In this episode, Rob talks with Josh Pigford in a first appearance since the sale of Baremetrics for $4m. They discuss his seven-year journey to build Baremetrics, the details of the sale, and Josh’s post-sale, non-software aspirations.
The topics we cover
- [02:42] Intros
- [04:26] Avoiding capital gains via qualified small business stock.
- [09:08] Josh’s post-sale purchases and other dramatic life shifts
- [13:46] Changes at Baremetrics after sale
- [18:32] Weeks of cash to profitable in 8 months
- [23:20] Breaking through plateaus and product vs marketing for growth out of plateaus
- [30:13] What motivated Josh to start thinking about selling
- [32:58] Launching a new feature called Intros in 2020
- [39:11] Laser tweets and post-sale aspirations
Links from the show
- Episode 244 | Competition, Transparency and Funding with Baremetrics Founder Josh Pigford
- Baremetrics: Subscription Analytics & Insights for Stripe, Braintree, Recurly & more!
- I sold Baremetrics – Baremetrics
- Qualified Small Business Stock (QSBS) (mentioned at 04:26)
- Four Percent Rule
- How we went from weeks of cash left in the bank to profitable in 8 months (mentioned at 18:42)
- Revenue Dashboard – Baremetrics Demo
- I almost sold Baremetrics for $5m – Baremetrics
- Laser Tweets: Wooden Laser Etched Tweets
If you enjoyed this episode, let us know by clicking the link and sharing what you learned.
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!
Rob: Thank you so much for joining me for another episode of Startups For The Rest Of Us. I’m really excited about this week. It’s episode 534. It’s a breaking-news episode where I talked with Josh Pigford, the founder of Baremetrics, about his recent sale of Baremetrics for $4,000,000 to Xenon Ventures. Even though the sale was about two months ago, Josh has not been doing podcasts or blogging. This is the first time that I know of that he has come out in public and made comments about the exit. I’m really happy and excited for Josh to see that his seven-year journey of building Baremetrics wound up with that kind of success for him.
I hope you really enjoy our conversation as we dive into the specifics of the purchase price—how much he walked away with, how he is basically getting away with paying almost zero taxes on the proceeds. We talk about what he bought after the exit, how it’s changed his life. Then we look back at the last few years because Josh was on the show back in 2015 and several both exciting and stressful things had happened to him in Baremetrics in the ensuing five years or so. We dig into each one of those.
Before we do that, I wanted to encourage you, if you haven’t gone to startupsfortherestofus.com and have gotten on our email list, there are a couple of reasons to do so. One, every week we send an email with expanded show notes. It’s almost like a detailed outline that is taken from the episodes by our assistant producer. If you go to the website, you’ll see a quick summary with links. But if you are on our email list, you get an email every week with a full-blown outline that includes time codes and just a really fleshed-out version of the episode in writing. That means you don’t have to go through the transcript. If you want to refer back to things, you can get it there.
In addition, if you do sign up to be on our email list, there are two episodes that have never been released on this feed. There’s Rob’s solo episode where I talked about the eight things you must know when launching your SaaS app. The other one is 10 things you should know as you grow or as you scale your SaaS app. I’ve got really positive reviews about both of those episodes. They also come with written guides. They’re like five-, six-pagepage PDF versions of the episodes in case you want to refer back to them or see it in writing. I’d encourage you to check it out, startupsfortherestofus.com, and enter your email.
With that, let’s dive into my conversation with Josh which, in all honesty, turned into a really good, steady-flowing, funny, entertaining conversation. I really think you’re going to enjoy this episode. Let’s dive-in.
Rob: Josh Pigford, thank you so much for coming back on the show.
Josh: Thank you for having me, Rob.
Rob: Your last appearance on Startups For The Rest Of Us was in 2015. It was episode 244. Where we talked about competition, transparency, and funding. We talked about how you had raised, I believe at that point, the full $800,000. Maybe it was only half-a-million at that point. But eventually, you raised a full $800,000 in funding. I asked on the show whether you regretted that at any point, and you said you really didn’t. That you didn’t regret the raise. That at some point, you regretted burning through it a little too fast. Does that ring a bell?
Josh: That’s accurate.
Rob: That’s usually what happens if you burn through it.
Josh: I wish I had not done that.
Rob: That’s the one thing. I am trying to imagine who’s listening to the show who hasn’t heard of Baremetrics. But Baremetrics, you started in 2013 and it was the first, essentially one-click subscription metrics for SaaS apps that worked on Stripe. You just one click, enter your Stripe account, and it gives this gorgeous dashboard of your MRR, LTV, your Churn, all this stuff.
There are certainly other apps that are out there doing it today, but it’s quite a success story in the early days. You and I actually talked about your pretty meteoric growth over the first couple of years. Again, you started in 2013, and we talked in 2015. Since then a ton has gone on.
I’m realizing, I should have had you back a couple of years ago. So many interesting things have happened to you and you’ve done so many interesting things with Baremetrics that there’s a lot of stories to tell here. But realistically 2 ½, 3 months ago, you wrote a blog post called I Sold Baremetrics and that was in November of 2020. In true Josh Pigford transparency, you walked through that there was no earn-out, that the sale price was $4 million, that you personally walked away with $3.7 million in cash. I believe you didn’t pay capital gains tax on that due to the qualified small business stock, is that right?
Josh: That’s correct.
Rob: Which is incredible. For people who don’t know, it’s called QSBS. That is mind blowing because normally you would pay 20% federal, I believe, or at least 18% federal. Then if you have any state tax, you would pay on that. You’re saving yourself between 20% and 30% of that number. What is QSBS for someone who hasn’t heard of it?
Josh: This is basically only really applicable in the US. But what the US government was trying to do was encourage people to hold on to stock in a business for longer periods of time They set up QSBS to say, after five years of holding on to the stock, you can cash out, and not pay any taxes on it—federal, state, et cetera. That requires the states to recognize it which is a classic Alabama fashion. Alabama does not recognize it. I actually end up paying 5% tax on mine which is still better than capital gains.
Rob: Thanks, Alabama.
Josh: That’s right. But otherwise, you pay no taxes on it. That’s cash in your bank.
Rob: Which is incredible.
Josh: It is. That’s one of these scenarios where when I formed Baremetrics as a C-corp that was not anything I had even remotely thought about. I didn’t even know it existed. I set it up as a C-corp because we were raising money at the time. I was like, okay, to do the whole shares-thing, C-corp is the natural entity for that. Otherwise, that would not exist for us.
Rob: If you’ve done an LLC, there’s no QSBS.
Josh: Right. It’s a different story. Honestly, I stumbled upon that by purely just luck.
Rob: You have to hold it longer than five years. The fact that some startups sell before five years and you did hold it for, in essence, about seven years, also opened you up to that. That made it possible. At a certain point, some of these tax benefits make it such that a sale is maybe feasible or not. The question I have is, would you have sold it if you had to pay 30% tax on that number because that’s a much smaller number?
Josh: Totally no, I would not. I remember in 2019, it’s probably April 2019, I had an offer for around $5 million. But it was an asset sale instead of a stock sale. After all that was said and done, nearly 50% of the purchase price would have gone away. I would not have done it then. It’s not worth it. It definitely is a make-or-break deal.
Rob: The thing is, I’ve heard people say, how do you calculate your number? Probably the number that you need to potentially live forever on, so to speak, to retire on. Knowing that people like you and I are never going to not do interesting things, not make things, we’re probably going to make money doing them as we get into later with your woodworking, your Laser Tweets, but just to have that safety of being like, I don’t have to work again.
There’s this rule called the 4% rule that economists studied. I think it was in the 80s and it’s been updated since then. They say, if you have enough cash in the bank, that you can live on 4% of that, then you can live for a 30-year retirement. They ran a bunch of scenarios and most of them worked and some of them don’t. If you sell right now, you put most of it in stocks, and then there’s a huge dip right away, it actually doesn’t work. There’s a timing of events.
Me, I want to be a little more concerned than that because these days, especially right now with stocks at historic highs, I don’t know if the 4% rule is as safe as it used to be. I don’t think it is, personally. But certainly, if you start notching down to a 3.5% rule, a 3% rule, you’d think about, oh, if I had $4,000,000 in the bank, 3% of that is $120,000 a year that you can draw. In essence, that’s your money. You don’t pay income tax on that. It’s already in your bank account, in essence. It’s not a $120,000 salary. It’s more like a $170,000 salary to pull a $20,000 out.
The idea there is a 3% rule. If you had $4,000,000 in the bank, you could potentially live for 30 plus years. In many of the scenarios, people actually had more money left at the end of the 30 years because of just the way the stock market has performed historically. All that said, a lot of people think, Oh, I need $10,000,000 to retire or $20,000,000 to retire. You probably don’t, assuming you’re decent with money, you invest well, you’re not crazy with going out, and buying a Lambo once you get the check. That leads me to my next question which is, did you buy anything in the past two or three months that maybe you’d been waiting most of your life to do? Did you make any crazy purchases?
Josh: The first thing we did was pit off our house. To your point about the 4% rule, that was a big part of our mortgage. It looks like a couple of thousand dollars a month. It’s like, okay, that instantly goes away. All of a sudden, your needs from a cash perspective drop pretty drastically. It’s like at that point, we have no debt. It’s like, okay well, we certainly can live off of the interest of $3.7 million.
Past that, I paid off the house and then bought a Tesla. That was it though. I went back and forth on the whole Tesla thing. We ended up getting a model X which was the most expensive Tesla which I was super happy with. But also, I’m not a big spender. I don’t care to buy really expensive things. I went back and forth on that one for quite a while. But I bit the bullet and I’m happy with it. Everybody loves it, too. That’s what it’s been.
Rob: Yeah, that’s what I found with some larger purchases. We both came from humble beginnings, I’ll say. My dad was an electrician. Mom didn’t work. We always had food, but definitely did not have money for any types of fancy stuff. I’ve always been pretty tight with money. As I started having some entrepreneurial success, we bought a bigger house. As you said, we had a house payment. It was $2,500. I remember being like, oh my gosh, that feels a lot.
Now, of course, it’s like, well, that’s not terrible. Not that big of a deal. After selling Drip, eventually upgrading, my cars were always used beaters that I drove for 10, 15 years. I had a salvage title Buick Rendezvous that I bought for $8,000 in cash from a gas station in Fresno, California. I drove that for 10 years while we were building Drip. It had the side-mirror taped on with duct tape. It just never bothered me. It was just a car.
Then after we moved to Minneapolis, I wanted an all-wheel-drive car with a remote start and heated seat. I’ve never had any of this stuff. I bought a Volvo which is when you hear it, it’s like, oh isn’t that like your grandpa’s car. But no, they’re actually crazy luxury, and they’re really nice cars. It was a big step. Frankly, Sherry pushed me to do it and encouraged me to do it. It was a good move so I hear you on that. Of course, I bought it used because I just couldn’t stand it.
Josh: We were the same way. It was like, I kept looking at like, should I get a used model X or something like that. Then it’s just like, no, we have nothing else. We’re just like, let’s spend tons of money on it. I was just like, let’s just buy it and be done with it.
Rob: Is there any other way you can think of selling Baremetrics and having these last few months to do really, truly what you want with it? Is it a dramatic shift? Do you feel your life has changed pretty dramatically?
Josh: I feel it has changed dramatically from a mental perspective. From a day-in and day-out, what am I doing? I still come up to my home office and do stuff. It’s not Baremetrics. I’m still doing things that probably most people would classify as work. What I don’t find myself doing is going home or leaving my office, and I’m still mentally chewing on whatever it is I’m working on. Whereas with Baremetrics, it goes to say, I would go to sleep worrying about something, maybe an employee had said, or maybe there’s an employee that seems like they’re unhappy so maybe I’ve had this gut feeling that they’re going to leave soon. These things that just occupy your brain space, that stuff pretty much went away overnight. I feel probably mentally freer than I had in the previous seven years.
Rob: I definitely know that feeling. It chews up a lot of mental cycles running a business.
Josh: After you do it for years, you don’t even realize how it’s become the baseline for you. That’s probably the biggest shift for me. It’s not chewing on stuff for days and days.
Rob: You have taken some time off social media, right? Or you had planned to?
Josh: Yeah. I take a little bit of time off. But I think pandemic stuff has made it. Social media can become, for me, some sort of like a social lifeline when it’s harder to see people in person as much.
Rob: It makes it tough. I’m curious, I’m going to ask you as someone who has gone through similar experiences of selling a company, leaving, and having the new owner perhaps make some decisions that I wouldn’t have made. With me, it was a Drip price increase with no grandfathering. That happened very quickly. I was not involved anymore. I sat and watched that debacle unfold. Over the past couple of months, I think that the new owner of Baremetrics has made decisions that you probably wouldn’t have made. I believe there are cancellations you have to call in. There’s stuff. They’re changing flows. How has that impacted you emotionally or in another way?
Josh: I don’t know that it has impacted me emotionally at all. It’s one of these things where, okay, if I have to have an opinion on this, my opinion is I would not have done that. We did not do that while I was running the company. I still would not do it. But I also know that there are different ways of doing things. It doesn’t bother me. Almost what bothers me more is in that particular case where the whole call-to-cancel thing while I’m not involved with Baremetrics. They still were keeping me informed like, well, here’s actually what went down. Everybody was piling on, and the reality was, there’s a lot more to that story than what probably seemed like on social media where everybody’s just piling on, which is always the case.
When somebody posts some angry thing on Twitter, the reality is, they’re not including everything. That was one of those cases where everybody’s piling on Baremetrics. I disagree with the call-to-cancel thing. But at the same time, there’s more to the story here. Baremetrics people just had to bite their tongue and let it pass.
Rob: I didn’t see you getting involved. You were just like, yeah, I’m not going to.
Josh: I didn’t at all because the only way that I said anything about it was I tweeted something about how I was going to write up some rant and then I just decided that I don’t care because that’s the reality. I have an opinion here, but it doesn’t matter.
Rob: That’s it. I hear founders say, I’m starting a new company, and I’m going to hire a CEO to run my old company. I’m going to run two companies at once. Why would I sell? It’s growing. It’s doing well. That’s one of those instances where I’m not saying you should sell or whatever, but there are moments where you are happy that you really are separate from the business, that you’re not, still an owner that a CEO is running. There really is a clean-cut between you and the company.
Josh: I had explored that, too. Let me hire a CEO and I’ll just sit back. But then the whole brain space thing, the whole mental breakdown—we talked about a few minutes ago—you don’t get the break from that. It’s still there because whoever’s running, runs it into the ground, that affects you.
Rob: Yeah. You’re under-diversified. You have literally millions of dollars in cash in this private company that you can’t get out and that’s tough. There’s a lot of risks there. A little bit joke-y but truly but did you buy any crypto with your mad-stacks of cash?
Josh: What we did with the money is we got a financial planner. Planner is probably the wrong word. I meant this financial planning.
Josh: Yeah. They’re managing our money for us. We basically just put it all with them. They’re handling buying the appropriate stocks and bonds, moving things over at the correct times, and all that stuff. In the same way that I pay a CPA to handle my taxes because I hate taxes and don’t want to try to become an expert on it. It’s the same with the life financial stuff where I can’t simply really wrap my head around it so that I don’t screw it up. I’m going to let somebody else do it.
Rob: Personal finance and investing have been a hobby of mine, a sick twisted hobby, much like entrepreneurship for years. I still manage my own money but I do think there’s a case to be made for getting outside help, getting experts as long as you find someone you can trust. As long as they’re being fairly compensated but there are no hidden fees because that’s something that happens in that space.
Josh: That’s crucial. I remember the first financial advisors that we talked to, I really got a sleazy feeling about him. I would not feel comfortable here and we found someone with whom I didn’t get that vibe with. I think that’s crucial, finding somebody that you feel okay with.
Rob: I want to roll the story back until late 2016. At a point where you almost ran out of money. Baremetrics almost ran out of money. You blogged about this later in March of 2017. How we went from weeks of cash left in the bank to profitable in eight months. The beauty, Josh, you were telling me offline before we started this. It’s so easy to interview you because all you have to do is go back and look at your blog posts and you just tell this extremely open story of what’s going on. You can almost just step from the crisis.
You write a blog about things that are really hard or really amazing wins. Those are the things that are interesting to talk about on the podcast. Almost running out of money and then trying to sell the company, and then selling it—these are all basically bronzed for us in these blog posts that will live on.
Talk to me about this decision in late 2016. By that time you had raised your funding, and I believe you were through it. You burned it. You’re running out of money. What was your thought process there? What was the story? That had been quite stressful. The first is how painful it was for you to sit here and think, I’ve built this amazing company for three years. We’re the envy of a lot of SaaS founders because you’ve been telling your story publicly and then, wow, I might miss payroll next week.
Josh: In 2015, we were on this traditional VC trajectory of okay, we need to get to a million MRR. That’s the next goal. We had raised $500,000. I was coming to the end of that. I was like, okay, we got to raise some more money. We raised $300,000. That was the end of 2015.
As 2016 progressed, we did not have the growth. It’s just a classic startup story of like, you keep raising money, and then you’re not hitting the growth that you thought you would. You’d just start burning through all your cash. Mid to late 2016, we had, in fact, started running out of cash. The financial details of things tend to bore me. I’m in the big picture. Let’s just build a product and see what happens. That’s fun to me, the building things. Managing things and spreadsheets is not fun for me.
That had gotten out of hand for me. I had not paid attention to burn rates stuff as I should have. All of a sudden, I realized, okay, we’ve just got a few weeks of cash left. We got to make some big changes here. I had already gone through the second round where we raised $300,000 more. I was like, man, I can’t do another. Let me go ask for more money from people.
It was either ask for money from people or let’s see if there’s a scenario where we can get profitable and not lay people off. The way that we did that was, everybody on the team took a 15% pay cut. I took a 30% pay cut. From a Silicon Valley perspective, our salaries were not astronomical or anything to begin with. By the end of 2016, we were able to change the graph so that we did not run out of money.
Rob: That’s tough. Did you lose anybody?
Josh: No. We had two people left. I was disconnected from that whole situation. It wasn’t like we had to lay people off or people were like okay, I’m not making enough, I need to leave. There are people who, from 2015 with those pay cuts, they’re still at the company today. All through, I’m pretty proud of how we handled that. But I guess, more grateful for the people who were willing to stick around.
Rob: Yeah, I bet. How was that? Obviously, it wasn’t fun. Did it take a noticeable toll on you? Is that one of the weeks where you maybe didn’t sleep well? Drink a few too many bourbons? How do you cope with that stuff?
Josh: It certainly affected sleep a lot. For me, the stressors with Baremetrics were almost always around the people. A wonderful team, but I always wanted to not do anything that would put the team in some hard position. The fact that we were putting people in our position by asking them to take a pay cut made me sick to my stomach. It was one of those things where, with entrepreneurship, I signed up for the roller coaster ride. I’m aware of the ups and downs. Baremetrics is not the first thing that I’ve ever started. Me, my family—we’re used to some instability when it comes to the financial side of things and comfortable with it, ultimately. But no one I hired signed up for that. It’s tough to ask people to do that. Certainly, some sleepless nights were on them.
Rob: Yeah. I could imagine that. Another interesting point, probably another down point is Baremetrics had a few plateaus over the years. A lot of folks listening to this building SaaS apps have experienced that. Where you’re growing, everything is going great, and suddenly, it’s like, why are we stuck at $30,000 MRR for six months?
People can go to demo.baremetrics.com and they can see your MRR since inception. That’s all I did in preparing for this. It looks like from late 2017 until early 2019, you’re growing a lot faster before then and then you were between $90,000 and $100,000 for 17 months, or 16 months, or something. What happened there? You broke through it. Because I believe right now, Baremetrics is at $150,000 MRR. Obviously, that’s the remedy itself. The first question is, what caused that, and then the second is, how did you figure out how to break through it?
Josh: There’s a number of things. One, there was some technical stuff. We were having to spend a lot of time rewriting things because when you build something, to begin with, there are all these things where you could build this thing to scale up to hundreds of thousands of customers or millions. But then you would never launch the thing because you spend all this time pre-optimizing things.
As is the case with most software, you get to a point where you’ve reached the technical limits of what you originally build. We delayed that rewrite as long as possible. But the 2017-ish timeframe was when we’re hitting the limits here. We ended up spending a ton of time rebuilding the internals. Externally, the customer seed—nothing from an improvement perspective. That was a lot of the plateaus. It was like okay, there are things that people are asking for or wanting but we don’t have the bandwidth to do those things right now because we’re in the middle of this rewrite.
That was a lot of it. Then at the same time, this is about when Stripe starts rolling out their own analytics thing. ChartMogul is probably the most—from a competition perspective—they’re pretty strong and they’ve handled the infrastructure stuff a lot better than we were able to at that time. There’s just all these things that converged and made it really difficult for us to grow ultimately. We only had six, seven people, and all of them focused on engineering stuff. No marketing team or anything like that. It was just a lot of different things that all piled up.
Rob: That had been tough for 15 or 17 months to be plateaued like that. How did you break through it eventually?
Josh: We made the infrastructure changes that ultimately allowed us to do more real-time stuff where previously, your metrics would be delayed by 24 hours. Those infrastructure changes set the groundwork for us to have a more powerful tool. You can do more real-time metrics, you can create all these different segments based on all these different attributes. From an analytical tooling perspective, Baremetrics became a lot more powerful. That was a huge one. As a tool, it lets people do a lot more than they could previously.
Then we started doing these add-ons. We’ve got recover, cancellation insights. There are these different add-ons that make Baremetrics as a tool more powerful. I do believe that product is ultimately what got us through the whole plateau thing. We hired a growth person for a while. That didn’t really work out and didn’t really have any progress there. At least, the entire time I was there, the product, and to some extent, the content stuff drove growth for us.
Rob: Yeah. That’s what I was going to ask was the product got you out of it? Do you think marketing could’ve gotten you out of it sooner? You and I are product people. The expression of like, hey, when you’re a product person, building features is a way to get out of plateaus. But I often think that more marketing could be helpful in those situations. But I’m curious about your take on that.
Josh: I wanted marketing to be this magic pill for us. Especially in the early days, it was product and it was me writing blog posts every single week. That works really well in the early days. But eventually, me writing a blog post every week, I just couldn’t keep up with it. Hiring a marketing person, my hope had been, okay, we can have somebody who can really focus on just marketing this thing and doing the things that I don’t have a skill set for.
For whatever reason, that ended up not really being the case for us on the marketing-hire side of things. I don’t know exactly what Xenon, the acquirer of Baremetrics, is doing on the marketing front now. But the entire time I was there, we never found this marketing channel or set of channels that worked really well for us. A lot of that was just my lack of skill, or maybe it was budget, or willingness to spend money. I never really found it.
Rob: Interest, too, probably.
Josh: Interest, for sure.
Rob: You’re not that interested.
Josh: Yeah. We hired a content marketing person. He was fantastic. If anything, I hired him in January of 2020. He had about eight or nine months where we worked together before I sold the company. In that time, he got that machine going again where it had died off in the previous couple of years with me trying to manage it. I still think content was and maybe still is the strongest acquisition channel for Baremetrics. It was hard to do anything outside of that.
Rob: Yeah. It’s interesting to hear you say, we never really found the channel outside of content and yet you grew a business to almost $2 million in annual recurring revenue. There are many ways to do this. One could argue well with, if we had found the channel over the seven years, it would be a larger business. But it’s also still possible.
Josh: Our friend, Nathan Barry with ConvertKit, was just doing nothing for years almost. He would say the same thing where he’s just at a few thousand dollars a month. Then does almost nothing on the product side, but repositions himself in the product. It just starts growing like gangbusters. I kept thinking with Baremetrics, are we just focused on the wrong people? Is our target market wrong? We just never could find whatever switch to make that happen.
Rob: In December of 2019, you wrote a blog post called I almost sold Baremetrics for $5 million. Leading up to that, I’m guessing, and correct me if I’m wrong but you’re basically, almost six years into this business, it’s growing but maybe not as fast as one would like. Do you feel like you were experiencing burnout? Were you tired of the grind? I guess the real question is what motivated you to start thinking about selling it?
Josh: A lot of that was life timing. I had not been thinking about selling. I certainly had not been pursuing anything and then got an email with a decent offer, relatively straightforward. No complicated stuff attached to it or anything. I was like, maybe this would make sense. At the time, family stuff was rough. There’s just a lot going on that it’s like man, I would love to not have this mental burden of running a company. That started the train down the tracks. Ultimately, it worked out.
Rob: The interested time folks can read that blog post if they want to hear more about how it didn’t work out. That was a bummer. I had to imagine. Obviously, later you sold it and basically got more money because you don’t have to pay taxes due to QSBS because it was a stock sale versus asset. But after that sale fell through, what was your headspace? How devastated did that feel? How did you pick yourself up after that?
Josh: From the time that I got that original offer—that was April and I might have a few months off here—it was August, September when I was like, okay, this is not going to work. At that point, I was so burned out on the process that I had accepted this isn’t going to work out, or at least this time around. I can’t pour more into this. I just need to get back to work.
After I made that decision, I really did not spend much time wallowing. I was just like, okay, well, this is what we got. Let me get back to work. A couple of months later, I hired three people. It was just, let’s go all-in make this happen. I was not as bummed as one would think. But I was probably more so because my nerves were just shot from the whole process and all that falling through.
Rob: I have a lot of respect for that because I don’t know if I could’ve recovered that quickly. My personality is I would hang on to things for months and probably wallowed in the sadness. But it sounds like that really wasn’t the case for you.
Josh: Other than like being bitterly angry at the people who ultimately ghosted us, screw those guys, but other than that, I was ready to get back to it.
Rob: And then in 2020, you launched a new feature. You said you hired people. You launched a new feature, this feature called Intros where I believe you had conversations with investors. It was going to match up potential investors or acquirers with Baremetrics customers who had opted into this thing of, hey, I am looking for funding or I am open to acquisition offers. Here are all our metrics. It’s a natural fit. You had conversations where people said, hey this is a great thing. You built it and it didn’t work. What happened there?
Josh: Of all the things that we had built with Baremetrics, I felt so confident in our research phase of this idea. I had dozens and dozens of calls with ultimate investors because they would be the customer here. We did interactive mock-ups before we wrote any code. We just tried all sorts of things to try to prove the idea before we spent the time to build it.
I felt so great about it. I also had this classic entrepreneur, pie in the sky. This is the thing that’s going to blow it up for us because we’re talking about million-dollar deals here. We’ll be able to make tens of thousands into MRR on day one. That’s the kind of feeling that it had.
We had so many investors who had signed up to be notified when it launched, even outside of all the people I had talked to. Then we launched it and I didn’t get a single paying customer for it. It was such a downer for me and the team as a whole like, where did we go wrong here?
That was probably one of the biggest morale destroyers in the history of Baremetrics. We spent months building this thing. It felt like we were onto something and we got it wrong.
Rob: Yeah. It’s tough. To me, when I think about Intros, obviously, you were going to charge the investor’s side for deal flow, in essence. When I think about it not working, I think well, that makes sense because most investors don’t actually need that much deal flow because they’re giving away money, giving it away in exchange for equity. Still, you’re going to have money and you’re going to invest. Deal flow isn’t as hard as I think people would make out.
If you were just to pitch me the idea, I’d be like, yeah, I’m not sure this is going to work. But the fact that you then did the mock-ups, have the conversations, did the validation, and that all pointed towards it working, that’s the surprising part to me. I just would’ve thought that there would be signals earlier in the process.
Josh: In all my conversations, probably where we didn’t spend enough time harping on this with the investors was the cost of it, or how much they would be willing to pay. Occasionally, someone would recommend, well, how about you take a percentage of the deal that goes through or whatever. We were trying to not complicate it or have a contract signed. We’re now some partial owner in whatever the deal is. There are a lot of different ways you could charge for something like that. We’re just trying to just say, okay look, if we can get you one new deal a month that you, otherwise, would not have gotten, this has got to be worth at least $500,000 a month or something like that. We couldn’t make it happen.
Again, part of that also went down to my aversion to sales-y marketing stuff. It’s like if we had had someone, a proper salesperson handling all that stuff, maybe we could’ve closed some of those deals. After we launched it and could not get people to convert, it was just okay, I don’t know what else to do here because this is so far out of my wheelhouse.
Rob: Right, and at $500,000 a month, it’s more of an enterprise sales process and you didn’t really want to do enterprise sales.
Josh: I did not. It just kills me. It’s not that I don’t think the product could’ve worked. I have seen a bunch of stuff, other things crap up in the past, a year or two since then, from people building similar things like trying to have deal flow and hooking up to your Stripe account and all this stuff. People are still trying it. I was the wrong guy for it.
Rob: That’s the thing I think folks should realize. Validation can work. I will say it does work not all the time. Oftentimes, we validate incorrectly or we make mistakes with it. Sometimes it does give us false signals. Validation is not 100%. But also, when you launch something, a lot of times, knowing yourself and knowing—like you said—what you are interested in, what you’re willing to do, sometimes a product needs something different than that.
As you said, I can feasibly be successful if it has different folks running it. I think of TinySeed and if I were pitching investors and raising money, TinySeed would not be nearly as successful as it is with my co-founder Einar Vollset, who is designed and made for that. It’s more of an enterprise sales process, its relationship, and all that stuff. Much like you, it’s not my sweet spot. In fact, I don’t ever want to do it, ever.
In that case, TinySeed wouldn’t work for me if I had started it on my own. It sounds like interest is a similar thing where it wasn’t in the right place for you. You did wind up selling it for $400,000. It was a year and a half later or something when you wound up getting some cash out of it.
Josh: Yes. I talked about from a moral perspective, how that thing’s failing was such a bummer for everybody. But selling it $400,000, it sort of flipped that over and everybody was really stoked on it. One of our goals for that year when we sold it was to get more cash in the bank. We got profitable after we almost ran out of money. But we were still operating pretty much right at breakeven on purpose. Having just some more cash to the bank to get a little bit more of a buffer wasn’t one of our goals going into the year. Being able to get that buffer in by selling this thing, the leftovers, felt like a win for everybody. I was happy with that outcome.
Rob: To take us forward, two, three months ago, you wind up selling Baremetrics in a true life-changing exit. I asked you before we hit record, Are you going to do the smart thing and take six months off, or knowing you, are you already working on your next thing?
You told me about Laser Tweets which I had seen you tweet about now and again. But I thought it was a hobby thing that you were doing. Folks can go to lasertweets.co and you have a full-on online store here, sir, with their coasters that are laser engraved with people’s tweets. You have a Lil Nas X Coaster set. The first one says, “old town road is literally about horses.” You have this one from Kanye West, well you have a whole set of them. But he says, “I have no interest in working with anyone who is too important, or too good, or too traditional to take a call at 3:00 AM.” Tell me about your maker. This makes sense. Tell me about how this came about and what it’s doing?
Josh: Yeah. It’s super dumb, Rob. In 2018, I got a laser cutter just because, why not. It sounded fun. Then I was like, maybe I should figure out some way to make something with it. Let’s laser etch tweets into woods and see what happens. It was still very much a little hobby thing. In 2019, I made $10,000 from that year. Then this past year, 2020, it’s certainly picking up in the summer. When I sold Baremetrics, I closed the deal by the end of October, early November, which also coincided with the shopping season for holidays.
The second I sold Baremetrics, I instantly jumped into running the laser cutter for 12 hours a day and packing orders all day. This just blew up, man. That’s what I’ve been doing. I haven’t taken a break because I’ve been laser etching Kanye tweets.
Rob: This is the most bizarre ending to a startup exit story that I’ve ever heard. Did you make some money?
Josh: I was looking at it now and I have $20,000 in 2020. I have doubled my growth. This is rocketship growth stuff here, Rob.
Rob: You need to raise funding. I think that you’re onto something here. Oh my gosh, I love it, man. Are you going to continue doing this? It sounds like it has legs of its own.
Josh: I guess. It was certainly not my plan to jump right into it. Right now, I want to see things through. With Baremetrics, for instance, I felt like my role or like my usefulness at the company, my ability to grow it ran its course. I was the wrong guy to keep trying to run the company. With Laser Tweets, it’s like, I’m still the right guy for it. Let me just see what happens. When we doubled sales for the past year, what happens if I double it again this year, in 2021? The first part of it is next year, sell it and be done with it then or something like that.
You’d asked about taking some time off, I don’t feel any desire to start anything new. This is more like, let me just see this through to the end of this thing that I’ve already got going. It doesn’t stress me out. That’s nice.
Rob: It’s nice that it’s so different. So different than running a SaaS app.
Josh: Exactly. I’m avoiding software, building any kind of software like the plague. I just don’t want to touch any software. This is very much not that. It’s handling wood and just like making physical things. That’s almost therapeutic for me, especially because with Baremetrics, it had to work because there were people, families relying on me not running that thing into the ground. Whereas like with Laser Tweets, if it stopped tomorrow, if people no longer wanted Kanye Tweets, fine. Who cares? I don’t. It doesn’t matter. There’s no stress associated with it.
Rob: That’s why I’ve loved watching you over these past seven, eight years since we got to know each other at MicroConf, and on Twitter you’re always doing interesting things. You’re framing them in a way that is both admirable and inspirational to a lot of folks. You make people around you want to build things. You make people want to be entrepreneurial or to do cookie things. I have a lot of respect for what you built with Baremetrics. Honestly, I’m just super happy that this was your outcome. I don’t like to use deserve because it just said a loaded word. I feel like you worked your ass off and you earned some success. Props to you.
Josh: Thanks, man. I appreciate that.
Rob: If folks want to keep up with you, you are @Shpigford on Twitter, obviously lasertweets.co if they want to see the amazing. Dude, you have picked out. Your taste in curating these is amazing. There’s the Elon Musk set. There’s Donald Trump coupled on, Trump sets. I notice Kanye West has the most sets.
Josh: He’s easily the most popular. Followed by Elon. People love some Kanye.
Rob: I can’t stop laughing as I read through these. I love it, man. Thanks again for joining me, man. If you do get the startup bug, I’m curious to see it over the next few months. You’re a maker. You’re a creator. You’ve built multiple SaaS apps. A lot of people don’t know that you had several apps before Baremetrics. But I am genuinely curious to see if it comes back to you. You’re always going to build and launch things. I wonder if you’re going to ever want to do software again.
I have not had the itch to launch production software since we sold Drip. I still build things. I still have packy-hacky ass PHP scripts that I connect to this and that API. I do things and I love codes. I’ve been writing codes since I was eight. But to launch something into production for other people to use, I have not had that desire. I’m, of course, scratching that itch with this podcast, MicroConf, and TinySeed. I’m building interesting things, things that are interesting to me through that. I’m curious to see how, aside from Laser Tweets, you figure out how to scratch that itch for yourself.
Josh: I’m curious as well. I think that the reality is I’ve been building software, trying to make money off of software for the better part of almost 15 years. It’s not like, oh, I’m stuck with Baremetrics for seven years. I’m moving on to something else. I’ve had a career, essentially, in the SaaS world for 15 years. Okay, I feel like I’ve done that. Now, I’m ready to move on to try other things. I get bored. I’m curious what the next few years look like.
Rob: Yeah. Congrats again to you, sir. Thanks for joining me today.
Josh: Thanks, Rob.
Rob: Thanks again to Josh for coming on the show. Thanks so much for joining me again this week and I’ll be in your earbuds again next Tuesday morning.