far into the weeds of the later bits of company building that I’m so familiar with. I also enjoy the following episodes with founders, and the way you intro those and talk briefly about their history, so you can get to the meat so much faster. The one this week with Derrick Reimer did that really well. Your solo episode was great as well, it resonated with many thoughts I’ve been harboring for years.”
He wrote a very nice email that I’m summarizing. He ends with, “Feels like I can just rant with you and have a beer about topics like this, which would be great. What this all circles back to is that I want to commend you for your approach. As one of the listeners mentioned in the 500th episode, your authenticity is very much appreciated. Everything you do is thoughtful, pragmatic, and truly helpful to the community you and Mike have built. Here’s to 500 more.”
Thank you so much, Josh. It honestly means a ton and I really appreciate hearing that. I know that we have been getting a lot more letters, and comments, and thoughts from listeners about episode types, topics, and just different approaches. I find that the more I’m experimenting, the more that people are able to weigh in. Like the recent Twitter poll I did where I said, should we redesign the podcast logo? I believe it wound up being about 58% no and 42% yes. We’ll see here in the coming months if I get the itch to think about redesigning it.
With that, let’s dive into our listener questions today. Asia Orangio, if you’re not familiar with her, she is Asia Matos on Twitter. She is the founder and CEO of demandmaven.io, where she helps SaaS founders find their first 100 customers, first 10,000 MRR, or first10,000MRR,orfirst100,000 MRR, with the confidence and clarity of a custom growth strategy and roadmap, and she helps with implementation, too.
I have a ton of respect for Asia. She’s doing great work. She does some work with TinySeed founders, she does work with a lot of founders in the MicroConf space, and she just has a killer marketing instinct. She knows funnels, she knows how to get in, do jobs to be done at interviews, execute on marketing channels to find one that works, start to scale it up, and work with founders to do that.
Asia has a wealth of knowledge. Actually, if you haven’t been listening to the In-demand Podcast, she started it just a few months ago. It’s just her on the mic, sharing her thoughts and her wisdom. I highly recommend it. It’s called In-demand. And with that, let’s dig into our listener questions on finding marketing channels, seat-limited trials, building a brand, and a couple of other topics. I hope you enjoy it.
Asia Orangio, thank you so much for joining me on the show.
Asia: Thank you so much for having me. I always love just working with you guys in general and super excited to answer some questions.
Rob: Me too. I am stoked, and given your experience, we have some good questions about finding the right channels, about branding, and about all that kind of stuff. I’m stoked to dive in. Per our typical listener question format, voicemails go to the top of the stack. Our first voicemail is from Mike Lawler.
Mike: Hey Rob, I’m working on a modified first step of your stairstep approach. My app migrates subscriptions from whatever recurring billing software you’re using, charge fees, or Recurly, et cetera to Stripe Billing. The one-time fee that I’m considering eventually morphing into a productized service. I believe in the demand for the product. I’ve been contracted to this exact thing two different times and then contracted another time to migrate and app onto Stripe Billing. I’ve talked to some of my fellow engineering managers that I know and they’ve done something similar or have it on the roadmap.
What I’m trying to figure out is what would be the most effective way and who would be the most effective group to market my product to? I think that there’s a strong argument to market to both developers so that they can educate the CEOs if that ends up on their roadmap, and then also to the CEOs and founders of different SaaS companies. I’m unsure what would be the best channel to do this, LinkedIn, Twitter, forums, et cetera. I don’t think the SEO and SEM would be particularly effective because I’m not sure how many decision-makers are searching for things like switching from Zaura to Stripe Billing, or whatever it may be. Any suggestions you have would be awesome. Thanks so much.
Asia: I love this question because my honest first thought was why not SEO and SEM? Purely because, well, a couple of things to be thinking about from a more strategic perspective, and then what I would actually do, which is I think that from a questions perspective, to be thinking about and mulling over is, who is the person who is ultimately going to live a better life because the product or the thing, and the service or whatever it is it’s solving that problem for, is that ultimately the CEO, or is that ultimately the developer?
I think that something to explore, but my guess is that, while it might not be the fastest channel in the world, if this is enough of a pain or problem, someone is probably searching it somewhere. I think the SEO and SEM route is actually what I would start with. I would do the research, of course, and that wouldn’t be necessarily a thing. I would just double down immediately.
I think you’d have to use a tool like Moz or Ahrefs to come see are people actually searching this. Based on the result that Google is serving up, in theory, if the search results are relevant to what you guys ultimately do, then that actually might be a very valid channel. That was my first impression. I’m curious though, Rob, what your thoughts were.
Rob: I was thinking that SEO might be the longer-term play, so it’s something I would get in quick, but I think to run quickly for that, I would start looking at Quora and Stack Overflow. My gut is that, as you said, founders and CEOs, if it’s a 100- or 200-person company probably don’t care, but if it’s a founder CEO of a five-person startup, they’re still involved in the Stripe Billing or the charge fee migrations.
That’s one place, but I really think that in general, it’ll be the developer. It will be some kind of developer who winds up doing this. When they go to Google to search, migrate from any of these places to Stripe, Quora should rank pretty high.
Shouldn’t there be (I’m guessing) a question like, how do I move from Chargebee to Stripe Billing? I would Google that now and see what’s in the top 10, or any of those places where you can contribute. Any of those are kind of user-contributable forums or whatever, Stack Overflow is the other one because (again) developers are going to use that.
I think if you wrote an article about that today in a brand new blog, I don’t think it’s going to rank immediately. That’s where I like Quora, Stack Overflow, even LinkedIn, Facebook groups, Twitter. Twitter is not going to come up every day, but having a search for some type of monitor on this, sure, chime in on those conversations, maybe once a week you wind up with a customer, once a month. I don’t think that’s going to be some massive influx, but I do think that you have a bit of learning to do right now. You want to talk to as many people as you can and people with the burning pain point are just so much more willing to talk to you. That’s what I love about it
To your point, I love the idea. I’ve always loved the comparison, SEO approach, where you say, it’s in the old days, 10 years ago, it was like, here is Drip versus all of the other email providers. It was a big grid, a big matrix. Well, now, it’s Drip versus MailChimp, Drip versus AWeber, each of these individual pages. You do a bunch of long-form content, such that when someone says, comparing Drip versus MailChimp, either your page or MailChimp, or maybe Quora, I bet one of those three ranks at the top for that question. I feel like this could be a little similar.
My concern is, again, if I didn’t have a blog with any type of domain authority and I wrote 10 blog posts today, or 10 essays or articles, do you think those would rank anytime soon or do you think you’d have to build up that domain’s authority first?
Asia: No, it would definitely take some time. I’m actually kind of curious if SEM would be something that would be a little of a faster route, even if it’s not the most infinitely scalable channel today, just depending on, of course, the pricing model that you have, but SEM could actually be a way that you evaluate just the quality of some of those searches, if of course there’s enough traffic volume in general for that. That’s definitely what I would use to test ideas and also just to test the funnel overall, in terms of who is actually searching this and who is actually coming to the marketing side and converting, signing up, or asking questions. I completely agree with going wherever people are talking about this problem and this pain.
It sounds like it’s a very common behavior, which makes me think it’s something that people are talking about in some kind of capacity somewhere. Like what you’re saying, Rob, I would go there and join that conversation if I can. I didn’t even think about Stack Exchange, but yes, that would absolutely be another place or another channel. This may even be a stretch, but Quora could also be a place where you test the advertising platform as well. Quora ads also exist, and if I’m not mistaken, depending on the query, you can get some pretty qualified traffic industry engagement overall. It’s definitely a test channel, definitely something to just try with a limited budget, if you have an advertising budget in any kind of way.
I would be looking at what are the most intent-driven channels that you can identify, related to that behavior, and related to that person. I would put SEM in there, Google ads. I would put Quora in there, the same thing for Stack Exchange where people are intentionally looking for a way to solve a problem.
Rob: I like that you’ve just defined that because I think some folks might not know what intent-driven ads versus (I guess) demographically-based. That’s like the Facebook ads, where this person likes Dungeons and Dragons and they live in Minneapolis, versus this person just said, how can I migrate to Stripe? That’s intent versus just who they are. The platforms you named—Google and Quora—would be really good in 10 months.
You threw out a term, SEM, which you and I both know that means, but I’m imagining someone maybe listening to it, wondering how is that different than SEO? SEM, Search Engine Marketing, is just kind of a synonym for buying ads on search engines. It’s usually pay-per-click ads on Google is how I think of it, but of course, it could be. There is SEM in Amazon.
You can buy ads if you have a book or product up on Amazon and you see the sponsored ranking there. Obviously, you can buy on Bing, YouTube, Google, and Yahoo, I guess anymore, I don’t even know at this point.
I also really like the question that you asked at the start which was, who will live a better life because of your service or product? That’s such a good thing to be thinking about as you get out and try to launch this. Thanks, Mike, for the question. I hope that was helpful. Our next question is from Cole Huey.
Cole: Hey Rob, Cole in Minneapolis here. I’m working on an app that facilitates HR employee onboarding processes. The set-up takes a medium amount of effort. It’s not integral to the business but definitely takes some intentionality to set up. I had the idea of allowing them to create an account for free as a single user and take as much time as they want to set it up and have them pay once they start adding other users. Because of the nature of the app, they can’t get value out of it on their own, so I think it prevents any way to abuse it. Any pitfalls or drawbacks that I’m not seeing in this approach? Thanks.
Rob: Interesting question. Asia, do you have thoughts on this?
Asia: I have so many follow-up questions.
Rob: Let’s do it. We’ll just go. I’ll just answer your questions. We’ll make it up as we go along.
Asia: Okay. This is a tough one because, for me, I think so much of how you think about the onboarding process in general and then also how much do you give away and how much time do you give someone to start making a decision. I think so much of it does depend on just your overall positioning in the market from a product perspective. How white glove is your approach, for example, from a product perspective? Just how much friction is there naturally before time-to-value is ultimately met?
Those are all things that we don’t necessarily have all the information on, but I would say if there’s a lot more (for lack of a better word) friction to get to aha moment and the product, if it takes just more time, in general, to configure things, to get things set up, part of me wonders is ultimately possible to speed that journey up? Without forsaking, of course, the overall customer experience, and also just getting to that time to aha moment.
I will say that no time limit depending on, just again, that positioning in the product space and then how complex the product is. On the one hand, I think that can actually be incredibly beneficial, but I also think it just ultimately depends on the user at the end of the day. It’s unclear to me at least who exactly we’re selling to, but I’m thinking, if it’s getting sold to an HR manager, that person is in a million different directions. With a no time limit kind of scenario, unless you just had some really intentional onboarding, whether it’s a white-glove approach or a fully self-serve kind of scenario, I think that you might end up getting forgotten. That’s what would concern me.
Maybe in the no time limit scenario, I don’t know. I could see pluses and minuses for both. I would be much more concerned about just the HR person or whoever is ultimately using the product just completely getting distracted at the end of the day.
Rob: That was my thought when I initially saw this or started thinking through it. Without some kind of time pressure, some type of demo where they either see you face-to-face, or they’re on a call, they see the product working, then you follow-up with them, and there’s some type of personal relationship, just not sure how an HR product works. Again, I’m under the same assumption that a busy HR professional is running this and that they’re the ones that would be purchasing.
I don’t see drawbacks to giving them a free single-user trial that they can’t do anything with, but I do think that personally upfront, it would be demo only because the learnings you’re going to get from doing demos are going to show you the pitfalls of the product, the questions they ask. You’re going to learn 10 times more than you will from someone just kind of tooling around in the app on their own and then bailing, which is what most people will do. That’s the first thing,
I don’t know that I would keep demo-only forever, but selling it to HR like this, I would price it such that you can because my guess is it will be high-touch sales. You’re trying to build a 20 a month HR product, selling to orgs is, how do I say, unless it’s20amonthHRproduct,sellingtoorgsis,howdoIsay,unlessit′s10 per seat or something, per employee that’s onboarded, permanently which doesn’t make a ton of sense, you need to have a high ticket price. I think you need to justify the demo only.
The time pressure thing is a little different. This is not going to be a self-service app. I don’t know of any HR apps like this that are just sign it and forget it. People sign up, they onboard, and it happens. It sounds like we’re in agreement, do you have other thoughts on it?
Asia: I completely agree. I think the only other thing I thought of as you’re kind of chatting about, who you’re ultimately selling to in the HR world at least. I’m just reminded of all the most popular HR platforms in general. What are the other SaaS tools an HR person might actually be using (like on any given day) today? I’m thinking about the experience that they have whenever they sign up for a product. Usually, they’re talking to someone at some point.
I just think it’s so rare to let an HR person, a professional, go willy-nilly into a product. I think if anything, in many ways, your experience will be compared to other product experiences, too. If a lot of other product experiences in this HR space is very much that personal touch, white-glove approach, then in a way, I would say, you’re literally competing with those experiences, but there might actually already be a standard that a demo can ultimately help you meet. Just from creating that personal touchpoint, but yes, I totally agree.
Rob: That’s one of the advantages you have as a founder, is in the early days and even as you go on, when you get on a call, it’s like, I’m the founder of this. I’m the lead developer and I’m going to make it great for you. There’s a little connection there. Now, that can scare some people off, so you’re not going to get Target or Best Buy to sign up with you the first day, but do you get a 5% or 10% percent target to be willing to invest in your solution? It’s possible. Thank you for the question. I hope that was helpful.
Our next question is about branding, it’s from Robert Brandl, and he’s from websitetooltester.com. He says, “Hello, Startups for the Rest of Us. As a longtime listener, I have a question for the show. I have become pretty decent at SEO and content marketing, but I was wondering if I should start investing in brand building at some point. I have a feeling this could accelerate our growth further.” Then he asks, “Can you maybe share a bit of the process of building the Drip brand or any other brands you’ve been involved with? Did you work with an agency? What were your goals and how did you measure them? Many thanks. Robert.”
Again, websitetooltester.com. What do you think, Asia?
Asia: I also love this because maybe it’s splitting hairs, just a tiny bit. I’m super curious to hear what you think also, Rob. There’s brand and then there’s branding. Branding is very much the colors and the fonts, and typefaces, and just things that you would leverage visually to represent your brand. Then there’s building a brand. I will say I am not a brand expert, but from the brand experts that I do know, many of them would say that brand is so much beyond just the colors, and the fonts, and logos, and things that you have in the graphics that you’re using, so much of it has to do with the overall culture of your business.
Culture (I think) is a word that can get sliced and diced in a million different ways, especially today. It might actually be very overused, but ultimately the core values of a particular business. Ultimately, when you think about building a brand, those core values are experienced by your customers, by your users, and people who look to your brand for guidance, wherever it is that you’re an expert in from an industry perspective, and then even beyond to where you get to the very highbrow Apple and Steve Jobs-level brand.
I think from building a brand perspective, I think what could be a different way to think about it would be, there’s a building that brand in that capacity, and then there’s also either generating more word of mouth from a channel perspective. I’d be curious if maybe how we think about and how we realize brand is really just looking to expand on the word-of-mouth piece as an extra channel to continue to just double down on, and what can we do around word-of-mouth to expand that, or is it literally, let’s actually build a brand, something that means something to someone. I would say that building a brand from a process perspective is much harder because it is so long-term, at least in my highbrow brand definition.
Rob: I like the idea of them building a brand. I think it will take them a while and I do think it’s a gamble. When I look at their site, they basically review website builders, ecommerce platforms, and hosting platforms. I’m sure they make buckets of money on affiliate links. It’s a nice site. It’s not the typical crappy affiliate referral set-up. It almost reminds me, given the quality of the content they have here (and I’m guessing their organic rankings, I’m guessing they’re just getting most of it from organic search), if I’m going to build a long-term business, it scares me. It concerns me that if no one ‘s typing my URL into the browser, then I am always beholden to Google.
The example I think of is similar to this if I were in his shoes, wanted to expand, and wanted to (a) diversify, but (b) get more traffic, I would personally look at Wirecutter. Wirecutter is just reviews and there were a bunch of reviews of all types of electronic stuff before Wirecutter. Wirecutter really just makes their money on a bunch of affiliate links, some […] ads and stuff now, too. But they just built a really high-quality thing. I will type in wirecutter.com and then I will search for their best earbuds, Bluetooth earbuds or whatever.
Why do I do that? Because somehow, they built a brand, and the way I heard about it was people mentioning it on podcasts, or linking it to an email newsletter, or something in the ether just started Wirecutter was a thing.
I don’t think that was by accident. I don’t think Wirecutter woke up one morning and is like, oh, everybody loves us. I think they had to pick some pretty deliberate steps to do that. If I was in Robert’s shoes, I would: (a) be looking at what did Wirecutter do, try to watch interviews with their folks and figure out if they had a plan, how did they execute on it, and (b) when I think about a brand like this, I want the founder to be quoted in all the articles that are on Forbes entrepreneur magazine, even trying to get on web shows and podcasts to get quotes, snippets, and press releases like an expert. It’s like, Robert so and so, the founder of WebsiteToolTester says blah, blah, blah, here’s our quote about this. You’re almost trying to become an expert, such that your site gleans with some of your expertise. I think that’s a first thought, and now I’m just brainstorming ways to try to build a brand.
The second one is, you have a bunch of written content, have you thought of starting, since we’re like a video show or a video review show of these things, is there anyone doing that and is that the next level here, or is it a podcast? I have to guess there’s a Wirecutter podcast. I’ve never looked, but given how strong their brand is, I would assume that there is.
I would think about, are there other media ways to go whether it’s starting that YouTube channel if you don’t already have it, is there a podcast. How do you elevate yourself above the other 50 website builder ecommerce and hosting review sites that are really just affiliate links, and they’re ranking the best one, are the ones that pay the most money at the top? How do you differentiate yourself from that? From there I think it’s going beyond just the written content and really thinking about what people resonate with and what other examples have come before me.
I think I’ll finish with this. When I think of a brand, I do like your differentiation, branding versus brand. I think branding is colors, logo, visual, this and that. I’ve read this somewhere, but brand is not what you do, it’s who you are. Brand is not how you see your company, it’s how your customers see it, or your prospects, or your visitors. It’s how they see it or hear about it.
When I say Wirecutter, if other people have heard of the site, they say, oh, that’s that reputable site that reviews these things and I trust their recommendations. Somehow, they built up that brand, it’s how we see them. Those are my thoughts when I heard it. I’m curious if you have other thoughts given our back and forth.
Asia: Actually, really a question for you, in your experience, how would you recommend someone build a brand from a personal brand and separating that. Or maybe it is just the same as the actual business brand, but how do you see building that personal brand versus the business brand, or do you find it’s very much the same?
Rob: I think you can do it either way. I’ve done both. Rob Walling started becoming a personal brand in the blogging space and then the podcasting space. Then we started MicroConf and MicroConf started becoming its own brand that was affiliated with Mike and I, the co-founders of MicroConf. Now, I was really all in. MicroConf was a thing we did on the side. Startups for the Rest of Us was a thing we did on the side, and really, I was still all in on the Rob Walling brand until I started Drip, and then I just got too busy.
What you’ll notice is, the Rob Walling brand these days is really tied heavily to the podcast, MicroConf, and TinySeed. Although I am the face of it, those brands are bigger than me. I’m not doing a bunch of personal. Go to robwalling.com and there hasn’t been a new essay in years, but you go to MicroConf, Startups for the Rest of Us, and TinySeed and there’s a bunch of new content coming out. Some of it’s from me and some of it’s from other people.
In his case, in WebsiteToolTester, unless Robert wants to become a personal brand himself (which he’s given no indication he has), although he can be the founder, the expert, and lend the insight, building a personal brand would involve him going out and maybe writing blog posts under his own name and starting a podcast where his brand is put ahead of WebsiteToolTester. But if you started the WebsiteToolTester podcast, and it’s just like, hey, I’m Robert, I’m the host of WebsiteToolTester, I’m the founder as well. Then he goes into it like, WebsiteToolTester gets the brand equity in that. In his case personally, again, unless he really wants to build a personal brand, I don’t think he needs to. I think he can build the brand without having to become the celebrity founder.
People can know who you are. Like Ruben Gamez with BidSketch and DocSketch, a lot of people, especially in our space, know who Ruben is, but he’s not some big personal brand, but DocSketch and BidSketch have momentum, and they really are these apps that have a lot of revenue, have customers and such. He’s been able to do that I think while being a little bit in the background.
If you look at Castos, a TinySeed batch one company, Craig Hewitt was the face of that brand. Then, he hired Matt Medeiros within the last couple of weeks from […], who is now the director of Podcaster Success. Matt is now going to start becoming more of that voice. I think the Castos brand is still very strong, and it wasn’t tied so closely to Craig that if Craig is only the co-host of the podcast, or takes a few weeks off of their podcast, or of blogging, or whatever. I don’t think the Castos brand suffers from that. I think that’s a really nice way to do it because it means that if you’re a 50- or 100-person company, Craig Hewitt doesn’t still have to be recording the podcast every week.
Asia: Thank you for that breakdown. I can hear that question in the back of some founder’s minds of, okay, but wait. Awesome, thank you.
Rob: Absolutely. Thanks Robert, I hope that thought process was helpful. Our next question is from Aton Efrati and he says, “Love, love, love the show, what you guys are building, and the message. Here’s my question, I got laid off because of Covid-19 and I’m looking to go back on my own. After more than five years of working for a venture capitalist, and then one of their high-growth portfolio companies, I know that I want to get involved in smaller profit-driven startups. I’m weighing a few different options of what my next steps could be.
I’ve got four kids at home, a supportive wife, and about six months of runaway. I’m trying to balance my confidence and enthusiasm with making smart decisions. I have a few options I want to layout for you and I’m curious to get your take.
Option one is high-risk, go out on my own which would start as contract work and evolve into a product type of service. I would continue to tinker on the side with other ideas and probably try to build a more substantial business in the next 1–2 years. This requires zero funding. Option number two, medium-risk. Join a fledgling startup that is inviting me to be the CEO to try to restart sales and marketing instead of closing down. They invested hundreds of thousands of dollars in angel money into building out technology, have dozens of paying customers, but it’s been several years and that company hasn’t taken off beyond break even. They have one full-time employee and two co-founders are still involved. They’d be paying me a meaningful profit sharing and equity.
Option number three is low-risk. Take a full-time job and tinker on the side with either freelance work, my own business idea, or someone else’s business idea. My market rate salary would put food on the table and then some, but I wouldn’t have much time to think or do anything outside of my full-time work. I appreciate any insight you have. Thanks in advance.”
Asia, what do you think? This is a fun one. This is an ‘it depends’ for sure, but let’s start with some thoughts.
Asia: From a decision-making framework perspective, if we really had to think about how we make decisions about just planning for our life and what’s important to us? Just looking at these options, it’s very clear that this person values entrepreneurship in some kind of way. This person wants to do something just on their own in some capacity. Going back to that statement of just becoming more independent. It’s very clear that this is a core value of this person.
From personal experience, I actually did number one. I lived option number one, which was going out on my own, starting as a contractor role, and then really building a service business over the next 1–2 years. I will say I did not quite go to the level of productized service, which I think is a step even further of the kinds of work that I do. But here’s the ‘gotcha.’ I don’t have children. I don’t have a mortgage. These are a few things about me making that choice and with the zero funding, I literally did it. I just started to do it.
The evaluation here is exactly right. It is absolutely high-risk. There is no guaranteed success for really any of these options. I’m very much someone who just doesn’t believe that job security is a thing that exists in the same way that it did 10 years ago or 20 years ago. Obviously, us even having this conversation, we’ve all got something entrepreneurial about us. I think in terms of thinking about how to make this decision, I think what I would do is a couple of things. I would try to really dig deep into what is it about being more independent and what is it about starting your own thing that gives this person the satisfaction and the fulfillment in life.
When we think about life just in general, what your goals are, and what you want to make sure that you accomplish before we exit the world. Not to make it morbid, but I think many of us, we’re motivated by something. There’s something about achieving that independence and achieving that level of independence that we’re obviously attracted to.
I think what I would maybe go back to the person asking the question with would just be, out of all the options, which one would you regret not doing? If you had to pick one, what would be the most regrettable experience out of all of them? Also out of all of these, what could you, in theory, do without? That’s how I would approach it.
I think in terms of just what I would do in this particular situation, given the context of just my family, my responsibilities, I hate to go in the middle of the road, but I actually think the medium-risk is probably the amount of risk that I would end up taking. Purely just based on my own personal values and the way that I think about what risk I would be comfortable taking.
I will say that it’s very clear that some amount of entrepreneurialism, or being a founder, or doing your own thing, or having a side hustle is very clearly important to this person. I would try to figure out what’s the minimum viable side hustle, or minimum viable foundership that this person can take and still be happy and feel fulfilled.
Rob: I love it. You kind of covered the bases, you covered regret minimization framework, although he didn’t say which of these would you regret not doing. That’s Jeff Bezos’ thing, regret minimization. Me personally even back in the day, I did go out on my own. I started as contract work and evolved into building and buying stuff on the side. I would have done option one and I had one child at the time, I did not have four, but there is some risk there and I think there always is.
The thing that I’ve always fallen back on is, depending on your skillset and your experience, unless there’s just a massive, massive recession, the odds of you being out of work are pretty low. You’ve worked for venture capitalists and then a high growth portfolio company. It sounds like you have some skills that are unique and will probably always be in demand. Especially now, we’ll be in demand remotely. I have to work for someone where I live.
To me, the low-risk of taking a job, I don’t know that I can ever recommend that for anybody in good conscience. Obviously, I had several salary jobs and I did it in the early days, but I think given that this is a turning point for you (it sounds like), I have a tough time imagining that you would want to take the low-risk. The fact that you were even evaluating the high and the medium, it implies that you probably (to me) shouldn’t take the low-risk.
The medium-risk one sounds interesting. That’s the one of joining a fledgling startup but it’s kind of failing in a sense and it’s flattened out. The fact that they’re only going to pay a meaningful profit sharing and equity, I don’t know if he’s getting a salary there or if he has to generate profit to do it. It’s hard to turn a company around. It can be really stressful. I guess if I knew more about the specifics of that, is it in my wheelhouse to do this, or is this a flyer where it’s like taking over this company just to see what I can do versus, I see the angle, I see the path on how to turn that around, that changes that calculus right there or some specifics there.
I did a turnaround with HitTail and I thought it was amazing. It was a great experience for me. I did it with a couple of other products before that, but it was a lot of work, and I didn’t know if it was going to work each time. There’s quite a bit of risk there.
I think something else to throw out is there’s a really good book recommended to me by Ruben Gamez, who I mentioned in an earlier episode. It’s Decisive: How to Make Better Choices in Life and Work. It’s by Chip and Dan Heath, who are known for their Made to Stick and their Switch books. There’s a framework in there about a four-step process designed to counteract the biases that most of us have, the emotional biases, and the pattern matching biases, just all these biases that are built into so much of our thinking.
I don’t know if a ton of you have time to read the entire book before doing this, but that’s something. I got it on Audible myself. I listen to it, take notes, and I refer back to it every now and again just to remind myself. If you’re going to make a hard decision, there are some frameworks to do it with.
Asia: Something that you said that triggered this memory that I had of when I started my business. It was really an opportunity cost question of what is the opportunity cost of option one versus option two. When I started DemandMaven, I was absolutely terrified, if I’m being honest. It was the most high-risk thing I probably could have done with a plan, but at the same exact time, no real proof that my service had service/market fit (if you will) but something that the CEO of my previous in-house—he was actually my boss from my previous in-house role—who really encouraged me to go out on my own and to do option one. Something that he said was, what is the opportunity cost of you not doing DemandMaven?
It really came down to, you could probably go take another in-house job, which no tea, no shade on that, but then there’s also, what would an MBA, Emory University—I’m in Atlanta; I don’t know any other university here in the state—cost? I was like oh my gosh, 100,000–100,000–120,000 maybe. He was like, okay great, so you’re going to go start your business for free and basically go get your MBA, learn way more about starting a business than most MBA grads probably today. Again, no tea, no shade to those who have MBAs.
The way that he framed that opportunity cost for me was also really what helped me make the decision. I did end up going for the high-risk option. Maybe like what Rob is saying, it’s very clear you have a high-risk tolerance. You’re evaluating these opportunities, but that also could be another way to think about, does the opportunity cost of what you’re leaving on the table.
Rob: I love it. Asia, thank you so much for joining me on the show today. Folks want to keep up with you, you are @AsiaMatos on Twitter, and of course demandmaven.io if they want to check out all the work you do in helping SaaS founders reach their growth milestones. Thanks again for hanging out with me.
Asia: Thank you so much. This was great.
Rob: Thanks again to Asia for joining me today. If you love this episode, I would super appreciate a five-star rating in whatever device you use, whatever app you use to listen to podcasts. I really appreciate it even if you can’t write a full comment. Getting some type of review helps me keep going and helps us keep pushing forward with the show. Thanks for listening. I’ll talk to you next Tuesday morning.
Before I dive into that, I want to read a snippet from an email from a long time listener, Josh. He said, “Hey Rob, congrats on the 500th episode. Truly an epic accomplishment. I want to say I enjoyed the new format. The recent two-part episode with you and Jordan was epic. It could just be recency bias, but I don’t recall an episode that went so far into the weeds of the later bits of company building that I’m so familiar with. I also enjoy the following episodes with founders, and the way you intro those and talk briefly about their history, so you can get to the meat so much faster. The one this week with Derrick Reimer did that really well. Your solo episode was great as well, it resonated with many thoughts I’ve been harboring for years.”
He wrote a very nice email that I’m summarizing. He ends with, “Feels like I can just rant with you and have a beer about topics like this, which would be great. What this all circles back to is that I want to commend you for your approach. As one of the listeners mentioned in the 500th episode, your authenticity is very much appreciated. Everything you do is thoughtful, pragmatic, and truly helpful to the community you and Mike have built. Here’s to 500 more.”
Thank you so much, Josh. It honestly means a ton and I really appreciate hearing that. I know that we have been getting a lot more letters, and comments, and thoughts from listeners about episode types, topics, and just different approaches. I find that the more I’m experimenting, the more that people are able to weigh in. Like the recent Twitter poll I did where I said, should we redesign the podcast logo? I believe it wound up being about 58% no and 42% yes. We’ll see here in the coming months if I get the itch to think about redesigning it.
With that, let’s dive into our listener questions today. Asia Orangio, if you’re not familiar with her, she is Asia Matos on Twitter. She is the founder and CEO of demandmaven.io, where she helps SaaS founders find their first 100 customers, first 10,000 MRR, or first10,000MRR,orfirst100,000 MRR, with the confidence and clarity of a custom growth strategy and roadmap, and she helps with implementation, too.
I have a ton of respect for Asia. She’s doing great work. She does some work with TinySeed founders, she does work with a lot of founders in the MicroConf space, and she just has a killer marketing instinct. She knows funnels, she knows how to get in, do jobs to be done at interviews, execute on marketing channels to find one that works, start to scale it up, and work with founders to do that.
Asia has a wealth of knowledge. Actually, if you haven’t been listening to the In-demand Podcast, she started it just a few months ago. It’s just her on the mic, sharing her thoughts and her wisdom. I highly recommend it. It’s called In-demand. And with that, let’s dig into our listener questions on finding marketing channels, seat-limited trials, building a brand, and a couple of other topics. I hope you enjoy it.
Asia Orangio, thank you so much for joining me on the show.
Asia: Thank you so much for having me. I always love just working with you guys in general and super excited to answer some questions.
Rob: Me too. I am stoked, and given your experience, we have some good questions about finding the right channels, about branding, and about all that kind of stuff. I’m stoked to dive in. Per our typical listener question format, voicemails go to the top of the stack. Our first voicemail is from Mike Lawler.
Mike: Hey Rob, I’m working on a modified first step of your stairstep approach. My app migrates subscriptions from whatever recurring billing software you’re using, charge fees, or Recurly, et cetera to Stripe Billing. The one-time fee that I’m considering eventually morphing into a productized service. I believe in the demand for the product. I’ve been contracted to this exact thing two different times and then contracted another time to migrate and app onto Stripe Billing. I’ve talked to some of my fellow engineering managers that I know and they’ve done something similar or have it on the roadmap.
What I’m trying to figure out is what would be the most effective way and who would be the most effective group to market my product to? I think that there’s a strong argument to market to both developers so that they can educate the CEOs if that ends up on their roadmap, and then also to the CEOs and founders of different SaaS companies. I’m unsure what would be the best channel to do this, LinkedIn, Twitter, forums, et cetera. I don’t think the SEO and SEM would be particularly effective because I’m not sure how many decision-makers are searching for things like switching from Zaura to Stripe Billing, or whatever it may be. Any suggestions you have would be awesome. Thanks so much.
Asia: I love this question because my honest first thought was why not SEO and SEM? Purely because, well, a couple of things to be thinking about from a more strategic perspective, and then what I would actually do, which is I think that from a questions perspective, to be thinking about and mulling over is, who is the person who is ultimately going to live a better life because the product or the thing, and the service or whatever it is it’s solving that problem for, is that ultimately the CEO, or is that ultimately the developer?
I think that something to explore, but my guess is that, while it might not be the fastest channel in the world, if this is enough of a pain or problem, someone is probably searching it somewhere. I think the SEO and SEM route is actually what I would start with. I would do the research, of course, and that wouldn’t be necessarily a thing. I would just double down immediately.
I think you’d have to use a tool like Moz or Ahrefs to come see are people actually searching this. Based on the result that Google is serving up, in theory, if the search results are relevant to what you guys ultimately do, then that actually might be a very valid channel. That was my first impression. I’m curious though, Rob, what your thoughts were.
Rob: I was thinking that SEO might be the longer-term play, so it’s something I would get in quick, but I think to run quickly for that, I would start looking at Quora and Stack Overflow. My gut is that, as you said, founders and CEOs, if it’s a 100- or 200-person company probably don’t care, but if it’s a founder CEO of a five-person startup, they’re still involved in the Stripe Billing or the charge fee migrations.
That’s one place, but I really think that in general, it’ll be the developer. It will be some kind of developer who winds up doing this. When they go to Google to search, migrate from any of these places to Stripe, Quora should rank pretty high.
Shouldn’t there be (I’m guessing) a question like, how do I move from Chargebee to Stripe Billing? I would Google that now and see what’s in the top 10, or any of those places where you can contribute. Any of those are kind of user-contributable forums or whatever, Stack Overflow is the other one because (again) developers are going to use that.
I think if you wrote an article about that today in a brand new blog, I don’t think it’s going to rank immediately. That’s where I like Quora, Stack Overflow, even LinkedIn, Facebook groups, Twitter. Twitter is not going to come up every day, but having a search for some type of monitor on this, sure, chime in on those conversations, maybe once a week you wind up with a customer, once a month. I don’t think that’s going to be some massive influx, but I do think that you have a bit of learning to do right now. You want to talk to as many people as you can and people with the burning pain point are just so much more willing to talk to you. That’s what I love about it
To your point, I love the idea. I’ve always loved the comparison, SEO approach, where you say, it’s in the old days, 10 years ago, it was like, here is Drip versus all of the other email providers. It was a big grid, a big matrix. Well, now, it’s Drip versus MailChimp, Drip versus AWeber, each of these individual pages. You do a bunch of long-form content, such that when someone says, comparing Drip versus MailChimp, either your page or MailChimp, or maybe Quora, I bet one of those three ranks at the top for that question. I feel like this could be a little similar.
My concern is, again, if I didn’t have a blog with any type of domain authority and I wrote 10 blog posts today, or 10 essays or articles, do you think those would rank anytime soon or do you think you’d have to build up that domain’s authority first?
Asia: No, it would definitely take some time. I’m actually kind of curious if SEM would be something that would be a little of a faster route, even if it’s not the most infinitely scalable channel today, just depending on, of course, the pricing model that you have, but SEM could actually be a way that you evaluate just the quality of some of those searches, if of course there’s enough traffic volume in general for that. That’s definitely what I would use to test ideas and also just to test the funnel overall, in terms of who is actually searching this and who is actually coming to the marketing side and converting, signing up, or asking questions. I completely agree with going wherever people are talking about this problem and this pain.
It sounds like it’s a very common behavior, which makes me think it’s something that people are talking about in some kind of capacity somewhere. Like what you’re saying, Rob, I would go there and join that conversation if I can. I didn’t even think about Stack Exchange, but yes, that would absolutely be another place or another channel. This may even be a stretch, but Quora could also be a place where you test the advertising platform as well. Quora ads also exist, and if I’m not mistaken, depending on the query, you can get some pretty qualified traffic industry engagement overall. It’s definitely a test channel, definitely something to just try with a limited budget, if you have an advertising budget in any kind of way.
I would be looking at what are the most intent-driven channels that you can identify, related to that behavior, and related to that person. I would put SEM in there, Google ads. I would put Quora in there, the same thing for Stack Exchange where people are intentionally looking for a way to solve a problem.
Rob: I like that you’ve just defined that because I think some folks might not know what intent-driven ads versus (I guess) demographically-based. That’s like the Facebook ads, where this person likes Dungeons and Dragons and they live in Minneapolis, versus this person just said, how can I migrate to Stripe? That’s intent versus just who they are. The platforms you named—Google and Quora—would be really good in 10 months.
You threw out a term, SEM, which you and I both know that means, but I’m imagining someone maybe listening to it, wondering how is that different than SEO? SEM, Search Engine Marketing, is just kind of a synonym for buying ads on search engines. It’s usually pay-per-click ads on Google is how I think of it, but of course, it could be. There is SEM in Amazon.
You can buy ads if you have a book or product up on Amazon and you see the sponsored ranking there. Obviously, you can buy on Bing, YouTube, Google, and Yahoo, I guess anymore, I don’t even know at this point.
I also really like the question that you asked at the start which was, who will live a better life because of your service or product? That’s such a good thing to be thinking about as you get out and try to launch this. Thanks, Mike, for the question. I hope that was helpful. Our next question is from Cole Huey.
Cole: Hey Rob, Cole in Minneapolis here. I’m working on an app that facilitates HR employee onboarding processes. The set-up takes a medium amount of effort. It’s not integral to the business but definitely takes some intentionality to set up. I had the idea of allowing them to create an account for free as a single user and take as much time as they want to set it up and have them pay once they start adding other users. Because of the nature of the app, they can’t get value out of it on their own, so I think it prevents any way to abuse it. Any pitfalls or drawbacks that I’m not seeing in this approach? Thanks.
Rob: Interesting question. Asia, do you have thoughts on this?
Asia: I have so many follow-up questions.
Rob: Let’s do it. We’ll just go. I’ll just answer your questions. We’ll make it up as we go along.
Asia: Okay. This is a tough one because, for me, I think so much of how you think about the onboarding process in general and then also how much do you give away and how much time do you give someone to start making a decision. I think so much of it does depend on just your overall positioning in the market from a product perspective. How white glove is your approach, for example, from a product perspective? Just how much friction is there naturally before time-to-value is ultimately met?
Those are all things that we don’t necessarily have all the information on, but I would say if there’s a lot more (for lack of a better word) friction to get to aha moment and the product, if it takes just more time, in general, to configure things, to get things set up, part of me wonders is ultimately possible to speed that journey up? Without forsaking, of course, the overall customer experience, and also just getting to that time to aha moment.
I will say that no time limit depending on, just again, that positioning in the product space and then how complex the product is. On the one hand, I think that can actually be incredibly beneficial, but I also think it just ultimately depends on the user at the end of the day. It’s unclear to me at least who exactly we’re selling to, but I’m thinking, if it’s getting sold to an HR manager, that person is in a million different directions. With a no time limit kind of scenario, unless you just had some really intentional onboarding, whether it’s a white-glove approach or a fully self-serve kind of scenario, I think that you might end up getting forgotten. That’s what would concern me.
Maybe in the no time limit scenario, I don’t know. I could see pluses and minuses for both. I would be much more concerned about just the HR person or whoever is ultimately using the product just completely getting distracted at the end of the day.
Rob: That was my thought when I initially saw this or started thinking through it. Without some kind of time pressure, some type of demo where they either see you face-to-face, or they’re on a call, they see the product working, then you follow-up with them, and there’s some type of personal relationship, just not sure how an HR product works. Again, I’m under the same assumption that a busy HR professional is running this and that they’re the ones that would be purchasing.
I don’t see drawbacks to giving them a free single-user trial that they can’t do anything with, but I do think that personally upfront, it would be demo only because the learnings you’re going to get from doing demos are going to show you the pitfalls of the product, the questions they ask. You’re going to learn 10 times more than you will from someone just kind of tooling around in the app on their own and then bailing, which is what most people will do. That’s the first thing,
I don’t know that I would keep demo-only forever, but selling it to HR like this, I would price it such that you can because my guess is it will be high-touch sales. You’re trying to build a 20 a month HR product, selling to orgs is, how do I say, unless it’s20amonthHRproduct,sellingtoorgsis,howdoIsay,unlessit′s10 per seat or something, per employee that’s onboarded, permanently which doesn’t make a ton of sense, you need to have a high ticket price. I think you need to justify the demo only.
The time pressure thing is a little different. This is not going to be a self-service app. I don’t know of any HR apps like this that are just sign it and forget it. People sign up, they onboard, and it happens. It sounds like we’re in agreement, do you have other thoughts on it?
Asia: I completely agree. I think the only other thing I thought of as you’re kind of chatting about, who you’re ultimately selling to in the HR world at least. I’m just reminded of all the most popular HR platforms in general. What are the other SaaS tools an HR person might actually be using (like on any given day) today? I’m thinking about the experience that they have whenever they sign up for a product. Usually, they’re talking to someone at some point.
I just think it’s so rare to let an HR person, a professional, go willy-nilly into a product. I think if anything, in many ways, your experience will be compared to other product experiences, too. If a lot of other product experiences in this HR space is very much that personal touch, white-glove approach, then in a way, I would say, you’re literally competing with those experiences, but there might actually already be a standard that a demo can ultimately help you meet. Just from creating that personal touchpoint, but yes, I totally agree.
Rob: That’s one of the advantages you have as a founder, is in the early days and even as you go on, when you get on a call, it’s like, I’m the founder of this. I’m the lead developer and I’m going to make it great for you. There’s a little connection there. Now, that can scare some people off, so you’re not going to get Target or Best Buy to sign up with you the first day, but do you get a 5% or 10% percent target to be willing to invest in your solution? It’s possible. Thank you for the question. I hope that was helpful.
Our next question is about branding, it’s from Robert Brandl, and he’s from websitetooltester.com. He says, “Hello, Startups for the Rest of Us. As a longtime listener, I have a question for the show. I have become pretty decent at SEO and content marketing, but I was wondering if I should start investing in brand building at some point. I have a feeling this could accelerate our growth further.” Then he asks, “Can you maybe share a bit of the process of building the Drip brand or any other brands you’ve been involved with? Did you work with an agency? What were your goals and how did you measure them? Many thanks. Robert.”
Again, websitetooltester.com. What do you think, Asia?
Asia: I also love this because maybe it’s splitting hairs, just a tiny bit. I’m super curious to hear what you think also, Rob. There’s brand and then there’s branding. Branding is very much the colors and the fonts, and typefaces, and just things that you would leverage visually to represent your brand. Then there’s building a brand. I will say I am not a brand expert, but from the brand experts that I do know, many of them would say that brand is so much beyond just the colors, and the fonts, and logos, and things that you have in the graphics that you’re using, so much of it has to do with the overall culture of your business.
Culture (I think) is a word that can get sliced and diced in a million different ways, especially today. It might actually be very overused, but ultimately the core values of a particular business. Ultimately, when you think about building a brand, those core values are experienced by your customers, by your users, and people who look to your brand for guidance, wherever it is that you’re an expert in from an industry perspective, and then even beyond to where you get to the very highbrow Apple and Steve Jobs-level brand.
I think from building a brand perspective, I think what could be a different way to think about it would be, there’s a building that brand in that capacity, and then there’s also either generating more word of mouth from a channel perspective. I’d be curious if maybe how we think about and how we realize brand is really just looking to expand on the word-of-mouth piece as an extra channel to continue to just double down on, and what can we do around word-of-mouth to expand that, or is it literally, let’s actually build a brand, something that means something to someone. I would say that building a brand from a process perspective is much harder because it is so long-term, at least in my highbrow brand definition.
Rob: I like the idea of them building a brand. I think it will take them a while and I do think it’s a gamble. When I look at their site, they basically review website builders, ecommerce platforms, and hosting platforms. I’m sure they make buckets of money on affiliate links. It’s a nice site. It’s not the typical crappy affiliate referral set-up. It almost reminds me, given the quality of the content they have here (and I’m guessing their organic rankings, I’m guessing they’re just getting most of it from organic search), if I’m going to build a long-term business, it scares me. It concerns me that if no one ‘s typing my URL into the browser, then I am always beholden to Google.
The example I think of is similar to this if I were in his shoes, wanted to expand, and wanted to (a) diversify, but (b) get more traffic, I would personally look at Wirecutter. Wirecutter is just reviews and there were a bunch of reviews of all types of electronic stuff before Wirecutter. Wirecutter really just makes their money on a bunch of affiliate links, some […] ads and stuff now, too. But they just built a really high-quality thing. I will type in wirecutter.com and then I will search for their best earbuds, Bluetooth earbuds or whatever.
Why do I do that? Because somehow, they built a brand, and the way I heard about it was people mentioning it on podcasts, or linking it to an email newsletter, or something in the ether just started Wirecutter was a thing.
I don’t think that was by accident. I don’t think Wirecutter woke up one morning and is like, oh, everybody loves us. I think they had to pick some pretty deliberate steps to do that. If I was in Robert’s shoes, I would: (a) be looking at what did Wirecutter do, try to watch interviews with their folks and figure out if they had a plan, how did they execute on it, and (b) when I think about a brand like this, I want the founder to be quoted in all the articles that are on Forbes entrepreneur magazine, even trying to get on web shows and podcasts to get quotes, snippets, and press releases like an expert. It’s like, Robert so and so, the founder of WebsiteToolTester says blah, blah, blah, here’s our quote about this. You’re almost trying to become an expert, such that your site gleans with some of your expertise. I think that’s a first thought, and now I’m just brainstorming ways to try to build a brand.
The second one is, you have a bunch of written content, have you thought of starting, since we’re like a video show or a video review show of these things, is there anyone doing that and is that the next level here, or is it a podcast? I have to guess there’s a Wirecutter podcast. I’ve never looked, but given how strong their brand is, I would assume that there is.
I would think about, are there other media ways to go whether it’s starting that YouTube channel if you don’t already have it, is there a podcast. How do you elevate yourself above the other 50 website builder ecommerce and hosting review sites that are really just affiliate links, and they’re ranking the best one, are the ones that pay the most money at the top? How do you differentiate yourself from that? From there I think it’s going beyond just the written content and really thinking about what people resonate with and what other examples have come before me.
I think I’ll finish with this. When I think of a brand, I do like your differentiation, branding versus brand. I think branding is colors, logo, visual, this and that. I’ve read this somewhere, but brand is not what you do, it’s who you are. Brand is not how you see your company, it’s how your customers see it, or your prospects, or your visitors. It’s how they see it or hear about it.
When I say Wirecutter, if other people have heard of the site, they say, oh, that’s that reputable site that reviews these things and I trust their recommendations. Somehow, they built up that brand, it’s how we see them. Those are my thoughts when I heard it. I’m curious if you have other thoughts given our back and forth.
Asia: Actually, really a question for you, in your experience, how would you recommend someone build a brand from a personal brand and separating that. Or maybe it is just the same as the actual business brand, but how do you see building that personal brand versus the business brand, or do you find it’s very much the same?
Rob: I think you can do it either way. I’ve done both. Rob Walling started becoming a personal brand in the blogging space and then the podcasting space. Then we started MicroConf and MicroConf started becoming its own brand that was affiliated with Mike and I, the co-founders of MicroConf. Now, I was really all in. MicroConf was a thing we did on the side. Startups for the Rest of Us was a thing we did on the side, and really, I was still all in on the Rob Walling brand until I started Drip, and then I just got too busy.
What you’ll notice is, the Rob Walling brand these days is really tied heavily to the podcast, MicroConf, and TinySeed. Although I am the face of it, those brands are bigger than me. I’m not doing a bunch of personal. Go to robwalling.com and there hasn’t been a new essay in years, but you go to MicroConf, Startups for the Rest of Us, and TinySeed and there’s a bunch of new content coming out. Some of it’s from me and some of it’s from other people.
In his case, in WebsiteToolTester, unless Robert wants to become a personal brand himself (which he’s given no indication he has), although he can be the founder, the expert, and lend the insight, building a personal brand would involve him going out and maybe writing blog posts under his own name and starting a podcast where his brand is put ahead of WebsiteToolTester. But if you started the WebsiteToolTester podcast, and it’s just like, hey, I’m Robert, I’m the host of WebsiteToolTester, I’m the founder as well. Then he goes into it like, WebsiteToolTester gets the brand equity in that. In his case personally, again, unless he really wants to build a personal brand, I don’t think he needs to. I think he can build the brand without having to become the celebrity founder.
People can know who you are. Like Ruben Gamez with BidSketch and DocSketch, a lot of people, especially in our space, know who Ruben is, but he’s not some big personal brand, but DocSketch and BidSketch have momentum, and they really are these apps that have a lot of revenue, have customers and such. He’s been able to do that I think while being a little bit in the background.
If you look at Castos, a TinySeed batch one company, Craig Hewitt was the face of that brand. Then, he hired Matt Medeiros within the last couple of weeks from […], who is now the director of Podcaster Success. Matt is now going to start becoming more of that voice. I think the Castos brand is still very strong, and it wasn’t tied so closely to Craig that if Craig is only the co-host of the podcast, or takes a few weeks off of their podcast, or of blogging, or whatever. I don’t think the Castos brand suffers from that. I think that’s a really nice way to do it because it means that if you’re a 50- or 100-person company, Craig Hewitt doesn’t still have to be recording the podcast every week.
Asia: Thank you for that breakdown. I can hear that question in the back of some founder’s minds of, okay, but wait. Awesome, thank you.
Rob: Absolutely. Thanks Robert, I hope that thought process was helpful. Our next question is from Aton Efrati and he says, “Love, love, love the show, what you guys are building, and the message. Here’s my question, I got laid off because of Covid-19 and I’m looking to go back on my own. After more than five years of working for a venture capitalist, and then one of their high-growth portfolio companies, I know that I want to get involved in smaller profit-driven startups. I’m weighing a few different options of what my next steps could be.
I’ve got four kids at home, a supportive wife, and about six months of runaway. I’m trying to balance my confidence and enthusiasm with making smart decisions. I have a few options I want to layout for you and I’m curious to get your take.
Option one is high-risk, go out on my own which would start as contract work and evolve into a product type of service. I would continue to tinker on the side with other ideas and probably try to build a more substantial business in the next 1–2 years. This requires zero funding. Option number two, medium-risk. Join a fledgling startup that is inviting me to be the CEO to try to restart sales and marketing instead of closing down. They invested hundreds of thousands of dollars in angel money into building out technology, have dozens of paying customers, but it’s been several years and that company hasn’t taken off beyond break even. They have one full-time employee and two co-founders are still involved. They’d be paying me a meaningful profit sharing and equity.
Option number three is low-risk. Take a full-time job and tinker on the side with either freelance work, my own business idea, or someone else’s business idea. My market rate salary would put food on the table and then some, but I wouldn’t have much time to think or do anything outside of my full-time work. I appreciate any insight you have. Thanks in advance.”
Asia, what do you think? This is a fun one. This is an ‘it depends’ for sure, but let’s start with some thoughts.
Asia: From a decision-making framework perspective, if we really had to think about how we make decisions about just planning for our life and what’s important to us? Just looking at these options, it’s very clear that this person values entrepreneurship in some kind of way. This person wants to do something just on their own in some capacity. Going back to that statement of just becoming more independent. It’s very clear that this is a core value of this person.
From personal experience, I actually did number one. I lived option number one, which was going out on my own, starting as a contractor role, and then really building a service business over the next 1–2 years. I will say I did not quite go to the level of productized service, which I think is a step even further of the kinds of work that I do. But here’s the ‘gotcha.’ I don’t have children. I don’t have a mortgage. These are a few things about me making that choice and with the zero funding, I literally did it. I just started to do it.
The evaluation here is exactly right. It is absolutely high-risk. There is no guaranteed success for really any of these options. I’m very much someone who just doesn’t believe that job security is a thing that exists in the same way that it did 10 years ago or 20 years ago. Obviously, us even having this conversation, we’ve all got something entrepreneurial about us. I think in terms of thinking about how to make this decision, I think what I would do is a couple of things. I would try to really dig deep into what is it about being more independent and what is it about starting your own thing that gives this person the satisfaction and the fulfillment in life.
When we think about life just in general, what your goals are, and what you want to make sure that you accomplish before we exit the world. Not to make it morbid, but I think many of us, we’re motivated by something. There’s something about achieving that independence and achieving that level of independence that we’re obviously attracted to.
I think what I would maybe go back to the person asking the question with would just be, out of all the options, which one would you regret not doing? If you had to pick one, what would be the most regrettable experience out of all of them? Also out of all of these, what could you, in theory, do without? That’s how I would approach it.
I think in terms of just what I would do in this particular situation, given the context of just my family, my responsibilities, I hate to go in the middle of the road, but I actually think the medium-risk is probably the amount of risk that I would end up taking. Purely just based on my own personal values and the way that I think about what risk I would be comfortable taking.
I will say that it’s very clear that some amount of entrepreneurialism, or being a founder, or doing your own thing, or having a side hustle is very clearly important to this person. I would try to figure out what’s the minimum viable side hustle, or minimum viable foundership that this person can take and still be happy and feel fulfilled.
Rob: I love it. You kind of covered the bases, you covered regret minimization framework, although he didn’t say which of these would you regret not doing. That’s Jeff Bezos’ thing, regret minimization. Me personally even back in the day, I did go out on my own. I started as contract work and evolved into building and buying stuff on the side. I would have done option one and I had one child at the time, I did not have four, but there is some risk there and I think there always is.
The thing that I’ve always fallen back on is, depending on your skillset and your experience, unless there’s just a massive, massive recession, the odds of you being out of work are pretty low. You’ve worked for venture capitalists and then a high growth portfolio company. It sounds like you have some skills that are unique and will probably always be in demand. Especially now, we’ll be in demand remotely. I have to work for someone where I live.
To me, the low-risk of taking a job, I don’t know that I can ever recommend that for anybody in good conscience. Obviously, I had several salary jobs and I did it in the early days, but I think given that this is a turning point for you (it sounds like), I have a tough time imagining that you would want to take the low-risk. The fact that you were even evaluating the high and the medium, it implies that you probably (to me) shouldn’t take the low-risk.
The medium-risk one sounds interesting. That’s the one of joining a fledgling startup but it’s kind of failing in a sense and it’s flattened out. The fact that they’re only going to pay a meaningful profit sharing and equity, I don’t know if he’s getting a salary there or if he has to generate profit to do it. It’s hard to turn a company around. It can be really stressful. I guess if I knew more about the specifics of that, is it in my wheelhouse to do this, or is this a flyer where it’s like taking over this company just to see what I can do versus, I see the angle, I see the path on how to turn that around, that changes that calculus right there or some specifics there.
I did a turnaround with HitTail and I thought it was amazing. It was a great experience for me. I did it with a couple of other products before that, but it was a lot of work, and I didn’t know if it was going to work each time. There’s quite a bit of risk there.
I think something else to throw out is there’s a really good book recommended to me by Ruben Gamez, who I mentioned in an earlier episode. It’s Decisive: How to Make Better Choices in Life and Work. It’s by Chip and Dan Heath, who are known for their Made to Stick and their Switch books. There’s a framework in there about a four-step process designed to counteract the biases that most of us have, the emotional biases, and the pattern matching biases, just all these biases that are built into so much of our thinking.
I don’t know if a ton of you have time to read the entire book before doing this, but that’s something. I got it on Audible myself. I listen to it, take notes, and I refer back to it every now and again just to remind myself. If you’re going to make a hard decision, there are some frameworks to do it with.
Asia: Something that you said that triggered this memory that I had of when I started my business. It was really an opportunity cost question of what is the opportunity cost of option one versus option two. When I started DemandMaven, I was absolutely terrified, if I’m being honest. It was the most high-risk thing I probably could have done with a plan, but at the same exact time, no real proof that my service had service/market fit (if you will) but something that the CEO of my previous in-house—he was actually my boss from my previous in-house role—who really encouraged me to go out on my own and to do option one. Something that he said was, what is the opportunity cost of you not doing DemandMaven?
It really came down to, you could probably go take another in-house job, which no tea, no shade on that, but then there’s also, what would an MBA, Emory University—I’m in Atlanta; I don’t know any other university here in the state—cost? I was like oh my gosh, 100,000–100,000–120,000 maybe. He was like, okay great, so you’re going to go start your business for free and basically go get your MBA, learn way more about starting a business than most MBA grads probably today. Again, no tea, no shade to those who have MBAs.
The way that he framed that opportunity cost for me was also really what helped me make the decision. I did end up going for the high-risk option. Maybe like what Rob is saying, it’s very clear you have a high-risk tolerance. You’re evaluating these opportunities, but that also could be another way to think about, does the opportunity cost of what you’re leaving on the table.
Rob: I love it. Asia, thank you so much for joining me on the show today. Folks want to keep up with you, you are @AsiaMatos on Twitter, and of course demandmaven.io if they want to check out all the work you do in helping SaaS founders reach their growth milestones. Thanks again for hanging out with me.
Asia: Thank you so much. This was great.
Rob: Thanks again to Asia for joining me today. If you love this episode, I would super appreciate a five-star rating in whatever device you use, whatever app you use to listen to podcasts. I really appreciate it even if you can’t write a full comment. Getting some type of review helps me keep going and helps us keep pushing forward with the show. Thanks for listening. I’ll talk to you next Tuesday morning.
Episode 507 | Making Cold Email Work in B2B SaaS
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Show Notes
On today’s episode, Rob chats with Damian Thompson, co-founder of LeadFuze. He’s also the founder of VPSales. They talk about if and when to hire a sales team, the kinds of cold email outreach campaigns that are working well today, the sales stack, and much more.
The topics we cover
- 5:43 Should a bootstrapper hire a Sales Development Rep (SDR)?
- 9:16 Assuming you understand your market, what kind of cold emails work today?
- 12:56 The formula to use for B2B cold email
- 14:37 Risks of bootstrappers hiring sales reps too quickly
- 17:19 Rule of thumb for hiring sales reps in 2020
- 21:29 Defining SDR (Sales Development Rep) and BDR (Business Development Rep)
- 24:47 What’s the bare minimum for a sales stack
- 36:42 The real challenge with outbound sales
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Rob: Welcome to this week’s episode of Startups For The Rest of Us. I’m your host, Rob Walling. This week we’re talking about making cold email work in B2B SaaS. But before we dive into that conversation, I’d like to talk about a couple of things. Number one is there are two exclusive episodes of Startups For The Rest of Us and these are only available if you join the mailing list. The episode titles are 8 Things You Must Know When Launching Your SaaS and 10 Things You Should Know as You Scale Your SaaS. There are two different points in the lifespan of a SaaS app. Head to startupsfortherestofus.com if you’re interested in hearing those. Both of those are solo episodes with me giving 8 things in one and 10 things in the other about things that I’ve learned and observed in my 15–20 years of entrepreneurship.
The other thing I wanted to mention—this is not an advertisement, but this is just something I wanted to call out that I think could be a useful resource and I’ve been recommending it to folks in the community—is dynamitejobs.com. This is a place to post remote jobs and there’s all types of categories, anything that you would need from developers to VAs to apprentices to SEO to paid ads. You can specify time zones and salary and all that kind of stuff. In addition to it being a job board, they also offer a paid recruitment service that some startups that I am invested in or involved in are using. It’s a really good deal for the money and they do a bunch of the upfront leg work.
This was a point where I got with Drip, where I was spending so much of my time hiring that I wanted to find someone who wasn’t the typical contingency recruiter where it’s like, I’m going to hire developer for $100,000 and you’re going to pay him $15,000, $20,000 because it’s based on their first year salary. I couldn’t afford that as a bootstrapper. What Dan and Ian are creating here is really a service for bootstrappers. It’s for people who can’t afford those high fees. From what I hear, they’re having really good results from it.
Again, not a paid advertisement, but I always love what Dan and Ian are up to. Dynamite Jobs is coming on my radar more and more and I wanted to point that out to you in case you are thinking about hiring. I would be adding it to my rotation of the job boards that I post positions to.
With that, we’re going to dive into my conversation. It’s with Damian Thompson. If you haven’t heard of Damian, he’s a Co-Founder of LeadFuze with Justin McGill, and he’s the founder of vpsales.co. His big thing is about scaling sales teams. I’m going to read from his Twitter bio, he says, “Building high-performing Sales & SalesOps teams for B2B Software & Service companies.”
He’s been, himself, a sales person or a sales consultant for going on 20 years, maybe a little bit more. I’ve known Damian for almost 10 years. We talked a little bit in the interview about how we met and it was via cold email that he sent which is pretty apropos for this. He has extensive experience both crafting cold emails, sending cold emails, testing them and closing deals, as well as consulting with software and service companies on how they should architect their sales process. His specialty is early stage to eight figures. I know he works a lot in the ‘get from seven figures to eight’ range, but Damian has a lot to share and I hope you enjoy our conversation today on making cold email work in B2B SaaS.
Damian Thompson, sir. Thanks for joining me on the podcast. How are you?
Damian: I’m great. Happy to be here.
Rob: Excellent. I already mentioned in your intro, you’d been doing a lot of sales for a lot of years, sir. Part of that is cold email and I’m glad you reminded me, I had completely forgotten that the way you and I met was that you sent me a cold email. You want to talk about that a little bit?
Damian: Yeah. Two things. One thing I love to say is, I think we were in Bangkok about May, four or five years ago, the DCBKK event you’re speaking […] stairstep thing, standing at the stage about I was your go to sales guy because I’ve been selling for decades. You aced it really well. I’ve been selling for a long time, cold calling especially.
About my first launch. I spent 15 odd years building sales teams and doing lead gen in enterprise sales. Symantec turned my career around the world doing that and got pretty good at prospecting, obviously. And then really took to cold email in the early 2010–2011 time frame. I burned the suit and tie in 2011 and moved to Asia, trying to figure this stuff out.
You got my radar, Danny from […] got my radar, and I was looking to build my first business—my content marketing agency—which I didn’t know about content marketing, but I just decided to sell it. I saw you when you were running HitTail. You had an eye out on oDesk for content writers, essentially. So, I reached out to some people who have shared in the same circles and […] and that didn’t work out. So I said, whatever. I’m just going to send an email. Cold email. From that, you became a client. […] investor in LeadFuze. That cold email has been very impactful on my life.
Rob: Yeah, totally. I remember you and your team are writing blog content for HitTail and I think you did for some Drip at some point. Yeah, we go way back, man. It’s cool. That’s what we’re talking about. I probably titled this episode, How To Make Cold Email Work With SaaS or In SaaS or something to that effect.
I actually got an email from a listener and right now, he runs a SaaS app and bootstrapped as well. He said, “I’m looking at investing in two SDRs plus a marketing person to run an outbound sales campaign that will run for at least six months. It’s pricey to do, but I just feel as though it is the right thing for us.
I come across a decent number of venture-backed startups which have done this with success, but I’m wondering if there are bootstrappers out there who have done it. The recent survey you ran, which is The State of Independent SaaS, seems to indicate there are because there are a lot of folks saying cold email was working for them.”
That’s the reason that I called you on. We don’t have to just answer this question because I know you have a lot of thoughts around this. You want to kick us off and talk about, he’s wondering, does this work for bootstrappers? Can you hire an SDR too? He has revenue, probably tens of thousands MRR. He has the budget to do it. But talk to me about what you’re seeing out there.
Damian: A couple of things. Yes, bootstrappers can do it. I’ve done it. I’ve been a bootstrapper […] a little bit of my LeadFuze that part of that was doing the rest of it and wasn’t a ‘change the world’ kind of array. You can. It comes into where you’re going to spend your money.
I love cold email. I think it’s very powerful. One of the reasons why I love B2B sales, especially B2B software or service sales, big ticket sales is that I’m in more control. It’s one of the real controls as a sales rep. If you’re in a high-transaction SaaS business, and always PC-backed, fast growing businesses where it’s all processed down, everything is basically an intake form of legs. You’re just doing these things they tell you to do. But the reality is that you don’t have any real control, you’re waiting on leads, you’re always complaining about the leads coming in, or this is not working, or the event or whatever.
With outbound, you’re in control. You decide, if I can define who my target market is and the better I can do it better, and I’m willing to do the work, then I can actually go to them. Most likely, if you define that persona well, they probably share the same problems. You solve the other people they solved problems with. That is not actively looking to solve that problem right now. Getting in front of them is 98% of people aren’t looking for an active solution right now. That’s a huge part of the market. I love it for that reason.
One of the things that people do (especially lovely bootstrapper people) is that we look for cheap ways out. We spend hours to save $10 on a monthly subscription charge. Or we find the cheapest way to do something because, money, cash is bullets. It gives us the ability to grow. Instead of spending tens of thousands of dollars a month on paid ads, Facebook Ads or whatever the other kind of lead mechanism would be, we try to do things like this.
Can it work? 100%. It happens all the time if our clients work every day. However—here’s the caveat—the problem is, generally, when people go in to do cold email, especially one to say, hey, I’m not sure this is going to work, or hey, it doesn’t work for me, it’s not about the mechanism. It’s not about the actual cold email versus what other tactic you want to use. It’s that they don’t understand their market well enough.
In order to rise above all the noise—just the amount of emails out there right now—you really have to punch someone in the face a little bit. The way you do that is, it’s to get straight to the point about what matters to them. It’s not about who you are or your company. It’s not even about being clever and doing all these silly ‘number three, are you trapped into a boulder’ kind of nonsense. It’s just about saying, hey, do you know the person you can help and you know the two biggest problems you can solve for them, and if you can, it gets pretty straightforward.
The challenge is people don’t do that a lot of times. You’ll hear all the time, why you? On time, they’re on a budget or because we are the XYZ, the sales force for HR platforms or whatevers it happens to be, which is not a reason people buy. They don’t have a good-enough understanding of their market and that’s the challenge.
Rob: Got it. Let’s really focus on B2B SaaS because that’s the majority of our audience here. When it works for B2B SaaS, you’re saying, you have to understand the market which is if I’m going to run ads and send people to the landing page, if your headline’s crap, you’re not going to convert people, either, so understanding the market. Once you do that, then what do you do? How do you translate that into an email? What types of emails are working today?
Damian: I can give you a pretty good framework, but […] point, you’re 100% correct. It’s interesting, I was talking to a client today actually about this. B2B SaaS company sells hospitals and health care networks, doing about half a million a year, about $600,000 in ARR. Doing well, […] about leads, but these are going through the process to get the set-up.
It’s clear he doesn’t really know his market. He’s done a lot of the inbound smaller deals. He’s trying to go up market, he’s got probably a handful of enterprise customers, and he’s trying to get more up there. We were talking about, well, who is the person in your organization that is involved in this decision, that’s not the person you’re talking to. The other people, the IT manager or the head of data or whatever, and what are their priorities? And became very clear, he didn’t know.
It’s not just […] conclusion that if you have some success, you have $50,000 MRR, that you’re going to know your market that well because it’s different, especially when you’re waiting for people to come to you. It’s, again, why I love outbound so much is that, especially in the earlier days, you can use this as market development or product development. You need to know this.
You said it. Your ads, your content, your SEO. You need to know how your customers are talking about the problems you solved and that lever has to be pulled somehow in your sales conversations, in your marketing materials and everything. It’s very important to do. It’s just that people a lot of times give up too fast on cold email because they don’t see the results they expect. You’re going to get an email from an angry person because where did you get my email address from?
Can work, sure. Here’s what I tell people, a couple of things. Long-term campaigns, these days about omni channels, it’s about multiple touches from multiple areas. Actually we’re putting together a sequence today, it’s 7 steps over 10 business days, over two weeks, and it’s a mix of LinkedIn connection request, cold email, two phone calls in there as well and then on the third emails of video.
You can get more tactical about the stuff, but that doesn’t really matter. What matters is the core, the message. The message needs to be, if you know the two biggest personas you serve and you know there are two biggest problems that you could help solve, you can write great cold emails. The format is this. I’m going to give away the secret and he’s never going to use it.
But the good news is, that it doesn’t matter. This is not a trick or a hack like the old break through their email stuff is. Let’s just say, you have any idea, think something else. What were the two biggest problems that Drip solved for people?
Rob: Well, I’ll throw this out and you can tell me if this is right, but we allowed them to communicate or stay in touch with their email list, for number one. And number two, we allowed them to see how their customers were reacting with their emails and to be able to keep profiles. It wasn’t just an email address, but if they clicked a link, you could tag them as something so there was knowing your customer and then there was also communicating with your customer.
Damian: Right. To me, one of the big things that you got right was this idea of heavy automation or work flow automation in the sequence when it wasn’t cool and no one else is really doing it. We had to go to Pardot or HubSpot so you can get ‘thousands a month’ kind of tool in order to do that. But that is all fed to that thing. This is the best.
For example, if all you do is talk about these features, sure, you’ll get someone that wants to talk about the features, but that’s not the issue. The real value is because of that, because I can trigger an email when someone lands on that specific sales page. Because they have that insight, the behaviors my customers are having, I get to understand my customers more. And as I understand them more, I can then sell them what they want. That’s the value I want to talk about.
Let’s just say we use that then. And then the second one, whatever it happened to be. Here is the formula no matter who’s listening. You figure out what those two problems are that you solve in your customer’s eyes. Not your eyes, I mean their eyes and their own language. Let’s call them AB for now.
Email one is very straightforward. Super short, no fluff, don’t use three words and one will do. Don’t thank them for their time, don’t tell them, I don’t want to waste your time, wasting your time. Just get straight to the point and the point is, in talking to other marketing directors, the thing they tell us they’re frustrated the most about their current to is A and B. Which of those is for you? That’s it, that’s your email. Don’t expect a huge response. You probably might get a 0% reply rate on that. But what we want to do is send that out.
Then, email two will be, if your problem is problem A, we talked about in the last email, here’s a free resource for you to help solve that problem. And then the third email is, hey, if your problem was problem B, here’s a free resource to help solve the problem. And the fourth email is, hey, maybe we can help you solve the problem, why don’t we talk?
It works gangbusters if you got the right person and the right problem. That’s what you have to have. You can overthink this stuff and you’re really crazy, and you do because you want even […] more success. But again, it comes down to do you actually know why your customers are buying and it is important to them?
We see this now, especially, I’m a geek about software. I love all the no codes stuff for the rest of it. We’re building a lot of stuff. It doesn’t matter right now. Which is cool, it’s fun, but that doesn’t last forever. You have to have a real reason. The customer has to have reason to engage with you.
These are the points where he’s thinking of hiring people. Then he’s got a lot of it figured out. Probably just needs to dot the Is and cross the Ts. This leaves them to the second problem, which is people hiring sales reps too quickly, especially technical founders. One gets sales off their plate. They bring people in without fully formed processes.
[…] engineers. Would have a code base that was maybe you skipped every third line and then you just expect for someone to come in and just fix it for you, just do it, just figure it out? That’s not what teammates too. It’s what employees do. Employees come in and work a process you give them. Especially in sales. This idea that you’re going to find this unicorn service provider that’s going to do it or this unicorn person just get him off the street and do this for you, which is very rare that happens.
In almost all cases, the same way when you write a code or you’re doing your content marketing, you’re doing sales. The founders should try it first, just to figure it out. Because you should have an understanding of a framework of here’s what working, here’s what not working, here’s what resonates to the customers, here’s what doesn’t resonate. Now let’s get better at it. Now, you get a full time person that could focus on it so this should be better, cool, but I have got an understanding of what’s working.
Rob: You’re saying you need to already have a working process in order to bring someone in, unless you bring in an expert. Like yourself, obviously. You’re the type of person that has done and seen so many of these that you would work with a customer, SaaS app or whatever to develop that process, right?
Damian: Yeah, if I do. If I come into B2B software companies, the beginning is always consulting 101. Give me your watch and I’ll tell you what time it is. […] figure that out, but once you do that, we craft some ideas. A lot of it is just me being tough love, telling them they’re wrong. What they’re saying doesn’t make sense or it’s not enough. […] for this too, but I have this idea of almost like the Toyota five whys kind of thing.
In sales, especially, we put these happy ears on it. We hear what we want to hear because it’s a tough job. When you’re being more cynical or more, not mean-spirited but a little bit more distrusting of what we hear or thinking we’ve got to figure it out. A lot of times, that means really pushing to get to that deeper core of what we do, so if you can figure that out.
Again, it doesn’t have to be something crazy difficult because they should draft everything. A lot of times what I find is, it’s because these people are having some success, they get away from the things that made success. They’re not talking to their customers so much anymore. They don’t really have these understandings of who they’re talking to and how they’re talking to them. That’s really what it is, it’s just about understanding your market. If you understand your market, craft. It’s simple to get that in front of them.
Rob: I have a rule of thumb of the lowest, lowest end annual contract value. Founders sometimes asks me. This is a couple years old. I haven’t run Drip on its own since 2016, but I remember saying if we can get annual contract values up to $5000 a year, that’s the bottom, bottom end where I would try cold email. Again, that’s years old. What is your rule of thumb here in 2020? If someone comes and says I have $1000 a year annual contract value. I’m guessing you’re like, no, don’t do that. But where is that number where you start to feel like it works?
Damian: To that question—I’m going to give the equivalent of ‘it depends’—you’re right. I say $3000–$5000 generally in that kind of space. But it also really depends on your cash positioning. Earlier in the journey, you might be willing to have it cost a little bit more. Because you’re figuring a lot of stuff out.
Like you said earlier, if you figure this out, this could help all the rest of your marketing as well. It might be worth it for that. But when you get bigger, then no. Especially if the idea is to have someone else to do it. Can you make it look profitable “on paper” if you’re the one doing all the work? Sure, you’re paying yourself that hourly wage. But to hire someone to come in, especially, roles like the BDR, SDR role where they’re going to be a little more junior to a sales rep and they’re going to need a lot of hand holding, a lot of managers, a lot of oversight, a lot of help like coaching.
Another thing I would tell people is, you think you’re going to get sales off your plate by hiring a team. Really, how you’re doing is just transferring it from sales work to sales management, so leadership of a team. If you have them come in and you don’t have a lot of these answers, they’re not going to have success.
This is what I see all the time when someone says, I just can’t seem to hire salespeople. That’s ludicrous. Yes, it’s hard. There are frameworks to do it, but it’s hard. The real problem is they bring them in, just throw them to the wolves, and just say, hey, you’re going to pay me a lot of money for it to be successful. Just go figure it out.
But that’s not how employees work. It’s team work and also you’re sending all these signals. I see this a lot when people are trying to do this too early, they just don’t want to do this anymore and they try and hire a couple SDRs, accounting execs, or whatever and they try to find ways to cut corners like try to find someone who’s commission-only.
I’m hearing it again right now because COVID. There’s so many people that are laid off. They want to do it. Even if you can find someone that’s good, that’s willing to do it, it’s going to be hard. You are sending the absolute wrong signals to them. You’re saying, hey, I don’t trust in my process, in this, or you, in order to actually commit this is a real rule. If you figure it out, cool and if you don’t, that’s okay, too.
Would you do that to other roles? Would you get a developer on board and say here’s the deal. If we sell a lot of these, if the product sells then I’ll pay you. Of course not. But somehow they think that’s a way to do it. It’s not that we’re scared of what we don’t understand. We look down on what we don’t understand in our circles a lot. ‘Sale’ is a dirty four-letter-word in a lot of ways.
The reality is, people that get to that stage, you’re a good salesperson, you’re a good marketer. Because you have to be, you had to be, to get to where you got to. Almost every founder is like that. If you don’t go out and raise a bunch of money where you solve problems like throwing money at people, then you’re going to have to figure almost everything out yourself first. That’s a good thing at the beginning.
At $100,000 a month or whatever, now you can start hiring people that are better and smarter than you in those individual roles because now you’ve got a framework of what’s working and their job is to come in and boost it up. Essentially, that’s what I do. I come in as a fractional VP of sales and say you can afford $400,000–$500,000 a year that a full-time VP of Sales will cost, but you need all this kind of institutional knowledge on how to do these stuff. So we come in and build it for you. On smaller, we’ll focus on things like building an SDR team, building the rev ops, just optimizing that, and finding these places to do that.
Sales is the most important function in a business. If we don’t sell, the business goes out. Period. I don’t care if you are the most in the basement coder, hate salespeople, hate everything about sales. I think it was Josh […] about the enterprise sales process the other day and yes, it’s a pain in the ass, but the reality is, it works because a lot of people do like that. Just because we don’t like that, […] sold that way, doesn’t mean other people don’t. You really have to give it the respect it deserves because it really is the important function.
There are two things that Peter Drucker said that a company does. It creates intellectual property and it sells it, markets it. Those are the two things you do. You build something and you sell it. We’re very focused on the building, we just have to get better at focusing on the selling as well.
Rob: Right, very cool. I think most people listening will know what SDR and BDR stands for. I started doing it, too. I read his email without doing that. SDR is Sales Development Rep and BDR is Business Development Rep. I’m going to say what I understand those to be and I’m curious if you have other thoughts. In my head, they’re the same thing. They’re two names for the same thing and it’s someone who is in charge of doing outbound outreach to generate leads, what warmish leads to hand to an account executive, which is just a salesperson. Is that relatively accurate?
Damian: It is. More importantly than that is, it’s not a good model. Love Aaron Ross, great guy, important in the software world to start thinking sales is a lot like an operation. A lot of the stuff he says is good, but this over-, hyper-focused sales roles of the BDR, SDR, AE, customer success all the rest of it is a model that worked really, really well at Salesforce a decade ago.
Salesforce was the first unicorn. It was the most important first SaaS tool. You could do that. It also raised a lot of money. You get through the palms at it. What I’ve seen here as well is these smaller businesses, bootstrap companies try to do that model as well. I think it’s a bad model. I don’t generally recommend it for my clients. What I suggest they do is, is get a little bit old school. This actually helps as well because if you think you’re ready to hire a salesperson, you have to hire two. If you can’t hire two, if you can’t afford to hire two, you probably are not ready for a salesperson yet.
Here’s why. There’s only three outcomes to happen if you hire two salespeople. Either they both fail and if so, it’s pretty clear you’ve got a problem. It’s a market problem, a product problem, it’s just an issue that you have to fix. If they both succeed, obviously that’s a win. Things are going well. If one succeeds and one fails, well cool, that’s probably a personal problem. It’s an HR issue, not a product/market fit kind of problem.
Really, two of the three outcomes are good. You kind of understand. Actually, all three of them are good because you actually have clarity of what’s happening. If you only hire one, you’re going to blame that person, it might not be their fault, it might be the process isn’t good, it might be that you don’t have things up correctly, it might be a bunch of things. You’re just never going to know, so you need both.
But here’s how you do that. Because we’re not going to do the SDR, BDR and get super hyper personalize it that we’re going to say your job is to handle inbound leads and outbound leads. Or do the outbound leads plus you handle the discovery calls. How you free up the founder’s time because they’re probably the ones driving the sales at this point. How you free their time up, when you start to give more of the selling function to this team. Again, you don’t want to single point a failure, it just makes a lot more sense.
The other thing is to really do it right, you probably got to invest the money. You’re going to need a decent CRM, you’re going to need some tools, you will not cheap out on it, you’re not going to want to figure out how to write a couple lines of code for […] endorse of it. No, just go buy your call. Pay $30 a month […]. You’re going to start thinking about that sales stack, start thinking about how you’re going to put that together.
What I’ve seen is, the people cheap out on them because they try to find one person and they try to make them commission only, it’s also not in the tools to be successful. Not only do they not have the direction or the clear strategy in plan, they also don’t have the tools. Inevitably, that founder blames that rep and says I hired a dud.
Rob: Let’s say I was a founder of a bootstrap, B2B SaaS, we’re at $100,000 MRR, so just in the seven figures. I want to hire these two salespeople like you’re telling me and I don’t have any of the sales stack you just said. When founders ask me I’m going to do email support. I’m moving from Gmail. I’m always like Help Scout’s a really good tool or if you want something lighter […] frontapp.com. Of course you’re going to use Stripe for payment. I can recommend all these stuff, but I don’t know much about the sales stuff. What is it? CRM and a call recorder? Is it just one tool? Is it two? What would you recommend? And specifically, too.
Damian: There’s 50 tools for the thing. Here’s the way I look at it now. I’m actually putting together a doc right now, actually. This is where I learned in my starting selling software in the late 90s. I worked at McAfee when they became Network Associates. They bought a slew of companies, they put this suite approach. They’re one of the first security companies for this suite approach together.
It’s always funny because I went to Trend Micro which was really good at gateway scanning. When you’re smaller and you’re good at one thing, you’ve screamed from roof top’s the best of breed. You own the best of breed solution, that’s what we want to do. When you’re bigger and you actually acquire those types, it’s all about suite solutions. You think whatever role you are is what’s the best.
The answer is, both of them can work. The first one is HubSpot. I’m a big believer in HubSpot. Is it the best here? No. But that Microsoft Office approach together is very important, especially in those earlier mid phases. From getting seven figures to eight. To me, there’s a lot of value there. It’s not cheap. You’re going to be spending significant money if you really go all in for the marketing and service, help desk and the sales. But the thing is, it handles almost everything. Your counter appointments, calling, everything. And it’s all one single record which is the true power of a CRM, should be the single pane view of your interaction to the customer.
That’s the one path to go down. And then the other path that I say is, it is PipeDrive is a pretty good cheaper alternative. They do a pretty good job now of having really good integration. It’s all about integration networks. It’s about their partner network.
In the RevUp side, the tools that really matter are a CRM, from the sales pipeline engagement manager point of view. You’re going to […] before that too. You’re going to need […] tool, a mail shake profit IOs and like that. And then you’re going to need a help desk tool. I’ve been talking about Help Scout a little bit. Freshdesk is actually pretty good. What do I start thinking about is the future of these tools as well, so how they interact great with everything else.
For example, Aircall is a Voice Over IP tool I recommend to most people because it integrates with the most other tools, with the most other CRMs, with the most other help desk, I would say, and that matters if you want to get that integrated understanding of what’s happening with the customer.
The other side would be PipeDrive, Help Scout, or Freshdesk, and then a marketing automation tool. I would’ve said Drip in the old days, but I’m not sure that’s the right solution anymore. Funny enough, these days, who’s doing a pretty good job is Mailchimp again. Again, I don’t care so much about all the landing pages, the rest of it. You know automation is deliverability and integration with the other tools. That’s when we can start thinking. This is how your head starts changing.
I’m talking to someone who’s doing about $1.5 million a year and he was like beating their chest proud that they were basically doing everything in Gmail still. I was like cool, you’re saving a thousand bucks a month, $1500 a month, whatever, but how much opportunity you lose because of that. How much of your time and energy is being spent doing that. He handed it off to someone else. If you live in your inbox, that’s where everything is happening, you’re going to give your inbox to your new sales rep? Of course not.
You have to start thinking about how you scale past where you’re currently are. I think that people overthink a lot of stuff. Just pick one. Go get HubSpot CRM because it’s free. Find out whether you like or not. It’s kind of a love or hate relationship a lot of times. And people that hate it, cool. Now, go buy PipeDrive then. That’s what we’re going to do. Then, integrate with the other tools you need to use. But understand that as you grow and as you grow up that kind of value stack and as you grow more, actually start growing the team, there’s even more and more tools. And then, there are meeting tools.
Now the big thing is around coaching. Things like gong.io and Chorus.ai which essentially records the calls so then the sales managers and leaders can coach with it, but also doing some really cool stuff where they’re essentially recording and anomizing hundreds of thousands of hours of sales calls and figure some really cool stuff out.
Like something I’ve been saying for a long time, which is, you should actually talk praising on the first sales call. Not specifics because you might not know, but really it’s the range. They just had a really […] recently, a big data set. Essentially, the call price was mentioned or discussed on their first call, closing it 40% versus a 28% where it was at way until the second call because people get frustrated by that. They don’t want to keep feeling like you’re getting away from them.
There’s some real cool stuff happening there about understanding what’s really happening, the real buying behavior and what’s going on. As you get deeper into it, you’ll have to have more and more tools. But to begin with, you want market automation or email service providers of some sort, you want a CRM, and you want a support service tool of some sort. Ideally, they all integrate very well together.
Rob: Cool. I want to return back to the thing we started with which was talking about the email sequence. What should someone do in their sequence? I think you named four emails that you would send in a sequence. But you also mentioned that you are putting one together for a client that had eight touch points. What’s that? Is that when you get more advanced? Or is that a specific thing where you would send more than four?
Damian: It’s actually for me. This is a ‘solved by me’ specifics on this. The most success you’re going to have is, again, […] challenge is multiple touches from multiple points. Same with leads, inbound leads, too. It’s being super aggressive in your follow up in your communications or in a short period of time and then bailing. That’s what I think.
They can’t pay me now; I just started today. I’ll be starting to run next week. Specifically—we’re talking about pain points here—I’m putting together a list with my VAs and the rest of it to look —again, I work for […] software and service companies—[…] before they reached seven figures, they want to get to eight figures, so looking for the kind of companies that match that profile.
They actually are hiring any role, generally not a salesperson. They’re looking for someone who doesn’t have a sales[…] or maybe they have one salesperson, but they’re hiring someone else. What I’m going to do is, I’m going to reach out to them about all the mistakes the founders make in hiring.
The first step, day one on Monday, I do a LinkedIn request. I try to connect with my LinkedIn. And then day two, which is literally a Tuesday, the first email will go out. That first email is going to be very clear, it’s going to be seen that you’re hiring for project manager, for whatever, who was not sure how many people to hire in that role. Or if you ever hired sales before, but here’s some mistakes that people make when they do that.
Mistake number one is not having the systems and process in place to actually make sure they have success. And mistake number two is not having a clear plan with how to manage them while they’re still there. Both these things end up doing what I call a $100,000 mistake, where you hire someone and they’re around forever. They’re not quite working out, but you don’t really pull the trigger firing them right away because you know it’s your fault, too, so they stick around for a while. The next thing you know, you’re $50,000–$60,000 into this thing, plus all that lost opportunity you had.
That’s email one. Which of those are your biggest issue? That’s email one. Then the next day, I’ll give them a call and then that’s Wednesday and then Friday, they’ll get another email. The Friday email will actually be me doing Hippo which is like a Loom or one of these screen recording types of things. I’ll do that from their website. I’ll be looking at the website, there will be a little picture of me up on the corner, basically pertaining to the same thing.
If your problem is not having a clear onboarding process and having a clear plan of […] goals, making sure they can hit the ground running, ramp up faster, all that kind of thing, here is a free resource (which is an ebook kind of thing) to help them figure out how to do that. Then, there’s a call to action for them to do that.
Then, the following week, they’ll get an automated email, then they’ll get an in-mail, like you said, like an in-mail, if all of a sudden I can’t get it from then. And then one last email, the end. That third email will be if your problem with hiring is you just don’t have the skillset here, you don’t know how to run it, you don’t know how to hire salespeople. Hiring salespeople is difficult for the fact that if they’re mediocre, they’re probably good enough to BS for three or four interviews. Also, sales is one of the few white collar high-paying, high-performing jobs where your work ethic actually matters more than almost any other job.
If you’re twice the salesperson I am, but I work three times as hard, I will sell more than you. It’s just math. It’s absolutely real. It happens all the time. The sales you’ll see generally indicate people in their 20s or 30s are decent salespeople. They’ve learned how to do it, they can talk the game to the rest of it, and then there’s this decision they have to make. I don’t think most people realize they’re making a decision, but either they want to take that next step, but they want to be the stars, they’re really, really good, or they’re just still happy making $100,000 a year, coasting.
The vast majority of them are happy making $100,000 a year, coasting. That’s what they do. Because the other one takes work. The difference between that person and the person who becomes that $300,000-, $400,000-, $500,000-sales rep is work, is effort. It’s actually how much time they have put into it. Thinking about how they’re going to solve each problem off work. They’re not punching a clock.
Really, that work ethic matters a lot. This is another problem that founders have, who are just bootstrapped once they’re remote. Everyone I’ve worked with has remote teams. You have to set the example early about a level of expected effort. The best way to do that is, in the old days being the same office, but now it’s about being really clear about their onboarding. That first week is very intense. Basically, you spend almost all your time with them. It’s very structured. You’re sending these signals to them about a structured, hardworking organization, that you have all the tools you need to be accessible, but this is what we expect.
But more importantly, in the recruiting process, what we have to do is we have to test them just to make sure they’re doing it. It’s to the point that adds some hurdles, add some things they’ve got to cross over to see how they deal with it. It’s about having a clear way of doing. Hiring engineers is different from hiring salespeople, which is different than hiring office people, which is different from hiring marketers. There’s a specific way to do it, but the problem is, people are bad at doing it. More importantly, they get them into business and they’ll figure it out. They leave with their own devices.
Then you’re a month or two in and then you’re upset with they’re not doing much work and they’re not probably. Engineers complain salespeople are lazy. That’s Damian’s axiom number one. It makes sense. Engineers don’t really complain. They look for problems, as we did, the problem solvers. They’re looking for ways to fix things. Salespeople, their job is to do as much as they can as fast as they can, cutting corners, moving fast. That’s what they do, but not focused correctly, those are both bad habits. They can get really bad especially in sales, especially when they’re remote.
This goes back to again, you’re going to worry about saving a couple hundred bucks a month on your CRM or whatever tool, but then without that, you don’t have this clear understanding what’s really happening inside your business. This is the challenge. People try to get sales off their plate very quickly. I tell them, if you hate sales, you’re going to hate sales management even more because now, you still have to be involved in the selling process. But you’re one person removed. You have lost control. It’s tough. It’s a tough thing to figure out. And now your job is really coach, your job is really support. It’s helping this person do it.
Again, it’s not like you’re all saying […] start coming out, you have to […] we’re sales again. It’s just now you were about bigger things, you were about how do we put the process in place, how do we create tools so we can double, triple, quadruple the size of the team over the next 2–3 years. It goes back to you having to have at least a working idea of what those problems are. I don’t care if you’ve never done cold email before. I can show you how to do cold email, that’s easy. I mean, it’s not easy. It’s work, it’s effort. That’s the big thing, is effort, but you have to have the content right, the context to it right.
The real challenge with outbound and why it is so enticing to hire people, why I think you should hire someone as soon as you can, is the real work is in the data. The real work is in the list building. It’s what takes the longest, it’s what actually makes the biggest difference. For example, I can go into co-founder of LeadFuze, we got a good tool. I can go in there and do a pretty dialed-in persona. The right title, the right size of the company, type of industry, all the rest of it, but that’s the beginning stage. I’m going to take that list and what I’m going to do is I’m going to get my […] admin or my VA to then go into LinkedIn and see how many employees on each account. I want them to be more than 2 employees, but less than 20.
The clearer you can get with that persona, the better you’re going to be which takes effort and time. And that’s the problem. Always on the shortcuts. I want to push a button, have a thousand of these pop out, I want to plug it into Mailshake, I just want to sit back and just wait for my 2% reply rate and now I’m a spreadsheet millionaire.
Rob: That’s the thing. I’ve taken away several things from this conversation—hopefully listeners have as well—but that’s one of the big things. This is a lot of work. Cold email in 2010 is different than it is today. Just like SEO is different than it is. And Facebook Ads back in 2012 when I was running it for HitTail. They were way cheaper and way easier. This stuff takes work. There are always of course new marketing and lead gen approaches coming out. They tend to be more uncertain, there’s not as much information out there, and it’s more of the wild west. But the tried and true things like cold email take time. That’s the same I take.
Damian: Yeah, they do. There’s always a market to sell. Again, let’s go back since we were lazy, you’ll never go poor selling salespeople on the ideas of not doing the things they don’t want to do. I remember when I first got to this entrepreneur game back in 2010, who’s the big ad? It was Gary whatever. He was the big monster in AdWords at the time, whatever his name was.
Rob: I know who you’re talking about, but I forgot his name, too.
Damian: Perry Marshall.
Rob: Perry Marshall, yup.
Damian: Perry Marshall dominates. But he, like all people in that world, was getting hard. When it gets hard to make money doing it, you start making money selling how they do it. He was doing that. It was funny when I was doing it. At the time, 2011, I cold email you, my business was what I’m doing now but I was working with Infusionsoft and a couple of things and was a little bit more down market.
I would send a cold email. It was one. I had the cadence of one email. Back then it was hard actually getting email addresses. The reportive hack on how to get stuff. You can get the VA to do it, but I would do that and then go to their website and find two things on their website. And here’s the list of seven you look for. There’s not an opt in on every page. There’s six or seven things.
I send an email to them. An email would be like, hey, Rob. I was checking out HitTail today. Really enjoyed this, something specific about what I enjoyed, but I noticed on this page and this page, you don’t have an email opt in. That’s probably killing your conversion rates. I’ve got three or four more ideas I’d like to share with you. Here’s a link to book a time. That was literally my first email and I have an 11% booking rate, like 11 people booking meetings.
Great. That’s awesome. It was hard to do. But it’s like every single marketing. It sometimes gets more expensive, the more people that do it, the less effective it is. It just loses efficacy, that’s just what happens. On the cold email especially, because everyone hates cold calling, I’m a crazy person, I really enjoy the game. I enjoy the gameship of it and I think I’ve just had to learn back in the days when jobless […] phonebook go, but 99.99% people don’t like it. If they say they do, they don’t want to do it. They go to cold email because this is kind of I’m behind the computer screen, I feel safe, I don’t have […]. It just happens over and over again. This is social selling nonsense.
Do I believe you should have a good social […]? Yes. Do I believe there’s a lot of value on being on LinkedIn and helping people and showing that you have chops? Absolutely. Does it replace everything else? Of course, it doesn’t. This idea of some magical, automated, easy, stress-free way of generating millions of dollars of revenue for your business, doesn’t exit.
Again, it’s just funny that in most places we expect that. Even in our community, even in our bootstrap community, we still get caught up in the success stories. How long was Drip? How long did you have Drip before you sold it?
Rob: It was from launch until sale, it was 3½ I think. It was pretty quick.
Damian: Fast. Very fast. Maybe five is very fast, really. You look at the history of business. Listen to that Shoe Dog, the film […]. For 14 years it was near bankruptcy, which is the extreme, obviously, but it happened. We look at the Basecamp guys, whether we like the way they’re not acting these days or not. Look at their business, it’s a model for a lot of us, that’s great. That business is 20 years old now. It gets crazy how old these businesses are. It took 7–8 years to really make money. They were first movers, almost kind of that stuff. It takes time.
Now of course then we get the Wunderkinds, the Travises of the world that go out there and nail it right away. Good for them. But that is very much not the norm. We have some really weird outsize expectations on this stuff. I see this a lot with prospecting in sales is, hey, I’ve been doing it for three weeks yet, and I’m not rich. Okay, yup, you’re right, you’re not. Because it’s a muscle. It’s going to the gym. You can go to the gym for four hours one time a month. You got to go 30 minutes every day. That’s the same thing with hire prospecting.
I think that’s the biggest thing, is just the greatest salespeople that I work with are generally ex-engineers, ex-process-oriented people, or operations people, because sales is a process and its problem-solving at its best. This cliché of the fast-talking, back-slapping salesperson (that I know that I naturally fall into a little bit) is actually incorrect for who actually buys, especially in the technology world.
In my world, I have to tone it down a little bit when I’m talking to people because I don’t want to feel that kind of pushy salesperson. My job is to be a problem solver. That’s what my job is in selling. That’s cool. Most entrepreneurs I know, that’s the kick they get. It’s the problem solving the problem. Solving the product problem, solving the market problem. We like problems, we like puzzles, that’s what we like.
If we start thinking of sales as just that, seeing like you got a product puzzle or a marketing puzzle or whatever, it’s the same thing. You just got to figure out what piece goes where and when. The fun part is that, like a lot of things, it’s constantly changing. What worked 18 months ago doesn’t work anymore. That’s why, again, I think this is the good old Warren Buffet, Zig versus Zag kind of thing. Right now, I’m just seeing so much success with cold calling. People are answering their phones. People are actually home. People are working from home. They’re bored, they’re answering their phones.
I got a client who sells lead data to solar companies and their connect rate essentially almost tripled since this CoronaVirus came out. Because again, people are home, taking their phone calls. But no one is out there beating that drum because no one wants to cold call, no one wants to do it. But sometimes, being an entrepreneur is putting on your big girl/big boy pants and doing the stuff you don’t want to do because what has to happen.
Rob: Damian Thompson, sir, we’re at time. Thank you so much for coming on the show. If folks want to follow you on Twitter you are @DamianThompson and vpsales.co is your current project, what you’re working on.
Damian: Yeah. damian@vpsales.co.
Rob: Got it. If they want to reach out and get in touch. Thanks again to Damian for joining me on the show today. If you have a question for me or our future guest, please email to questions@startupsfortherestofus.com. Thanks for joining me this week. I’ll see you next Tuesday.
The other thing I wanted to mention—this is not an advertisement, but this is just something I wanted to call out that I think could be a useful resource and I’ve been recommending it to folks in the community—is dynamitejobs.com. This is a place to post remote jobs and there’s all types of categories, anything that you would need from developers to VAs to apprentices to SEO to paid ads. You can specify time zones and salary and all that kind of stuff. In addition to it being a job board, they also offer a paid recruitment service that some startups that I am invested in or involved in are using. It’s a really good deal for the money and they do a bunch of the upfront leg work.
This was a point where I got with Drip, where I was spending so much of my time hiring that I wanted to find someone who wasn’t the typical contingency recruiter where it’s like, I’m going to hire developer for $100,000 and you’re going to pay him $15,000, $20,000 because it’s based on their first year salary. I couldn’t afford that as a bootstrapper. What Dan and Ian are creating here is really a service for bootstrappers. It’s for people who can’t afford those high fees. From what I hear, they’re having really good results from it.
Again, not a paid advertisement, but I always love what Dan and Ian are up to. Dynamite Jobs is coming on my radar more and more and I wanted to point that out to you in case you are thinking about hiring. I would be adding it to my rotation of the job boards that I post positions to.
With that, we’re going to dive into my conversation. It’s with Damian Thompson. If you haven’t heard of Damian, he’s a Co-Founder of LeadFuze with Justin McGill, and he’s the founder of vpsales.co. His big thing is about scaling sales teams. I’m going to read from his Twitter bio, he says, “Building high-performing Sales & SalesOps teams for B2B Software & Service companies.”
He’s been, himself, a sales person or a sales consultant for going on 20 years, maybe a little bit more. I’ve known Damian for almost 10 years. We talked a little bit in the interview about how we met and it was via cold email that he sent which is pretty apropos for this. He has extensive experience both crafting cold emails, sending cold emails, testing them and closing deals, as well as consulting with software and service companies on how they should architect their sales process. His specialty is early stage to eight figures. I know he works a lot in the ‘get from seven figures to eight’ range, but Damian has a lot to share and I hope you enjoy our conversation today on making cold email work in B2B SaaS.
Damian Thompson, sir. Thanks for joining me on the podcast. How are you?
Damian: I’m great. Happy to be here.
Rob: Excellent. I already mentioned in your intro, you’d been doing a lot of sales for a lot of years, sir. Part of that is cold email and I’m glad you reminded me, I had completely forgotten that the way you and I met was that you sent me a cold email. You want to talk about that a little bit?
Damian: Yeah. Two things. One thing I love to say is, I think we were in Bangkok about May, four or five years ago, the DCBKK event you’re speaking […] stairstep thing, standing at the stage about I was your go to sales guy because I’ve been selling for decades. You aced it really well. I’ve been selling for a long time, cold calling especially.
About my first launch. I spent 15 odd years building sales teams and doing lead gen in enterprise sales. Symantec turned my career around the world doing that and got pretty good at prospecting, obviously. And then really took to cold email in the early 2010–2011 time frame. I burned the suit and tie in 2011 and moved to Asia, trying to figure this stuff out.
You got my radar, Danny from […] got my radar, and I was looking to build my first business—my content marketing agency—which I didn’t know about content marketing, but I just decided to sell it. I saw you when you were running HitTail. You had an eye out on oDesk for content writers, essentially. So, I reached out to some people who have shared in the same circles and […] and that didn’t work out. So I said, whatever. I’m just going to send an email. Cold email. From that, you became a client. […] investor in LeadFuze. That cold email has been very impactful on my life.
Rob: Yeah, totally. I remember you and your team are writing blog content for HitTail and I think you did for some Drip at some point. Yeah, we go way back, man. It’s cool. That’s what we’re talking about. I probably titled this episode, How To Make Cold Email Work With SaaS or In SaaS or something to that effect.
I actually got an email from a listener and right now, he runs a SaaS app and bootstrapped as well. He said, “I’m looking at investing in two SDRs plus a marketing person to run an outbound sales campaign that will run for at least six months. It’s pricey to do, but I just feel as though it is the right thing for us.
I come across a decent number of venture-backed startups which have done this with success, but I’m wondering if there are bootstrappers out there who have done it. The recent survey you ran, which is The State of Independent SaaS, seems to indicate there are because there are a lot of folks saying cold email was working for them.”
That’s the reason that I called you on. We don’t have to just answer this question because I know you have a lot of thoughts around this. You want to kick us off and talk about, he’s wondering, does this work for bootstrappers? Can you hire an SDR too? He has revenue, probably tens of thousands MRR. He has the budget to do it. But talk to me about what you’re seeing out there.
Damian: A couple of things. Yes, bootstrappers can do it. I’ve done it. I’ve been a bootstrapper […] a little bit of my LeadFuze that part of that was doing the rest of it and wasn’t a ‘change the world’ kind of array. You can. It comes into where you’re going to spend your money.
I love cold email. I think it’s very powerful. One of the reasons why I love B2B sales, especially B2B software or service sales, big ticket sales is that I’m in more control. It’s one of the real controls as a sales rep. If you’re in a high-transaction SaaS business, and always PC-backed, fast growing businesses where it’s all processed down, everything is basically an intake form of legs. You’re just doing these things they tell you to do. But the reality is that you don’t have any real control, you’re waiting on leads, you’re always complaining about the leads coming in, or this is not working, or the event or whatever.
With outbound, you’re in control. You decide, if I can define who my target market is and the better I can do it better, and I’m willing to do the work, then I can actually go to them. Most likely, if you define that persona well, they probably share the same problems. You solve the other people they solved problems with. That is not actively looking to solve that problem right now. Getting in front of them is 98% of people aren’t looking for an active solution right now. That’s a huge part of the market. I love it for that reason.
One of the things that people do (especially lovely bootstrapper people) is that we look for cheap ways out. We spend hours to save $10 on a monthly subscription charge. Or we find the cheapest way to do something because, money, cash is bullets. It gives us the ability to grow. Instead of spending tens of thousands of dollars a month on paid ads, Facebook Ads or whatever the other kind of lead mechanism would be, we try to do things like this.
Can it work? 100%. It happens all the time if our clients work every day. However—here’s the caveat—the problem is, generally, when people go in to do cold email, especially one to say, hey, I’m not sure this is going to work, or hey, it doesn’t work for me, it’s not about the mechanism. It’s not about the actual cold email versus what other tactic you want to use. It’s that they don’t understand their market well enough.
In order to rise above all the noise—just the amount of emails out there right now—you really have to punch someone in the face a little bit. The way you do that is, it’s to get straight to the point about what matters to them. It’s not about who you are or your company. It’s not even about being clever and doing all these silly ‘number three, are you trapped into a boulder’ kind of nonsense. It’s just about saying, hey, do you know the person you can help and you know the two biggest problems you can solve for them, and if you can, it gets pretty straightforward.
The challenge is people don’t do that a lot of times. You’ll hear all the time, why you? On time, they’re on a budget or because we are the XYZ, the sales force for HR platforms or whatevers it happens to be, which is not a reason people buy. They don’t have a good-enough understanding of their market and that’s the challenge.
Rob: Got it. Let’s really focus on B2B SaaS because that’s the majority of our audience here. When it works for B2B SaaS, you’re saying, you have to understand the market which is if I’m going to run ads and send people to the landing page, if your headline’s crap, you’re not going to convert people, either, so understanding the market. Once you do that, then what do you do? How do you translate that into an email? What types of emails are working today?
Damian: I can give you a pretty good framework, but […] point, you’re 100% correct. It’s interesting, I was talking to a client today actually about this. B2B SaaS company sells hospitals and health care networks, doing about half a million a year, about $600,000 in ARR. Doing well, […] about leads, but these are going through the process to get the set-up.
It’s clear he doesn’t really know his market. He’s done a lot of the inbound smaller deals. He’s trying to go up market, he’s got probably a handful of enterprise customers, and he’s trying to get more up there. We were talking about, well, who is the person in your organization that is involved in this decision, that’s not the person you’re talking to. The other people, the IT manager or the head of data or whatever, and what are their priorities? And became very clear, he didn’t know.
It’s not just […] conclusion that if you have some success, you have $50,000 MRR, that you’re going to know your market that well because it’s different, especially when you’re waiting for people to come to you. It’s, again, why I love outbound so much is that, especially in the earlier days, you can use this as market development or product development. You need to know this.
You said it. Your ads, your content, your SEO. You need to know how your customers are talking about the problems you solved and that lever has to be pulled somehow in your sales conversations, in your marketing materials and everything. It’s very important to do. It’s just that people a lot of times give up too fast on cold email because they don’t see the results they expect. You’re going to get an email from an angry person because where did you get my email address from?
Can work, sure. Here’s what I tell people, a couple of things. Long-term campaigns, these days about omni channels, it’s about multiple touches from multiple areas. Actually we’re putting together a sequence today, it’s 7 steps over 10 business days, over two weeks, and it’s a mix of LinkedIn connection request, cold email, two phone calls in there as well and then on the third emails of video.
You can get more tactical about the stuff, but that doesn’t really matter. What matters is the core, the message. The message needs to be, if you know the two biggest personas you serve and you know there are two biggest problems that you could help solve, you can write great cold emails. The format is this. I’m going to give away the secret and he’s never going to use it.
But the good news is, that it doesn’t matter. This is not a trick or a hack like the old break through their email stuff is. Let’s just say, you have any idea, think something else. What were the two biggest problems that Drip solved for people?
Rob: Well, I’ll throw this out and you can tell me if this is right, but we allowed them to communicate or stay in touch with their email list, for number one. And number two, we allowed them to see how their customers were reacting with their emails and to be able to keep profiles. It wasn’t just an email address, but if they clicked a link, you could tag them as something so there was knowing your customer and then there was also communicating with your customer.
Damian: Right. To me, one of the big things that you got right was this idea of heavy automation or work flow automation in the sequence when it wasn’t cool and no one else is really doing it. We had to go to Pardot or HubSpot so you can get ‘thousands a month’ kind of tool in order to do that. But that is all fed to that thing. This is the best.
For example, if all you do is talk about these features, sure, you’ll get someone that wants to talk about the features, but that’s not the issue. The real value is because of that, because I can trigger an email when someone lands on that specific sales page. Because they have that insight, the behaviors my customers are having, I get to understand my customers more. And as I understand them more, I can then sell them what they want. That’s the value I want to talk about.
Let’s just say we use that then. And then the second one, whatever it happened to be. Here is the formula no matter who’s listening. You figure out what those two problems are that you solve in your customer’s eyes. Not your eyes, I mean their eyes and their own language. Let’s call them AB for now.
Email one is very straightforward. Super short, no fluff, don’t use three words and one will do. Don’t thank them for their time, don’t tell them, I don’t want to waste your time, wasting your time. Just get straight to the point and the point is, in talking to other marketing directors, the thing they tell us they’re frustrated the most about their current to is A and B. Which of those is for you? That’s it, that’s your email. Don’t expect a huge response. You probably might get a 0% reply rate on that. But what we want to do is send that out.
Then, email two will be, if your problem is problem A, we talked about in the last email, here’s a free resource for you to help solve that problem. And then the third email is, hey, if your problem was problem B, here’s a free resource to help solve the problem. And the fourth email is, hey, maybe we can help you solve the problem, why don’t we talk?
It works gangbusters if you got the right person and the right problem. That’s what you have to have. You can overthink this stuff and you’re really crazy, and you do because you want even […] more success. But again, it comes down to do you actually know why your customers are buying and it is important to them?
We see this now, especially, I’m a geek about software. I love all the no codes stuff for the rest of it. We’re building a lot of stuff. It doesn’t matter right now. Which is cool, it’s fun, but that doesn’t last forever. You have to have a real reason. The customer has to have reason to engage with you.
These are the points where he’s thinking of hiring people. Then he’s got a lot of it figured out. Probably just needs to dot the Is and cross the Ts. This leaves them to the second problem, which is people hiring sales reps too quickly, especially technical founders. One gets sales off their plate. They bring people in without fully formed processes.
[…] engineers. Would have a code base that was maybe you skipped every third line and then you just expect for someone to come in and just fix it for you, just do it, just figure it out? That’s not what teammates too. It’s what employees do. Employees come in and work a process you give them. Especially in sales. This idea that you’re going to find this unicorn service provider that’s going to do it or this unicorn person just get him off the street and do this for you, which is very rare that happens.
In almost all cases, the same way when you write a code or you’re doing your content marketing, you’re doing sales. The founders should try it first, just to figure it out. Because you should have an understanding of a framework of here’s what working, here’s what not working, here’s what resonates to the customers, here’s what doesn’t resonate. Now let’s get better at it. Now, you get a full time person that could focus on it so this should be better, cool, but I have got an understanding of what’s working.
Rob: You’re saying you need to already have a working process in order to bring someone in, unless you bring in an expert. Like yourself, obviously. You’re the type of person that has done and seen so many of these that you would work with a customer, SaaS app or whatever to develop that process, right?
Damian: Yeah, if I do. If I come into B2B software companies, the beginning is always consulting 101. Give me your watch and I’ll tell you what time it is. […] figure that out, but once you do that, we craft some ideas. A lot of it is just me being tough love, telling them they’re wrong. What they’re saying doesn’t make sense or it’s not enough. […] for this too, but I have this idea of almost like the Toyota five whys kind of thing.
In sales, especially, we put these happy ears on it. We hear what we want to hear because it’s a tough job. When you’re being more cynical or more, not mean-spirited but a little bit more distrusting of what we hear or thinking we’ve got to figure it out. A lot of times, that means really pushing to get to that deeper core of what we do, so if you can figure that out.
Again, it doesn’t have to be something crazy difficult because they should draft everything. A lot of times what I find is, it’s because these people are having some success, they get away from the things that made success. They’re not talking to their customers so much anymore. They don’t really have these understandings of who they’re talking to and how they’re talking to them. That’s really what it is, it’s just about understanding your market. If you understand your market, craft. It’s simple to get that in front of them.
Rob: I have a rule of thumb of the lowest, lowest end annual contract value. Founders sometimes asks me. This is a couple years old. I haven’t run Drip on its own since 2016, but I remember saying if we can get annual contract values up to $5000 a year, that’s the bottom, bottom end where I would try cold email. Again, that’s years old. What is your rule of thumb here in 2020? If someone comes and says I have $1000 a year annual contract value. I’m guessing you’re like, no, don’t do that. But where is that number where you start to feel like it works?
Damian: To that question—I’m going to give the equivalent of ‘it depends’—you’re right. I say $3000–$5000 generally in that kind of space. But it also really depends on your cash positioning. Earlier in the journey, you might be willing to have it cost a little bit more. Because you’re figuring a lot of stuff out.
Like you said earlier, if you figure this out, this could help all the rest of your marketing as well. It might be worth it for that. But when you get bigger, then no. Especially if the idea is to have someone else to do it. Can you make it look profitable “on paper” if you’re the one doing all the work? Sure, you’re paying yourself that hourly wage. But to hire someone to come in, especially, roles like the BDR, SDR role where they’re going to be a little more junior to a sales rep and they’re going to need a lot of hand holding, a lot of managers, a lot of oversight, a lot of help like coaching.
Another thing I would tell people is, you think you’re going to get sales off your plate by hiring a team. Really, how you’re doing is just transferring it from sales work to sales management, so leadership of a team. If you have them come in and you don’t have a lot of these answers, they’re not going to have success.
This is what I see all the time when someone says, I just can’t seem to hire salespeople. That’s ludicrous. Yes, it’s hard. There are frameworks to do it, but it’s hard. The real problem is they bring them in, just throw them to the wolves, and just say, hey, you’re going to pay me a lot of money for it to be successful. Just go figure it out.
But that’s not how employees work. It’s team work and also you’re sending all these signals. I see this a lot when people are trying to do this too early, they just don’t want to do this anymore and they try and hire a couple SDRs, accounting execs, or whatever and they try to find ways to cut corners like try to find someone who’s commission-only.
I’m hearing it again right now because COVID. There’s so many people that are laid off. They want to do it. Even if you can find someone that’s good, that’s willing to do it, it’s going to be hard. You are sending the absolute wrong signals to them. You’re saying, hey, I don’t trust in my process, in this, or you, in order to actually commit this is a real rule. If you figure it out, cool and if you don’t, that’s okay, too.
Would you do that to other roles? Would you get a developer on board and say here’s the deal. If we sell a lot of these, if the product sells then I’ll pay you. Of course not. But somehow they think that’s a way to do it. It’s not that we’re scared of what we don’t understand. We look down on what we don’t understand in our circles a lot. ‘Sale’ is a dirty four-letter-word in a lot of ways.
The reality is, people that get to that stage, you’re a good salesperson, you’re a good marketer. Because you have to be, you had to be, to get to where you got to. Almost every founder is like that. If you don’t go out and raise a bunch of money where you solve problems like throwing money at people, then you’re going to have to figure almost everything out yourself first. That’s a good thing at the beginning.
At $100,000 a month or whatever, now you can start hiring people that are better and smarter than you in those individual roles because now you’ve got a framework of what’s working and their job is to come in and boost it up. Essentially, that’s what I do. I come in as a fractional VP of sales and say you can afford $400,000–$500,000 a year that a full-time VP of Sales will cost, but you need all this kind of institutional knowledge on how to do these stuff. So we come in and build it for you. On smaller, we’ll focus on things like building an SDR team, building the rev ops, just optimizing that, and finding these places to do that.
Sales is the most important function in a business. If we don’t sell, the business goes out. Period. I don’t care if you are the most in the basement coder, hate salespeople, hate everything about sales. I think it was Josh […] about the enterprise sales process the other day and yes, it’s a pain in the ass, but the reality is, it works because a lot of people do like that. Just because we don’t like that, […] sold that way, doesn’t mean other people don’t. You really have to give it the respect it deserves because it really is the important function.
There are two things that Peter Drucker said that a company does. It creates intellectual property and it sells it, markets it. Those are the two things you do. You build something and you sell it. We’re very focused on the building, we just have to get better at focusing on the selling as well.
Rob: Right, very cool. I think most people listening will know what SDR and BDR stands for. I started doing it, too. I read his email without doing that. SDR is Sales Development Rep and BDR is Business Development Rep. I’m going to say what I understand those to be and I’m curious if you have other thoughts. In my head, they’re the same thing. They’re two names for the same thing and it’s someone who is in charge of doing outbound outreach to generate leads, what warmish leads to hand to an account executive, which is just a salesperson. Is that relatively accurate?
Damian: It is. More importantly than that is, it’s not a good model. Love Aaron Ross, great guy, important in the software world to start thinking sales is a lot like an operation. A lot of the stuff he says is good, but this over-, hyper-focused sales roles of the BDR, SDR, AE, customer success all the rest of it is a model that worked really, really well at Salesforce a decade ago.
Salesforce was the first unicorn. It was the most important first SaaS tool. You could do that. It also raised a lot of money. You get through the palms at it. What I’ve seen here as well is these smaller businesses, bootstrap companies try to do that model as well. I think it’s a bad model. I don’t generally recommend it for my clients. What I suggest they do is, is get a little bit old school. This actually helps as well because if you think you’re ready to hire a salesperson, you have to hire two. If you can’t hire two, if you can’t afford to hire two, you probably are not ready for a salesperson yet.
Here’s why. There’s only three outcomes to happen if you hire two salespeople. Either they both fail and if so, it’s pretty clear you’ve got a problem. It’s a market problem, a product problem, it’s just an issue that you have to fix. If they both succeed, obviously that’s a win. Things are going well. If one succeeds and one fails, well cool, that’s probably a personal problem. It’s an HR issue, not a product/market fit kind of problem.
Really, two of the three outcomes are good. You kind of understand. Actually, all three of them are good because you actually have clarity of what’s happening. If you only hire one, you’re going to blame that person, it might not be their fault, it might be the process isn’t good, it might be that you don’t have things up correctly, it might be a bunch of things. You’re just never going to know, so you need both.
But here’s how you do that. Because we’re not going to do the SDR, BDR and get super hyper personalize it that we’re going to say your job is to handle inbound leads and outbound leads. Or do the outbound leads plus you handle the discovery calls. How you free up the founder’s time because they’re probably the ones driving the sales at this point. How you free their time up, when you start to give more of the selling function to this team. Again, you don’t want to single point a failure, it just makes a lot more sense.
The other thing is to really do it right, you probably got to invest the money. You’re going to need a decent CRM, you’re going to need some tools, you will not cheap out on it, you’re not going to want to figure out how to write a couple lines of code for […] endorse of it. No, just go buy your call. Pay $30 a month […]. You’re going to start thinking about that sales stack, start thinking about how you’re going to put that together.
What I’ve seen is, the people cheap out on them because they try to find one person and they try to make them commission only, it’s also not in the tools to be successful. Not only do they not have the direction or the clear strategy in plan, they also don’t have the tools. Inevitably, that founder blames that rep and says I hired a dud.
Rob: Let’s say I was a founder of a bootstrap, B2B SaaS, we’re at $100,000 MRR, so just in the seven figures. I want to hire these two salespeople like you’re telling me and I don’t have any of the sales stack you just said. When founders ask me I’m going to do email support. I’m moving from Gmail. I’m always like Help Scout’s a really good tool or if you want something lighter […] frontapp.com. Of course you’re going to use Stripe for payment. I can recommend all these stuff, but I don’t know much about the sales stuff. What is it? CRM and a call recorder? Is it just one tool? Is it two? What would you recommend? And specifically, too.
Damian: There’s 50 tools for the thing. Here’s the way I look at it now. I’m actually putting together a doc right now, actually. This is where I learned in my starting selling software in the late 90s. I worked at McAfee when they became Network Associates. They bought a slew of companies, they put this suite approach. They’re one of the first security companies for this suite approach together.
It’s always funny because I went to Trend Micro which was really good at gateway scanning. When you’re smaller and you’re good at one thing, you’ve screamed from roof top’s the best of breed. You own the best of breed solution, that’s what we want to do. When you’re bigger and you actually acquire those types, it’s all about suite solutions. You think whatever role you are is what’s the best.
The answer is, both of them can work. The first one is HubSpot. I’m a big believer in HubSpot. Is it the best here? No. But that Microsoft Office approach together is very important, especially in those earlier mid phases. From getting seven figures to eight. To me, there’s a lot of value there. It’s not cheap. You’re going to be spending significant money if you really go all in for the marketing and service, help desk and the sales. But the thing is, it handles almost everything. Your counter appointments, calling, everything. And it’s all one single record which is the true power of a CRM, should be the single pane view of your interaction to the customer.
That’s the one path to go down. And then the other path that I say is, it is PipeDrive is a pretty good cheaper alternative. They do a pretty good job now of having really good integration. It’s all about integration networks. It’s about their partner network.
In the RevUp side, the tools that really matter are a CRM, from the sales pipeline engagement manager point of view. You’re going to […] before that too. You’re going to need […] tool, a mail shake profit IOs and like that. And then you’re going to need a help desk tool. I’ve been talking about Help Scout a little bit. Freshdesk is actually pretty good. What do I start thinking about is the future of these tools as well, so how they interact great with everything else.
For example, Aircall is a Voice Over IP tool I recommend to most people because it integrates with the most other tools, with the most other CRMs, with the most other help desk, I would say, and that matters if you want to get that integrated understanding of what’s happening with the customer.
The other side would be PipeDrive, Help Scout, or Freshdesk, and then a marketing automation tool. I would’ve said Drip in the old days, but I’m not sure that’s the right solution anymore. Funny enough, these days, who’s doing a pretty good job is Mailchimp again. Again, I don’t care so much about all the landing pages, the rest of it. You know automation is deliverability and integration with the other tools. That’s when we can start thinking. This is how your head starts changing.
I’m talking to someone who’s doing about $1.5 million a year and he was like beating their chest proud that they were basically doing everything in Gmail still. I was like cool, you’re saving a thousand bucks a month, $1500 a month, whatever, but how much opportunity you lose because of that. How much of your time and energy is being spent doing that. He handed it off to someone else. If you live in your inbox, that’s where everything is happening, you’re going to give your inbox to your new sales rep? Of course not.
You have to start thinking about how you scale past where you’re currently are. I think that people overthink a lot of stuff. Just pick one. Go get HubSpot CRM because it’s free. Find out whether you like or not. It’s kind of a love or hate relationship a lot of times. And people that hate it, cool. Now, go buy PipeDrive then. That’s what we’re going to do. Then, integrate with the other tools you need to use. But understand that as you grow and as you grow up that kind of value stack and as you grow more, actually start growing the team, there’s even more and more tools. And then, there are meeting tools.
Now the big thing is around coaching. Things like gong.io and Chorus.ai which essentially records the calls so then the sales managers and leaders can coach with it, but also doing some really cool stuff where they’re essentially recording and anomizing hundreds of thousands of hours of sales calls and figure some really cool stuff out.
Like something I’ve been saying for a long time, which is, you should actually talk praising on the first sales call. Not specifics because you might not know, but really it’s the range. They just had a really […] recently, a big data set. Essentially, the call price was mentioned or discussed on their first call, closing it 40% versus a 28% where it was at way until the second call because people get frustrated by that. They don’t want to keep feeling like you’re getting away from them.
There’s some real cool stuff happening there about understanding what’s really happening, the real buying behavior and what’s going on. As you get deeper into it, you’ll have to have more and more tools. But to begin with, you want market automation or email service providers of some sort, you want a CRM, and you want a support service tool of some sort. Ideally, they all integrate very well together.
Rob: Cool. I want to return back to the thing we started with which was talking about the email sequence. What should someone do in their sequence? I think you named four emails that you would send in a sequence. But you also mentioned that you are putting one together for a client that had eight touch points. What’s that? Is that when you get more advanced? Or is that a specific thing where you would send more than four?
Damian: It’s actually for me. This is a ‘solved by me’ specifics on this. The most success you’re going to have is, again, […] challenge is multiple touches from multiple points. Same with leads, inbound leads, too. It’s being super aggressive in your follow up in your communications or in a short period of time and then bailing. That’s what I think.
They can’t pay me now; I just started today. I’ll be starting to run next week. Specifically—we’re talking about pain points here—I’m putting together a list with my VAs and the rest of it to look —again, I work for […] software and service companies—[…] before they reached seven figures, they want to get to eight figures, so looking for the kind of companies that match that profile.
They actually are hiring any role, generally not a salesperson. They’re looking for someone who doesn’t have a sales[…] or maybe they have one salesperson, but they’re hiring someone else. What I’m going to do is, I’m going to reach out to them about all the mistakes the founders make in hiring.
The first step, day one on Monday, I do a LinkedIn request. I try to connect with my LinkedIn. And then day two, which is literally a Tuesday, the first email will go out. That first email is going to be very clear, it’s going to be seen that you’re hiring for project manager, for whatever, who was not sure how many people to hire in that role. Or if you ever hired sales before, but here’s some mistakes that people make when they do that.
Mistake number one is not having the systems and process in place to actually make sure they have success. And mistake number two is not having a clear plan with how to manage them while they’re still there. Both these things end up doing what I call a $100,000 mistake, where you hire someone and they’re around forever. They’re not quite working out, but you don’t really pull the trigger firing them right away because you know it’s your fault, too, so they stick around for a while. The next thing you know, you’re $50,000–$60,000 into this thing, plus all that lost opportunity you had.
That’s email one. Which of those are your biggest issue? That’s email one. Then the next day, I’ll give them a call and then that’s Wednesday and then Friday, they’ll get another email. The Friday email will actually be me doing Hippo which is like a Loom or one of these screen recording types of things. I’ll do that from their website. I’ll be looking at the website, there will be a little picture of me up on the corner, basically pertaining to the same thing.
If your problem is not having a clear onboarding process and having a clear plan of […] goals, making sure they can hit the ground running, ramp up faster, all that kind of thing, here is a free resource (which is an ebook kind of thing) to help them figure out how to do that. Then, there’s a call to action for them to do that.
Then, the following week, they’ll get an automated email, then they’ll get an in-mail, like you said, like an in-mail, if all of a sudden I can’t get it from then. And then one last email, the end. That third email will be if your problem with hiring is you just don’t have the skillset here, you don’t know how to run it, you don’t know how to hire salespeople. Hiring salespeople is difficult for the fact that if they’re mediocre, they’re probably good enough to BS for three or four interviews. Also, sales is one of the few white collar high-paying, high-performing jobs where your work ethic actually matters more than almost any other job.
If you’re twice the salesperson I am, but I work three times as hard, I will sell more than you. It’s just math. It’s absolutely real. It happens all the time. The sales you’ll see generally indicate people in their 20s or 30s are decent salespeople. They’ve learned how to do it, they can talk the game to the rest of it, and then there’s this decision they have to make. I don’t think most people realize they’re making a decision, but either they want to take that next step, but they want to be the stars, they’re really, really good, or they’re just still happy making $100,000 a year, coasting.
The vast majority of them are happy making $100,000 a year, coasting. That’s what they do. Because the other one takes work. The difference between that person and the person who becomes that $300,000-, $400,000-, $500,000-sales rep is work, is effort. It’s actually how much time they have put into it. Thinking about how they’re going to solve each problem off work. They’re not punching a clock.
Really, that work ethic matters a lot. This is another problem that founders have, who are just bootstrapped once they’re remote. Everyone I’ve worked with has remote teams. You have to set the example early about a level of expected effort. The best way to do that is, in the old days being the same office, but now it’s about being really clear about their onboarding. That first week is very intense. Basically, you spend almost all your time with them. It’s very structured. You’re sending these signals to them about a structured, hardworking organization, that you have all the tools you need to be accessible, but this is what we expect.
But more importantly, in the recruiting process, what we have to do is we have to test them just to make sure they’re doing it. It’s to the point that adds some hurdles, add some things they’ve got to cross over to see how they deal with it. It’s about having a clear way of doing. Hiring engineers is different from hiring salespeople, which is different than hiring office people, which is different from hiring marketers. There’s a specific way to do it, but the problem is, people are bad at doing it. More importantly, they get them into business and they’ll figure it out. They leave with their own devices.
Then you’re a month or two in and then you’re upset with they’re not doing much work and they’re not probably. Engineers complain salespeople are lazy. That’s Damian’s axiom number one. It makes sense. Engineers don’t really complain. They look for problems, as we did, the problem solvers. They’re looking for ways to fix things. Salespeople, their job is to do as much as they can as fast as they can, cutting corners, moving fast. That’s what they do, but not focused correctly, those are both bad habits. They can get really bad especially in sales, especially when they’re remote.
This goes back to again, you’re going to worry about saving a couple hundred bucks a month on your CRM or whatever tool, but then without that, you don’t have this clear understanding what’s really happening inside your business. This is the challenge. People try to get sales off their plate very quickly. I tell them, if you hate sales, you’re going to hate sales management even more because now, you still have to be involved in the selling process. But you’re one person removed. You have lost control. It’s tough. It’s a tough thing to figure out. And now your job is really coach, your job is really support. It’s helping this person do it.
Again, it’s not like you’re all saying […] start coming out, you have to […] we’re sales again. It’s just now you were about bigger things, you were about how do we put the process in place, how do we create tools so we can double, triple, quadruple the size of the team over the next 2–3 years. It goes back to you having to have at least a working idea of what those problems are. I don’t care if you’ve never done cold email before. I can show you how to do cold email, that’s easy. I mean, it’s not easy. It’s work, it’s effort. That’s the big thing, is effort, but you have to have the content right, the context to it right.
The real challenge with outbound and why it is so enticing to hire people, why I think you should hire someone as soon as you can, is the real work is in the data. The real work is in the list building. It’s what takes the longest, it’s what actually makes the biggest difference. For example, I can go into co-founder of LeadFuze, we got a good tool. I can go in there and do a pretty dialed-in persona. The right title, the right size of the company, type of industry, all the rest of it, but that’s the beginning stage. I’m going to take that list and what I’m going to do is I’m going to get my […] admin or my VA to then go into LinkedIn and see how many employees on each account. I want them to be more than 2 employees, but less than 20.
The clearer you can get with that persona, the better you’re going to be which takes effort and time. And that’s the problem. Always on the shortcuts. I want to push a button, have a thousand of these pop out, I want to plug it into Mailshake, I just want to sit back and just wait for my 2% reply rate and now I’m a spreadsheet millionaire.
Rob: That’s the thing. I’ve taken away several things from this conversation—hopefully listeners have as well—but that’s one of the big things. This is a lot of work. Cold email in 2010 is different than it is today. Just like SEO is different than it is. And Facebook Ads back in 2012 when I was running it for HitTail. They were way cheaper and way easier. This stuff takes work. There are always of course new marketing and lead gen approaches coming out. They tend to be more uncertain, there’s not as much information out there, and it’s more of the wild west. But the tried and true things like cold email take time. That’s the same I take.
Damian: Yeah, they do. There’s always a market to sell. Again, let’s go back since we were lazy, you’ll never go poor selling salespeople on the ideas of not doing the things they don’t want to do. I remember when I first got to this entrepreneur game back in 2010, who’s the big ad? It was Gary whatever. He was the big monster in AdWords at the time, whatever his name was.
Rob: I know who you’re talking about, but I forgot his name, too.
Damian: Perry Marshall.
Rob: Perry Marshall, yup.
Damian: Perry Marshall dominates. But he, like all people in that world, was getting hard. When it gets hard to make money doing it, you start making money selling how they do it. He was doing that. It was funny when I was doing it. At the time, 2011, I cold email you, my business was what I’m doing now but I was working with Infusionsoft and a couple of things and was a little bit more down market.
I would send a cold email. It was one. I had the cadence of one email. Back then it was hard actually getting email addresses. The reportive hack on how to get stuff. You can get the VA to do it, but I would do that and then go to their website and find two things on their website. And here’s the list of seven you look for. There’s not an opt in on every page. There’s six or seven things.
I send an email to them. An email would be like, hey, Rob. I was checking out HitTail today. Really enjoyed this, something specific about what I enjoyed, but I noticed on this page and this page, you don’t have an email opt in. That’s probably killing your conversion rates. I’ve got three or four more ideas I’d like to share with you. Here’s a link to book a time. That was literally my first email and I have an 11% booking rate, like 11 people booking meetings.
Great. That’s awesome. It was hard to do. But it’s like every single marketing. It sometimes gets more expensive, the more people that do it, the less effective it is. It just loses efficacy, that’s just what happens. On the cold email especially, because everyone hates cold calling, I’m a crazy person, I really enjoy the game. I enjoy the gameship of it and I think I’ve just had to learn back in the days when jobless […] phonebook go, but 99.99% people don’t like it. If they say they do, they don’t want to do it. They go to cold email because this is kind of I’m behind the computer screen, I feel safe, I don’t have […]. It just happens over and over again. This is social selling nonsense.
Do I believe you should have a good social […]? Yes. Do I believe there’s a lot of value on being on LinkedIn and helping people and showing that you have chops? Absolutely. Does it replace everything else? Of course, it doesn’t. This idea of some magical, automated, easy, stress-free way of generating millions of dollars of revenue for your business, doesn’t exit.
Again, it’s just funny that in most places we expect that. Even in our community, even in our bootstrap community, we still get caught up in the success stories. How long was Drip? How long did you have Drip before you sold it?
Rob: It was from launch until sale, it was 3½ I think. It was pretty quick.
Damian: Fast. Very fast. Maybe five is very fast, really. You look at the history of business. Listen to that Shoe Dog, the film […]. For 14 years it was near bankruptcy, which is the extreme, obviously, but it happened. We look at the Basecamp guys, whether we like the way they’re not acting these days or not. Look at their business, it’s a model for a lot of us, that’s great. That business is 20 years old now. It gets crazy how old these businesses are. It took 7–8 years to really make money. They were first movers, almost kind of that stuff. It takes time.
Now of course then we get the Wunderkinds, the Travises of the world that go out there and nail it right away. Good for them. But that is very much not the norm. We have some really weird outsize expectations on this stuff. I see this a lot with prospecting in sales is, hey, I’ve been doing it for three weeks yet, and I’m not rich. Okay, yup, you’re right, you’re not. Because it’s a muscle. It’s going to the gym. You can go to the gym for four hours one time a month. You got to go 30 minutes every day. That’s the same thing with hire prospecting.
I think that’s the biggest thing, is just the greatest salespeople that I work with are generally ex-engineers, ex-process-oriented people, or operations people, because sales is a process and its problem-solving at its best. This cliché of the fast-talking, back-slapping salesperson (that I know that I naturally fall into a little bit) is actually incorrect for who actually buys, especially in the technology world.
In my world, I have to tone it down a little bit when I’m talking to people because I don’t want to feel that kind of pushy salesperson. My job is to be a problem solver. That’s what my job is in selling. That’s cool. Most entrepreneurs I know, that’s the kick they get. It’s the problem solving the problem. Solving the product problem, solving the market problem. We like problems, we like puzzles, that’s what we like.
If we start thinking of sales as just that, seeing like you got a product puzzle or a marketing puzzle or whatever, it’s the same thing. You just got to figure out what piece goes where and when. The fun part is that, like a lot of things, it’s constantly changing. What worked 18 months ago doesn’t work anymore. That’s why, again, I think this is the good old Warren Buffet, Zig versus Zag kind of thing. Right now, I’m just seeing so much success with cold calling. People are answering their phones. People are actually home. People are working from home. They’re bored, they’re answering their phones.
I got a client who sells lead data to solar companies and their connect rate essentially almost tripled since this CoronaVirus came out. Because again, people are home, taking their phone calls. But no one is out there beating that drum because no one wants to cold call, no one wants to do it. But sometimes, being an entrepreneur is putting on your big girl/big boy pants and doing the stuff you don’t want to do because what has to happen.
Rob: Damian Thompson, sir, we’re at time. Thank you so much for coming on the show. If folks want to follow you on Twitter you are @DamianThompson and vpsales.co is your current project, what you’re working on.
Damian: Yeah. damian@vpsales.co.
Rob: Got it. If they want to reach out and get in touch. Thanks again to Damian for joining me on the show today. If you have a question for me or our future guest, please email to questions@startupsfortherestofus.com. Thanks for joining me this week. I’ll see you next Tuesday.
Episode 506 | Shutting Down and Starting Up with Derrick Reimer
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On today’s episode of Startups For The Rest Of Us, Rob catches up with guest Derrick Reimer as they discuss shutting down a slack competitor while building and preparing to launch a new calendar SaaS. They discuss topics like user research, defining and validating an idea, choosing a big market, viral loops, and more.
The topics we cover with Derrick Reimer
- 2:49 Shutting down a Slack competitor
- 6:32 Building StaticKit to get something in the market
- 13:16 Developing the next idea
- 17:03 Validating the Mighty Cal idea
- 19:07 Potential dangers of going into a big competitive space
- 23:38 Choosing the specific customer/s to target for Mighty Cal
- 25:45 Built-in Viral loops
Links from the show
- @derrickreimer | Twitter
- The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer | Episode 482
- How Derrick Reimer is Validating His Ambitious Third SaaS Application | Episode 399
- The Art of Product with Guests Derrick Reimer and Ben Orenstein | Episode 354
- What It’s Like Selling a $128k Side Project (With Guest Derrick Reimer) | Episode 311
- How to Mentally & Technically Prepare For Your Launch (With Guest Derrick Reimer) | Episode 274
- StaticKit
- Drip
- Mighty Cal
- Codetree
- The Mom Test | Book
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host, Rob Walling. This week, I talked with Derrick Reimer who’s been a many time repeat guest on this podcast. We talked about his decision to shut down his prior effort, Level, that he and I spoke about two years ago on this show and his new effort, Mighty Cal, that he’s working on and he’s going to be launching here in the next few weeks.
Before we dive in, I want to talk about an app called Subbly, subbly.co. This is through helpfounders.com where I donated ads slots and sponsorship slots on this podcast to help other bootstrap founders get some exposure in our space. subbly.co is a subscription ecommerce platform that focuses on direct-to-consumer ecommerce brands especially those that are selling subscriptions. If that’s you, please give Subbly a look, subbly.co.
In addition, in case you miss a few episodes ago, I mentioned that with TinySeed which is the SaaS startup accelerator that I started two years ago with my co-founder Einar, we are raising fund two. Today, we have funded 23 companies with our first fund. Now, we are raising that second fund. If you are an accredited investor and are interested in diversifying an investment across many dozens, if not hundreds, ultimately, of early-stage B2B SaaS companies, head to tinyseed.com/invest. Enter your info there and let’s have a conversation. There’s certainly no commitment, but if you want to learn more about what that might look like, hit us up at tinyseed.com/invest.
A little background on Derrick before we dive into our conversation. Derrick and I started Drip way back in 2012. We grew it together, sold it to Leadpages in 2016, then moved on in 2018. Since then, Derrick has started a couple of different projects; we’ll dig into those. I won’t spoil them for you, but last time we talked was about two years ago and we were talking about how he was trying to validate his app, Level, which is a Slack competitor. We basically pick up right where we left off. We talk about his decision to shut level down and then what he’s been up to since then. Without further ado, let’s dive into my conversation with Derrick Reimer.
Derrick Reimer, thanks for joining me in the show again.
Derrick: Hey, thanks for having me.
Rob: I think you’ve been in this show at least five times?
Derrick: Oh my goodness.
Rob: Yeah, I know. The most recent was almost two years to the day. It was July of 2018 where we talked about how you were validating Level. It was your ambitious third SaaS application. It’s been a while, man. You’ve been up to some stuff.
Derrick: It’s been a while, yeah. A lot happened in the last couple of years.
Rob: Yeah. Let’s dive right into Level; we can catch folks up. Level (in essence) was a Slack competitor that you’re working on. Your angle on it was a less interruptive, get deep work done as a developer or creator but still have some type of chat tool. You want to catch people up on that?
Derrick: Sure. Level was borne out of the experience in large Slack teams especially after the post-Drip acquisition, 150 people in a Slack room. The company that time had basically said we’re going to shift everything into Slack, not use email anymore, and experiencing firsthand all of the challenges that come with the interruptive nature as a maker, trying to manage all these communications in a realtime chat format.
The premise was to strike a better balance, a healthier balance. There were some innovations that I came up with like putting things in a hybrid between Slack and emails. There was an inbox in Level that would queue up your messages. They wouldn’t disappear when you read them but you could subscribe to certain things that would flow into your inbox and other things which are in a feed.
It’s actually funny. It’s quite similar to some of the concepts that I see in Hey!, the new email app from Basecamp. I just found that amusing that they have some similar concepts, like important things landing in your inbox and other things that are just there for you to peruse or in this feed. You can just kind of scroll through that.
That was kind of the idea. It was admittedly ambitious. The proposition was basically convincing companies to move their whole communication infrastructure off of Slack; a big, big learning that smacked me right in the face once I attempted to launch it after building it for about nine months. It’s just the wide chasm between people’s recognition that their communication patterns were not healthy and that a product could help to add that, then their actual willingness and ability to get organizational support behind moving off of Slack.
Rob: Yeah, that’s the thing because when an individual can’t make the decision to move anymore, it’s a really tough thing. Unlike, if I were to try the situation from Calendly, for example. Even if I was on the team, as long as I have a credit card, I can get a free trial. I can just go, sign up for that, and use it on my own right now. I don’t have to convince other people.
The switch and cost of Slack are high, the feature depth. They have a pretty big moat now with the integrations. I remember you and I talking. I was like, mobile apps, dude. I’m not sure you can do this without mobile apps. There’s a lot to it. There’s always uncertainty when you’re launching things, but it really was an ambitious project for you to take on.
Derrick: Yeah. It was fresh off of a long stint with Drip, all the way through acquisition and I was really excited to work on a new, ambitious challenge. That was kind of where my mindset was at that time. I did recognize that it was going to be an uphill battle, but I was willing to take some risks then. I learned a ton in that process.
I wrote a whole in-depth blog post retrospective about it; the folks can check out on my blog. Just learning about how to ask better questions up front, I became acquainted with The Mom Test methodology, which is booked by that name. That kind of gives you a brief, manual, very actionable, about how to ask the right questions because people who have the best intentions to help you out will often steer you in the wrong direction. They’ll be excited but that excitement doesn’t actually translate to actually making a purchase.
Rob: Yeah. You basically sunsetted. You’ve got a few folks to use Level, but it was an uphill battle. You just couldn’t get enough traction. Was that about a year ago now?
Derrick: Yeah, it was just over a year ago.
Rob: You’ve moved on to your next app which is called StaticKit. That’s in the StaticKit website form and point stuff. If I recall, when you and I talked about it, you were like, I want to do this to get something out there quickly. I don’t want to spend six months thinking, manifesting, and doing all of that again. I’m interested in static sites anyway. I think there are some opportunities here but I’m not quite sure what it was. It almost felt like you needed to get something into the world to tool around with. Is that accurate?
Derrick: Yeah. It was pretty rough. Psychologically, it was rough after coming to grips with the fact that putting nine months for it into Level and for it to not work out was tough. It was partially therapeutic to dive into some tech and some stuff that I was particularly interested in. There’s a lot of stuff happening in the static site ecosystem, the JAMstack (the term coined by Netlify). A lot of interesting momentum around that, and a lot of folks leaving WordPress and adapting static sites instead.
It seemed to me that there are emerging trends around this. Again, I recognized that this was still nascent and not entirely positive that the market was ready to start buying tools to fill in the gaps between what they could accomplish with the monolithic WordPress back-end and some of the newer static site technologies.
It had been an idea that kind of floated around in my notebook over the years about building some back-end and building blocks to come alongside static sites. I just started building some stuff, threw a landing page up, and right away got some interest from some of the major hosting providers in the space. They reached out directly and were very excited about the developer-centric form back-end.
It was the first dipping the toe in the water for StaticKit. It got a good amount of excitement from some of the other people in the ecosystem and the willingness to come alongside, and promote in their marketplace and stuff like that. That sort of is what drew me into going a little deeper into the space and seeing what I could make of it.
Rob: It just feels like it was one of those waves. We kept talking about it like, hey, WordPress was small. Then, it wasn’t. There are these technology waves that come and static sites feel like they have the potential to do that. No one knows if they actually will, but there was an opportunity to build something relatively small, get it out there in a few weeks, have these bigger players reaching out, and saying we want to integrate, we want to promote. That’s an interesting opportunity. That’s one of the reasons I like the idea of you doing it, you not going from a standing stop when that happens.
Derrick: Right. That gave me excitement and gave me some glimmer that there’s something there. I still had to learn that point like, all right. What’s the market actually look like for this? I know there’s a lot of developers experimenting with these tools. Developers love everything you can manage in version control, your entire configuration, and developers will eat that up. I knew that I had the interest of developers, but how many agencies were actually using this instead of the older monolithic Content Management System stack?
There’s a lot of other players alongside static sites like Content Management Systems, for one, that caters specifically to this audience. A lot of them are funded. It’s hard to know really how much traction any of these companies have when they have funding. They’re out there doing their marketing and having a presence in the tech’s sphere but what is their revenue story actually looked like and how much traction they have started?
It’s hard to ascertain that without just diving in and seeing what you can do. I definitely had my learning hat on during that process and started to become clear that there’s a lot of people that are signing up for tools like these are not buyers. They’re not in the situation of ready to actually exchange dollars for the tools. I think some of the large hosting platforms like Netlify, like Vercel have demonstrated that you need a large free tier at the bottom to service the folks who are just playing with stuff and ultimately make your money selling into the enterprise, kind of doing an enterprise sales process. That became more and more clear that that was likely what was needed to happen for StaticKit to really get traction, and that gave me a lot of pause.
Rob: Yeah. You invested enough time and started to feel that you threw the time after that. It’s one of those things. You could obviously look at it and say why give up so quickly, what were the signals, and all that. Really, you’ve laid them out there. It became painfully obvious that there are a lot more free tools in the space. I think it’s still a viable space. You have a certain revenue milestone. You want to get to a certain amount of time. It’s going to be really challenging in that space to do it. I think longer term is a better play.
Derrick: Yup. A lot of bootstrappers have this wisdom, hard-earned, it takes some iterations. It takes some different attempts and different angles. You’ve got to keep building and exploring to arrive at the thing that’s really going to resonate with the market. I’m trying to get better at that being malleable, being keen and an open mind, not getting too overly committed to something. I think that was one of the tough calls, to figure out when’s the right time to shift focus. Do I keep hammering away with this thing? Do I go with my gut, listen to these signals that I’m getting, what I’m learning in the market, and shift my attention?
Ultimately, after consulting with some advisors, you included, I started looking at other spaces.
Rob: Yeah. That’s the important thing, too. These decisions are never clear cut. There’s always (a) some gray areas, and (b) a lack of certainty but you have your own gut feel and it helps to sanity check that with other people. I do know that you and I had several conversations about it over the course of many months.
Even from early on, are you sure that this space is going to be what you need? But you’re already in it. It’s going to take a few weeks to get something live. Let’s follow that. You pulled the thread, see where it goes. Hard work, luck, and skill. It’s like you’re putting in the work. You have scaled the building, launched it. It’s like, are we going to catch a little bit of luck here and there, like potentially propel it forward?
As you were starting to back off of StaticKit a little bit, realizing if I invest more time into this, it’s not going to yield what I want. You started noodling on other ideas. You have a big idea list of not only apps but spaces. You’re just going all the directions. Everyone always does, like how do I come up with an idea? I know you and I have a lot of conversations about that. I thought it was clever the way that you came up with one list in particular, which was stuff you were using, you were paying for.
Derrick: Yeah. I never wanted to say, as an absolute, that you should always scratch your own itch. I think there are always opportunities to find business ideas in other ways. I knew one leg-up that you can give yourself is to just have some direct experience, some recognition of understanding what the problem is, and what the market is if it’s a tool that you yourself use.
One exercise I would do with my notebook is to list off all the tools we use while building Drip. We have aero monitoring. We have all kinds of exception tracking, uptime monitoring, hosting, calendaring, email, scheduling, and on and on and on. Just an exhaustive listing of everything and running them against my rubric which I gradually been building. It was something that I need to be able to launch an MVP quickly on. It needs to not be so mission-critical that if there are two minutes of downtime, it’s trucking someone’s whole business.
I started running them through my filters and pretty quickly scratch off most of them. One that lingered on there was scheduling and tools like Calendly that you use to send a booking link to somebody. I remember we adopted that pretty early on at Drip for our demo process. It was one of the killer tools in our stack. I started looking really closely at this because it felt like there were areas to improve. I definitely had my own ideas about that.
There are some interesting properties about this space, one being the opposite of Level. People can use this in a single-player mode which is very attractive to me. It’s something that I could build the kernel of decently quickly. That checked those boxes right away then we started thinking about that a little deeper.
Rob: I remember the conversations when you would call out an app name like aero monitoring. It’s like, okay, what are the pros and cons of the ones we’ve used? And Calendly. I was like, oh, I’ll tell you what. When I do group scheduling, it’s a nightmare. Why doesn’t Calendly overlay my calendar over there? Is it for both customers? It was pretty quick. There was innovation.
Again, you go back to the 2012 ESP mindset. Mailchimp and AWeber solved this problem. They’re perfectly good solutions. Once you start thinking, how could it be better? What are the personalizations, the tags, the automation to make it a better system? Oh, I see the future a little bit. Or we think back to email, Gmail, and then to Superhuman. Email and the online clients were just fine for a decade. Nobody touched them. We just use them the way they were.
When someone comes along and says Superhuman is a new email client, or hey.com you do realize there are ways to innovate on these tried and true solutions. That’s how I started pretty quickly thinking about Mighty Cal. Mighty Cal is your app. It’s at mightycal.com. It became pretty obvious that there were innovations that could be made to make this a better process.
That doesn’t mean that this is a viable market. This doesn’t mean that this is a viable product. That was something we were careful of. It’s just like, look, I can tell you five things that I would switch for but you’ve got to go talk to other people next.
Derrick: That’s what I did. After we did a whiteboarding session and came up with a bunch of our own ideas, I didn’t want to stop there. That’s a classic mistake. I think I solicited maybe 10 different conversations. A handful of them was like, yup, I used Calendly. It works fine. Not that big of a deal.
I tried my best to keep the conversations decently high level. We talked about, what does your day look like? Trying to understand the person, understand what their cadence looked like, what their flow looks like. With everyone I talked to, there were elements of calendar management, schedule management that were a pain for them. A good chunk of them was kind of within the scope of the broader vision that we started to come up with when we were whiteboarding.
It’s always hard. It’s really hard to interpret those kinds of conversations because when you don’t have a product to attempt to sell to somebody, you’ve got to hold things loosely when you’re having those conversations. I did feel like I got as good an indication as I could. There’s pain around this and there’s also fairly low switching cost, which was another thing that was pretty intriguing. You could use this in a single-player mode. If you didn’t have a super complicated setup, then it would be fairly easy for you to switch to a different tool. If I could just innovate on some pieces that a lot of people care about, then that may not be too difficult of a proposition.
Rob: I think the low switching cost is nice. I think the potential for expansion revenue is because it’s per seat. This is a perfect per seat product. If two people log into Mighty Cal, they’ll see different things because it’s their calendars. I don’t think you’ve decided on final pricing but Calendly is 7 a month. I’m assuming you’re going to be in that range. Obviously, normally we’ll say oh, no.7amonth.I′massumingyou′regoingtobeinthatrange.Obviously,normallywe′llsayoh,no.10 a month? That’s not a price point. You need a huge funnel, but (a) The market is massive. There are so many people using these tools constantly. There are tons of traffic streams you can get in front of, but (b) you get a team. Even the TinySeed, MicroConf team, there’s four of us plus my assistant producer so five. We’re a 50 a month client if we were to switch everybody. That’s where this starts to not be a50amonthclientifweweretoswitcheverybody.That′swherethisstartstonotbea10 a month product. There’s a lot of pluses to it.
On the flip side, let’s talk about the dangers. If we look back in the year and this hasn’t worked, why won’t it work? What’s going to trip you up in this space?
Derrick: I think a big risk is getting the positioning right with people; unlocking the positioning of people who really care about a more powerful, better-curated experience. I did sense among some folks an apathy, like Calendly is fine. It’s not perfect but it’s good enough. One risk is are there enough people who care enough about the nuances of their scheduling process and polishing off the rough edges of this scheduling experience?
I think I have some compelling product innovations on presenting things as a calendar instead of a list of times giving people a richer view. Again, at this point, it’s a hypothesis. Is that going to resonate to get enough lift or is it just going to be an apathetic response? I think that’s a big risk.
Rob: Yeah, a lot of competition. Again, if you’re at the first step of your stairstep and this is the first product you ever launched, you didn’t know how to write copy and support people, do design, coding, and build an app, there are all these things you can learn, I would say. It’s pretty ambitious to go up against Calendly and YouCanBook.me, whatever the schedule […] (there are 10 or 20 of these), but you’re a little further along having done Drip and Codetree which is an app we talked about in the past that you sold for 128,000 several years ago. You’ve had a few false starts here, but you’re past that early needing to get the basic skills. I’m such a fan. I’m secretly a fan of these really big competitive spaces. If you could go back to Start Small, Stay Small, of course, you start in the niches. There are all these reasons to do it. I would still say early on that was a great thing. Those were also great autopilot businesses and they’re great businesses to stair-step up from into if you want to do it. Not everyone wants to build a seven-figure business. It’s okay. If you want to build a128,000severalyearsago.You′vehadafewfalsestartshere,butyou’repastthatearlyneedingtogetthebasicskills.I′msuchafan.I′msecretlyafanofthesereallybigcompetitivespaces.IfyoucouldgobacktoStartSmall,StaySmall,ofcourse,youstartintheniches.Thereareallthesereasonstodoit.Iwouldstillsayearlyonthatwasagreatthing.Thosewerealsogreatautopilotbusinessesandthey′regreatbusinessestostair−stepupfromintoifyouwanttodoit.Noteveryonewantstobuildaseven−figurebusiness.It′sokay.Ifyouwanttobuilda150,000 business and just live an amazing life, do that. There’s nothing wrong with that. I know that you have ambitions. That’s your starting point.
You want to get to the point where default is alive. You’re paying your paycheck. Your ambitions are to grow up larger in terms of revenue startup. That’s where you think, is it easy to grow and make a 5 million SaaS in a really tight small niche? Is it easier to do it in a big space? Easy is relative. There are just hundreds and millions of dollars floating around in this whole scheduling space. You don’t have to stop at a little calendar widget. You’re going to get people using it. You’re going to get folks like me. You’re going to get salespeople. You’re going to get founders. You’re going to get whoever else. You know that there are angles. Whether you niche down or whether you add features that are more power user or that are just at the fringes, who knows the direction you can take in terms of integrations or automation or whatever else? Knowing that you can build a nice, innovative, little calendar widget, and get enough traction to get you to a nice revenue milestone, whether that’s5millionSaaSinareallytightsmallniche?Isiteasiertodoitinabigspace?Easyisrelative.Therearejusthundredsandmillionsofdollarsfloatingaroundinthiswholeschedulingspace.Youdon′thavetostopatalittlecalendarwidget.You′regoingtogetpeopleusingit.You′regoingtogetfolkslikeme.You′regoingtogetsalespeople.You′regoingtogetfounders.You′regoingtogetwhoeverelse.Youknowthatthereareangles.Whetheryounichedownorwhetheryouaddfeaturesthataremorepoweruserorthatarejustatthefringes,whoknowsthedirectionyoucantakeintermsofintegrationsorautomationorwhateverelse?Knowingthatyoucanbuildanice,innovative,littlecalendarwidget,andgetenoughtractiontogetyoutoanicerevenuemilestone,whetherthat′s10,000 a month or whatever, that’s a real bonus of being in a big space like this.
Derrick: Yeah. I think this is the classic kind of app where I’m picking a specific wedge. The wedge here is smoothing out the booking experience. The experience of one person getting another person’s calendar. That’s just one small piece of someone managing their whole schedule. Back in the day, business people would have executive assistants or secretaries. They would have humans there helping this whole process for them. That’s less common these days, especially among startup people.
There are tons of people doing business that are now managing their own schedules and calendar. There’s something even deeper to that than just booking links. I think this is an interesting wedge where this is a product onto itself but there’s a lot of different areas to expand it into. As I said, it’s just a huge market.
Rob: Are you going to focus on a specific use case? When I think of me, I’m kind of like a busy startup founder. A busy executive, a busy startup founder, whatever. That’s my use case. I’m also a podcaster. I’m going to need those two meeting types or whatever. There are obviously salespeople who’ll use this quite a bit, I can imagine.
When I do think of Superhuman and one of the angles where they want, the founders and investors. They’d be the Silicon Valley thing where they went after those two. Do you have an avatar in your mind if it’s busy founders and executives or are you specifically thinking there are podcasters, there are founders, there are CEOs, and there are investors or something like that? I’m just curious how you think about that.
Derrick: A first few that I have in my mind are founders; people similar to myself. I think that’s also another piece that I’m hoping to use as kindling. It’s my own small audience that I have from the podcast and just from being in the space. There’s a decent amount of people in my sphere who I think are potential customers for this. I hoped to use that as the first circle of people that I’m marketing this to. I think it’s going to be a lot of founders, bootstrappers, and potentially some investors in there, too. I think the business will expand organically from there. Let’s see what kind of viral lift it has. There is a viral component to this, too.
Every time someone shares a booking link, its exposure to whoever they’re sharing it with. It’ll be a little bit of following the organic growth track of it. I think that’ll be a very important thing to suss out. It’s like getting the position nailed. What I see a lot right now among others in the space is extremely broad positioning. I think there’s an opportunity here to speak a little more directly to some specific pains and be the de facto tool for that group.
Rob: Yeah. Especially when there is our space of founders and startup executives. Really, I just think a lot of us were operators, just trying to get something. It’s not a huge space. There are only so many influencers. Everyone talks to each other. Everyone’s online, spreading the word if a tool comes through that really is superior, it’s a superior experience, and people start seeing it, I think that helps us spread quickly.
In addition, we haven’t even talked about the viral loop of when I sent the link out, someone’s going to click on it. They’re going to go to mightycal.com. They’re going to see a Powered by Mighty Cal. There’s a lot of that was a driver in the Drip days. We have the Widget, the Powered by Drip. You know that that was a driver in Calendly’s growth. I think that’s something we haven’t mentioned.
In addition to low switching costs, big market, the potential for innovation, there is that built-in virality which is really hard to do. It’s hard to make that, not impossible to make that if it’s not built-in. You can’t fake that. Having it in such a native way (I think) is a bonus.
Derrick: Yeah. I’m investing a ton of time into this flow. I think about it similar to, now that we’re in a pandemic era, I’ve been doing more ordering food through a mobile browser. I’m learning quickly some of the apps that really have it nailed, the interface feels so intuitive. That’s the experience I’m striving for for this. I want the people who are on the other side of the booking equation to be using these person’s links and coming away from that saying oh my gosh. That was amazing. How can I get that for me? This is what I want to give to people who are scheduling it with me.
Rob: I remember having that experience with Calendly. It’s like, Wow! I don’t want to be emailing back and forth anymore. That was really cool. I want to do it.
As we start to wrap up, you’re using this yourself now. It’s in production.
Derrick: Yes. I’m […].
Rob: It’s cool. Do you think you have some exterior customers? I guess, early access customers here in the next week or two?
Derrick: Yeah. As of yesterday, my burndown chart says 96% of the wait. I’m running out of excuses to not have additional users on the platform.
Rob: Seriously. […] way more than I have been. Cool. I look forward to seeing my invite come through. Obviously, if folks are interested in seeing what you’re up to but really getting on the list which is if you do feel like using Calendly or competitor, and there are some things I’d like to see improved for it, focus on the startup founder, the busy executive type thing. It’s mightycal.com. Of course, if they want to see what trip you on Twitter, you are @derrickreimer.
Derrick: That’s me.
Rob: Thanks again for joining me on the pod, man.
Derrick: Thanks, man. Thanks for having me back to give some updates.
Rob: Absolutely.
Thanks, again, to Derrick for coming on the show. If you have a question for me or a future guest, please send it in to questions@startupsfortherestofus.com. You can send it in text or you can record an MP3. Send me a Google Drive link, a Dropbox link. I read every email that comes to that address. I really appreciate you tuning in each week. Every Tuesday morning, I’m going to be in your earbuds. Talk to you next time.
Before we dive in, I want to talk about an app called Subbly, subbly.co. This is through helpfounders.com where I donated ads slots and sponsorship slots on this podcast to help other bootstrap founders get some exposure in our space. subbly.co is a subscription ecommerce platform that focuses on direct-to-consumer ecommerce brands especially those that are selling subscriptions. If that’s you, please give Subbly a look, subbly.co.
In addition, in case you miss a few episodes ago, I mentioned that with TinySeed which is the SaaS startup accelerator that I started two years ago with my co-founder Einar, we are raising fund two. Today, we have funded 23 companies with our first fund. Now, we are raising that second fund. If you are an accredited investor and are interested in diversifying an investment across many dozens, if not hundreds, ultimately, of early-stage B2B SaaS companies, head to tinyseed.com/invest. Enter your info there and let’s have a conversation. There’s certainly no commitment, but if you want to learn more about what that might look like, hit us up at tinyseed.com/invest.
A little background on Derrick before we dive into our conversation. Derrick and I started Drip way back in 2012. We grew it together, sold it to Leadpages in 2016, then moved on in 2018. Since then, Derrick has started a couple of different projects; we’ll dig into those. I won’t spoil them for you, but last time we talked was about two years ago and we were talking about how he was trying to validate his app, Level, which is a Slack competitor. We basically pick up right where we left off. We talk about his decision to shut level down and then what he’s been up to since then. Without further ado, let’s dive into my conversation with Derrick Reimer.
Derrick Reimer, thanks for joining me in the show again.
Derrick: Hey, thanks for having me.
Rob: I think you’ve been in this show at least five times?
Derrick: Oh my goodness.
Rob: Yeah, I know. The most recent was almost two years to the day. It was July of 2018 where we talked about how you were validating Level. It was your ambitious third SaaS application. It’s been a while, man. You’ve been up to some stuff.
Derrick: It’s been a while, yeah. A lot happened in the last couple of years.
Rob: Yeah. Let’s dive right into Level; we can catch folks up. Level (in essence) was a Slack competitor that you’re working on. Your angle on it was a less interruptive, get deep work done as a developer or creator but still have some type of chat tool. You want to catch people up on that?
Derrick: Sure. Level was borne out of the experience in large Slack teams especially after the post-Drip acquisition, 150 people in a Slack room. The company that time had basically said we’re going to shift everything into Slack, not use email anymore, and experiencing firsthand all of the challenges that come with the interruptive nature as a maker, trying to manage all these communications in a realtime chat format.
The premise was to strike a better balance, a healthier balance. There were some innovations that I came up with like putting things in a hybrid between Slack and emails. There was an inbox in Level that would queue up your messages. They wouldn’t disappear when you read them but you could subscribe to certain things that would flow into your inbox and other things which are in a feed.
It’s actually funny. It’s quite similar to some of the concepts that I see in Hey!, the new email app from Basecamp. I just found that amusing that they have some similar concepts, like important things landing in your inbox and other things that are just there for you to peruse or in this feed. You can just kind of scroll through that.
That was kind of the idea. It was admittedly ambitious. The proposition was basically convincing companies to move their whole communication infrastructure off of Slack; a big, big learning that smacked me right in the face once I attempted to launch it after building it for about nine months. It’s just the wide chasm between people’s recognition that their communication patterns were not healthy and that a product could help to add that, then their actual willingness and ability to get organizational support behind moving off of Slack.
Rob: Yeah, that’s the thing because when an individual can’t make the decision to move anymore, it’s a really tough thing. Unlike, if I were to try the situation from Calendly, for example. Even if I was on the team, as long as I have a credit card, I can get a free trial. I can just go, sign up for that, and use it on my own right now. I don’t have to convince other people.
The switch and cost of Slack are high, the feature depth. They have a pretty big moat now with the integrations. I remember you and I talking. I was like, mobile apps, dude. I’m not sure you can do this without mobile apps. There’s a lot to it. There’s always uncertainty when you’re launching things, but it really was an ambitious project for you to take on.
Derrick: Yeah. It was fresh off of a long stint with Drip, all the way through acquisition and I was really excited to work on a new, ambitious challenge. That was kind of where my mindset was at that time. I did recognize that it was going to be an uphill battle, but I was willing to take some risks then. I learned a ton in that process.
I wrote a whole in-depth blog post retrospective about it; the folks can check out on my blog. Just learning about how to ask better questions up front, I became acquainted with The Mom Test methodology, which is booked by that name. That kind of gives you a brief, manual, very actionable, about how to ask the right questions because people who have the best intentions to help you out will often steer you in the wrong direction. They’ll be excited but that excitement doesn’t actually translate to actually making a purchase.
Rob: Yeah. You basically sunsetted. You’ve got a few folks to use Level, but it was an uphill battle. You just couldn’t get enough traction. Was that about a year ago now?
Derrick: Yeah, it was just over a year ago.
Rob: You’ve moved on to your next app which is called StaticKit. That’s in the StaticKit website form and point stuff. If I recall, when you and I talked about it, you were like, I want to do this to get something out there quickly. I don’t want to spend six months thinking, manifesting, and doing all of that again. I’m interested in static sites anyway. I think there are some opportunities here but I’m not quite sure what it was. It almost felt like you needed to get something into the world to tool around with. Is that accurate?
Derrick: Yeah. It was pretty rough. Psychologically, it was rough after coming to grips with the fact that putting nine months for it into Level and for it to not work out was tough. It was partially therapeutic to dive into some tech and some stuff that I was particularly interested in. There’s a lot of stuff happening in the static site ecosystem, the JAMstack (the term coined by Netlify). A lot of interesting momentum around that, and a lot of folks leaving WordPress and adapting static sites instead.
It seemed to me that there are emerging trends around this. Again, I recognized that this was still nascent and not entirely positive that the market was ready to start buying tools to fill in the gaps between what they could accomplish with the monolithic WordPress back-end and some of the newer static site technologies.
It had been an idea that kind of floated around in my notebook over the years about building some back-end and building blocks to come alongside static sites. I just started building some stuff, threw a landing page up, and right away got some interest from some of the major hosting providers in the space. They reached out directly and were very excited about the developer-centric form back-end.
It was the first dipping the toe in the water for StaticKit. It got a good amount of excitement from some of the other people in the ecosystem and the willingness to come alongside, and promote in their marketplace and stuff like that. That sort of is what drew me into going a little deeper into the space and seeing what I could make of it.
Rob: It just feels like it was one of those waves. We kept talking about it like, hey, WordPress was small. Then, it wasn’t. There are these technology waves that come and static sites feel like they have the potential to do that. No one knows if they actually will, but there was an opportunity to build something relatively small, get it out there in a few weeks, have these bigger players reaching out, and saying we want to integrate, we want to promote. That’s an interesting opportunity. That’s one of the reasons I like the idea of you doing it, you not going from a standing stop when that happens.
Derrick: Right. That gave me excitement and gave me some glimmer that there’s something there. I still had to learn that point like, all right. What’s the market actually look like for this? I know there’s a lot of developers experimenting with these tools. Developers love everything you can manage in version control, your entire configuration, and developers will eat that up. I knew that I had the interest of developers, but how many agencies were actually using this instead of the older monolithic Content Management System stack?
There’s a lot of other players alongside static sites like Content Management Systems, for one, that caters specifically to this audience. A lot of them are funded. It’s hard to know really how much traction any of these companies have when they have funding. They’re out there doing their marketing and having a presence in the tech’s sphere but what is their revenue story actually looked like and how much traction they have started?
It’s hard to ascertain that without just diving in and seeing what you can do. I definitely had my learning hat on during that process and started to become clear that there’s a lot of people that are signing up for tools like these are not buyers. They’re not in the situation of ready to actually exchange dollars for the tools. I think some of the large hosting platforms like Netlify, like Vercel have demonstrated that you need a large free tier at the bottom to service the folks who are just playing with stuff and ultimately make your money selling into the enterprise, kind of doing an enterprise sales process. That became more and more clear that that was likely what was needed to happen for StaticKit to really get traction, and that gave me a lot of pause.
Rob: Yeah. You invested enough time and started to feel that you threw the time after that. It’s one of those things. You could obviously look at it and say why give up so quickly, what were the signals, and all that. Really, you’ve laid them out there. It became painfully obvious that there are a lot more free tools in the space. I think it’s still a viable space. You have a certain revenue milestone. You want to get to a certain amount of time. It’s going to be really challenging in that space to do it. I think longer term is a better play.
Derrick: Yup. A lot of bootstrappers have this wisdom, hard-earned, it takes some iterations. It takes some different attempts and different angles. You’ve got to keep building and exploring to arrive at the thing that’s really going to resonate with the market. I’m trying to get better at that being malleable, being keen and an open mind, not getting too overly committed to something. I think that was one of the tough calls, to figure out when’s the right time to shift focus. Do I keep hammering away with this thing? Do I go with my gut, listen to these signals that I’m getting, what I’m learning in the market, and shift my attention?
Ultimately, after consulting with some advisors, you included, I started looking at other spaces.
Rob: Yeah. That’s the important thing, too. These decisions are never clear cut. There’s always (a) some gray areas, and (b) a lack of certainty but you have your own gut feel and it helps to sanity check that with other people. I do know that you and I had several conversations about it over the course of many months.
Even from early on, are you sure that this space is going to be what you need? But you’re already in it. It’s going to take a few weeks to get something live. Let’s follow that. You pulled the thread, see where it goes. Hard work, luck, and skill. It’s like you’re putting in the work. You have scaled the building, launched it. It’s like, are we going to catch a little bit of luck here and there, like potentially propel it forward?
As you were starting to back off of StaticKit a little bit, realizing if I invest more time into this, it’s not going to yield what I want. You started noodling on other ideas. You have a big idea list of not only apps but spaces. You’re just going all the directions. Everyone always does, like how do I come up with an idea? I know you and I have a lot of conversations about that. I thought it was clever the way that you came up with one list in particular, which was stuff you were using, you were paying for.
Derrick: Yeah. I never wanted to say, as an absolute, that you should always scratch your own itch. I think there are always opportunities to find business ideas in other ways. I knew one leg-up that you can give yourself is to just have some direct experience, some recognition of understanding what the problem is, and what the market is if it’s a tool that you yourself use.
One exercise I would do with my notebook is to list off all the tools we use while building Drip. We have aero monitoring. We have all kinds of exception tracking, uptime monitoring, hosting, calendaring, email, scheduling, and on and on and on. Just an exhaustive listing of everything and running them against my rubric which I gradually been building. It was something that I need to be able to launch an MVP quickly on. It needs to not be so mission-critical that if there are two minutes of downtime, it’s trucking someone’s whole business.
I started running them through my filters and pretty quickly scratch off most of them. One that lingered on there was scheduling and tools like Calendly that you use to send a booking link to somebody. I remember we adopted that pretty early on at Drip for our demo process. It was one of the killer tools in our stack. I started looking really closely at this because it felt like there were areas to improve. I definitely had my own ideas about that.
There are some interesting properties about this space, one being the opposite of Level. People can use this in a single-player mode which is very attractive to me. It’s something that I could build the kernel of decently quickly. That checked those boxes right away then we started thinking about that a little deeper.
Rob: I remember the conversations when you would call out an app name like aero monitoring. It’s like, okay, what are the pros and cons of the ones we’ve used? And Calendly. I was like, oh, I’ll tell you what. When I do group scheduling, it’s a nightmare. Why doesn’t Calendly overlay my calendar over there? Is it for both customers? It was pretty quick. There was innovation.
Again, you go back to the 2012 ESP mindset. Mailchimp and AWeber solved this problem. They’re perfectly good solutions. Once you start thinking, how could it be better? What are the personalizations, the tags, the automation to make it a better system? Oh, I see the future a little bit. Or we think back to email, Gmail, and then to Superhuman. Email and the online clients were just fine for a decade. Nobody touched them. We just use them the way they were.
When someone comes along and says Superhuman is a new email client, or hey.com you do realize there are ways to innovate on these tried and true solutions. That’s how I started pretty quickly thinking about Mighty Cal. Mighty Cal is your app. It’s at mightycal.com. It became pretty obvious that there were innovations that could be made to make this a better process.
That doesn’t mean that this is a viable market. This doesn’t mean that this is a viable product. That was something we were careful of. It’s just like, look, I can tell you five things that I would switch for but you’ve got to go talk to other people next.
Derrick: That’s what I did. After we did a whiteboarding session and came up with a bunch of our own ideas, I didn’t want to stop there. That’s a classic mistake. I think I solicited maybe 10 different conversations. A handful of them was like, yup, I used Calendly. It works fine. Not that big of a deal.
I tried my best to keep the conversations decently high level. We talked about, what does your day look like? Trying to understand the person, understand what their cadence looked like, what their flow looks like. With everyone I talked to, there were elements of calendar management, schedule management that were a pain for them. A good chunk of them was kind of within the scope of the broader vision that we started to come up with when we were whiteboarding.
It’s always hard. It’s really hard to interpret those kinds of conversations because when you don’t have a product to attempt to sell to somebody, you’ve got to hold things loosely when you’re having those conversations. I did feel like I got as good an indication as I could. There’s pain around this and there’s also fairly low switching cost, which was another thing that was pretty intriguing. You could use this in a single-player mode. If you didn’t have a super complicated setup, then it would be fairly easy for you to switch to a different tool. If I could just innovate on some pieces that a lot of people care about, then that may not be too difficult of a proposition.
Rob: I think the low switching cost is nice. I think the potential for expansion revenue is because it’s per seat. This is a perfect per seat product. If two people log into Mighty Cal, they’ll see different things because it’s their calendars. I don’t think you’ve decided on final pricing but Calendly is 7 a month. I’m assuming you’re going to be in that range. Obviously, normally we’ll say oh, no.7amonth.I′massumingyou′regoingtobeinthatrange.Obviously,normallywe′llsayoh,no.10 a month? That’s not a price point. You need a huge funnel, but (a) The market is massive. There are so many people using these tools constantly. There are tons of traffic streams you can get in front of, but (b) you get a team. Even the TinySeed, MicroConf team, there’s four of us plus my assistant producer so five. We’re a 50 a month client if we were to switch everybody. That’s where this starts to not be a50amonthclientifweweretoswitcheverybody.That′swherethisstartstonotbea10 a month product. There’s a lot of pluses to it.
On the flip side, let’s talk about the dangers. If we look back in the year and this hasn’t worked, why won’t it work? What’s going to trip you up in this space?
Derrick: I think a big risk is getting the positioning right with people; unlocking the positioning of people who really care about a more powerful, better-curated experience. I did sense among some folks an apathy, like Calendly is fine. It’s not perfect but it’s good enough. One risk is are there enough people who care enough about the nuances of their scheduling process and polishing off the rough edges of this scheduling experience?
I think I have some compelling product innovations on presenting things as a calendar instead of a list of times giving people a richer view. Again, at this point, it’s a hypothesis. Is that going to resonate to get enough lift or is it just going to be an apathetic response? I think that’s a big risk.
Rob: Yeah, a lot of competition. Again, if you’re at the first step of your stairstep and this is the first product you ever launched, you didn’t know how to write copy and support people, do design, coding, and build an app, there are all these things you can learn, I would say. It’s pretty ambitious to go up against Calendly and YouCanBook.me, whatever the schedule […] (there are 10 or 20 of these), but you’re a little further along having done Drip and Codetree which is an app we talked about in the past that you sold for 128,000 several years ago. You’ve had a few false starts here, but you’re past that early needing to get the basic skills. I’m such a fan. I’m secretly a fan of these really big competitive spaces. If you could go back to Start Small, Stay Small, of course, you start in the niches. There are all these reasons to do it. I would still say early on that was a great thing. Those were also great autopilot businesses and they’re great businesses to stair-step up from into if you want to do it. Not everyone wants to build a seven-figure business. It’s okay. If you want to build a128,000severalyearsago.You′vehadafewfalsestartshere,butyou’repastthatearlyneedingtogetthebasicskills.I′msuchafan.I′msecretlyafanofthesereallybigcompetitivespaces.IfyoucouldgobacktoStartSmall,StaySmall,ofcourse,youstartintheniches.Thereareallthesereasonstodoit.Iwouldstillsayearlyonthatwasagreatthing.Thosewerealsogreatautopilotbusinessesandthey′regreatbusinessestostair−stepupfromintoifyouwanttodoit.Noteveryonewantstobuildaseven−figurebusiness.It′sokay.Ifyouwanttobuilda150,000 business and just live an amazing life, do that. There’s nothing wrong with that. I know that you have ambitions. That’s your starting point.
You want to get to the point where default is alive. You’re paying your paycheck. Your ambitions are to grow up larger in terms of revenue startup. That’s where you think, is it easy to grow and make a 5 million SaaS in a really tight small niche? Is it easier to do it in a big space? Easy is relative. There are just hundreds and millions of dollars floating around in this whole scheduling space. You don’t have to stop at a little calendar widget. You’re going to get people using it. You’re going to get folks like me. You’re going to get salespeople. You’re going to get founders. You’re going to get whoever else. You know that there are angles. Whether you niche down or whether you add features that are more power user or that are just at the fringes, who knows the direction you can take in terms of integrations or automation or whatever else? Knowing that you can build a nice, innovative, little calendar widget, and get enough traction to get you to a nice revenue milestone, whether that’s5millionSaaSinareallytightsmallniche?Isiteasiertodoitinabigspace?Easyisrelative.Therearejusthundredsandmillionsofdollarsfloatingaroundinthiswholeschedulingspace.Youdon′thavetostopatalittlecalendarwidget.You′regoingtogetpeopleusingit.You′regoingtogetfolkslikeme.You′regoingtogetsalespeople.You′regoingtogetfounders.You′regoingtogetwhoeverelse.Youknowthatthereareangles.Whetheryounichedownorwhetheryouaddfeaturesthataremorepoweruserorthatarejustatthefringes,whoknowsthedirectionyoucantakeintermsofintegrationsorautomationorwhateverelse?Knowingthatyoucanbuildanice,innovative,littlecalendarwidget,andgetenoughtractiontogetyoutoanicerevenuemilestone,whetherthat′s10,000 a month or whatever, that’s a real bonus of being in a big space like this.
Derrick: Yeah. I think this is the classic kind of app where I’m picking a specific wedge. The wedge here is smoothing out the booking experience. The experience of one person getting another person’s calendar. That’s just one small piece of someone managing their whole schedule. Back in the day, business people would have executive assistants or secretaries. They would have humans there helping this whole process for them. That’s less common these days, especially among startup people.
There are tons of people doing business that are now managing their own schedules and calendar. There’s something even deeper to that than just booking links. I think this is an interesting wedge where this is a product onto itself but there’s a lot of different areas to expand it into. As I said, it’s just a huge market.
Rob: Are you going to focus on a specific use case? When I think of me, I’m kind of like a busy startup founder. A busy executive, a busy startup founder, whatever. That’s my use case. I’m also a podcaster. I’m going to need those two meeting types or whatever. There are obviously salespeople who’ll use this quite a bit, I can imagine.
When I do think of Superhuman and one of the angles where they want, the founders and investors. They’d be the Silicon Valley thing where they went after those two. Do you have an avatar in your mind if it’s busy founders and executives or are you specifically thinking there are podcasters, there are founders, there are CEOs, and there are investors or something like that? I’m just curious how you think about that.
Derrick: A first few that I have in my mind are founders; people similar to myself. I think that’s also another piece that I’m hoping to use as kindling. It’s my own small audience that I have from the podcast and just from being in the space. There’s a decent amount of people in my sphere who I think are potential customers for this. I hoped to use that as the first circle of people that I’m marketing this to. I think it’s going to be a lot of founders, bootstrappers, and potentially some investors in there, too. I think the business will expand organically from there. Let’s see what kind of viral lift it has. There is a viral component to this, too.
Every time someone shares a booking link, its exposure to whoever they’re sharing it with. It’ll be a little bit of following the organic growth track of it. I think that’ll be a very important thing to suss out. It’s like getting the position nailed. What I see a lot right now among others in the space is extremely broad positioning. I think there’s an opportunity here to speak a little more directly to some specific pains and be the de facto tool for that group.
Rob: Yeah. Especially when there is our space of founders and startup executives. Really, I just think a lot of us were operators, just trying to get something. It’s not a huge space. There are only so many influencers. Everyone talks to each other. Everyone’s online, spreading the word if a tool comes through that really is superior, it’s a superior experience, and people start seeing it, I think that helps us spread quickly.
In addition, we haven’t even talked about the viral loop of when I sent the link out, someone’s going to click on it. They’re going to go to mightycal.com. They’re going to see a Powered by Mighty Cal. There’s a lot of that was a driver in the Drip days. We have the Widget, the Powered by Drip. You know that that was a driver in Calendly’s growth. I think that’s something we haven’t mentioned.
In addition to low switching costs, big market, the potential for innovation, there is that built-in virality which is really hard to do. It’s hard to make that, not impossible to make that if it’s not built-in. You can’t fake that. Having it in such a native way (I think) is a bonus.
Derrick: Yeah. I’m investing a ton of time into this flow. I think about it similar to, now that we’re in a pandemic era, I’ve been doing more ordering food through a mobile browser. I’m learning quickly some of the apps that really have it nailed, the interface feels so intuitive. That’s the experience I’m striving for for this. I want the people who are on the other side of the booking equation to be using these person’s links and coming away from that saying oh my gosh. That was amazing. How can I get that for me? This is what I want to give to people who are scheduling it with me.
Rob: I remember having that experience with Calendly. It’s like, Wow! I don’t want to be emailing back and forth anymore. That was really cool. I want to do it.
As we start to wrap up, you’re using this yourself now. It’s in production.
Derrick: Yes. I’m […].
Rob: It’s cool. Do you think you have some exterior customers? I guess, early access customers here in the next week or two?
Derrick: Yeah. As of yesterday, my burndown chart says 96% of the wait. I’m running out of excuses to not have additional users on the platform.
Rob: Seriously. […] way more than I have been. Cool. I look forward to seeing my invite come through. Obviously, if folks are interested in seeing what you’re up to but really getting on the list which is if you do feel like using Calendly or competitor, and there are some things I’d like to see improved for it, focus on the startup founder, the busy executive type thing. It’s mightycal.com. Of course, if they want to see what trip you on Twitter, you are @derrickreimer.
Derrick: That’s me.
Rob: Thanks again for joining me on the pod, man.
Derrick: Thanks, man. Thanks for having me back to give some updates.
Rob: Absolutely.
Thanks, again, to Derrick for coming on the show. If you have a question for me or a future guest, please send it in to questions@startupsfortherestofus.com. You can send it in text or you can record an MP3. Send me a Google Drive link, a Dropbox link. I read every email that comes to that address. I really appreciate you tuning in each week. Every Tuesday morning, I’m going to be in your earbuds. Talk to you next time.
Episode 505 | 42 Side Projects and the #NoCode Movement
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Show Notes
You’ve probably heard a lot about the #NoCode movement but may not know what it means, exactly. Today, we have the great pleasure of talking with someone who is knee-deep in the #NoCode movement.
Helen Ryles has launched 42 projects over 10+ years and on this episode, she shares with us why she builds so many products, her process for choosing what to work on, and how she determines a good time to sell a #NoCode product.
The topics we cover with Helen Ryles
- 6:11 Ryles on why she chose to launch so many products
- 9:04 The snowball effect for learning new skills
- 14:10 Advice for reluctant marketers
- 16:05 Keeping side-projects small on purpose
- 18:27 Deciding when to sell a business
- 21:41 A primer on the #NoCode movement
Links from the show
- Helen Ryles | Twitter
- Side Project Review – 2020 – @HelenRyles | Google Sheets
- TinyHello
- NamesAce
- FeedbackFridays.com
- NoCodeo.com
- NoCodeo.com
- SideProjectors
- Borderline.biz
- Podwords
- NocodeExchange.com
- IndieMaker.co
- Carrd
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
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Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host Rob Walling. This week I talk with Helen Ryles about the 42 side projects that she’s launched over the past 10 years. We dig into the No-Code Movement, which I know what it is. Like you, I probably have a concept in my mind, but I wanted to speak with someone who’s knee-deep in the No-Code Movement and find out how she thinks about it.
Before we get into that, I wanted to tell you about something we’ve launched with MicroConf On Air. What it is, is we’re going back through the best MicroConf talks of all time, and we’re taking the audio tracks from those talks. We are releasing one every Tuesday morning on the MicroConf On Air Podcast. So, microconfpodcast.com, or you can go to any podcatcher and search for MicroConf On Air. Every Tuesday morning there will be a new MicroConf talk and every Thursday morning there will be an audio release of our Wednesday MicroConf On Air live stream.
We have three talks that have already been released. You can go check them out. These are three of the top five rated MicroConf talks of all time. The first one is from Joanna Wiebe, Proven Ways to Widen Your Funnel Using Just Your Calls to Action. The other one is Designing the Ideal Bootstrap Business from Jason Cohen. The third is Playing the Long Game: Making Entrepreneurship a Sustainable Life by my wife, Dr. Sherry Walling.
Coming up with our talks from Patio11, a talk from me 11 years to overnight success, where I talk about the Drip exit and what that will look like. We’re going to go on. We’re going to dig into the best talks of MicroConf. We have close to 200 of them. We have a lot of content to release that you can listen to the audio. You don’t have to sit and watch a video because I struggled to watch videos even at 1.7x speed. This is a way where you can stream it or you’re doing the dishes just like any other podcasts and we’ll drip them out over time, so it doesn’t feel like a bunch of homework. It feels like a jolt of creativity or inspiration at that moment when you need it. For that check out the MicroConf On Air Podcast.
In addition, I have mentioned in the past that Basecamp is a headline partner of MicroConf. As part of that, here is the 60-second message from Basecamp. As I’ve said in the past, I don’t plan to sell ads on Startups For the Rest of Us or to have ads running every week or anything like that. At this point, it’s pretty infrequent, but with that, let’s listen to the 60-second spot from Basecamp:
We asked founders and entrepreneurs why they switched to Basecamp when their company started to grow. Christina had just hired some more people. When it came to internal communication, everything was all over the place. There was more work and more people than before, and no way to keep track of it all. Sometimes information was in an email, sometimes in the chat room. They spent too much time on conference calls to figure out what was going on.
Then one day, they almost missed a deadline for an important customer because the information was in the wrong place. She knew they needed to get organized, but all the software she looked at seemed complicated, and it would take too long to train everybody. Then she found Basecamp. Basecamp puts all of your internal communication in one place, so nothing slips through the cracks.
Unlike other tools, Basecamp has an incredibly simple structure organized around your teams and projects. Your team will immediately understand and start using it when they see the two-minute introduction video on our site. Go to basecamp.com to learn more, and start a free trial.
Rob: Thanks to Basecamp for supporting independent builders. With that, let’s dive into my conversation with Helen Ryles. We dig into the 42 side projects she’s launched over the past decade as well as dig into and hear her experience with the No-Code Movement. Hope you enjoy the show.
Helen, thank you so much for joining me on the show today.
Helen: Hi Rob, it’s great to be here.
Rob: It’s lovely to be speaking with you. I’ve been watching some of the stuff you’re doing on Twitter talking about all these side projects you’ve launched. I think at last count, are you over 40 now?
Helen: Yeah, right about 42 something like that.
Rob: Excellent. Are they all No-Code? Did you write code for any of them?
Helen: All custom-coded apps. I have done some coding for some that I’ve hired developers for as well. I’d say the large majority are probably No-Code related or using existing tools to build something new. I think there’s quite a mix in there. I think each one is quite different and uses a different toolset.
Rob: What languages do you code in by choice when you’re given the chance?
Helen: My development experience is quite limited in terms of my day job doesn’t really require any coding. I could have done a little bit of Python, a little bit of Ruby on Rails, enough to spaghetti code my way into something I want to make. Often, even just starting with a template or starting with something pre-existing is a lot easier to work from. Even just things like writing simple scripts to automate batch files and things like that. There are different ways you can work things on the back-end, even if it’s not necessarily something you’re building from scratch. There are lots of ways you can use even a base level of coding skills to produce a product.
Rob: I learned to code when I was eight, then I was a professional developer in the day job, and then on my own products, for about 13 years. At a certain point, we just decided it was much better for the businesses if I didn’t put my hacky commando code into this source code repo anymore.
I like to joke that my co-founder Derrick revoked my right privileges to GitHub. That didn’t actually happen. We were just like, hey, my time is better spent, but also, I just don’t have the time to keep the chops up, so that I’m any good at anything anymore. I still hack. I’ll hack PHP on the weekend, just for kicks or to hit an API. I started teaching myself Python maybe a year and a half ago. I went and started TinySeed. I got distracted but I agree. I still will hack together little scripts to do this with an image or just utilities and stuff.
Batch scripts and just enough knowledge to do what I think is so important. Leading into your experience, I’m fascinated. The first question is 42 of these small apps that you’ve launched is a very atypical approach to doing things. I’ve been trying to convince people for years to do the stair-step approach of, hey, build one thing small. Get a little bit of revenue. Build a few more. You pile those on, and then eventually, buyers are on time, and then you can get and do “the big home run,” whatever that is for people, maybe it’s a SaaS app or something like that.
I still find so many people are like, nope, I’m going to go from now this SaaS app as my first app in this big competitive space because that’s what I see everybody else doing. But you are literally taking the opposite approach to that. I’m wondering what has motivated you to take the approach?
Helen: I think for me, I build side projects because I want to see my ideas exist not necessarily because I want to run them long-term as particular businesses. There are definitely things I would consider doing that with. I think for a lot of people, perhaps earning more money or freeing up time is a big motivator. For me, it’s a hobby, like somebody who is interested in woodworking doesn’t necessarily just stop making one day. Their idea is to keep practicing and keep building new things. I think partially, the fastest way to stop making and testing new ideas is to have your time taken up by a full-time company. For me, the more things that could enable me to build new things are most interesting to me.
Rob: I like the parallel you made there to woodworking. Folks listening to this probably know that my goal with software products was to quit the day job. I didn’t have to consult and I wanted to own my own time so I could work on whenever I wanted because I always struggled to enjoy what I was doing at the day job.
I would work for a year and then get bored at any place, so I was unemployable as the way I think about it. It doesn’t sound that’s the case for you. It sounds like the motivation is much more about building interesting things that interest you, like woodworking. I collect comic books like old Silver Age comic books. I do that. I also make money doing that, but not that much compared to my time. My time would be so much better spent doing something else, but I just love it. I love the experience of it. It sounds like that’s why you’re building these apps.
Helen: Definitely. My end goal is to have more time making those things. I think the skills that you learned from one definitely snowball into the next one, and it gets easier to spot ideas, trends, patterns, and pick up on ideas and collect evidence for a project that you think has a better chance of succeeding. It’s quite nice to take one product that is quite different from the next but still try and have some experience and get better. The more things you create, it’s trying to increase your chances overlooked by rolling the dice as many times as you can.
Rob: I’ve heard you talk about this concept of building the tool belt. Part of stair-stepping is that when you start out, you either have no skills or typically one skill. If you’re a developer you know how to write code. If you’re a copywriter you know how to write copy. If you’re a salesperson you know how to be salesy or whatever.
Building this tool belt, I imagine the batarang or a construction worker, it’s like, oh, I’m going to learn to do AdWords on this one. I’m going to learn to do SEO. I’m going to learn to do pay per click ads. I’m going to learn to do word-of-mouth marketing. I’m going to learn to use this new No-Code tool, and you’ve talked about that as well. I think you’ve referred to it as your snowball effect. Do you want to talk a little bit about that?
Helen: Definitely. I think going back to your coining the phrase about the stair-step approach. I remember reading that article probably back in 2015 and realizing that it’s actually okay to do that. Originally, I was always quite unsure if that’s an okay thing to do, and maybe I was feeling almost bad for constantly creating things. I should maybe become a better developer and focus on one thing.
I think over time realized that my best skills are acquiring and trying to be perhaps more of a generalist in some ways. I think I look at each project as even if it’s not going to become profitable. What can I learn from this? Is there a new skill, a new tool? For example a new app I’ve built recently. I tested out Glide Apps, which is a progressive web app and also Print on Demand. So, combine two new things I’ve never done before into an app to see if that’s something that works, if it’s something that interests me. Now, that’s something I’ve tried and tested, and I can move forward with that, perhaps in a bigger and better project in the future.
Rob: That’s a really intriguing way of thinking about it. That’s for TinyHello I assume, tinyhello.com?
Helen: TinyHello is more of a craft-based business that’s been around quite a while. That started more on these gig types of platforms where people can pay for different kinds of products and services. That became more of a streamlined product through the use of No-Code tools where you can automate certain processes in order to make a craft business simpler to run.
The most recent one was basically a language app for people who are traveling, who are either vegetarian or vegan, and they want to explain in a language that they don’t necessarily speak, and what their dietary requirements are. This was an app that I built, and then there’s also some T-shirts and merchandise as part of the app as well, using a Print on Demand platform. That’s two quite separate and different business models and you see. It was something that I could combine together two different things and find a way to launch a new product using those two together.
Rob: That makes sense. I just want to give listeners an idea of some of the things you’ve launched. TinyHello I just mentioned, which sends your love anywhere in the world. Turn your words into a handwritten tiny letter that they will remember forever. There’s namesace.com and when I first saw it, I thought it was NameSace like Versace. When I got that I was like, oh, no, it’s NamesAce. Find the perfect domain and find dot-coms for side projects. I think this is actually super cool to leverage that skill that you’ve obviously developed because you have some pretty good domain names.
This other one is called NoCodeo, nocodeo.com. Sell your No-Code apps, templates, and domains. Once again, you’ve built so many of them yourself and I know that you’ve sold about a fifth of the apps that you’ve built. I’m guessing you could almost trace your trajectory based on which of these things you built because building NoCodeo when you first started (maybe wouldn’t have made as much sense), but now that you have a whole cache of apps to sell, it seems to fall in line.
Helen: Definitely. I think as well as being part of different communities gives you these different ideas. You’ll see each one is probably for a completely different audience. I think a lot of people would probably think that’s a terrible idea, but for me, I’m trying to find out which audiences are interested in things, which audiences are interested in free or paid products. I think everything’s just a learning experience, whether you pick a different audience every time and finally realize that it’s actually okay to do that.
If you’re getting something out of that, whether that’s selling the project to the end of it or turning it into a profitable business, I think there are lots that can be gained from just letting ideas almost run wild in your spare time and just see what comes of it.
Rob: How many out of these 42 do you still own approximately or a percentage, just some idea?
Helen: Probably less than 10.
Rob: Can you give us an idea of what type of revenue combined do they bring in for you?
Helen: They vary. Let’s say TinyHello can bring in some months are quite low and some months are a couple of 100. Depends on how much I promote something. What I tend to do is try and find opportunities to market these that feel more natural. I think people who perhaps shy away from sales. If you are a reluctant marketer, then what you need instead is time to spot these opportunities where it feels less salesy, to casually mention a product that you’ve had around for a while. I think at one point, the card deck which I’ve now sold was at its highest point. I think it was about 100. That was on a physical product. Some months it was down to perhaps a couple of $100. It’s quite a wide range. By all means, there’s a lot of the time that these make nothing, and then sometimes something comes along […], something is launched on Product Hunt, or it gets picked up on Twitter. There’s a flurry of sales and it can easily go back down to nothing if you aren’t marketing full-time.
Just to point out, I don’t necessarily spend anything on advertising. I try to do this as organically as possible. I’ve realized that that’s my style. I guess that that’s okay. I would prefer to do it that way than trying to force myself to talk about the same product every day, all day. I just try to drop products into natural conversations into communities that I think would bring value to people and just hope that the product itself is self-evident what the value is. I’m there to explain any additional features or help out as needed. It’s a very laid-back approach to sales.
Rob: It’s much, much less growth hacky and more organic. It sounds like that is your preference. Especially given that they are side projects, and you don’t have to do anything that you don’t feel comfortable with. That seems a perfectly reasonable approach.
Helen: One thing to remember is that if you are working a full-time job, if you have multiple side projects, sometimes a project becoming too successful too quickly puts you in a dilemma where you have to think, well, what needs to give in order to let this fulfill its potential. In some respects, keeping things quite low-key is a way to protect your own time. If I ever wanted to pick one particular idea and run with it full-time, then I would probably have to sacrifice and not market some of the other things.
I like having these assets that exist and occasionally automatically make sales, whether that’s an ebook in the background or physical products and things like that. I like having this collection of things that make surprising sales every now and again, and it’s not too time-consuming, it’s not too overwhelming, and it’s manageable for me to continue on and build new things as well.
Rob: It’s a hobby. It makes sense. It’s not bringing in a full-time salary. It’s not like you could quit the job.
Helen: I’ve definitely had products half than that. I’ve had PodWords. I think its highest had around 5 or 6 recurring clients with about a couple of $1000 a month MRR. I’ve definitely had other physical products, which you’ve pulled in similar amounts and certain points. There have been times when I have not been working a day job and have been running that is 50% of the time alongside contracts, consulting, and things.
There’s definitely potential and I would definitely be interested to have a product, do that at some point in the future. In the meantime, I need to be careful and mindful of spreading myself too thin across lots of different things and not being able to do what it is that I enjoy which is actually making and trying new things, and helping other people to learn how they can do the same.
Rob: That’s the freedom. I often talk about freedom, purpose, and relationships as guiding principles. You’re talking a lot about the freedom and the purpose part there, the freedom to do what you want to have an app that produces half your income and then to consult, to work a day job, and have stuff on the side. The purpose is (that’s where I think hobbies bring a lot of that) you get a lot of happiness and enjoyment out of learning new things. That can often lead to feeling that sense of purpose of like, yeah, my purpose right now is to create and launch these small apps and do a bunch of learning. When does it hit the point where you decide you want to sell it? How do you make that decision?
Helen: I think when I’ve absorbed as much out of it as I had originally intended. Whether I’ve learned a tool to the point where I’ve achieved what I originally set out to do, or whether I think a product is at a good point for somebody to take it over and be successful with it. I think a lot of people maybe leave a product until it’s fizzling out and I would rather sell something while it has the potential to become a bigger thing. I tend to sell my projects with a list of marketing ideas and a list of ways of going forward with it.
I like to make sure that there’s still a lot of untapped potential in a product, and it’s a position that somebody could take this on easily. Is it able to be packaged up in a way that somebody could hit the ground running and make the most out of what I have built already?
Rob: Does it ever happen you just get bored with something and you want to pass it on to the next person?
Helen: It’s not necessarily about getting bored. I think it’s more a case of it serving the purpose of what I originally set out to do. I come up with a hypothetical either a hunch or a guess and think, well, if I set something up in this way, I think this would work. This business model should be interesting to people, this pricing model. When I’ve proved that out, I think it doesn’t necessarily have to be me that continues to run it. I think it’s quite nice to know that there are people out there that perhaps haven’t got time to build things that are interested in picking something up that’s been proven that the process is streamlined. They can pick up something that they wouldn’t necessarily have time to create themselves. It’s a win-win to build these things and sell them on in some ways.
Rob: You actually published a tweet, “My 2020 side-project spreadsheet. 10+ years, 40+ projects. Countless lessons learned!” You link to a Google spreadsheet in there. We will link that up in the show notes if folks want to check out. There are literally 43 in there. Several are dormant and several are retired, but you can see what’s live and click through, and several are sold. That’s pretty cool. It seems you’ve been having a lot of fun with it.
Helen: It’s been good to share that. It’s only been recently that I’ve actually started sharing what it is I’ve been building over the past 10 years or so. The feedback I’ve had has been really encouraging and really helpful. Hopefully, I can dig deep into some of the stories from each individual project and put some blog posts together. The people might find it interesting if they want to start similar businesses themselves in the future.
Rob: My assistant producer particular some notes for me. It sounds like when you go to sell these you’ve sold them on sideprojectors.com, indiemaker.co, OnekProject, and for No-Code stuff, No-Code exchange, and NoCodeo which is your own site marketplace-type thing. Do other people post on NoCodeo or is it all your stuff?
Helen: Yeah. I didn’t even install it until recently, a little bit earlier this year. We just started to have the first handful of projects to be posted up there. They’re going to go to be put live in the next few weeks. It’ll start being a busier marketplace quite soon.
Rob: I’d like to switch up the topic here to almost educate myself a little bit, and perhaps folks in the audience. I have heard of No-Code and I typically think of Zapier, maybe Notion, Airtable. There are the beta Squarespace and No-Code. These are the tools that I have been exposed to, but I know there’s this whole iceberg under the water that I’ve never even heard of. Just when I was looking through my assistant producer’s notes that he put down for you, you mentioned a bunch of tools you use, like Boundless, which is boundlesslabs.com is one.
I clicked through and I started looking through it. I’m like, okay, so it’s a site builder, No-Code required. Cool. How is (just Boundless in particular) that different than using Squarespace to build a site?
Helen: Boundless is more focused on the app calculators in terms of the functionality of Excel, or even going back into Access and things like that. The functionality of database-driven app calculators and things like that, that you can build with that logic in that workflow in something that is as simple to use as a landing page builder like Squarespace or Carrd and things like that.
It’s got that additional layer of function and logic behind it to put those formulas in and create things that are interactive, as opposed to a static site that displays text, images, and things like that. It’s a really useful tool. It’s got quite a lot of powerful features in there that can really build some interesting things.
Rob: That’s super helpful. Thanks. There was obviously a super noob question. As you started singing, I was like, oh, so it’s totally different, but I really couldn’t tell because I have so little exposure to the new tools here. I’m curious as someone who is obviously steeped in No-Code. How do you describe it to someone if they’ve never heard that term?
Helen: I guess there are a couple of different sides to No-Code. First of all the tools which people are probably familiar with and have used over the last 10 years or so. Things like Zapier, Webflow, and landing page builders like Cardd. These tools that enable people to build quite complex systems and also link them together within integrations that don’t necessarily require any custom code, the speed of which you can prototype something is incredible.
You can go from nothing to an app on 100 people’s phones in a couple of hours. I think just that speed of prototyping is a big seller of the No-Code tools, but then there’s also the community side as well. A huge thing that I found most encouraging is that there’s a huge community of people who are helping each other as well. Let’s say 10 years ago, I was building sites in different No-Code tools, which they are considered to be now.
There weren’t necessarily people who could help me integrate one thing with another, with another, and that just necessarily wasn’t the thing. Developers have always been able to find each other through the frameworks that they use. Just this name of No-Code enables people to find other people like themselves, other people who build things like I do, which it’s really been an interesting experience to talk to other people and learn from them and share my things with them. I think if it hadn’t been for the No-Code community, I wouldn’t have shared the projects that I’ve made.
Rob: Very cool. I went and looked. It looks like you have used Glide Apps (glideapps.com) and their h1 is creating an app from a Google Sheet in five minutes for free, and this is a mobile app. I’m looking at the interface, and it’s blowing my mind. It’s like a landing page builder where if you need truly custom design and truly everything, then don’t use this. Then you need to write code, but it feels pretty powerful to me based on just looking at that and having an animated GIF on the homepage.
Helen: Definitely. You can take a Google Sheet full of data and layouts, and turn that into a progressive web app. That feels like a native app on your phone in literally minutes. I think the learning curve is so intuitive that it opens people up to building new things and even helps people to get into coding. There are lots of people who start out with No-Code and it makes it more approachable. It makes that mindset and that thinking of the logical process of integrating tools together. It exposes you to things you haven’t experienced before and is a great introduction to becoming a developer much more approachable.
Rob: You have another No-Code tool that maybe is a favorite one that you think other folks haven’t heard about?
Helen: I think the one I use the most this Carrd.
Rob: And Carrd is at carrd.co. It says it’s simple, free, fully responsive one-page sites for pretty much anything. It is a landing page builder. Does it have more functionality or flexibility than other tools?
Helen: Yeah. It’s integrated with all the tools like Stripe and Gumroad so you can build a subscription business. I have a landing page. I built a transcription business using Carrd integrated with the Stripe to take recurring payments. Insert tables and videos. You can go from 0–1 really quickly and there are lots of useful templates out there that help people to build something that looks really well-designed.
Rob: That’s what I was going to ask because I look at TinyHello, I look at NamesAce, and I’m struck by how attractive they are. Are these custom designs or did you pull those from Carrd templates?
Helen: NamesAce is a Carrd site. I think mostly that was based on a very basic theme that I’ve customized myself with the layout. TinyHello is just a templated HTML, CSS template really, with some custom design, characters, and things in there. I think you can do a lot of combining reusable design elements into existing templates. The elements of design can make something look really highly polished when it can be quite simple underneath it all.
Rob: I was struck by that. I’ll admit at my peak, I think I owned 12 revenue-generating products, but one of them was a collection of like 6 AdSense websites back when that was a thing. I had an ecommerce website for beach towels. I had a couple of different ebooks in different niches, and then I had a bunch of software. Everything else was little software products, some downloads, some add-ons, all that stuff.
My sites did not look as good as yours. They didn’t need to. They get the job done, but I was struck by it. Typically, when I see people having a portfolio like this, you have some things that are a little long in the tooth or they’re just not that well-designed or optimized for conversion rather than aesthetics. Your stuff looks really nice.
As we move towards wrapping up. I’m curious. You’ve done all this in No-Code. Have you ever thought of building one of these No-Code tools, like a landing page builder? Have you ever had a No-Code, maybe you thought it wasn’t solved, so I’m going to build it myself?
Helen: There’s definitely lots of room for improvement in the No-Code space. There are lots of interesting things that people are waiting to be launched. Things like browser extensions and things that push the boundaries of things that can be templated. For me, I don’t think I have the skillset quite yet to build something that’s a completely fully fleshed No-Code product.
I think there are definitely ideas out there that I would be interested in. I think I would probably build a small single feature thing. There’s one thing I’m working on at the moment with a friend who’s a developer to look at reporting through email marketing services, and things like that to see if you can look at best performing email broadcasts and things like that. That may be something that’s on the horizon that could be almost termed a No-Code tool for people to perhaps embed into Notion, embed into Slack, or things like that. There may be something in the future that is more custom coded and may be of interest to No-Coders to use.
Rob: Very cool. Helen, thanks so much for taking some time to join me on the show today. Folks want to keep up with you. It looks like you’re @HelenRyles on Twitter. Anywhere else they should check out?
Helen: I’ve also got a site called FeedbackFridays. Let’s have a chat about the side project. They can go over to feedbackfridays.com.
Rob: Sounds great. Thanks again.
Helen: Thank you. Bye.
Rob: Thank you as always for listening. I hope you enjoyed my conversation with Helen. If you did, it would be great if you would tweet her out and thank her for coming on Startups Pod. Hope you have a good week. I will talk to you next Tuesday morning.
Before we get into that, I wanted to tell you about something we’ve launched with MicroConf On Air. What it is, is we’re going back through the best MicroConf talks of all time, and we’re taking the audio tracks from those talks. We are releasing one every Tuesday morning on the MicroConf On Air Podcast. So, microconfpodcast.com, or you can go to any podcatcher and search for MicroConf On Air. Every Tuesday morning there will be a new MicroConf talk and every Thursday morning there will be an audio release of our Wednesday MicroConf On Air live stream.
We have three talks that have already been released. You can go check them out. These are three of the top five rated MicroConf talks of all time. The first one is from Joanna Wiebe, Proven Ways to Widen Your Funnel Using Just Your Calls to Action. The other one is Designing the Ideal Bootstrap Business from Jason Cohen. The third is Playing the Long Game: Making Entrepreneurship a Sustainable Life by my wife, Dr. Sherry Walling.
Coming up with our talks from Patio11, a talk from me 11 years to overnight success, where I talk about the Drip exit and what that will look like. We’re going to go on. We’re going to dig into the best talks of MicroConf. We have close to 200 of them. We have a lot of content to release that you can listen to the audio. You don’t have to sit and watch a video because I struggled to watch videos even at 1.7x speed. This is a way where you can stream it or you’re doing the dishes just like any other podcasts and we’ll drip them out over time, so it doesn’t feel like a bunch of homework. It feels like a jolt of creativity or inspiration at that moment when you need it. For that check out the MicroConf On Air Podcast.
In addition, I have mentioned in the past that Basecamp is a headline partner of MicroConf. As part of that, here is the 60-second message from Basecamp. As I’ve said in the past, I don’t plan to sell ads on Startups For the Rest of Us or to have ads running every week or anything like that. At this point, it’s pretty infrequent, but with that, let’s listen to the 60-second spot from Basecamp:
We asked founders and entrepreneurs why they switched to Basecamp when their company started to grow. Christina had just hired some more people. When it came to internal communication, everything was all over the place. There was more work and more people than before, and no way to keep track of it all. Sometimes information was in an email, sometimes in the chat room. They spent too much time on conference calls to figure out what was going on.
Then one day, they almost missed a deadline for an important customer because the information was in the wrong place. She knew they needed to get organized, but all the software she looked at seemed complicated, and it would take too long to train everybody. Then she found Basecamp. Basecamp puts all of your internal communication in one place, so nothing slips through the cracks.
Unlike other tools, Basecamp has an incredibly simple structure organized around your teams and projects. Your team will immediately understand and start using it when they see the two-minute introduction video on our site. Go to basecamp.com to learn more, and start a free trial.
Rob: Thanks to Basecamp for supporting independent builders. With that, let’s dive into my conversation with Helen Ryles. We dig into the 42 side projects she’s launched over the past decade as well as dig into and hear her experience with the No-Code Movement. Hope you enjoy the show.
Helen, thank you so much for joining me on the show today.
Helen: Hi Rob, it’s great to be here.
Rob: It’s lovely to be speaking with you. I’ve been watching some of the stuff you’re doing on Twitter talking about all these side projects you’ve launched. I think at last count, are you over 40 now?
Helen: Yeah, right about 42 something like that.
Rob: Excellent. Are they all No-Code? Did you write code for any of them?
Helen: All custom-coded apps. I have done some coding for some that I’ve hired developers for as well. I’d say the large majority are probably No-Code related or using existing tools to build something new. I think there’s quite a mix in there. I think each one is quite different and uses a different toolset.
Rob: What languages do you code in by choice when you’re given the chance?
Helen: My development experience is quite limited in terms of my day job doesn’t really require any coding. I could have done a little bit of Python, a little bit of Ruby on Rails, enough to spaghetti code my way into something I want to make. Often, even just starting with a template or starting with something pre-existing is a lot easier to work from. Even just things like writing simple scripts to automate batch files and things like that. There are different ways you can work things on the back-end, even if it’s not necessarily something you’re building from scratch. There are lots of ways you can use even a base level of coding skills to produce a product.
Rob: I learned to code when I was eight, then I was a professional developer in the day job, and then on my own products, for about 13 years. At a certain point, we just decided it was much better for the businesses if I didn’t put my hacky commando code into this source code repo anymore.
I like to joke that my co-founder Derrick revoked my right privileges to GitHub. That didn’t actually happen. We were just like, hey, my time is better spent, but also, I just don’t have the time to keep the chops up, so that I’m any good at anything anymore. I still hack. I’ll hack PHP on the weekend, just for kicks or to hit an API. I started teaching myself Python maybe a year and a half ago. I went and started TinySeed. I got distracted but I agree. I still will hack together little scripts to do this with an image or just utilities and stuff.
Batch scripts and just enough knowledge to do what I think is so important. Leading into your experience, I’m fascinated. The first question is 42 of these small apps that you’ve launched is a very atypical approach to doing things. I’ve been trying to convince people for years to do the stair-step approach of, hey, build one thing small. Get a little bit of revenue. Build a few more. You pile those on, and then eventually, buyers are on time, and then you can get and do “the big home run,” whatever that is for people, maybe it’s a SaaS app or something like that.
I still find so many people are like, nope, I’m going to go from now this SaaS app as my first app in this big competitive space because that’s what I see everybody else doing. But you are literally taking the opposite approach to that. I’m wondering what has motivated you to take the approach?
Helen: I think for me, I build side projects because I want to see my ideas exist not necessarily because I want to run them long-term as particular businesses. There are definitely things I would consider doing that with. I think for a lot of people, perhaps earning more money or freeing up time is a big motivator. For me, it’s a hobby, like somebody who is interested in woodworking doesn’t necessarily just stop making one day. Their idea is to keep practicing and keep building new things. I think partially, the fastest way to stop making and testing new ideas is to have your time taken up by a full-time company. For me, the more things that could enable me to build new things are most interesting to me.
Rob: I like the parallel you made there to woodworking. Folks listening to this probably know that my goal with software products was to quit the day job. I didn’t have to consult and I wanted to own my own time so I could work on whenever I wanted because I always struggled to enjoy what I was doing at the day job.
I would work for a year and then get bored at any place, so I was unemployable as the way I think about it. It doesn’t sound that’s the case for you. It sounds like the motivation is much more about building interesting things that interest you, like woodworking. I collect comic books like old Silver Age comic books. I do that. I also make money doing that, but not that much compared to my time. My time would be so much better spent doing something else, but I just love it. I love the experience of it. It sounds like that’s why you’re building these apps.
Helen: Definitely. My end goal is to have more time making those things. I think the skills that you learned from one definitely snowball into the next one, and it gets easier to spot ideas, trends, patterns, and pick up on ideas and collect evidence for a project that you think has a better chance of succeeding. It’s quite nice to take one product that is quite different from the next but still try and have some experience and get better. The more things you create, it’s trying to increase your chances overlooked by rolling the dice as many times as you can.
Rob: I’ve heard you talk about this concept of building the tool belt. Part of stair-stepping is that when you start out, you either have no skills or typically one skill. If you’re a developer you know how to write code. If you’re a copywriter you know how to write copy. If you’re a salesperson you know how to be salesy or whatever.
Building this tool belt, I imagine the batarang or a construction worker, it’s like, oh, I’m going to learn to do AdWords on this one. I’m going to learn to do SEO. I’m going to learn to do pay per click ads. I’m going to learn to do word-of-mouth marketing. I’m going to learn to use this new No-Code tool, and you’ve talked about that as well. I think you’ve referred to it as your snowball effect. Do you want to talk a little bit about that?
Helen: Definitely. I think going back to your coining the phrase about the stair-step approach. I remember reading that article probably back in 2015 and realizing that it’s actually okay to do that. Originally, I was always quite unsure if that’s an okay thing to do, and maybe I was feeling almost bad for constantly creating things. I should maybe become a better developer and focus on one thing.
I think over time realized that my best skills are acquiring and trying to be perhaps more of a generalist in some ways. I think I look at each project as even if it’s not going to become profitable. What can I learn from this? Is there a new skill, a new tool? For example a new app I’ve built recently. I tested out Glide Apps, which is a progressive web app and also Print on Demand. So, combine two new things I’ve never done before into an app to see if that’s something that works, if it’s something that interests me. Now, that’s something I’ve tried and tested, and I can move forward with that, perhaps in a bigger and better project in the future.
Rob: That’s a really intriguing way of thinking about it. That’s for TinyHello I assume, tinyhello.com?
Helen: TinyHello is more of a craft-based business that’s been around quite a while. That started more on these gig types of platforms where people can pay for different kinds of products and services. That became more of a streamlined product through the use of No-Code tools where you can automate certain processes in order to make a craft business simpler to run.
The most recent one was basically a language app for people who are traveling, who are either vegetarian or vegan, and they want to explain in a language that they don’t necessarily speak, and what their dietary requirements are. This was an app that I built, and then there’s also some T-shirts and merchandise as part of the app as well, using a Print on Demand platform. That’s two quite separate and different business models and you see. It was something that I could combine together two different things and find a way to launch a new product using those two together.
Rob: That makes sense. I just want to give listeners an idea of some of the things you’ve launched. TinyHello I just mentioned, which sends your love anywhere in the world. Turn your words into a handwritten tiny letter that they will remember forever. There’s namesace.com and when I first saw it, I thought it was NameSace like Versace. When I got that I was like, oh, no, it’s NamesAce. Find the perfect domain and find dot-coms for side projects. I think this is actually super cool to leverage that skill that you’ve obviously developed because you have some pretty good domain names.
This other one is called NoCodeo, nocodeo.com. Sell your No-Code apps, templates, and domains. Once again, you’ve built so many of them yourself and I know that you’ve sold about a fifth of the apps that you’ve built. I’m guessing you could almost trace your trajectory based on which of these things you built because building NoCodeo when you first started (maybe wouldn’t have made as much sense), but now that you have a whole cache of apps to sell, it seems to fall in line.
Helen: Definitely. I think as well as being part of different communities gives you these different ideas. You’ll see each one is probably for a completely different audience. I think a lot of people would probably think that’s a terrible idea, but for me, I’m trying to find out which audiences are interested in things, which audiences are interested in free or paid products. I think everything’s just a learning experience, whether you pick a different audience every time and finally realize that it’s actually okay to do that.
If you’re getting something out of that, whether that’s selling the project to the end of it or turning it into a profitable business, I think there are lots that can be gained from just letting ideas almost run wild in your spare time and just see what comes of it.
Rob: How many out of these 42 do you still own approximately or a percentage, just some idea?
Helen: Probably less than 10.
Rob: Can you give us an idea of what type of revenue combined do they bring in for you?
Helen: They vary. Let’s say TinyHello can bring in some months are quite low and some months are a couple of 100. Depends on how much I promote something. What I tend to do is try and find opportunities to market these that feel more natural. I think people who perhaps shy away from sales. If you are a reluctant marketer, then what you need instead is time to spot these opportunities where it feels less salesy, to casually mention a product that you’ve had around for a while. I think at one point, the card deck which I’ve now sold was at its highest point. I think it was about 100. That was on a physical product. Some months it was down to perhaps a couple of $100. It’s quite a wide range. By all means, there’s a lot of the time that these make nothing, and then sometimes something comes along […], something is launched on Product Hunt, or it gets picked up on Twitter. There’s a flurry of sales and it can easily go back down to nothing if you aren’t marketing full-time.
Just to point out, I don’t necessarily spend anything on advertising. I try to do this as organically as possible. I’ve realized that that’s my style. I guess that that’s okay. I would prefer to do it that way than trying to force myself to talk about the same product every day, all day. I just try to drop products into natural conversations into communities that I think would bring value to people and just hope that the product itself is self-evident what the value is. I’m there to explain any additional features or help out as needed. It’s a very laid-back approach to sales.
Rob: It’s much, much less growth hacky and more organic. It sounds like that is your preference. Especially given that they are side projects, and you don’t have to do anything that you don’t feel comfortable with. That seems a perfectly reasonable approach.
Helen: One thing to remember is that if you are working a full-time job, if you have multiple side projects, sometimes a project becoming too successful too quickly puts you in a dilemma where you have to think, well, what needs to give in order to let this fulfill its potential. In some respects, keeping things quite low-key is a way to protect your own time. If I ever wanted to pick one particular idea and run with it full-time, then I would probably have to sacrifice and not market some of the other things.
I like having these assets that exist and occasionally automatically make sales, whether that’s an ebook in the background or physical products and things like that. I like having this collection of things that make surprising sales every now and again, and it’s not too time-consuming, it’s not too overwhelming, and it’s manageable for me to continue on and build new things as well.
Rob: It’s a hobby. It makes sense. It’s not bringing in a full-time salary. It’s not like you could quit the job.
Helen: I’ve definitely had products half than that. I’ve had PodWords. I think its highest had around 5 or 6 recurring clients with about a couple of $1000 a month MRR. I’ve definitely had other physical products, which you’ve pulled in similar amounts and certain points. There have been times when I have not been working a day job and have been running that is 50% of the time alongside contracts, consulting, and things.
There’s definitely potential and I would definitely be interested to have a product, do that at some point in the future. In the meantime, I need to be careful and mindful of spreading myself too thin across lots of different things and not being able to do what it is that I enjoy which is actually making and trying new things, and helping other people to learn how they can do the same.
Rob: That’s the freedom. I often talk about freedom, purpose, and relationships as guiding principles. You’re talking a lot about the freedom and the purpose part there, the freedom to do what you want to have an app that produces half your income and then to consult, to work a day job, and have stuff on the side. The purpose is (that’s where I think hobbies bring a lot of that) you get a lot of happiness and enjoyment out of learning new things. That can often lead to feeling that sense of purpose of like, yeah, my purpose right now is to create and launch these small apps and do a bunch of learning. When does it hit the point where you decide you want to sell it? How do you make that decision?
Helen: I think when I’ve absorbed as much out of it as I had originally intended. Whether I’ve learned a tool to the point where I’ve achieved what I originally set out to do, or whether I think a product is at a good point for somebody to take it over and be successful with it. I think a lot of people maybe leave a product until it’s fizzling out and I would rather sell something while it has the potential to become a bigger thing. I tend to sell my projects with a list of marketing ideas and a list of ways of going forward with it.
I like to make sure that there’s still a lot of untapped potential in a product, and it’s a position that somebody could take this on easily. Is it able to be packaged up in a way that somebody could hit the ground running and make the most out of what I have built already?
Rob: Does it ever happen you just get bored with something and you want to pass it on to the next person?
Helen: It’s not necessarily about getting bored. I think it’s more a case of it serving the purpose of what I originally set out to do. I come up with a hypothetical either a hunch or a guess and think, well, if I set something up in this way, I think this would work. This business model should be interesting to people, this pricing model. When I’ve proved that out, I think it doesn’t necessarily have to be me that continues to run it. I think it’s quite nice to know that there are people out there that perhaps haven’t got time to build things that are interested in picking something up that’s been proven that the process is streamlined. They can pick up something that they wouldn’t necessarily have time to create themselves. It’s a win-win to build these things and sell them on in some ways.
Rob: You actually published a tweet, “My 2020 side-project spreadsheet. 10+ years, 40+ projects. Countless lessons learned!” You link to a Google spreadsheet in there. We will link that up in the show notes if folks want to check out. There are literally 43 in there. Several are dormant and several are retired, but you can see what’s live and click through, and several are sold. That’s pretty cool. It seems you’ve been having a lot of fun with it.
Helen: It’s been good to share that. It’s only been recently that I’ve actually started sharing what it is I’ve been building over the past 10 years or so. The feedback I’ve had has been really encouraging and really helpful. Hopefully, I can dig deep into some of the stories from each individual project and put some blog posts together. The people might find it interesting if they want to start similar businesses themselves in the future.
Rob: My assistant producer particular some notes for me. It sounds like when you go to sell these you’ve sold them on sideprojectors.com, indiemaker.co, OnekProject, and for No-Code stuff, No-Code exchange, and NoCodeo which is your own site marketplace-type thing. Do other people post on NoCodeo or is it all your stuff?
Helen: Yeah. I didn’t even install it until recently, a little bit earlier this year. We just started to have the first handful of projects to be posted up there. They’re going to go to be put live in the next few weeks. It’ll start being a busier marketplace quite soon.
Rob: I’d like to switch up the topic here to almost educate myself a little bit, and perhaps folks in the audience. I have heard of No-Code and I typically think of Zapier, maybe Notion, Airtable. There are the beta Squarespace and No-Code. These are the tools that I have been exposed to, but I know there’s this whole iceberg under the water that I’ve never even heard of. Just when I was looking through my assistant producer’s notes that he put down for you, you mentioned a bunch of tools you use, like Boundless, which is boundlesslabs.com is one.
I clicked through and I started looking through it. I’m like, okay, so it’s a site builder, No-Code required. Cool. How is (just Boundless in particular) that different than using Squarespace to build a site?
Helen: Boundless is more focused on the app calculators in terms of the functionality of Excel, or even going back into Access and things like that. The functionality of database-driven app calculators and things like that, that you can build with that logic in that workflow in something that is as simple to use as a landing page builder like Squarespace or Carrd and things like that.
It’s got that additional layer of function and logic behind it to put those formulas in and create things that are interactive, as opposed to a static site that displays text, images, and things like that. It’s a really useful tool. It’s got quite a lot of powerful features in there that can really build some interesting things.
Rob: That’s super helpful. Thanks. There was obviously a super noob question. As you started singing, I was like, oh, so it’s totally different, but I really couldn’t tell because I have so little exposure to the new tools here. I’m curious as someone who is obviously steeped in No-Code. How do you describe it to someone if they’ve never heard that term?
Helen: I guess there are a couple of different sides to No-Code. First of all the tools which people are probably familiar with and have used over the last 10 years or so. Things like Zapier, Webflow, and landing page builders like Cardd. These tools that enable people to build quite complex systems and also link them together within integrations that don’t necessarily require any custom code, the speed of which you can prototype something is incredible.
You can go from nothing to an app on 100 people’s phones in a couple of hours. I think just that speed of prototyping is a big seller of the No-Code tools, but then there’s also the community side as well. A huge thing that I found most encouraging is that there’s a huge community of people who are helping each other as well. Let’s say 10 years ago, I was building sites in different No-Code tools, which they are considered to be now.
There weren’t necessarily people who could help me integrate one thing with another, with another, and that just necessarily wasn’t the thing. Developers have always been able to find each other through the frameworks that they use. Just this name of No-Code enables people to find other people like themselves, other people who build things like I do, which it’s really been an interesting experience to talk to other people and learn from them and share my things with them. I think if it hadn’t been for the No-Code community, I wouldn’t have shared the projects that I’ve made.
Rob: Very cool. I went and looked. It looks like you have used Glide Apps (glideapps.com) and their h1 is creating an app from a Google Sheet in five minutes for free, and this is a mobile app. I’m looking at the interface, and it’s blowing my mind. It’s like a landing page builder where if you need truly custom design and truly everything, then don’t use this. Then you need to write code, but it feels pretty powerful to me based on just looking at that and having an animated GIF on the homepage.
Helen: Definitely. You can take a Google Sheet full of data and layouts, and turn that into a progressive web app. That feels like a native app on your phone in literally minutes. I think the learning curve is so intuitive that it opens people up to building new things and even helps people to get into coding. There are lots of people who start out with No-Code and it makes it more approachable. It makes that mindset and that thinking of the logical process of integrating tools together. It exposes you to things you haven’t experienced before and is a great introduction to becoming a developer much more approachable.
Rob: You have another No-Code tool that maybe is a favorite one that you think other folks haven’t heard about?
Helen: I think the one I use the most this Carrd.
Rob: And Carrd is at carrd.co. It says it’s simple, free, fully responsive one-page sites for pretty much anything. It is a landing page builder. Does it have more functionality or flexibility than other tools?
Helen: Yeah. It’s integrated with all the tools like Stripe and Gumroad so you can build a subscription business. I have a landing page. I built a transcription business using Carrd integrated with the Stripe to take recurring payments. Insert tables and videos. You can go from 0–1 really quickly and there are lots of useful templates out there that help people to build something that looks really well-designed.
Rob: That’s what I was going to ask because I look at TinyHello, I look at NamesAce, and I’m struck by how attractive they are. Are these custom designs or did you pull those from Carrd templates?
Helen: NamesAce is a Carrd site. I think mostly that was based on a very basic theme that I’ve customized myself with the layout. TinyHello is just a templated HTML, CSS template really, with some custom design, characters, and things in there. I think you can do a lot of combining reusable design elements into existing templates. The elements of design can make something look really highly polished when it can be quite simple underneath it all.
Rob: I was struck by that. I’ll admit at my peak, I think I owned 12 revenue-generating products, but one of them was a collection of like 6 AdSense websites back when that was a thing. I had an ecommerce website for beach towels. I had a couple of different ebooks in different niches, and then I had a bunch of software. Everything else was little software products, some downloads, some add-ons, all that stuff.
My sites did not look as good as yours. They didn’t need to. They get the job done, but I was struck by it. Typically, when I see people having a portfolio like this, you have some things that are a little long in the tooth or they’re just not that well-designed or optimized for conversion rather than aesthetics. Your stuff looks really nice.
As we move towards wrapping up. I’m curious. You’ve done all this in No-Code. Have you ever thought of building one of these No-Code tools, like a landing page builder? Have you ever had a No-Code, maybe you thought it wasn’t solved, so I’m going to build it myself?
Helen: There’s definitely lots of room for improvement in the No-Code space. There are lots of interesting things that people are waiting to be launched. Things like browser extensions and things that push the boundaries of things that can be templated. For me, I don’t think I have the skillset quite yet to build something that’s a completely fully fleshed No-Code product.
I think there are definitely ideas out there that I would be interested in. I think I would probably build a small single feature thing. There’s one thing I’m working on at the moment with a friend who’s a developer to look at reporting through email marketing services, and things like that to see if you can look at best performing email broadcasts and things like that. That may be something that’s on the horizon that could be almost termed a No-Code tool for people to perhaps embed into Notion, embed into Slack, or things like that. There may be something in the future that is more custom coded and may be of interest to No-Coders to use.
Rob: Very cool. Helen, thanks so much for taking some time to join me on the show today. Folks want to keep up with you. It looks like you’re @HelenRyles on Twitter. Anywhere else they should check out?
Helen: I’ve also got a site called FeedbackFridays. Let’s have a chat about the side project. They can go over to feedbackfridays.com.
Rob: Sounds great. Thanks again.
Helen: Thank you. Bye.
Rob: Thank you as always for listening. I hope you enjoyed my conversation with Helen. If you did, it would be great if you would tweet her out and thank her for coming on Startups Pod. Hope you have a good week. I will talk to you next Tuesday morning.
Episode 504 | 15 Tools We Use to Run Our Business
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This week we chat with Tracy Osborn (@tracymakes) as we discuss 15 of the top tools we use to run our businesses. As a followup to a previous, popular tweet, we thought we’d give an update on what tools we continue to use today, as well as share some of the new tools we have started to use.
While tools are necessary for founders, it’s important to find a good balance between good-enough and perfect when it comes to evaluating which tools to use. As Tracy says in the show, “It’s a good lesson for founders because they often want to build something the ‘right way’ from the start. Many times there are tradeoffs and sometimes you have to use the tool that has constraints so that you can work faster. It might not be perfect, but it gets the job done.”
Are you using any of the tools we mention in the show or have a tool you think we should use? Let us know in the comments!
The top 15 tools we cover
- 6:04 #1 Calendly vs YouCanBook.me
- 7:45 #2 Slack: how and why we use it
- 12:20 #3 How we use Notion for permanent documentation
- 16:21 #4 Google Drive vs Dropbox for Business
- 18:42 #5 LastPass for Business
- 20:05 #6 Dasharoo
- 21:57 #7 Squadcast.fm & Castos.fm to run this podcast
- 23.57 #8 Drip & RightMessage for email marketing
- 25:15 #9 Trello for personal business (vs other task management tools)
- 26:57 #10 Squarespace for websites
- 30:35 #11 Voxer push to talk audio vs text messaging
- 32:52 #12 Keynote for conference talks and eBook PDFs
- 36:02 #13 Tweetbot vs Twitter.com
- 38:08 #14 Buffer
- 39:29 #15 Submittable and Pipedrive
- 42:20 BONUS: FrontApp for email collaboration
Links from the show
- Tracy Osborn | tracyosborn.com
- Tracy Osborn on Twitter
- Rob’s tweet on tools used | Twitter
- Calendly
- YouCanBook.me
- Discord
- Discourse
- Basecamp
- Notion
- Dasharoo
- Lastpass
- Sunrise KPI
- Trello
- Establishing a High-Performance Productivity Stack with Tracy Osborn | MicroConf on Air
- Squarespace
- Voxer
- Guides: 18 Things SaaS Founders Should Know | Startups For the Rest of Us
- Zencaster
- Squadcast
- Castos
- Drip
- RightMessage
- Tweetbot
- [Buffer](https://buffer.com/?)
- Submittable
- Pipedrive
- FrontApp
- Helpscout
- Boomerang
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Episode 503 | Idea Validation, Expanding Internationally, Affiliate Programs, and More Listener Questions
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This week Rob answers some great listener questions. We discuss the best way to validate a product idea, how to expand a product with traction internationally, advice on launching a restaurant product during COVID-19, and whether to start an affiliate program.
If you have questions about starting or scaling a software business that you’d like us to cover, please submit your question for the next episode. We’d love to hear from you!
The listener questions we cover
- 1:39 [Arturo Ceballos] What’s the best way to validate an idea and pre-launch without an audience?
- 13:33 [Ger Apeldoorn] When a product has product-market fit and existing customers, how would you grow internationally?
- 20:31 [Davis] Do you have any experience running an affiliate program. I’m worried about people that sign up for affiliate would be people that would signup anyways?
- 26:40 [Jacob Warren] Should I launch a startup in the service/hospitality industry during COVID-19?
- 28:21 [Casey Collins] Following the Stairstep approach, what’s the best marketplace to use?
Links from the show
- Vetting a startup (or two): The systematic birth of @WPEngine | Jason Cohen
- Idea Validation & Risk Avoidance | Episode 324
- The Stairstep Approach to Bootstrapping | Rob Walling
- Clay Collins on Leadpages and how they used affiliate marketing | Podcast
How can I support the podcast?
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
Click here to share your number one takeaway from the episode.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for the next episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify | Stitcher
Welcome to this all listener question episode of Startups for the Rest of Us. I’m your host, Rob Walling. On this show, each week we cover topics relating to building and growing ambitious startups using a sustainable approach. I’m excited to hear from each one of you out there. We have a couple of voice mails to kick this off and we’ll dig into some text questions.
I’m going to be flying solo today. I’ve been doing several Q&A episodes over the last few months with guests, but I wanted to spend some time today and really dig into a few questions I’ve received. Also, I want to let you know that I’ve recorded two exclusive episodes of Startups for the Rest of Us that are available to subscribers of the email list.
The first episode is called Eight Things You Must Know When Launching Your SaaS and the other one is Ten Things You Should Know as You Scale Your SaaS. I cover both the launching and the scaling phase. If you go to startupsfortherestofus.com anywhere on that site you can subscribe to the email list on the homepage or the widget in the lower right. You will get both of those episodes, of those solo episodes of just me going through bullet points and thinking through the lessons I’ve learned in 20 years of entrepreneurship.
They also come with these really nice PDF guides that are well-designed and summarize each of the points. If you listen to the episode and you take something away from it that you want to refer back to, you have something in writing to jog the memory.
I think both of these episodes and the guides turned out really well and I think if you’re a fan of this show, you’ll enjoy them too. Just head to startupsfortherestofus.com, sign up to be on the mail list, and you’ll get those episodes in your inbox.
Let’s kick off with our first question from Arturo Ceballos.
Arturo: Hey, Rob. This is Arturo Ceballos out of Fresno, California and I actually know you from the Geekwise days when I was first learning how to code. Since then I’ve learned how to develop apps and I’ve tried to build by launching a handful of these now. It wasn’t until I started listening to your podcast that I realized that I was probably going about things the wrong way. Your podcast has been instrumental in changing the way that I think about starting a business and this time around, instead of starting by writing code, I like to do things your way.
I’m now an online marketing manager and I have an idea around helping other online marketers make better decisions with their ads by giving them context around what is and isn’t working for them. There are a couple of people in the market that do this, but not in the way that I’m imagining.
I think there are a lot of ways that we can innovate in the space and I want to see if my idea would actually help others. To get to my question, I listened to your podcast, the episode that came out last week around the first six stages of SaaS growth, and in there you mentioned that you’re running Facebook ads during your Drip pre-launch to different landing pages in order to test that different value propositions.
This is the stage that I find myself in right now. I’m assuming at that time your goal was to build out an email list. If so, what is it that you’re offering people in exchange for their email address? Were you just telling them that you notify them when Drip is ready? Or how did you know that people will pay for Drip? Or that the idea was even worth working on before writing any code?
You’ve probably answered this question a million times in the past. I’m sorry if I’m bringing it up again, but any advice or resources would be super helpful. I really thank you for your time and I appreciate everything that you do with the podcast. Keep up the great work. I know it’s helping a ton of other people. It definitely helped me. Thanks.
Rob: It’s a good question, Arturo, and thanks for sending it in. Congrats on your progress. I do remember you from Fresno. I remember you going through the coding school at Geekwise. That’s cool that you’re getting into marketing because I’ll tell you what. There are few things more powerful in the startup space than a developer who knows how to market. Those are two skills that most people pick one or the other and learning both (at least in that space) is pretty incredible.
There are two answers to this. One is what I did and the second is what I would do in your shoes. I think they are related, but they are not identical if that makes sense. What I did with Drip was I went out and pre-validated that at least a few people would be willing to pay, at that time I said $100 a month. It actually ended up being $50 a month for what I had in mind to build at Drip, for the vision I had for the product.
I did that by getting into email conversations with 17 founders and other people I knew through MicroConf. This is really the first time that I used my network and my audience to grow my software companies. I have, of course, used the audience I had built over (by then it was) 7–8 years of blogging and podcasting. I used that to offer my book, to sell tickets to MicroConf, to create a couple of courses about some different things.
I had used that personal brand site for that kind of stuff, but really all the software, almost without exception that I have built before then. I hadn’t sold much to my audience and hadn’t really used my network to expand that because it was in these bizarre little tiny niches for a lot of the stuff. There was a job board for electricians, there was a wedding website builder. The stuff where me talking to other founders at MicroConf really wasn’t going to help or me talking to the audience of Startups for the Rest of Us wasn’t going to generate any kind of customer base. I did a little bit with HitTail, but it really didn’t. It was tens of customers from my warm audience and the rest of it was just hustle, marketing, writing copy, support, and all of that stuff.
All that to say, with Drip I did lose my network for the first time, but if you don’t have that, then you just have to go back and do what I did before. I had no audience which was to hustle, put in the leg work, and have conversations. I had 17 conversations. I had 11 people say we’re willing to try it out and if it works, we’re willing to pay that price point that you mentioned. That was the validation for me. I heard Jason Cohen did this with WP Engine and he wanted 40 people to give him the thumbs up.
He said 40 people at $99 a month, that was his number. I said 10 and I just picked it randomly. I don’t think 10 is right or wrong. I don’t think 40 and more is better, but it’s just how much time do you want to spend before writing code. Once the 10 had said yes, that’s when I approached Derrick Reimer who’s contracting for me on HitTail and I said do you want to build this other app? You’re not doing full-time work on HitTail, and he said yeah, let’s do it. We met at the Iron Bird Cafe there in Fresno. I talked to him through. I said here’s what I think you should do. I have some validation. Let’s just talk to some screens and just go off and build it.
In retrospect, was that enough validation? Probably not. I think I was a little overconfident in my own ability to market it and I was probably overconfident in my network and my audience that I would be able to sell it to them.
There’s this thing, the curse of the audience is how I refer to it where if you have an audience and you’ve been selling them books, courses, and stuff and you think that you can sell them software in the same way almost without exception, it doesn’t work that way. It is much, much, much harder to sell a SaaS or any software of any kind, but especially a recurring subscription because it’s just not an impulse purchase, people have to have it in their workflow. A lot of these courses, people buy and they never read. It’s aspirational. Whereas, if you’re not paying for SaaS every month, it’s if it’s aspirational, you can’t sell it. It’s a whole different ball game.
I’ve seen literally a few dozen info-marketers who have projections or think of that because they have been marketing courses, coaching, and all that stuff, that they can do the same with SaaS. Eventually, you do figure it out, but it’s different. I would say it’s a lot harder to get people to try it than to get people to stick around.
To circle back on your comment about Facebook ads, in my mind I have already validated it right or wrong and probably more on the wrong side. Once we launched, I think some of those people did wind up using it and other people started using it and said this really doesn’t do much for me. Of the 11 who said yes, I think 4 or 5 probably wound up being paying customers. I do kind of […] my shoulders.
I don’t know, was that validated or not and I think that you can never get to 100%. Right now, you’re at zero percent or you’re maybe at 20% because it’s an idea in your head and how you get to 30%, 40%, 50%, 60%, even 70% is probably pretty high; 70% certainty. I was probably 70% certain but in reality, shouldn’t have been.
I was then trying to build the email list. That’s what the Facebook ads are for. I was trying to do that. I call it concentric circle marketing where on the circle, on the inside is your audience. It’s people you can reach directly on Twitter, via email, or even if they’re on your email list you can reach out directly to them.
Then, the next circle out is your network. It’s people that you may not be listening to but you do know and that you can reach out directly and say would you be willing to try this?
Then, that third layer is your network’s audience. Network’s audiences, which again, if you know people who host podcasts or if you know people who have any type of audience, then you can go to their podcast and get some distribution.
The fourth circle out is cold and that’s what I was doing with Facebook just to see if people cared enough about the value that we’re trying to provide an email address. I was promising nothing except for some value. I was basically saying improve conversion rates on your website or capture emails better than any other tool. It was that type of stuff because Drip originally was really just the little Drip widget. It was the email capture widget before it was Sumo, OptinMonster, and […]. It was before all of those. There was really no off-the-shelf javascript email capture widget.
I was testing things around that and did get ideas that converted most. I tried a bunch of different copies. It was a fun experiment, but I didn’t assume that was validation because that was just someone being intrigued enough to enter an email which isn’t a big commitment. If I had not already validated it, I would have either gone straight to my network or my audience and if I didn’t have one of those, I would have probably have done cold outreach.
This is where I’m getting it to being in your shoes. Today, I would probably try to find other marketing managers who you think are in your same role. You can find them on LinkedIn. You could cold outreach and say I’m a bootstrap founder. I’m starting a new software idea that helps you get more insight into your ads. I’m wondering if I can chat with you for 15 minutes or I can even ask you questions via email if that works even better for you.
I think that cold outbound outreach, of course, you have to send a lot of emails in order to make that work. That’s one way to do it. Or if you have a little bit of budget, obviously running Facebook ads on your landing page, but I would be personal about that one as well, being like, hey, I’m Arturo. I’m a bootstrap founder and I’m thinking about launching a tool that does this. Are you interested in this? Just send your email and let’s find time to chat. Or you can put a calend.ly link right there and just embed it and be like, book 20 minutes with me.
In addition, if there are already other tools that are doing this, that’s good. I would lean into that and not try to call your tools something else. I would put it in that category of whatever tool it is, the advertising insight tool, or whatever. I would go to their forums and I would go to the Facebook groups that talk about those tools, whether it’s the marketing manager Facebook groups, the forums, get into the Slack channels, whatever.
There are two things. One, you want to observe and you want to see what people are complaining about these tools. Is anyone saying I really need these XYZ insights, and that’s the tool that you’re thinking about building. If they’re not, if you participate for a bit, then you just ask some questions like, I’m having trouble as a marketer. I can’t get this XYZ insight into my ads and I would like more context around it. Does anyone else have that problem?
You can just couch it like that just to see if everyone weighs in because if you say you’re selling something or you say you’re building a product, people are either going to be put off by it or they’re going to be like that’s a great idea. Do it. You should do it. They want to be encouraging. But if you say I have a problem. Do you have it, yes or no, then you can get thoughts, feelings, and I’ll say it’s more unbiased. It’s less biased information and thoughts because you don’t really have skin in the game. They’re not going to offend you by saying they don’t. They’re just not going to chime in.
At that point, if a few people respond, you’ll have some names, you can DM them and say I have this problem. I’m actually thinking of solving it for myself. Would you be interested and talk about it? Those are all the ways.
Again, should you get 10 people willing to pay you $50 a month, or $100 a month, or should it be $40, or should it be $5? It’s just a made-up number. To me, five just doesn’t sound enough. I don’t think you’ve proven a market with five people telling you they’ll pay. I think 10 is reasonable and 20 is better. When I had 10 people saying yes, I had an email list of who knows 10 or 12,000 people at that point. I knew that if enough people validated, I could reach a lot more fairly quickly who I thought would-be customers.
If you don’t have that luxury, then maybe that’s something that you think about that you want to validate it more or by the time you launch, if you have 20 people willing to pay you $100, that’s $2000 in MRR. It all won’t come through, but if half of it does, that’s still $1000 in MRR throughout the gate. That may be worth the time upfront to land more sales in advance so to speak. Then, there’s a whole nother conversation here about should they write you a cheque that you don’t cash? Should you take payment and use it to pay for the app? Should you take payment as a commitment to this and that?
We’ve actually covered that topic. You can Google that it’s in the transcripts. I don’t think I want to rehash that here. It’s already taken a bit of time answering this, but thanks for the question, Arturo. I hope you keep me updated on your progress and I definitely wish you the best of luck getting this going.
My next question is from Ger and I apologize for mispronouncing his name, but you’ll hear him pronouncing it in the voicemail.
Ger: Hi Rob and guest. My name is Ger Apeldoorn and I’m one of the cofounders of RoutineFactory. RoutineFactory is a set of tools that helps people with a learning disability and autism spectrum disorder to be more self-reliant. Our main customers assisted living facilities and workplaces.
We are growing rapidly in our home country, the Netherlands, and our info board has less than 1% churn per year so I would say that we have a good amount of product/market fit. The thing that bugs me is that there’s so much of the market that we’re not serving right now. Not only because we’re leaving a lot on the table but also because we hear a lot of stories via our customers that RoutineFactory is making a big difference for the client’s self-reliance and confidence.
Care professionals are very hard to reach over the internet. Word of mouth is extremely important but that is very hard to get started. With a few customers that we have, I do try to motivate and to write about their experiences on social media, et cetera, to get the ball rolling.
As for my question, what would you do to grow internationally if you were standing in my shoes? Anyway, thank you very much and I hope to see you again in Dubrovnik later this year. By the way, if the answer is find partners, I would like to follow-up with a shoutout for people that want to get started with an already proven product. Just write me a line at info@routinefactory.com. Thanks.
Rob: Thanks for that question. A couple of things and note on Dubrovnik, which is MicroConf Europe. That was planned for October of this year 2020. We have had to postpone it due to COVID. It’s now scheduled for October of 2021. We hope to still have an event in Europe. It would most likely be in London in September and we’re obviously playing that by ear like everyone else is.
It’s interesting. I was not thinking about proposing that he find a partner in a different locale, but I think that’s an interesting enough idea that I left that part of the voicemail in. Obviously, if you’re interested in reaching out to him, he left his info in there. I think it’s info@routinefactory.com.
Of course, partnerships would be one thing I would entertain. I think the other idea, I was thinking of two different approaches. One would be to pick a country that is close to you, that’s culturally similar, that you feel like you have insight, and it’s easy pickings. It’s going to be probably another small market.
I’m imagining I’m comparing the Netherlands in my head to the United States as an example. Those are going to be culturally quite different but the size of the market is going to be substantially different. It’s going to be much much larger with care facilities.
When I think about you going to a bordering country that maybe you feel like you have more insight into, that’s going to be, I’m guessing an easier transition especially it’s in the EU. There’s just a bunch of stuff that makes it easier, but it’s not going to be nearly as big of a market. That’s the first thing I would think about.
The second one, of course, is to say what’s perhaps the biggest western market for this? I’m guessing the United States. I don’t have any knowledge on this, but it’s just purely based on population. Looking at English-speaking markets, I think that that would be a good assumption and then figure out how essentially to target building word of mouth in the United States.
I don’t know all the trade-offs there. My gut would be to go after the larger market. Might think there are some drawbacks there. Obviously, it’s going to be perhaps more competitive. It’s also going to mean that the support, the hours, you’re going to have to hire someone further west in order to have hours during US work hours and perhaps you’re not going to be able to charge in Euros.
I shouldn’t say I’m not going to be able to. It’s not going to be ideal for you to charge in Euros. That’s going to be a yellow flag for folks. There’s just going to be a lot of adjustments, I think, that you’ll have to make versus going after a much smaller market near you where it’s in the EU and you can still charge in Euros. Probably don’t need to change much about what you’re doing today and there may be care providers that reach across the boundaries. If they have five facilities, maybe there’s some of them in the Netherlands and some next door in a neighboring country. Those are some pros and cons that I think about.
Whatever you do, whichever approach you take, the way I think about getting into a new market like this is are there influencers? Are there? And there might not be, but that’s what I would just look at. Are there any podcasts, or blogs, or publications where getting a mention would make a difference and then strategize?
It’s not a cold email of hey, mention me, but strategizing how do we start that piece of it. You said they are hard to reach online and that’s fair, but are there anywhere online? Are they in these private Facebook groups, private Slack groups, forums? It’s places like that where you can hang around and be part of the community much like what I was talking about with Arturo.
You can participate and kind of not be overt that you have a product, but just learn the market, learn the space, and get a little bit of a reputation. Again, that may not be possible, either. There may literally be no forums for this, so in that case, then I would seriously consider doing cold outreach.
This is what really cold outreach is made for. It’s for folks who are not online often. I say not online, of course, they have email or phone numbers, but they are not spending all day on Quora and Twitter, like some of our audiences are.
That’s where getting good at cold outreach and the thing, the advantage you have is it sounds like you have something pretty unique that’s working and you have a reputation in a geographic space. I know you can get testimonials and it sounds like a product is pretty mature. It’s also a pain point and it helps people. I think that’s a big deal.
This is probably the same strategy for whether you would come to the United States or just go to a country right around you. It’s like when people aren’t online that much, how do you find them? You can email them. You can call them. You can go to local events like trade shows. Obviously, right at this moment, that’s not happening, but in six months, in nine months, that’s a way to reach them as well.
I hear some people scoff at the idea of going to in-person events, but I’m personally involved with a couple of companies who before COVID were just killing it at these offline events because their audience really doesn’t gather online, but they gather offline once or twice a year at a couple of industry events. You pay $10,000, you get a booth, and it feels terrible when you do it, but then you get 10,20,30 leads that you close.
You have the pricing to make this work. You can’t be charging $10 a month to make an app like this work with this type of sales process, but assuming you have that enterprise price point, I think that you have a lot of options in terms of expanding. Hopefully, those thoughts were helpful. Thanks again for the question Ger.
My next question is from Davis and it came in through Twitter back in January. Man, it seems like a lifetime ago. Pre-COVID times. Davis, it took me so long to answer this.
Davis says, “Hey, Rob. I sent a voicemail a few months back but I don’t think it ever aired.” Actually there was a voicemail that came through that’s all static, maybe that’s what happened. He says, “My question was about referrals/affiliate programs. We have many customers asking if we have one and we do not currently. Do you have any experience running a successful affiliate program?”
The answer is yes I do, but I have seen people do it more successfully than I have. I’m going to talk about what they’ve done. But then he follows up and he says, “My concern is that the people who would sign up and share their affiliate link are mostly the same people who would share our site anyway, so we might end up paying for the organic word of growth we would have gotten anyway sans affiliate programs, but on the flip side, one affiliate sending anything to their massive mailing list could be a huge source of traffic and customers.”
Here are my thoughts. I think that some people will share it organically and others will essentially want an affiliate program and they won’t share it unless you have one. I think that if you have people asking and they are willing to share it, then yes, I would set one up.
Now, there are some folks like running an affiliate program and just starting it, and having a link available almost no one is going to come in who has an audience and promotes your stuff. This is more like business development. At this point, it becomes enterprise sales, or at least having a big network, or at least having customers with audiences.
There’s a certain level of luxury to marketing to other net marketers as we saw with Leadpages, for example, in the early days where Clay Collins built Leadpages and a bunch of the customers were internet marketers with audiences. Boom, it was just like one, two, three. Set up that affiliate program, line up the webinar for next week, and that was the playbook.
That is a very unique conflux of things because if you (say) build software for construction firms, then whether you have an affiliate program or not, your customer’s probably aren’t going to be sharing with their massive audiences their construction firm. At that point, you have to do probably more of a reseller or an agency model if you need implementation.
Back to the original question. There are some dangers with affiliate programs that I think it’s not most people think. Number one, one danger is you spend a bunch of time implementing it and barely anybody uses it. The other is that I’ve heard this phrase used by someone who has seen the books of a popular SaaS app that is used by a lot of affiliates and a lot of webinars.
It’s not Leadpages. It’s a different one and the person told me they built a large business in terms of ARR, but it’s one of the least profitable SaaS companies I’ve ever seen. The reason was that they have this enormous affiliate commission. In internet marketing circles, giving away 30%, 40%, 50% commissions on an ebook or a course that really has no or very little marginal cost can be standard.
Back in the day, there were these trashy affiliate marketplaces. They would have commissions of 70%. It’s like you take 70% when you make the sale and I only get 30%. That doesn’t work with SaaS and if you’re solo and you build some $10,000, $20,000, $30,000 a month, okay. Yes, you can give away as much as you want. But SaaS net margins are kind of at the scale of let’s say 20%–50%, 30%–50%. If you build a SaaS company that is doing $10 million a year and it has 50% net margin, you are doing very, very well in terms of profitability.
If you’re giving away 30% of that or 30+ percent of your MRR to your affiliates forever if it goes past the first year. Some of these folks are limited at a year and then that shuts us down, but if you literally say perpetual commissions on anyone you bring and it’s 20%, or 30%, or 40% you can build a SaaS business that is barely break even or that really doesn’t just have the profit that most SaaS companies do.
That would be something that I would think about and I’ve actually talked to some founders who are doing affiliate stuff but they’re being careful not to have all their eggs in the affiliate basket because they don’t want 80%–90% of their customers to essentially have this massive lack of profitability or being barely profitable. That’s something that I think you need to certainly think about.
In addition, I guess circling back, if you have customers who do want the affiliate program personally, I would set it up and figure it out. Is it 15% or 20% affiliate commission? Is that viable? Is that respectable? Is that enough in your space? Are competitors doing it whether they’re affiliate commissions?
See what you’re comfortable with and if it has to be 30%, I would say 30% for the first year or for the first 18 months or something. Some time limit on it so you’re not giving away effectively the vast majority of your potential profit on every customer.
Then once you do set it up, that’s where the business development piece comes into play. You figure out your network. You figure out if anyone in your network has an audience that would potentially make a good customer, good prospects for your app and you can also do some cold emailing.
I remember doing this with HitTail which was an SEO keyword tool, I reached out to several ranked trackers which are in essence complementary apps, and I sent six or seven emails figuring I’d get zero or one response and I got six or seven affirmative responses immediately. It was literally a joint venture.
I just said we’re not going to build anything. We’re not going to integrate, but let’s just email our respective customer basis. Here’s how many customers plus the marketing list we have. Here’s how many you have. We did a mutual one and I said no affiliate links and let’s just recommend. I went in and used the tool of course and made sure I should become a customer for quite some time.
I only did it with one of them. I didn’t do it with a bunch, but it was a pretty nice way to go. In this case, you could do it where you don’t even need that list and do the reciprocal mailing. You can say would you be willing to promote? Here’s what you get out of it. I think there’s a way to be creative with this and I do think that affiliate stuff, while some people just take it too far and make it really spammy, there are viable ways to make it work both in the info product space and in software.
Thanks for the question, Davis. I hope that was helpful.
My next question is from Jacob about launching a startup for the service/hospitality industry through COVID. He says, “Hey, Rob. Big fan. I’ve been listening to you since I was in high school. I’m bootstrapping a startup that is a self-served reputation management tool for the service/hospitality industry. It’s called Grow Glad and it helps you turn unhappy customers into happy customers and happy customers into advocates through SMS and machine learning.
As you can imagine, this is probably the worst time in history to launch this which is why it’s just sitting on a server right now not live. Luckily, I’m gainfully employed, so I’m not desperate to launch it, however, I’ve put quite some money into it. I ran growth marketing for a successful tech company, but even with my experience, I can’t figure out how to launch this company in the midst of COVID when restaurants and service-based shops can’t pay the bills. I’ve considered putting the bills for customers for up to three months, but that would wipe out my savings. What would you recommend based on your startup experience? Thanks.”
It seems pretty cut and dry to me. I would not launch it right now. I don’t see any way. The only way would be literally to launch it and say you can use it and don’t pay for three, or six, or nine months. As you said, that would wipe out your savings, so I don’t see that as a viable option.
In your shoes, I would just sit and wait. You’re gainfully employed. You don’t have a gun on your head or deadline to launch this, and I would wait until things start to ease up or continue to ease up and the environment becomes more conducive to this.
It’s just probably a bit of bad luck that this happened. Obviously, you’re probably working on this since long before COVID and that’s a bummer, but as a startup founder, we have to be agile. We have to make last-minute, quick decisions with incomplete information. Frankly, in this one, I think you do have more than enough information to make a sensible decision. Thanks for the question.
On to our last question of the day from Casey Collins who said, “Hey, Rob. I know you mentioned often that a founder should start small by building a WordPress plugin.” Breaking in here, the stairstep approach to bootstrapping doesn’t specifically say WordPress plugin. That is one of the examples. But step one of the stairstep approach is to build a small thing that’s relatively easy to build and sell on a one-time basis just so you can cut your teeth and learn some basic skills, make a little money before you try to do the hard stuff.
I would say SaaS is harder than a lot of these things. Back to Casey’s email. “Do you have any suggestions for alternatives to that? What about an Office 365 or G Suite add on? Any idea if paid for products in those marketplaces get any traction?”
My answer would be those are great ideas. The idea is not to stick to any one of these. I often say WordPress plugin, info product, Shopify add-on. I throw out random stuff. The commonality there usually is that there is a marketplace where you can easily get discovered. That’s the part that I think helps you get distribution without having to learn how to do all the marketing and all the other things around building a brand from scratch.
You can piggyback on these larger apps like G Suite or Office 365. I don’t have intimate knowledge of Office 365 or G Suite add-ons, but I bet you can go to research, find out are there forums where they hang out? You can DM some people. You could just try to build a quick one on a weekend, launch it, and see what happens. There’s a bunch of ways to do this. I don’t know if any of those add-ons are paid, that would again be a research thing, but there are obviously many other ideas.
There’s the Magento add-on. Obviously, there are WordPress plugins, there are themes, there are Shopify, there are Photoshop add-ons. Does Discourse base have a marketplace? That would be one I’d look at. Salesforce has its own Salesforce cloud ecosystem.
Even the ThemeForest family of companies, there’s a bunch of Envato and a few others where they sell things. Of course, they take a cut, and of course, I don’t think you’re going to build a million-dollar software company there, but could you build something doing $2000–$3000 a month? Yeah, I think so.
Maybe you have to get a little lucky. Maybe you have to put in a little bit of hard work. You’re going to build some skill, but it’s doing it with training wheels. Once you’ve done that where you learn how to write the code, how to shift the code, how to support it, how to do some type of copywriting, and how to interact with customers, then you can move up.
You can get a few more of those and pay for your time. The one thing that I do mention that is not in these ecosystems is I’ve often said create an ebook or a course and launch that. Those can obviously be one time and with those, you may have to build an audience.
If you just write an ebook, you probably are going to have to build an audience first because you’re not going to be able to run ads to it. If you don’t have people who know, like, and trust you, it’s going to be a hard way to go.
Ebooks may be one that if you don’t already have an audience then you look at the others. I do think building a course now that there are the Udemys, the Udacitys, the Teachables, there’s this whole class of course marketplaces. It’s basically the same thing. Building courses, recording yourself, talking to a screen, having some expertise and editing it, then getting in there and getting some discoverability, probably doing some marketing on your own, but you don’t have to do all of the work.
Again, this is not the end-all-be-all. If you already sold a seven-figure SaaS app or you’ve already built a bunch of your skills, they already have a head start, then I wouldn’t go back to step one. But if you never had a successful product, this is just a good way to go about learning how to do that.
If you want to see examples of founders who’ve done that, google Stairstep Approach to Bootstrapping. I give a bunch of examples in there and I probably know two or three more dozen that I didn’t know about when I published that blog post.
Thanks for that question, Casey. Sorry I couldn’t answer the specifics about Office 365 or G Suite specifically. Frankly, I don’t have intimate knowledge of a lot of these marketplaces, but I do see people having success in them, and assuming that there are paid add-ons, I have to imagine that there are some people having success in those marketplaces as well. Good luck, sir. Thanks for writing in.
That wraps us up for the day. If you have a question for me or me and a guest in a future episode, just send it to questions@startupsfortherestofus.com. If you send it as an attached voicemail, or as a Dropbox, or a Google Drive link, then that goes to the top of the stack, but I always appreciate text questions as well.
I love to hear from you and hear how the communities think about things and the challenges folks are facing and thinking through. That’s it for this week’s episode. Thanks so much for joining me. I’ll talk to you next week.
I’m going to be flying solo today. I’ve been doing several Q&A episodes over the last few months with guests, but I wanted to spend some time today and really dig into a few questions I’ve received. Also, I want to let you know that I’ve recorded two exclusive episodes of Startups for the Rest of Us that are available to subscribers of the email list.
The first episode is called Eight Things You Must Know When Launching Your SaaS and the other one is Ten Things You Should Know as You Scale Your SaaS. I cover both the launching and the scaling phase. If you go to startupsfortherestofus.com anywhere on that site you can subscribe to the email list on the homepage or the widget in the lower right. You will get both of those episodes, of those solo episodes of just me going through bullet points and thinking through the lessons I’ve learned in 20 years of entrepreneurship.
They also come with these really nice PDF guides that are well-designed and summarize each of the points. If you listen to the episode and you take something away from it that you want to refer back to, you have something in writing to jog the memory.
I think both of these episodes and the guides turned out really well and I think if you’re a fan of this show, you’ll enjoy them too. Just head to startupsfortherestofus.com, sign up to be on the mail list, and you’ll get those episodes in your inbox.
Let’s kick off with our first question from Arturo Ceballos.
Arturo: Hey, Rob. This is Arturo Ceballos out of Fresno, California and I actually know you from the Geekwise days when I was first learning how to code. Since then I’ve learned how to develop apps and I’ve tried to build by launching a handful of these now. It wasn’t until I started listening to your podcast that I realized that I was probably going about things the wrong way. Your podcast has been instrumental in changing the way that I think about starting a business and this time around, instead of starting by writing code, I like to do things your way.
I’m now an online marketing manager and I have an idea around helping other online marketers make better decisions with their ads by giving them context around what is and isn’t working for them. There are a couple of people in the market that do this, but not in the way that I’m imagining.
I think there are a lot of ways that we can innovate in the space and I want to see if my idea would actually help others. To get to my question, I listened to your podcast, the episode that came out last week around the first six stages of SaaS growth, and in there you mentioned that you’re running Facebook ads during your Drip pre-launch to different landing pages in order to test that different value propositions.
This is the stage that I find myself in right now. I’m assuming at that time your goal was to build out an email list. If so, what is it that you’re offering people in exchange for their email address? Were you just telling them that you notify them when Drip is ready? Or how did you know that people will pay for Drip? Or that the idea was even worth working on before writing any code?
You’ve probably answered this question a million times in the past. I’m sorry if I’m bringing it up again, but any advice or resources would be super helpful. I really thank you for your time and I appreciate everything that you do with the podcast. Keep up the great work. I know it’s helping a ton of other people. It definitely helped me. Thanks.
Rob: It’s a good question, Arturo, and thanks for sending it in. Congrats on your progress. I do remember you from Fresno. I remember you going through the coding school at Geekwise. That’s cool that you’re getting into marketing because I’ll tell you what. There are few things more powerful in the startup space than a developer who knows how to market. Those are two skills that most people pick one or the other and learning both (at least in that space) is pretty incredible.
There are two answers to this. One is what I did and the second is what I would do in your shoes. I think they are related, but they are not identical if that makes sense. What I did with Drip was I went out and pre-validated that at least a few people would be willing to pay, at that time I said $100 a month. It actually ended up being $50 a month for what I had in mind to build at Drip, for the vision I had for the product.
I did that by getting into email conversations with 17 founders and other people I knew through MicroConf. This is really the first time that I used my network and my audience to grow my software companies. I have, of course, used the audience I had built over (by then it was) 7–8 years of blogging and podcasting. I used that to offer my book, to sell tickets to MicroConf, to create a couple of courses about some different things.
I had used that personal brand site for that kind of stuff, but really all the software, almost without exception that I have built before then. I hadn’t sold much to my audience and hadn’t really used my network to expand that because it was in these bizarre little tiny niches for a lot of the stuff. There was a job board for electricians, there was a wedding website builder. The stuff where me talking to other founders at MicroConf really wasn’t going to help or me talking to the audience of Startups for the Rest of Us wasn’t going to generate any kind of customer base. I did a little bit with HitTail, but it really didn’t. It was tens of customers from my warm audience and the rest of it was just hustle, marketing, writing copy, support, and all of that stuff.
All that to say, with Drip I did lose my network for the first time, but if you don’t have that, then you just have to go back and do what I did before. I had no audience which was to hustle, put in the leg work, and have conversations. I had 17 conversations. I had 11 people say we’re willing to try it out and if it works, we’re willing to pay that price point that you mentioned. That was the validation for me. I heard Jason Cohen did this with WP Engine and he wanted 40 people to give him the thumbs up.
He said 40 people at $99 a month, that was his number. I said 10 and I just picked it randomly. I don’t think 10 is right or wrong. I don’t think 40 and more is better, but it’s just how much time do you want to spend before writing code. Once the 10 had said yes, that’s when I approached Derrick Reimer who’s contracting for me on HitTail and I said do you want to build this other app? You’re not doing full-time work on HitTail, and he said yeah, let’s do it. We met at the Iron Bird Cafe there in Fresno. I talked to him through. I said here’s what I think you should do. I have some validation. Let’s just talk to some screens and just go off and build it.
In retrospect, was that enough validation? Probably not. I think I was a little overconfident in my own ability to market it and I was probably overconfident in my network and my audience that I would be able to sell it to them.
There’s this thing, the curse of the audience is how I refer to it where if you have an audience and you’ve been selling them books, courses, and stuff and you think that you can sell them software in the same way almost without exception, it doesn’t work that way. It is much, much, much harder to sell a SaaS or any software of any kind, but especially a recurring subscription because it’s just not an impulse purchase, people have to have it in their workflow. A lot of these courses, people buy and they never read. It’s aspirational. Whereas, if you’re not paying for SaaS every month, it’s if it’s aspirational, you can’t sell it. It’s a whole different ball game.
I’ve seen literally a few dozen info-marketers who have projections or think of that because they have been marketing courses, coaching, and all that stuff, that they can do the same with SaaS. Eventually, you do figure it out, but it’s different. I would say it’s a lot harder to get people to try it than to get people to stick around.
To circle back on your comment about Facebook ads, in my mind I have already validated it right or wrong and probably more on the wrong side. Once we launched, I think some of those people did wind up using it and other people started using it and said this really doesn’t do much for me. Of the 11 who said yes, I think 4 or 5 probably wound up being paying customers. I do kind of […] my shoulders.
I don’t know, was that validated or not and I think that you can never get to 100%. Right now, you’re at zero percent or you’re maybe at 20% because it’s an idea in your head and how you get to 30%, 40%, 50%, 60%, even 70% is probably pretty high; 70% certainty. I was probably 70% certain but in reality, shouldn’t have been.
I was then trying to build the email list. That’s what the Facebook ads are for. I was trying to do that. I call it concentric circle marketing where on the circle, on the inside is your audience. It’s people you can reach directly on Twitter, via email, or even if they’re on your email list you can reach out directly to them.
Then, the next circle out is your network. It’s people that you may not be listening to but you do know and that you can reach out directly and say would you be willing to try this?
Then, that third layer is your network’s audience. Network’s audiences, which again, if you know people who host podcasts or if you know people who have any type of audience, then you can go to their podcast and get some distribution.
The fourth circle out is cold and that’s what I was doing with Facebook just to see if people cared enough about the value that we’re trying to provide an email address. I was promising nothing except for some value. I was basically saying improve conversion rates on your website or capture emails better than any other tool. It was that type of stuff because Drip originally was really just the little Drip widget. It was the email capture widget before it was Sumo, OptinMonster, and […]. It was before all of those. There was really no off-the-shelf javascript email capture widget.
I was testing things around that and did get ideas that converted most. I tried a bunch of different copies. It was a fun experiment, but I didn’t assume that was validation because that was just someone being intrigued enough to enter an email which isn’t a big commitment. If I had not already validated it, I would have either gone straight to my network or my audience and if I didn’t have one of those, I would have probably have done cold outreach.
This is where I’m getting it to being in your shoes. Today, I would probably try to find other marketing managers who you think are in your same role. You can find them on LinkedIn. You could cold outreach and say I’m a bootstrap founder. I’m starting a new software idea that helps you get more insight into your ads. I’m wondering if I can chat with you for 15 minutes or I can even ask you questions via email if that works even better for you.
I think that cold outbound outreach, of course, you have to send a lot of emails in order to make that work. That’s one way to do it. Or if you have a little bit of budget, obviously running Facebook ads on your landing page, but I would be personal about that one as well, being like, hey, I’m Arturo. I’m a bootstrap founder and I’m thinking about launching a tool that does this. Are you interested in this? Just send your email and let’s find time to chat. Or you can put a calend.ly link right there and just embed it and be like, book 20 minutes with me.
In addition, if there are already other tools that are doing this, that’s good. I would lean into that and not try to call your tools something else. I would put it in that category of whatever tool it is, the advertising insight tool, or whatever. I would go to their forums and I would go to the Facebook groups that talk about those tools, whether it’s the marketing manager Facebook groups, the forums, get into the Slack channels, whatever.
There are two things. One, you want to observe and you want to see what people are complaining about these tools. Is anyone saying I really need these XYZ insights, and that’s the tool that you’re thinking about building. If they’re not, if you participate for a bit, then you just ask some questions like, I’m having trouble as a marketer. I can’t get this XYZ insight into my ads and I would like more context around it. Does anyone else have that problem?
You can just couch it like that just to see if everyone weighs in because if you say you’re selling something or you say you’re building a product, people are either going to be put off by it or they’re going to be like that’s a great idea. Do it. You should do it. They want to be encouraging. But if you say I have a problem. Do you have it, yes or no, then you can get thoughts, feelings, and I’ll say it’s more unbiased. It’s less biased information and thoughts because you don’t really have skin in the game. They’re not going to offend you by saying they don’t. They’re just not going to chime in.
At that point, if a few people respond, you’ll have some names, you can DM them and say I have this problem. I’m actually thinking of solving it for myself. Would you be interested and talk about it? Those are all the ways.
Again, should you get 10 people willing to pay you $50 a month, or $100 a month, or should it be $40, or should it be $5? It’s just a made-up number. To me, five just doesn’t sound enough. I don’t think you’ve proven a market with five people telling you they’ll pay. I think 10 is reasonable and 20 is better. When I had 10 people saying yes, I had an email list of who knows 10 or 12,000 people at that point. I knew that if enough people validated, I could reach a lot more fairly quickly who I thought would-be customers.
If you don’t have that luxury, then maybe that’s something that you think about that you want to validate it more or by the time you launch, if you have 20 people willing to pay you $100, that’s $2000 in MRR. It all won’t come through, but if half of it does, that’s still $1000 in MRR throughout the gate. That may be worth the time upfront to land more sales in advance so to speak. Then, there’s a whole nother conversation here about should they write you a cheque that you don’t cash? Should you take payment and use it to pay for the app? Should you take payment as a commitment to this and that?
We’ve actually covered that topic. You can Google that it’s in the transcripts. I don’t think I want to rehash that here. It’s already taken a bit of time answering this, but thanks for the question, Arturo. I hope you keep me updated on your progress and I definitely wish you the best of luck getting this going.
My next question is from Ger and I apologize for mispronouncing his name, but you’ll hear him pronouncing it in the voicemail.
Ger: Hi Rob and guest. My name is Ger Apeldoorn and I’m one of the cofounders of RoutineFactory. RoutineFactory is a set of tools that helps people with a learning disability and autism spectrum disorder to be more self-reliant. Our main customers assisted living facilities and workplaces.
We are growing rapidly in our home country, the Netherlands, and our info board has less than 1% churn per year so I would say that we have a good amount of product/market fit. The thing that bugs me is that there’s so much of the market that we’re not serving right now. Not only because we’re leaving a lot on the table but also because we hear a lot of stories via our customers that RoutineFactory is making a big difference for the client’s self-reliance and confidence.
Care professionals are very hard to reach over the internet. Word of mouth is extremely important but that is very hard to get started. With a few customers that we have, I do try to motivate and to write about their experiences on social media, et cetera, to get the ball rolling.
As for my question, what would you do to grow internationally if you were standing in my shoes? Anyway, thank you very much and I hope to see you again in Dubrovnik later this year. By the way, if the answer is find partners, I would like to follow-up with a shoutout for people that want to get started with an already proven product. Just write me a line at info@routinefactory.com. Thanks.
Rob: Thanks for that question. A couple of things and note on Dubrovnik, which is MicroConf Europe. That was planned for October of this year 2020. We have had to postpone it due to COVID. It’s now scheduled for October of 2021. We hope to still have an event in Europe. It would most likely be in London in September and we’re obviously playing that by ear like everyone else is.
It’s interesting. I was not thinking about proposing that he find a partner in a different locale, but I think that’s an interesting enough idea that I left that part of the voicemail in. Obviously, if you’re interested in reaching out to him, he left his info in there. I think it’s info@routinefactory.com.
Of course, partnerships would be one thing I would entertain. I think the other idea, I was thinking of two different approaches. One would be to pick a country that is close to you, that’s culturally similar, that you feel like you have insight, and it’s easy pickings. It’s going to be probably another small market.
I’m imagining I’m comparing the Netherlands in my head to the United States as an example. Those are going to be culturally quite different but the size of the market is going to be substantially different. It’s going to be much much larger with care facilities.
When I think about you going to a bordering country that maybe you feel like you have more insight into, that’s going to be, I’m guessing an easier transition especially it’s in the EU. There’s just a bunch of stuff that makes it easier, but it’s not going to be nearly as big of a market. That’s the first thing I would think about.
The second one, of course, is to say what’s perhaps the biggest western market for this? I’m guessing the United States. I don’t have any knowledge on this, but it’s just purely based on population. Looking at English-speaking markets, I think that that would be a good assumption and then figure out how essentially to target building word of mouth in the United States.
I don’t know all the trade-offs there. My gut would be to go after the larger market. Might think there are some drawbacks there. Obviously, it’s going to be perhaps more competitive. It’s also going to mean that the support, the hours, you’re going to have to hire someone further west in order to have hours during US work hours and perhaps you’re not going to be able to charge in Euros.
I shouldn’t say I’m not going to be able to. It’s not going to be ideal for you to charge in Euros. That’s going to be a yellow flag for folks. There’s just going to be a lot of adjustments, I think, that you’ll have to make versus going after a much smaller market near you where it’s in the EU and you can still charge in Euros. Probably don’t need to change much about what you’re doing today and there may be care providers that reach across the boundaries. If they have five facilities, maybe there’s some of them in the Netherlands and some next door in a neighboring country. Those are some pros and cons that I think about.
Whatever you do, whichever approach you take, the way I think about getting into a new market like this is are there influencers? Are there? And there might not be, but that’s what I would just look at. Are there any podcasts, or blogs, or publications where getting a mention would make a difference and then strategize?
It’s not a cold email of hey, mention me, but strategizing how do we start that piece of it. You said they are hard to reach online and that’s fair, but are there anywhere online? Are they in these private Facebook groups, private Slack groups, forums? It’s places like that where you can hang around and be part of the community much like what I was talking about with Arturo.
You can participate and kind of not be overt that you have a product, but just learn the market, learn the space, and get a little bit of a reputation. Again, that may not be possible, either. There may literally be no forums for this, so in that case, then I would seriously consider doing cold outreach.
This is what really cold outreach is made for. It’s for folks who are not online often. I say not online, of course, they have email or phone numbers, but they are not spending all day on Quora and Twitter, like some of our audiences are.
That’s where getting good at cold outreach and the thing, the advantage you have is it sounds like you have something pretty unique that’s working and you have a reputation in a geographic space. I know you can get testimonials and it sounds like a product is pretty mature. It’s also a pain point and it helps people. I think that’s a big deal.
This is probably the same strategy for whether you would come to the United States or just go to a country right around you. It’s like when people aren’t online that much, how do you find them? You can email them. You can call them. You can go to local events like trade shows. Obviously, right at this moment, that’s not happening, but in six months, in nine months, that’s a way to reach them as well.
I hear some people scoff at the idea of going to in-person events, but I’m personally involved with a couple of companies who before COVID were just killing it at these offline events because their audience really doesn’t gather online, but they gather offline once or twice a year at a couple of industry events. You pay $10,000, you get a booth, and it feels terrible when you do it, but then you get 10,20,30 leads that you close.
You have the pricing to make this work. You can’t be charging $10 a month to make an app like this work with this type of sales process, but assuming you have that enterprise price point, I think that you have a lot of options in terms of expanding. Hopefully, those thoughts were helpful. Thanks again for the question Ger.
My next question is from Davis and it came in through Twitter back in January. Man, it seems like a lifetime ago. Pre-COVID times. Davis, it took me so long to answer this.
Davis says, “Hey, Rob. I sent a voicemail a few months back but I don’t think it ever aired.” Actually there was a voicemail that came through that’s all static, maybe that’s what happened. He says, “My question was about referrals/affiliate programs. We have many customers asking if we have one and we do not currently. Do you have any experience running a successful affiliate program?”
The answer is yes I do, but I have seen people do it more successfully than I have. I’m going to talk about what they’ve done. But then he follows up and he says, “My concern is that the people who would sign up and share their affiliate link are mostly the same people who would share our site anyway, so we might end up paying for the organic word of growth we would have gotten anyway sans affiliate programs, but on the flip side, one affiliate sending anything to their massive mailing list could be a huge source of traffic and customers.”
Here are my thoughts. I think that some people will share it organically and others will essentially want an affiliate program and they won’t share it unless you have one. I think that if you have people asking and they are willing to share it, then yes, I would set one up.
Now, there are some folks like running an affiliate program and just starting it, and having a link available almost no one is going to come in who has an audience and promotes your stuff. This is more like business development. At this point, it becomes enterprise sales, or at least having a big network, or at least having customers with audiences.
There’s a certain level of luxury to marketing to other net marketers as we saw with Leadpages, for example, in the early days where Clay Collins built Leadpages and a bunch of the customers were internet marketers with audiences. Boom, it was just like one, two, three. Set up that affiliate program, line up the webinar for next week, and that was the playbook.
That is a very unique conflux of things because if you (say) build software for construction firms, then whether you have an affiliate program or not, your customer’s probably aren’t going to be sharing with their massive audiences their construction firm. At that point, you have to do probably more of a reseller or an agency model if you need implementation.
Back to the original question. There are some dangers with affiliate programs that I think it’s not most people think. Number one, one danger is you spend a bunch of time implementing it and barely anybody uses it. The other is that I’ve heard this phrase used by someone who has seen the books of a popular SaaS app that is used by a lot of affiliates and a lot of webinars.
It’s not Leadpages. It’s a different one and the person told me they built a large business in terms of ARR, but it’s one of the least profitable SaaS companies I’ve ever seen. The reason was that they have this enormous affiliate commission. In internet marketing circles, giving away 30%, 40%, 50% commissions on an ebook or a course that really has no or very little marginal cost can be standard.
Back in the day, there were these trashy affiliate marketplaces. They would have commissions of 70%. It’s like you take 70% when you make the sale and I only get 30%. That doesn’t work with SaaS and if you’re solo and you build some $10,000, $20,000, $30,000 a month, okay. Yes, you can give away as much as you want. But SaaS net margins are kind of at the scale of let’s say 20%–50%, 30%–50%. If you build a SaaS company that is doing $10 million a year and it has 50% net margin, you are doing very, very well in terms of profitability.
If you’re giving away 30% of that or 30+ percent of your MRR to your affiliates forever if it goes past the first year. Some of these folks are limited at a year and then that shuts us down, but if you literally say perpetual commissions on anyone you bring and it’s 20%, or 30%, or 40% you can build a SaaS business that is barely break even or that really doesn’t just have the profit that most SaaS companies do.
That would be something that I would think about and I’ve actually talked to some founders who are doing affiliate stuff but they’re being careful not to have all their eggs in the affiliate basket because they don’t want 80%–90% of their customers to essentially have this massive lack of profitability or being barely profitable. That’s something that I think you need to certainly think about.
In addition, I guess circling back, if you have customers who do want the affiliate program personally, I would set it up and figure it out. Is it 15% or 20% affiliate commission? Is that viable? Is that respectable? Is that enough in your space? Are competitors doing it whether they’re affiliate commissions?
See what you’re comfortable with and if it has to be 30%, I would say 30% for the first year or for the first 18 months or something. Some time limit on it so you’re not giving away effectively the vast majority of your potential profit on every customer.
Then once you do set it up, that’s where the business development piece comes into play. You figure out your network. You figure out if anyone in your network has an audience that would potentially make a good customer, good prospects for your app and you can also do some cold emailing.
I remember doing this with HitTail which was an SEO keyword tool, I reached out to several ranked trackers which are in essence complementary apps, and I sent six or seven emails figuring I’d get zero or one response and I got six or seven affirmative responses immediately. It was literally a joint venture.
I just said we’re not going to build anything. We’re not going to integrate, but let’s just email our respective customer basis. Here’s how many customers plus the marketing list we have. Here’s how many you have. We did a mutual one and I said no affiliate links and let’s just recommend. I went in and used the tool of course and made sure I should become a customer for quite some time.
I only did it with one of them. I didn’t do it with a bunch, but it was a pretty nice way to go. In this case, you could do it where you don’t even need that list and do the reciprocal mailing. You can say would you be willing to promote? Here’s what you get out of it. I think there’s a way to be creative with this and I do think that affiliate stuff, while some people just take it too far and make it really spammy, there are viable ways to make it work both in the info product space and in software.
Thanks for the question, Davis. I hope that was helpful.
My next question is from Jacob about launching a startup for the service/hospitality industry through COVID. He says, “Hey, Rob. Big fan. I’ve been listening to you since I was in high school. I’m bootstrapping a startup that is a self-served reputation management tool for the service/hospitality industry. It’s called Grow Glad and it helps you turn unhappy customers into happy customers and happy customers into advocates through SMS and machine learning.
As you can imagine, this is probably the worst time in history to launch this which is why it’s just sitting on a server right now not live. Luckily, I’m gainfully employed, so I’m not desperate to launch it, however, I’ve put quite some money into it. I ran growth marketing for a successful tech company, but even with my experience, I can’t figure out how to launch this company in the midst of COVID when restaurants and service-based shops can’t pay the bills. I’ve considered putting the bills for customers for up to three months, but that would wipe out my savings. What would you recommend based on your startup experience? Thanks.”
It seems pretty cut and dry to me. I would not launch it right now. I don’t see any way. The only way would be literally to launch it and say you can use it and don’t pay for three, or six, or nine months. As you said, that would wipe out your savings, so I don’t see that as a viable option.
In your shoes, I would just sit and wait. You’re gainfully employed. You don’t have a gun on your head or deadline to launch this, and I would wait until things start to ease up or continue to ease up and the environment becomes more conducive to this.
It’s just probably a bit of bad luck that this happened. Obviously, you’re probably working on this since long before COVID and that’s a bummer, but as a startup founder, we have to be agile. We have to make last-minute, quick decisions with incomplete information. Frankly, in this one, I think you do have more than enough information to make a sensible decision. Thanks for the question.
On to our last question of the day from Casey Collins who said, “Hey, Rob. I know you mentioned often that a founder should start small by building a WordPress plugin.” Breaking in here, the stairstep approach to bootstrapping doesn’t specifically say WordPress plugin. That is one of the examples. But step one of the stairstep approach is to build a small thing that’s relatively easy to build and sell on a one-time basis just so you can cut your teeth and learn some basic skills, make a little money before you try to do the hard stuff.
I would say SaaS is harder than a lot of these things. Back to Casey’s email. “Do you have any suggestions for alternatives to that? What about an Office 365 or G Suite add on? Any idea if paid for products in those marketplaces get any traction?”
My answer would be those are great ideas. The idea is not to stick to any one of these. I often say WordPress plugin, info product, Shopify add-on. I throw out random stuff. The commonality there usually is that there is a marketplace where you can easily get discovered. That’s the part that I think helps you get distribution without having to learn how to do all the marketing and all the other things around building a brand from scratch.
You can piggyback on these larger apps like G Suite or Office 365. I don’t have intimate knowledge of Office 365 or G Suite add-ons, but I bet you can go to research, find out are there forums where they hang out? You can DM some people. You could just try to build a quick one on a weekend, launch it, and see what happens. There’s a bunch of ways to do this. I don’t know if any of those add-ons are paid, that would again be a research thing, but there are obviously many other ideas.
There’s the Magento add-on. Obviously, there are WordPress plugins, there are themes, there are Shopify, there are Photoshop add-ons. Does Discourse base have a marketplace? That would be one I’d look at. Salesforce has its own Salesforce cloud ecosystem.
Even the ThemeForest family of companies, there’s a bunch of Envato and a few others where they sell things. Of course, they take a cut, and of course, I don’t think you’re going to build a million-dollar software company there, but could you build something doing $2000–$3000 a month? Yeah, I think so.
Maybe you have to get a little lucky. Maybe you have to put in a little bit of hard work. You’re going to build some skill, but it’s doing it with training wheels. Once you’ve done that where you learn how to write the code, how to shift the code, how to support it, how to do some type of copywriting, and how to interact with customers, then you can move up.
You can get a few more of those and pay for your time. The one thing that I do mention that is not in these ecosystems is I’ve often said create an ebook or a course and launch that. Those can obviously be one time and with those, you may have to build an audience.
If you just write an ebook, you probably are going to have to build an audience first because you’re not going to be able to run ads to it. If you don’t have people who know, like, and trust you, it’s going to be a hard way to go.
Ebooks may be one that if you don’t already have an audience then you look at the others. I do think building a course now that there are the Udemys, the Udacitys, the Teachables, there’s this whole class of course marketplaces. It’s basically the same thing. Building courses, recording yourself, talking to a screen, having some expertise and editing it, then getting in there and getting some discoverability, probably doing some marketing on your own, but you don’t have to do all of the work.
Again, this is not the end-all-be-all. If you already sold a seven-figure SaaS app or you’ve already built a bunch of your skills, they already have a head start, then I wouldn’t go back to step one. But if you never had a successful product, this is just a good way to go about learning how to do that.
If you want to see examples of founders who’ve done that, google Stairstep Approach to Bootstrapping. I give a bunch of examples in there and I probably know two or three more dozen that I didn’t know about when I published that blog post.
Thanks for that question, Casey. Sorry I couldn’t answer the specifics about Office 365 or G Suite specifically. Frankly, I don’t have intimate knowledge of a lot of these marketplaces, but I do see people having success in them, and assuming that there are paid add-ons, I have to imagine that there are some people having success in those marketplaces as well. Good luck, sir. Thanks for writing in.
That wraps us up for the day. If you have a question for me or me and a guest in a future episode, just send it to questions@startupsfortherestofus.com. If you send it as an attached voicemail, or as a Dropbox, or a Google Drive link, then that goes to the top of the stack, but I always appreciate text questions as well.
I love to hear from you and hear how the communities think about things and the challenges folks are facing and thinking through. That’s it for this week’s episode. Thanks so much for joining me. I’ll talk to you next week.
Episode 502 | Accelerating Growth and a Failed Product Hunt Launch
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In his second appearance on the show (he first appeared on Episode 367), we chat with Benedikt Deicke from Userlist. Along with his co-founder, Jane Portman, they are building an easy to use customer messaging tool catered specifically towards SaaS companies.
In this show, we talk about some of the challenges in building a product while working full-time, finding the ideal SaaS pricing model, their underwhelming Product Hunt launch, as well as their recent purchase of the Userlist.com domain name.
Jane & Benedikt are also part of Tinyseed batch #2, and we explore Benedikt’s experience so far in the program, and the lessons he’s learned.
What we discuss with Benedikt Deicke
- 1:37 The story & motivation behind helpfounders.com
- 4:30 Userlist and slow growth in the early days
- 5:30 Challenges with building a SaaS while not full-time
- 7:50 What has helped with recent Userlist growth
- 9:00 Navigating SaaS pricing
- 12:30 An underwhelming Product Hunt launch
- 15:30 Acquiring the userlist.com domain name
- 17:30 The most challenging moments thus far in building Userlist
- 20:48 Why did Jane & Benedikt apply to Tinyseed
Links from the show:
- HelpFounders
- Benedikt Deicke | Twitter
- Jane Portman | Twitter
- Slow & Steady | Podcast
- Userlist
- Fighting to Gain Traction in a Crowded Space with Jane Portman of Userlist | Episode 471
- Userlist on Product Hunt
- Tinyseed
How can I support the podcast?
If you enjoyed this episode with Benedikt Deicke, let him know by clicking on the link below and sending him a quick shout out on Twitter:
Click here to thank Benedikt Deicke on Twitter.
Click here to share your number one takeaway from the episode.
Subscribe & Review: iTunes | Spotify | Stitcher
Rob: Welcome to episode 502 of Startups For the Rest of Us. If you guessed that I am your host, Rob Walling you guessed correctly. This week, I talked with Benedikt Deicke from Userlist, and you’ll remember I spoke with his co-founder, Jane Portman, about six or eight months ago about their progress growing their startup. Since I spoke with Jane, Userlist has become part of TinySeed’s second batch, our 2020 batch and we talk a little bit about that today in the conversation.
Before we dive into that, if you’ve checked out the kinds of companies that TinySeed is investing in, and you’d be interested in investing in TinySeed and effectively diversifying your investment across many, many early-stage B2B SaaS companies with traction, and to see the companies we invested in in batch one and two with our first fund, you can just head to the homepage, tinyseed.com and you’ll see all the links there or you can hit this tinyseed.com/latest and we have a list of our second batch that we just announced.
The types of companies we invest in are bootstrapped cash-efficient. They’re the types of startups that you hear me talk about and espouse on Startups For the Rest of Us, and that you run into at MicroConf and other events that cater to those of us who are building ambitious yet sane startups. If this is an asset class you’ve considered investing in and you’re an accredited investor, TinySeed is a nice way to do that, because of the automatic diversification you get across many B2B SaaS companies with traction instead of having to seek out all that deal flow and do all the due diligence and all the research yourself, you can instead rely on us to do the legwork for you. Tinyseed.com/invest if you are interested.
Just a little more background on Benedikt, before we dive into the conversation, Benedikt is the co-founder of Userlist. It’s at userlist.com, and their headline is behavior-based customer messaging perfect for your SaaS, so they have email and in-app messages. With that, let’s dive into our conversation.
Benedikt, thank you so much for joining me on the show.
Benedikt: Thanks for having me.
Rob: It’s great to have you. It’s your first time on the podcast?
Benedikt: It’s my second time.
Rob: Oh, you and Mike did MicroConf Europe Recap.
Benedikt: Yeah, a couple of years ago.
Rob: That’s right. I think I was with my family in Europe taking a vacation after MicroConf Europe and you came on and of course, Jane Portman, your co-founder has been on at least twice, and she was on about six or eight months ago, talking about your journey together, building Userlist, and of course, we’ll talk through that today a bit. I wanted to start by asking you about Help Founders.
It’s at helpfounders.com, and folks who are listeners to this show know that, in essence, it’s free advertising for early-stage SaaS products. We have donated a few slots to Help Founders and folks have heard a couple of the ads essentially that I’ve read and there are fewer ads, and it’s more of me talking about the product. I actually had met one of the founders of the products through MicroConf Connect. It was cool, but I’m curious. What was your motivation and Jane’s motivation behind starting that initiative?
Benedikt: To be honest, it was mostly Jane’s idea, entirely Jane’s idea. It was her first response to this whole pandemic coming over us and causing problems for a lot of founders, and we just wanted to do something to help out with the stuff we can do. Both Jane and I run podcasts, so it felt like an easy decision to just give shoutouts to fellow founders in our podcasts and just help the community that way.
Luckily, once we started reaching out and promoting this idea, a lot of other people like you joined with their podcasts, and I think at some point, we had more podcasts or more slots on podcasts than actual products. I’m not entirely sure what the numbers are right now, but the support we got or the support Jane got with this was amazing.
Rob: That’s something I love about this community of bootstrappers, makers, whatever we want to call them. That the founder community that we work in is, in general, just a very positive community. I think that comes from doing hard things, and knowing that putting things out in the world is pretty hard, and the generosity that I think you saw where you have more ad slots than Startups asking for them is pretty cool.
Benedikt: That was definitely an exciting part, and so far, I think it’s going well. People are getting shout outs. Some podcasts do really amazing jobs like doing real in-depth teardowns, more or less of the products, and the product ideas. It’s even more than just ad spots, at least on some shows.
Rob: I want to change it up and talk about Userlist. Userlist is behavior-based customer messaging, perfect for your SaaS. That’s the headline on your homepage. It’s basically emails and in-app messaging for SaaS apps behavior-based. A competitor of customer.io. You and I had chatted a little bit offline briefly about how it helps to couch in a person’s mind who’s listening like, what is this product similar to?
You guys have been working on this for several years now, and I know that growth has started picking up for you, but that in talking to Jane, again on the podcast several months back that it was really slow early on that it was slow getting going. Did that surprise you how long it took you to go from starting to build to $1000 of MRR?
Benedikt: It was definitely slower than we expected, but I feel a lot of that has to do with just how long it takes to actually build a product like this with doing consulting on the side, and basically doing this part-time. I’m sure if we were able to fully focus on it from day one, it would have been a lot faster, just because we didn’t have too many other things going at the same time, but then again, who knows? This is only a one time experience and not sure, maybe I’m wrong about it, and it would be slow.
Rob: It is pretty typical, especially both you and Jane were doing it on the side while consulting, is that right?
Benedikt: We had to pay our bills in the early days like the product doesn’t pay. With consulting on the side, you only get maybe a day or two of focused work on the product, especially on the technical side. Implementing the hard stuff makes it really challenging with just one or two days per week, then having a longer break, trying to get back into it, trying to remember what you did last week, what’s the plan to move forward, what changes are still missing, and stuff like that. Since we were able to go full-time earlier this year, we move a lot faster with everything.
Rob: I always struggled with that when I was still building on the side of whether to try to carve out a day a week. I really didn’t have the luxury at the time of carving out two days but carving out one day a week or whether it was evening hours and some weekend hours. Of course, in the evening and weekends, I was tired or I didn’t want to be doing it. I wanted that to be out having fun, but if I carved out the day a week, it’s exactly what you said.
You’d lose the context, the mental RAM of loading all the entire code base and everything, all the objects up in your head, the model, and then it’s like, well, I only have like six or eight hours to work on this, and then it’s six days—five days gap—until the next time, and it’s really, really cumbersome, and that’s where I think the difference between an early hypothesis of TinySeed was getting folks who are trying to do this part-time and get them to full time.
Even in the first batch, and especially in the second batch, most of the founders were already doing it full time. While that hypothesis has held in a small way, it’s not the main focus of what we’re doing anymore, but I do feel like that step from part-time to full-time focus, if you can work 15 hours a week on it versus 45 hours a week, it’s not three times more productive. I think it’s 5–10 times more productive because all of your focus is there. All of your mental RAM is devoted to it and you can just keep it loaded up constantly.
Benedikt: Even on the days where you’re working on the product test, there are so much other stuff going on in the background that just takes focus away. Just being able to focus on one thing for the entire time is just super valuable because it just removes all the other background tasks and responsibilities you have with your clients. That makes it easier to execute on the product.
Rob: Your growth has picked up. Why do you think that is?
Benedikt: I think what helped is that we launched our in-app messaging feature and recently launched our new $9 startup plan. I think that lowered the barrier for some people to try the product and get started using it, even when they’re still in early stages. Previously, we had the lowest plan of $49 a month and I feel there’s still a reasonable price point but for someone who’s just starting out, it was a little bit too much.
We wanted to offer a better deal for small people similar to where we are and provide them with a product that they can integrate early and start using to send messages to their customers. I think that helped, the numbers show that since we launched that plan, we get more trials and more trials to convert, especially into the small plan.
Rob: You feel it’s working so far?
Benedikt: Yeah. I think it’s working so far. It’s still below our goal, but the time horizon for that is still two months out. We wanted to reevaluate after two months, three months, and I’m confident that we’ll get there.
Rob: Right, because the danger obviously for listeners is, if your current lowest pricing plan is $49, and you’re going to introduce a $9 plan, (1) you can cannibalize some of your existing MRR for people who are who qualify for that $9 plan who are already your customers, and (2) people who would come and would have signed up for $49 sign up for your $9 and so you’re basically dropping your average revenue per customer, and that’s the danger of it. What do you think about that?
Benedikt: Our hope to limit on the starter plan on the new $9 plan is 100 customers, and we hope that people in that range are more willing to pay for a $9 plan than they are for a $49 plan. Ultimately, I hope it’s more people who are willing to sign up instead, and those who would have signed up instead and now are paying less than they would have before.
Rob: That’s the thing, 100 customers, so that’s 100 contacts, 100 people, 100 email addresses, and if you’re running a SaaS app, and you have 50 customers, if your average revenue per user is $1000 a month or something, wow, that’s a $600,000 a year business, but a lot of the SaaS (I think) that’s probably signing up for this when you’re under 100 customers, you’re still pretty early stage.
Benedikt: I think I agree but that’s also one of the challenges with our pricing is one customer of our customers is valued a lot differently depending on their business model. If you’re running a premium business, then one customer or one user in Userlist isn’t worth much, but maybe it’s an enterprise business that just needs 50 users to be super profitable, then when using Userlist is worth a lot to them. That makes it hard, but so far, I feel this is a good middle ground.
Rob: We struggled with that running Drip, too. It’s a similar thing. We’d have a blogger with 600,000 people on their email list, and they didn’t have that much revenue. They didn’t make that much revenue off of each person, so they were worth $1 amount less and then we’d have a consulting agency with 500 contacts or 1000, but each contract was worth $30,000, $40,000, $50,000 to that agency, and we shrugged their shoulders and said the only way to get around this or to figure out how to get more value-based pricing is to not just have it be a number of subscribers. It didn’t introduce feature gating where I knew the agency wanted integration with some Salesforce or they wanted integration with some tool that only the agents will be using and that the blogger would not use.
If we were to go, we didn’t wind up going down this path, because it just wasn’t worth the time. There were more important things to work on, but that’s how we would have done it is implemented a feature or two, and then put it in a gated, whether it was an add on of $100 per month to have that integration or whether it’s just a separate tier that you’d have to be. If you wanted the most value of an agency, that’s how I would think about it.
Benedikt: We considered this when we launched in-app messages. Basically, the idea was let’s just launch in-app messages on the larger plan, I think starting at $99 per month, but ultimately we decided against it because it felt a little bit against our ethos or motivation to build a tool for people like us, and then artificially limiting an essential feature or somewhat essential feature felt the wrong way to go. It makes more sense when the actual features are only valuable to a certain type of customer, but within that message, it felt like it was the wrong way to go.
Rob: Speaking of the in-app messaging launch, that was just a few weeks back, and you would talk on your podcast about you and Jane focused on launching it on Product Hunt, but it didn’t quite go the way that you wanted. You want to talk listeners through what the goal was, I guess, to get a lot of exposure and what went wrong there?
Benedikt: The plan, as you said, was to get a lot of exposure, especially outside of our audience, because we have a mailing list and we send regular updates to the travels on our mailing list, our customers, our Twitter followers, and stuff like that. I think most of them were probably aware that we were building this and working on this because frankly, it took a long time and we’ve been talking about this for months now. The plan for the launch was to make a little bit of a splash and get it noticed outside of our communities and our audiences, and the plan was to basically launch it on Product Hunt on that day, send an email to our mailing list, announcing it linking to the Product Hunt page.
I tried to get a lot of eyes on the Product Hunt posting and a lot of AdWords there, so it would get on the front page and rank really well. It gets a lot of AdWords and stuff like that. The problem is that it didn’t happen. We posted it and sent the emails, tweeted about it. I guess a lot of people in our audience saw it and uploaded it, but it wasn’t enough to get us on the front page, and then the popular category for the day. That essentially meant that nobody else saw it, or very few people outside of our audience saw it. That was a little bit sad because it didn’t work out.
Rob: Was it like you put all your eggs in one basket, the Product Hunt basket and it didn’t work?
Benedikt: Yeah, absolutely. All of our communication around the launch was focused on our Product Hunt page, even in our Google Analytics stats for our website, there’s no way to notice the launch. There’s no spike in traffic, nothing. We put all our eggs in the Product Hunt basket and that didn’t work out. In a way it was a little bit of a failure, to be honest.
Rob: That’s a bummer. It’s always an experiment to do that. We each face that dilemma. Anytime we want to do a launch, it’s like, okay, we’re going to post it to Product Hunt. Do we send everyone there? Do we send some people to our landing page and some people to Product Hunt, and some people to Hacker News? There are a lot of moving parts. There’s a lot of gut feeling of let’s try it out. Here’s the thing. If it had worked, you would have gotten a lot of exposure. Just because it didn’t work doesn’t mean it’s the wrong decision. I think that’s something to think about.
Benedikt: That’s true but next time I probably at least link to the website as well, in the emails and stuff like that. Just be deliberate about also, using other platforms properly. For example, post it on Indie Hackers. We did that but also linked to the Product Hunt page. We just did a bad job at promoting the launch outside of Product Hunt. In hindsight that was a problem.
Rob: It could have had a little bit of link diversification is what you’re saying?
Benedikt: Yeah, link to the website here and there, and then maybe have a little banner on the website that links back to Product Hunt or something like that.
Rob: That’s cool. I used to describe you as, hey, it’s userlist.io because that was your domain name, but you bought the .com six months ago or whatever, and you paid a few thousand dollars for it. I think you said the price on your podcasts. Do you want to talk us through? Obviously, the thought process is because the.com is awesome and now your name can just be Userlist rather than everyone saying Userlist.io, but was that a risk for you guys? Did you feel it was a lot of money to pay? Do you think it’s been worth it?
Benedikt: It was a lot of money to pay but I think it was worth it. It’s so much better.
Rob: What was the price?
Benedikt: It was $4000. I think in the episode with Jane, I think you talked about this a little bit as well. If listeners want to get to full details on the negotiation stuff like that, they should probably just go back there.
Rob: I probably should have mentioned this episode earlier. We talked about Jane being on the podcast, it was episode 471 of the show called, Fighting to Gain Traction in a Crowded Space, and we do talk about just about a bunch of other interesting stuff that I’m not going to rehash here, but you had a third co-founder and how you guys work through that.
I’m curious over this to this 2½ years, what’s been the funnest part? What’s been the best part for you where you think, man, this is so cool?
Benedikt: Getting it into the hands of the first customers, the first beta customers, and seeing them use the product and get some value out of it. That was definitely something exciting, and seeing the product work in reality and not just on my development machine, my test setup. That was definitely exciting. Once we launched the launch of the product on Product Hunt went really well. That was also exciting. Joining TinySeed was also a cool milestone, to be honest.
Rob: I want to talk about that in a second because we’re essentially five weeks into batch two that you’re in, but a little more than that we’ve been in the Slack channel. I want to touch on your experience there. Before we do that I’m curious what one or two things have been the hardest for you? You can either take us back to a moment where you were shaking your head like this is terrible or just talk more generally.
Benedikt: The hardest part was definitely staying focused while we were still doing this on the site, keeping up the momentum, and making meaningful progress while also doing a lot of other stuff. That was definitely hard, and I also remember late last year, there was a phase where a lot of stuff was going on. I think it was shortly after we applied to TinySeed, and for some reason, during a couple of weeks, customer support was just really tough. There were a lot of requests by customers and also a lot of very hard support tasks with people asking us to review basically their entire setup.
Answering one of those tickets took well over an hour just to browse through their account, understand what they were doing, figure out all the edge cases. It just was a lot, and it was really tough on me, and I felt in that week or those two weeks, I felt I’m burning out. I can’t do this. I can’t do this anymore, but eventually got better, and since then I’ve been a little bit more deliberate about not having notifications for every single support ticket that comes in just to not get distracted by work stuff when I’m actually not working in the evenings and things like that.
Rob: It’s really hard in those early days because you’re trying to make every customer super happy, and what becomes completely not scalable later, is spending 60–90 minutes on a support ticket, but in the early days, I remembered us doing it as well. I’ve done it with multiple products where I’m going above and beyond because you’re scraping and clawing, not only for every customer to keep them around, but you wanted them to just have that wow moment and you want them to tell other people about your product. In order to do that, you have to sometimes do things that feel ridiculous when you say them out loud. It’s an hour on a support ticket but that was probably worth it. They’re probably a customer for life.
Benedikt: Yeah. Also, at this stage, we’re still learning so many things about how people use the product, so it’s also valuable just from a product development standpoint just to dig in and understand what people are doing with the tool. We still do that. When the need arises, we really dig in and try to understand the problem and analyze what’s going on, but I don’t get notifications for every single email in our support […] anymore.
Rob: I think there’s a moment in every product’s lifespan, and it’s typically fairly early on where it’s like, okay, I need to disable the email I get every time a credit card is charged because when you have five customers and they charged across a month, it’s like, oh, it’s no big deal. When you have 100 or 1000, it becomes ridiculous. That’s a cool milestone, and that’s the other one. At first, hey, we’re getting one support ticket a day or three a week, and then suddenly, it’s like, well, we’re getting three a day, we’re getting five a day, and that’s a good sign that things are moving in the right direction, but you have to figure out a balance there.
Very cool. TinySeed I hinted at that earlier, as I said, in your introduction, Userlist is, of course, a TinySeed batch two company for the 2020 batch. I’m curious. You and Jane, why did you decide to apply? What did you hope that you would get out of TinySeed?
Benedikt: I hinted that a couple of times and the answer is definitely focus. This was the main reason for us. We decided to go full-time in January and made that decision even before applying to TinySeed, but it was clear that we’d only have a runway of six months or so. Applying to TinySeed allowed us to extend that runway by a little over a year and just be able to focus on the product throughout this entire year and not worry about anything else.
Of course, we didn’t know it back then but now with the pandemic, it’s really, really nice to not have to worry about getting a new consulting gig, finding new work, and stuff like that. We got lucky there, I guess.
Rob: Pandemic was unexpected for a lot of us but it’s interesting to hear, because obviously, I said earlier, hey, our initial hypothesis two years ago, when we started it was to get people working full-time. You were effectively already doing that, but it’s an extension of the runway. In a way, it still fits that initial hypothesis just giving you more time to focus full-time, and I think that’s going to be valuable for you all.
Benedikt: It really works out that way for us in our particular situation. We honestly thought about applying for a batch one, but back then decided against it. Back then we were still three founders and I think you invested a little bit less money than you did this time. Back then it didn’t make a lot of sense in terms of we wouldn’t be able to pay the three of us salaries that would allow us to just focus full-time. Back then it didn’t make sense but this time, just being two founders and getting a little bit more money, it has absolutely made sense.
Rob: That makes a lot of sense. We’ve just made minor tweaks from batch one to batch two. I think the terms were virtually identical. Except for that for additional co-founders, we upped the amount. We increase the amount that we give. That’s cool to hear that that made a difference for you. You’re five weeks in technically to the batch but we’ve all been in the Slack channel now for a few months. Any surprises for you?
Benedikt: No surprise so far, I guess. Nothing big at least. It was an exciting day. We all join the Slack channel and discover that well-known faces and friends in the batch. There are certainly fun parts and a surprise. Other than that, I am really enjoying it so far, especially the weekly calls, with small lectures by you and Einar. Those have been really, really good. I’m also a little bit sad that we didn’t make it to MicroConf US didn’t happen because we were supposed to go there, meet everyone. That didn’t happen, but the replacement online retreat that Tracy came up with was really enjoyable. Even though it was like three hours on two days, which is a ridiculously long Zoom call. It was still a lot of fun.
Rob: It was such a bummer for everyone. There are worse things happening. It’s hard to complain, but that was one of the biggest disappointments I’ll say, around the pandemic was not being able to have the MicroConf here in Minneapolis and not being able to get together both with MicroConf folks but also all of you in TinySeed.
All right, sir. Thank you so much for coming on the show. I think we’re going to wrap up here. If folks want to check out what you’re working on, they can head to userlist.com, and of course, the Slow & Steady Podcast you released with Brian every week and @benediktdeicke on Twitter.
Benedikt: Go to the show notes and click on the link. It’s easier.
Rob: I won’t spell his name out. Very cool, man. Thanks again for coming on the show.
Benedikt: Thanks for having me.
Rob: Thanks again to Benedikt for joining me today. If you want to invest in companies similar to Userlist we are working on raising our second fund at tinyseed.com/invest. Next week’s episode I’m hoping to do a Q&A episode, so if you have any questions for me or our potential guests I will bring on, please send them to questions@startupsfortherestofus.com and of course voicemails go to the top of the stack. I believe we only have one maybe two voicemails right now, so it will likely get answered next week if you send a voicemail in, but text questions are always welcome as well. Thanks for joining me today. I’ll see you next time.
Before we dive into that, if you’ve checked out the kinds of companies that TinySeed is investing in, and you’d be interested in investing in TinySeed and effectively diversifying your investment across many, many early-stage B2B SaaS companies with traction, and to see the companies we invested in in batch one and two with our first fund, you can just head to the homepage, tinyseed.com and you’ll see all the links there or you can hit this tinyseed.com/latest and we have a list of our second batch that we just announced.
The types of companies we invest in are bootstrapped cash-efficient. They’re the types of startups that you hear me talk about and espouse on Startups For the Rest of Us, and that you run into at MicroConf and other events that cater to those of us who are building ambitious yet sane startups. If this is an asset class you’ve considered investing in and you’re an accredited investor, TinySeed is a nice way to do that, because of the automatic diversification you get across many B2B SaaS companies with traction instead of having to seek out all that deal flow and do all the due diligence and all the research yourself, you can instead rely on us to do the legwork for you. Tinyseed.com/invest if you are interested.
Just a little more background on Benedikt, before we dive into the conversation, Benedikt is the co-founder of Userlist. It’s at userlist.com, and their headline is behavior-based customer messaging perfect for your SaaS, so they have email and in-app messages. With that, let’s dive into our conversation.
Benedikt, thank you so much for joining me on the show.
Benedikt: Thanks for having me.
Rob: It’s great to have you. It’s your first time on the podcast?
Benedikt: It’s my second time.
Rob: Oh, you and Mike did MicroConf Europe Recap.
Benedikt: Yeah, a couple of years ago.
Rob: That’s right. I think I was with my family in Europe taking a vacation after MicroConf Europe and you came on and of course, Jane Portman, your co-founder has been on at least twice, and she was on about six or eight months ago, talking about your journey together, building Userlist, and of course, we’ll talk through that today a bit. I wanted to start by asking you about Help Founders.
It’s at helpfounders.com, and folks who are listeners to this show know that, in essence, it’s free advertising for early-stage SaaS products. We have donated a few slots to Help Founders and folks have heard a couple of the ads essentially that I’ve read and there are fewer ads, and it’s more of me talking about the product. I actually had met one of the founders of the products through MicroConf Connect. It was cool, but I’m curious. What was your motivation and Jane’s motivation behind starting that initiative?
Benedikt: To be honest, it was mostly Jane’s idea, entirely Jane’s idea. It was her first response to this whole pandemic coming over us and causing problems for a lot of founders, and we just wanted to do something to help out with the stuff we can do. Both Jane and I run podcasts, so it felt like an easy decision to just give shoutouts to fellow founders in our podcasts and just help the community that way.
Luckily, once we started reaching out and promoting this idea, a lot of other people like you joined with their podcasts, and I think at some point, we had more podcasts or more slots on podcasts than actual products. I’m not entirely sure what the numbers are right now, but the support we got or the support Jane got with this was amazing.
Rob: That’s something I love about this community of bootstrappers, makers, whatever we want to call them. That the founder community that we work in is, in general, just a very positive community. I think that comes from doing hard things, and knowing that putting things out in the world is pretty hard, and the generosity that I think you saw where you have more ad slots than Startups asking for them is pretty cool.
Benedikt: That was definitely an exciting part, and so far, I think it’s going well. People are getting shout outs. Some podcasts do really amazing jobs like doing real in-depth teardowns, more or less of the products, and the product ideas. It’s even more than just ad spots, at least on some shows.
Rob: I want to change it up and talk about Userlist. Userlist is behavior-based customer messaging, perfect for your SaaS. That’s the headline on your homepage. It’s basically emails and in-app messaging for SaaS apps behavior-based. A competitor of customer.io. You and I had chatted a little bit offline briefly about how it helps to couch in a person’s mind who’s listening like, what is this product similar to?
You guys have been working on this for several years now, and I know that growth has started picking up for you, but that in talking to Jane, again on the podcast several months back that it was really slow early on that it was slow getting going. Did that surprise you how long it took you to go from starting to build to $1000 of MRR?
Benedikt: It was definitely slower than we expected, but I feel a lot of that has to do with just how long it takes to actually build a product like this with doing consulting on the side, and basically doing this part-time. I’m sure if we were able to fully focus on it from day one, it would have been a lot faster, just because we didn’t have too many other things going at the same time, but then again, who knows? This is only a one time experience and not sure, maybe I’m wrong about it, and it would be slow.
Rob: It is pretty typical, especially both you and Jane were doing it on the side while consulting, is that right?
Benedikt: We had to pay our bills in the early days like the product doesn’t pay. With consulting on the side, you only get maybe a day or two of focused work on the product, especially on the technical side. Implementing the hard stuff makes it really challenging with just one or two days per week, then having a longer break, trying to get back into it, trying to remember what you did last week, what’s the plan to move forward, what changes are still missing, and stuff like that. Since we were able to go full-time earlier this year, we move a lot faster with everything.
Rob: I always struggled with that when I was still building on the side of whether to try to carve out a day a week. I really didn’t have the luxury at the time of carving out two days but carving out one day a week or whether it was evening hours and some weekend hours. Of course, in the evening and weekends, I was tired or I didn’t want to be doing it. I wanted that to be out having fun, but if I carved out the day a week, it’s exactly what you said.
You’d lose the context, the mental RAM of loading all the entire code base and everything, all the objects up in your head, the model, and then it’s like, well, I only have like six or eight hours to work on this, and then it’s six days—five days gap—until the next time, and it’s really, really cumbersome, and that’s where I think the difference between an early hypothesis of TinySeed was getting folks who are trying to do this part-time and get them to full time.
Even in the first batch, and especially in the second batch, most of the founders were already doing it full time. While that hypothesis has held in a small way, it’s not the main focus of what we’re doing anymore, but I do feel like that step from part-time to full-time focus, if you can work 15 hours a week on it versus 45 hours a week, it’s not three times more productive. I think it’s 5–10 times more productive because all of your focus is there. All of your mental RAM is devoted to it and you can just keep it loaded up constantly.
Benedikt: Even on the days where you’re working on the product test, there are so much other stuff going on in the background that just takes focus away. Just being able to focus on one thing for the entire time is just super valuable because it just removes all the other background tasks and responsibilities you have with your clients. That makes it easier to execute on the product.
Rob: Your growth has picked up. Why do you think that is?
Benedikt: I think what helped is that we launched our in-app messaging feature and recently launched our new $9 startup plan. I think that lowered the barrier for some people to try the product and get started using it, even when they’re still in early stages. Previously, we had the lowest plan of $49 a month and I feel there’s still a reasonable price point but for someone who’s just starting out, it was a little bit too much.
We wanted to offer a better deal for small people similar to where we are and provide them with a product that they can integrate early and start using to send messages to their customers. I think that helped, the numbers show that since we launched that plan, we get more trials and more trials to convert, especially into the small plan.
Rob: You feel it’s working so far?
Benedikt: Yeah. I think it’s working so far. It’s still below our goal, but the time horizon for that is still two months out. We wanted to reevaluate after two months, three months, and I’m confident that we’ll get there.
Rob: Right, because the danger obviously for listeners is, if your current lowest pricing plan is $49, and you’re going to introduce a $9 plan, (1) you can cannibalize some of your existing MRR for people who are who qualify for that $9 plan who are already your customers, and (2) people who would come and would have signed up for $49 sign up for your $9 and so you’re basically dropping your average revenue per customer, and that’s the danger of it. What do you think about that?
Benedikt: Our hope to limit on the starter plan on the new $9 plan is 100 customers, and we hope that people in that range are more willing to pay for a $9 plan than they are for a $49 plan. Ultimately, I hope it’s more people who are willing to sign up instead, and those who would have signed up instead and now are paying less than they would have before.
Rob: That’s the thing, 100 customers, so that’s 100 contacts, 100 people, 100 email addresses, and if you’re running a SaaS app, and you have 50 customers, if your average revenue per user is $1000 a month or something, wow, that’s a $600,000 a year business, but a lot of the SaaS (I think) that’s probably signing up for this when you’re under 100 customers, you’re still pretty early stage.
Benedikt: I think I agree but that’s also one of the challenges with our pricing is one customer of our customers is valued a lot differently depending on their business model. If you’re running a premium business, then one customer or one user in Userlist isn’t worth much, but maybe it’s an enterprise business that just needs 50 users to be super profitable, then when using Userlist is worth a lot to them. That makes it hard, but so far, I feel this is a good middle ground.
Rob: We struggled with that running Drip, too. It’s a similar thing. We’d have a blogger with 600,000 people on their email list, and they didn’t have that much revenue. They didn’t make that much revenue off of each person, so they were worth $1 amount less and then we’d have a consulting agency with 500 contacts or 1000, but each contract was worth $30,000, $40,000, $50,000 to that agency, and we shrugged their shoulders and said the only way to get around this or to figure out how to get more value-based pricing is to not just have it be a number of subscribers. It didn’t introduce feature gating where I knew the agency wanted integration with some Salesforce or they wanted integration with some tool that only the agents will be using and that the blogger would not use.
If we were to go, we didn’t wind up going down this path, because it just wasn’t worth the time. There were more important things to work on, but that’s how we would have done it is implemented a feature or two, and then put it in a gated, whether it was an add on of $100 per month to have that integration or whether it’s just a separate tier that you’d have to be. If you wanted the most value of an agency, that’s how I would think about it.
Benedikt: We considered this when we launched in-app messages. Basically, the idea was let’s just launch in-app messages on the larger plan, I think starting at $99 per month, but ultimately we decided against it because it felt a little bit against our ethos or motivation to build a tool for people like us, and then artificially limiting an essential feature or somewhat essential feature felt the wrong way to go. It makes more sense when the actual features are only valuable to a certain type of customer, but within that message, it felt like it was the wrong way to go.
Rob: Speaking of the in-app messaging launch, that was just a few weeks back, and you would talk on your podcast about you and Jane focused on launching it on Product Hunt, but it didn’t quite go the way that you wanted. You want to talk listeners through what the goal was, I guess, to get a lot of exposure and what went wrong there?
Benedikt: The plan, as you said, was to get a lot of exposure, especially outside of our audience, because we have a mailing list and we send regular updates to the travels on our mailing list, our customers, our Twitter followers, and stuff like that. I think most of them were probably aware that we were building this and working on this because frankly, it took a long time and we’ve been talking about this for months now. The plan for the launch was to make a little bit of a splash and get it noticed outside of our communities and our audiences, and the plan was to basically launch it on Product Hunt on that day, send an email to our mailing list, announcing it linking to the Product Hunt page.
I tried to get a lot of eyes on the Product Hunt posting and a lot of AdWords there, so it would get on the front page and rank really well. It gets a lot of AdWords and stuff like that. The problem is that it didn’t happen. We posted it and sent the emails, tweeted about it. I guess a lot of people in our audience saw it and uploaded it, but it wasn’t enough to get us on the front page, and then the popular category for the day. That essentially meant that nobody else saw it, or very few people outside of our audience saw it. That was a little bit sad because it didn’t work out.
Rob: Was it like you put all your eggs in one basket, the Product Hunt basket and it didn’t work?
Benedikt: Yeah, absolutely. All of our communication around the launch was focused on our Product Hunt page, even in our Google Analytics stats for our website, there’s no way to notice the launch. There’s no spike in traffic, nothing. We put all our eggs in the Product Hunt basket and that didn’t work out. In a way it was a little bit of a failure, to be honest.
Rob: That’s a bummer. It’s always an experiment to do that. We each face that dilemma. Anytime we want to do a launch, it’s like, okay, we’re going to post it to Product Hunt. Do we send everyone there? Do we send some people to our landing page and some people to Product Hunt, and some people to Hacker News? There are a lot of moving parts. There’s a lot of gut feeling of let’s try it out. Here’s the thing. If it had worked, you would have gotten a lot of exposure. Just because it didn’t work doesn’t mean it’s the wrong decision. I think that’s something to think about.
Benedikt: That’s true but next time I probably at least link to the website as well, in the emails and stuff like that. Just be deliberate about also, using other platforms properly. For example, post it on Indie Hackers. We did that but also linked to the Product Hunt page. We just did a bad job at promoting the launch outside of Product Hunt. In hindsight that was a problem.
Rob: It could have had a little bit of link diversification is what you’re saying?
Benedikt: Yeah, link to the website here and there, and then maybe have a little banner on the website that links back to Product Hunt or something like that.
Rob: That’s cool. I used to describe you as, hey, it’s userlist.io because that was your domain name, but you bought the .com six months ago or whatever, and you paid a few thousand dollars for it. I think you said the price on your podcasts. Do you want to talk us through? Obviously, the thought process is because the.com is awesome and now your name can just be Userlist rather than everyone saying Userlist.io, but was that a risk for you guys? Did you feel it was a lot of money to pay? Do you think it’s been worth it?
Benedikt: It was a lot of money to pay but I think it was worth it. It’s so much better.
Rob: What was the price?
Benedikt: It was $4000. I think in the episode with Jane, I think you talked about this a little bit as well. If listeners want to get to full details on the negotiation stuff like that, they should probably just go back there.
Rob: I probably should have mentioned this episode earlier. We talked about Jane being on the podcast, it was episode 471 of the show called, Fighting to Gain Traction in a Crowded Space, and we do talk about just about a bunch of other interesting stuff that I’m not going to rehash here, but you had a third co-founder and how you guys work through that.
I’m curious over this to this 2½ years, what’s been the funnest part? What’s been the best part for you where you think, man, this is so cool?
Benedikt: Getting it into the hands of the first customers, the first beta customers, and seeing them use the product and get some value out of it. That was definitely something exciting, and seeing the product work in reality and not just on my development machine, my test setup. That was definitely exciting. Once we launched the launch of the product on Product Hunt went really well. That was also exciting. Joining TinySeed was also a cool milestone, to be honest.
Rob: I want to talk about that in a second because we’re essentially five weeks into batch two that you’re in, but a little more than that we’ve been in the Slack channel. I want to touch on your experience there. Before we do that I’m curious what one or two things have been the hardest for you? You can either take us back to a moment where you were shaking your head like this is terrible or just talk more generally.
Benedikt: The hardest part was definitely staying focused while we were still doing this on the site, keeping up the momentum, and making meaningful progress while also doing a lot of other stuff. That was definitely hard, and I also remember late last year, there was a phase where a lot of stuff was going on. I think it was shortly after we applied to TinySeed, and for some reason, during a couple of weeks, customer support was just really tough. There were a lot of requests by customers and also a lot of very hard support tasks with people asking us to review basically their entire setup.
Answering one of those tickets took well over an hour just to browse through their account, understand what they were doing, figure out all the edge cases. It just was a lot, and it was really tough on me, and I felt in that week or those two weeks, I felt I’m burning out. I can’t do this. I can’t do this anymore, but eventually got better, and since then I’ve been a little bit more deliberate about not having notifications for every single support ticket that comes in just to not get distracted by work stuff when I’m actually not working in the evenings and things like that.
Rob: It’s really hard in those early days because you’re trying to make every customer super happy, and what becomes completely not scalable later, is spending 60–90 minutes on a support ticket, but in the early days, I remembered us doing it as well. I’ve done it with multiple products where I’m going above and beyond because you’re scraping and clawing, not only for every customer to keep them around, but you wanted them to just have that wow moment and you want them to tell other people about your product. In order to do that, you have to sometimes do things that feel ridiculous when you say them out loud. It’s an hour on a support ticket but that was probably worth it. They’re probably a customer for life.
Benedikt: Yeah. Also, at this stage, we’re still learning so many things about how people use the product, so it’s also valuable just from a product development standpoint just to dig in and understand what people are doing with the tool. We still do that. When the need arises, we really dig in and try to understand the problem and analyze what’s going on, but I don’t get notifications for every single email in our support […] anymore.
Rob: I think there’s a moment in every product’s lifespan, and it’s typically fairly early on where it’s like, okay, I need to disable the email I get every time a credit card is charged because when you have five customers and they charged across a month, it’s like, oh, it’s no big deal. When you have 100 or 1000, it becomes ridiculous. That’s a cool milestone, and that’s the other one. At first, hey, we’re getting one support ticket a day or three a week, and then suddenly, it’s like, well, we’re getting three a day, we’re getting five a day, and that’s a good sign that things are moving in the right direction, but you have to figure out a balance there.
Very cool. TinySeed I hinted at that earlier, as I said, in your introduction, Userlist is, of course, a TinySeed batch two company for the 2020 batch. I’m curious. You and Jane, why did you decide to apply? What did you hope that you would get out of TinySeed?
Benedikt: I hinted that a couple of times and the answer is definitely focus. This was the main reason for us. We decided to go full-time in January and made that decision even before applying to TinySeed, but it was clear that we’d only have a runway of six months or so. Applying to TinySeed allowed us to extend that runway by a little over a year and just be able to focus on the product throughout this entire year and not worry about anything else.
Of course, we didn’t know it back then but now with the pandemic, it’s really, really nice to not have to worry about getting a new consulting gig, finding new work, and stuff like that. We got lucky there, I guess.
Rob: Pandemic was unexpected for a lot of us but it’s interesting to hear, because obviously, I said earlier, hey, our initial hypothesis two years ago, when we started it was to get people working full-time. You were effectively already doing that, but it’s an extension of the runway. In a way, it still fits that initial hypothesis just giving you more time to focus full-time, and I think that’s going to be valuable for you all.
Benedikt: It really works out that way for us in our particular situation. We honestly thought about applying for a batch one, but back then decided against it. Back then we were still three founders and I think you invested a little bit less money than you did this time. Back then it didn’t make a lot of sense in terms of we wouldn’t be able to pay the three of us salaries that would allow us to just focus full-time. Back then it didn’t make sense but this time, just being two founders and getting a little bit more money, it has absolutely made sense.
Rob: That makes a lot of sense. We’ve just made minor tweaks from batch one to batch two. I think the terms were virtually identical. Except for that for additional co-founders, we upped the amount. We increase the amount that we give. That’s cool to hear that that made a difference for you. You’re five weeks in technically to the batch but we’ve all been in the Slack channel now for a few months. Any surprises for you?
Benedikt: No surprise so far, I guess. Nothing big at least. It was an exciting day. We all join the Slack channel and discover that well-known faces and friends in the batch. There are certainly fun parts and a surprise. Other than that, I am really enjoying it so far, especially the weekly calls, with small lectures by you and Einar. Those have been really, really good. I’m also a little bit sad that we didn’t make it to MicroConf US didn’t happen because we were supposed to go there, meet everyone. That didn’t happen, but the replacement online retreat that Tracy came up with was really enjoyable. Even though it was like three hours on two days, which is a ridiculously long Zoom call. It was still a lot of fun.
Rob: It was such a bummer for everyone. There are worse things happening. It’s hard to complain, but that was one of the biggest disappointments I’ll say, around the pandemic was not being able to have the MicroConf here in Minneapolis and not being able to get together both with MicroConf folks but also all of you in TinySeed.
All right, sir. Thank you so much for coming on the show. I think we’re going to wrap up here. If folks want to check out what you’re working on, they can head to userlist.com, and of course, the Slow & Steady Podcast you released with Brian every week and @benediktdeicke on Twitter.
Benedikt: Go to the show notes and click on the link. It’s easier.
Rob: I won’t spell his name out. Very cool, man. Thanks again for coming on the show.
Benedikt: Thanks for having me.
Rob: Thanks again to Benedikt for joining me today. If you want to invest in companies similar to Userlist we are working on raising our second fund at tinyseed.com/invest. Next week’s episode I’m hoping to do a Q&A episode, so if you have any questions for me or our potential guests I will bring on, please send them to questions@startupsfortherestofus.com and of course voicemails go to the top of the stack. I believe we only have one maybe two voicemails right now, so it will likely get answered next week if you send a voicemail in, but text questions are always welcome as well. Thanks for joining me today. I’ll see you next time.
