In this episode, Rob chats with Dan Norris about selling his productized service to GoDaddy, his latest book, and latest business, a very successful brewery in Australia. They also ruminate on the impact that post-exit money has had on their lives.
The topics we cover
[07:04] Finding the motivation to write 6 books
[07:38] Selling WP Curve to GoDaddy
[18:11] Compound Marketing and applying the principles to Black Hops
[33:53] Life post-exit and the arrival fallacy
[45:57] Rob and the sale of Drip
[53:37] Building a SaaS to sell vs as a long-term, profitable company
Links from the show
- Episode 183 | 5 Startup Rules to Live By with Dan Norris
- The 7 Day Startup
- Compound book
- Black Hops Brewing – Gold Coast Craft Beer Brewery
- State of Independent SaaS Report 2021 — MicroConf – The Most Trusted Community for Non-Venture Track SaaS Founders
- Dan Norris (@thedannorris) | Twitter
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: Welcome to this week’s episode of Startups for the Rest of Us. Thanks again for joining me this week. This is the show where we look at ambitious yet sane approaches to building startups. It’s not the Silicon Valley approach of raising buckets of money, not having any customers. It can be bootstrapped or mostly bootstrapped. But these are capital, efficient businesses that may not change the entire world, but they’re likely to change our little corner of it.
I’m your host, Rob Walling and today I have the pleasure of speaking with Dan Norris. This was such a good conversation. I let it run a lot longer than most Startups for the Rest of Us episodes. Dan and I have known each other, I don’t even know now. Probably a decade is a little long, but eight or nine years.
He and I have only met in person once, but I have followed his journey. He’s written several books. You’ll hear me talk about a few of them in our conversation, and he went from having a couple of failed SaaS efforts to then starting a productized service that grew quickly and he sold to GoDaddy. Now he runs a brewery, a very successful brewery doing north of $10 million a year in revenue down in Australia.
Dan and I talked through success, exits, and what changed in his and my life after we sold our companies. Dan actually turns the table on me towards the end of the interview, probably about 40 or 50 minutes in, and starts asking me questions about selling Drip and my thoughts on all kinds of things that I think will be interesting for you to hear. I gave a lot of thoughts that maybe I haven’t said in public before. I appreciated that Dan was willing to come on the show and spend over an hour with me.
Before we dive into this conversation, you should go to microconfremote.com if you’re an early-stage SaaS founder. MicroConf Remote is happening in just a couple of weeks towards the end of March. We are digging into five early-stage marketing approaches for SaaS. Each keynote is going to be a case study with numbers from a founder who has done this approach. We’re going to be approaches like an AppSumo deal or a Product Hunt launch. Again, we have actual founders, real-life SaaS founders who have done this within the past few years, have had success at it. They’re going to share their numbers and their thoughts on what they did right, what they did wrong.
I’m really excited about this approach. It’s almost going to be a bunch of mini-workshops. I think it’ll be very, very valuable for you, especially if you’re, let’s say, pre $5000 or $10,000 of MRR. All the way from the idea up to $5000 or $10,000. It’s for that earlier stage where you’re trying to get traction and you need maybe a one-off marketing approach to help you start to get some revenue and kick start your customer account. Microconfremote.com, if you’re interested. With that, let’s dive in to my conversation with Dan.
Mr. Dan Norris, thanks for joining me today.
Dan: Thanks for having me mate. It’s been a while since we talked, I’m looking forward to it.
Rob: Yeah. It’s been at least a couple of years. I was looking back. You were on this podcast episode 183, Five Startup Rules to Live By with Dan Norris. I think we were about your book The 7 Day Startup. To give people context, today’s episode 539, so it’s been a minute, sir. The last time you and I met in person was really the only time I think we had, DCBKK in 2014 if you believe it. Back when we used to do in-person events, remember those days?
Dan: Yeah. That was fun. I think they did one in the last couple of years, but I went to most of them. They’re always good. I meant to say congratulations on the podcast. It blows my mind, people who do that many podcasts. I had a podcast early on. I think I got to 100 and I was like no. I just lost energy for it. It’s such a difficult thing to just keep doing and doing, so well done with that.
Rob: Thanks. Mike and I did it for about 450 episodes and then he stepped back to focus on his other stuff, so I’ve been doing it for about the last 100. I think for me, (a) I do enjoy it and I think if I didn’t enjoy it, I just wouldn’t do it. But (b) it also became that streak where literally every week for 10 years, a new episode has come out. That’s the point of I think both of pride, but also a point of commitment for me that I wanted to be out every week.
Also frankly, the feedback. The fact that there are people listening and that I get emails, tweets, and comments that are like hey, this is good, this is not, great job here, whatever. That helps me realize this is having an impact. If people are listening but no one cared, that would also probably make me stop doing it.
Dan: Yeah, that’s right. I always loved that about podcasts. We do one for the brewery, which again, I’ve dropped the ball on because I just find it difficult to keep doing them, but we’re going to do another series of them. When we go to beer events in person, people always are talking about the podcast, even though out of the content we do, it’s got by far the smallest audience.
Rob: Yeah. But I’ve found that it tends to be more engaged than written content because people hear you in their earbuds, it’s very personal. I’m going to say you’re complimenting me on the podcast, congrats and I’m super jealous of you, six books. You’ve written six books and we will talk about your sixth book today called Compound Marketing. I want to talk a little bit about you selling your company before we get in there, but if folks haven’t read The 7 Day Startup, which I think was your first or second book. I would recommend they go check that out now as well as Compound Marketing.
They can buy those on Amazon or wherever good books are sold. I actually wrote the foreword to The 7 Day Startup, didn’t I?
Dan: Yeah. I don’t think I’ve ever been congratulated on or told people were jealous for writing six books. I don’t think anyone else really wants to write six books. Normally, when people say they’re jealous because I get to work in a brewery and drink beer all day, not that I got to write six books.
Rob: Right. Six books, no doubt. I mean, I was telling you before we hit record that I’m working on my third book and it’s just tough. It’s really hard. Every day I show up and either write something and I feel like this isn’t good enough, that wasn’t enough, or I don’t write anything, and then I feel like crap that I didn’t move the ball forward. I just can’t imagine having written six books. It doesn’t seem to be that hard for you, or is it just that you don’t care that it’s that hard and you push through?
Dan: No, it’s not that hard for me, but I think I always say cheat a little bit. I don’t read a lot of books. I don’t research a lot. I don’t dig into other companies too much. In most of my books, if I feel like I’ve got something interesting to say about what I’m working on and how that can affect other founders then I’ll do something. If I don’t then I won’t write something. It just so happens that I’ve had six different topics that popped into my head that felt that I’ve got enough interesting things in there to write about.
With Compound Marketing, I did look at other companies more so than I normally do because I felt like it would improve the book overall if I didn’t just talk about myself the whole time. It was a fair bit more work than other books. It’s also longer than the other books. The other books are pretty short, but it does come easily. It’s getting harder and harder, but some of the books—I think 7 Day Startup, I wrote like a week and a half. There were chunks of that brewery books and the content machine that I wrote on the fly.
I write 10,000 words in one six-hour stint. There were things like that that I’ve been able to do to make it a lot easier for me than normal people. But it’s still not super easy to write books.
Rob: Well, congrats on that. I’d love to talk a little bit, kick us off with some conversation before we dive into Compound Marketing about your sale of WP Curve. WP Curve subscription WordPress support service, a fixed monthly price for unlimited jobs. I believe, if memory serves me, that was the first business of that model that I had ever seen. Now, there’s Design Pickle and there’s this model for a bunch of consulting-ish stuff that used to hire freelancers for. Did you come up with the idea of this fixed monthly price for unlimited jobs?
Dan: Yeah, I think so. As far as I’m aware, the idea of the recurring business wasn’t something I came up with, but there was a lot of talk at the time about recurring software businesses. That’s what I wanted. I used to listen to your podcast all the time. All I wanted was to start a software company. I had an agency that was just a terrible business. I tried and tried to do software and I just couldn’t make it work. I just found it so hard. I just couldn’t come up with the right idea. I’m also not a developer. I just think it’s just not a good idea to start a software business if you’re not a developer. So many reasons I couldn’t do it.
I was looking for a way to just selfishly start a business that was more like a startup than anything I’d done before. It wasn’t like I‘d gone out and done a whole bunch of customer interviews and being like this is what people want, this is a gap in the market. It wasn’t like that at all.
I had a developer. I want to keep working with him. I was a few weeks away from needing to get back and get a job after seven years as an entrepreneur. I didn’t want to do that. I just said what if I combine the two together because I’ve got someone who can do the work. If I made it recurring, it’ll be growth, it’ll keep me motivated, it’ll be more like a startup, and ultimately, it will be worth more.
That’s what I did and it worked pretty well. A lot of other people followed, which is great. I encourage everyone else to follow as well in my writing the book and giving people a framework for doing and all that stuff. It was a good time.
Rob: You wound up selling that. You had a co-founder and you guys wound up selling that to GoDaddy. It was about four or five years ago?
Dan: Yeah, it was 2015 or 2016, something like that.
Rob: Was it that long ago? Yeah, five years ago. Now, talk to me a little bit about that. I know that you can’t talk about the exact same price, but was it more of—there are the acquihires where it’s like they absorb your team and it’s a lower purchase price point, or was it a strategic acquisition that really fit into this desperate need that GoDaddy had? Can you give us an idea of what that acquisition looks like?
Dan: It was a weird time. I was thinking about this because I thought you’d ask me about it, and I haven’t been asked about it since then. My life now has nothing to do with this world. I had to reflect on it. Basically, what happened was me and my co-founder, we never worked together. We’re on opposite sides of the world. We didn’t know each other before I started this business. I started it by myself and then brought him in via my blog randomly, very early on because I realized I couldn’t run a business that ran 24/7.
We did a pretty good job making that all work, but the business was almost too easy in the sense. We had people do the work and I did content from time to time, but there was no real work. There wasn’t a huge amount of work in managing the business like there is with my current business. Alex did a lot of that stuff, but neither of us really worked full time on the business. We both had other things going on.
We started thinking about the idea of selling. We had conversations with the guys from Envato. They reached out to us and they were like we’re interested in doing something. We gave more information. I had calls with them and all that. After that, you know what? I’m not game. I kind of forgot about all that, but I was listening to your episode with Josh Pigford I was like, that’s right. That exact same thing happened to us.
When that happened, Alex had reached out to GoDaddy at one point and just had a contact who happened to work in the M&A section or something. I can’t remember exactly how it happened. After the Envato thing fell through, we were like you know what, we were kind of getting excited about the idea of selling this. We proactively went back to GoDaddy and said we were just about to sell this. It’s fallen through. Are you guys interested in talking? They said, yeah, we’re interested in talking.
I flew over to California, we met with them. Alex handled most of it. I’m still unclear about why. The meetings were so strange to me. I was in this mode of working for myself in Australia then we got to the back of this massive meeting room where I used to live in the corporate world. It was just weird. I don’t really know why they were buying it. I don’t know if it turned out well for them. I don’t think it exists anymore. I think that’s pretty common.
They said they wanted to get into this recurring service, they wanted a team and all that kind of stuff. But this is a gigantic company. I’m sure they could have gone and hired a bunch of people in the Philippines. In the end, I think they got rid of their Philippines team anyway, which was one of what WP Curve was. I don’t know exactly why. I think at the time, it was one person there who decided they wanted to buy it and we decided we wanted to sell it. I don’t know how much more complicated it was than that.
Rob: What did that do for you in terms of finances? You sold to GoDaddy, so obviously it was probably some life-changing money. Oftentimes, I’ll say look, $250,000 in a sale is life-changing money if you’ve never had more than $10,000 or $20,000 in a bank account. For you, is it enough money that you didn’t have to work again? Was it like I can take a lot of years off and really figure out what my next thing is?
Dan: Well, yeah. We can’t talk about it because of NDA. It has been so long. I think it probably is very unlikely to get sued.
Dan: I wouldn’t describe it as life-changing money, I mean, it’s more than $250,000. I wouldn’t describe it as life-changing. It was good for me because I was ready to leave. It took me a while to work out my next move, but in hindsight, I was already working on my next move. The day I met with GoDaddy was the day we opened the brewery. I just thought it was a small thing, but it eventually turned into a much bigger thing. I was on a path. I didn’t want to move to America. There’s no way I was going to keep working.
I wanted to get out of the business. I wasn’t going to do a thing where I stayed there for five years. It’s perfect for me. I just got a bunch of cash and literally left the next day. But I mean in terms of life-changing, at the time I was renting a unit around the corner from where I am now. It was costing me $540 a week to rent it.
Then when I got this money from the sale, I bought a house just around the corner from where I was renting. I didn’t quite have enough. I basically put all of it into the house. I didn’t do anything else with it. I didn’t quite have enough to buy all of it. I had to get a mortgage for about $300,000. The repayments on the mortgage end up being exactly $540 a week.
For me, it was literally not life-changing at all. I just moved up the street. Instead of renting my house, I was owning my house. I mean live in an amazing location. I never would’ve been able to buy a house in this spot. I’m 50 meters to the beach in one of the best suburbs in Queensland. It’s amazing. I never would’ve been able to do that without the money. But I still would be living here. It would be how much are you paying to rent, I think.
Rob: That’s funny how that works.
Dan: It turns out that also when I bought this place, I thought I was buying at the top of the market. I bought it for what they’re asking. I didn’t try to bargain. I just thought if I don’t buy it now, this money’s going to lose its value. The property is going to go up and I’m not going to get in. I bought it for what I thought was a lot of money. Since then it’s gone absolutely nuts and that’s a fluke, but it’s worth a lot more now.
Rob: That’s kind of how it goes. I was telling someone the other day after I sold Drip, I had a lot of money coming to the bank account and it gave me the luxury to dabble in some small things that I probably wouldn’t have the time or really wouldn’t have had enough money to dabble in before or to make it worthwhile.
Dan: But were they valuable things? For me, when I dabble in small things, it always a lot of the time ends up being a waste of time.
Rob: No. I mean I had not bought any cryptocurrency before 2016. When I sold Drip I was like, I have some money to play around with. I don’t buy individual stocks. I buy assets. I buy index funds and stuff. I’m going to throw 2%, maybe 3% of our net worth into crypto. That was 2% or 3% at that point after selling a company like that was not an inconsequential amount of money.
I kept saying it’s either going to go to zero or it’s going to 100X, right? It’s like an angel investment and that was where I felt like I had the luxury to do that. Of course, that has panned out well. I feel like it’s similar to you because you’re like, well, I wouldn’t have the money I’d be renting, so you would be living in the same place, but you wouldn’t have almost stumbled into making—you’ve made a bunch of money on your house now in equity. I feel like there’s a weird luxury you have.
Dan: A house is a weird thing to make money on. It’s the best thing to make money on because you don’t have to pay taxes on it in Australia. I don’t know what it’s like over there, but with houses, if you live in it here, you don’t have to pay taxes on capital gains.
Rob: That’s amazing.
Dan: At the moment, the market’s going nuts around here. But if I sell my house here, I’m just going to have to buy another one somewhere else. The real estate lawyers are going to get rich. It doesn’t feel like my life is changing, but obviously, it would be wrong to say I’m not in a different position than I was. I think in terms of how much we sold it for, I was really happy with what we sold it for. It was in line with—I’ve heard you talk about smaller software companies and the multiples they sell for.
It was in line with that, which was my thinking the whole time was if I had an agency that was turning over $1 million a year and making $300,000 in core profit for the founders, that’s basically what it was. We were turning over about $1 million a year. Founders were earning about $150,000 each and there wasn’t much left. If I was to sell an agency like that, I’d be lucky to sell it for a small profit multiple.
I always thought if I create a business that is more like a startup, it should be worth a small revenue multiple, and that’s ultimately what we got. I think that’s pretty good when you talk to other people with services businesses that are reasonably unusual. I think the model was good, the team was good, but the brand I always just come back to the brand because same as our current business, there are breweries that do more volume than us that are worth almost zero and there are ones that worth $100 million-plus that don’t do much more volume but just have an amazing brand. It’s just such an important thing that you just can’t ignore.
Rob: That actually is a great segue into your book Compound Marketing because you used a lot of the elements in this book to build WP Curve and to build Black Hops Brewing. The four things you touch on in Compound Marketing are brand, storytelling, content, and community. When you put that in a sentence, you say build a brand and tell a story via content to your community.
I know the story of WP Curve, and I sat and watched you build it. Your story being transparent in the entrepreneurial community and the word spread. Then people said WP Curve is cool. Obviously, you got enough subscriptions that you were turning over $1 million a year like you were saying. How did you apply this to Black Hops?
Dan: It’s funny because I’ve written the book now. It seems quite simple to follow that sentence and do that. There were things I did realize. One thing I realized was in the online space, this way of building companies was happening a lot. You had Josh from Baremetrics, there was Nathan Barry. You were doing it. There were so many people—Pat Flynn with the Income Report. There were many people doing this kind of stuff in the online world that wasn’t unusual anymore, it was quite normal. But in physical businesses like breweries, this was very rare.
I knew that coming into it because we had the problem of needing to build a brewery, not having any idea how to do it. We got on Google to have a look at what was around and just couldn’t find anything. It was hard to get any information. To me, that was a really good opportunity. I’d always thought, in the online world when you do it, there’s just so much noise and so much competition, even if you’re reasonably good at it. I wouldn’t describe myself was particularly great at doing any form of content.
You look at some of the guys who do this really well, people are really, really good at this in the online entrepreneur space. But a little bit less competition in the physical business area and I thought we would really stand out. I just applied all of that to Black Hops. We had a podcast, a blog. I wrote a book for Black Hops. We started releasing all of our recipes. We’ve done homebrew confs where we actually release our beer for people to brew it home. We’ve revealed our finances. We’ve done equity crowdfunding where we reveal all of our back-end information, just everything. Calls with investors we publish.
We just applied all the stuff that is not weed in the online world to the offline world. I thought that would be personally rewarding for me, and I thought it would be good for the business. It was because it gave us a bit of a point of difference. At the time, I wasn’t like I’m going to do these four things. It was just like, well we’ve got a cool story. I know we need to build a good brand because I learned that with WP Curve and how important that was. I sort of began to fall in love with the design after many years of doing it for other people.
The content was just in my nature. It was just something I enjoyed doing, and so I just did it naturally. On the community building side, again, it was taking that income report idea to this offline business where we’ve got all these different opportunities to build these little communities. Whether it be Facebook groups, social media, or in person at the taprooms and really just combine all of these things together.
I didn’t do it consciously from a point of view of having the four platforms. But reflecting on it, I just did the same thing I’d always done. It just has worked particularly well now and made sense to put it into a list of four things and write a book about it.
Rob: When you talked about creating content, the way you describe it just now is a lot about transparency like this is how we’re building the business. I think that can work but also you’re building a brewery and although I will drink beer, I don’t particularly care about how to build a brewery because I’m not going to build one, for me personally.
Do you find that when you create content about how you’re building the brewery with transparency that it applies to other brewers and other people that want to start a brewery business? It’s not all about transparency. There have to be other types of content. What type of continue is creating with Black Hops today that is applying more to your end-users?
Dan: The end-users, the thing they love the most is just every single beer we put out. I consider that to be content in a way—we put a lot of effort into the names, the designs, all of that stuff to do with launching a beer. Our community, our Facebook group, and online social media stuff are all about launching new beers. We’ll go to extreme lengths to make sure we put out something that people are going to like. We do a lot of that. You’d be surprised how many people who are really core craft beer lovers are actually interested in behind the scenes side of things as well.
Because we’ve done the equity crowd-funding, we’ve also got 600 investors. The 600 people investors and the 3000 people in our Facebook group are super interested in what’s going on. In fact, we just talked about the podcast before. I had a guy post in the group just a couple of days ago—a super fan, one of the investors, one of our early crowdfunding people in the group. I guess you would call him an influencer in the craft beer world. He brought a thread in the group saying, can you guys get back on the podcast. You’re doing this new project. I’d love to hear about it.
A lot of people do you like hearing about that sort of thing. But there’s a lot more we can do. Two weeks ago I did a photo competition, and I did that not in our own group but in a beer photographers’ group. This was a photographers’ group who are often sent free beer by people to take photos, and we never do that because we don’t really send out free beers to influencers, that kind of thing. We just want to make a good product for people to pay for it. I thought I’d do a competition in that group because I really like seeing the photos I was seeing there.
I thought it’d be cool if they took some photos of our beers. This competition went really, really well. It was a new audience. There were 50 people who signed up for it. There were over 50 photos submitted, a lot of which we can use on our own social media and help out our own social media. But it’s also helping that part of craft beer communities that are really passionate enough to spend hours and hours taking a photo of one beer.
For us, it’s really good content. We’ll keep sharing it over the next couple of months. It becomes a cool story. That kind of stuff that you’re doing for the really core people ends up resulting in a brand that other people enjoy for reasons that they might not understand. There’s a lot of love out there for our brand. The average drinker who finds out beer in a big retailer may not listen to the podcast, but we do get to benefit from them loving the brand because there’s a lot for it that comes up through this grassroots community.
Rob: A founder who’s listening to this, maybe a SaaS founder might be thinking, well, I’m more of a direct response marketer. I’m going to do ads, SEO. I’m going to convert people through a funnel, in essence, which is totally valid as well. It’s a different type of approach. What I’ve found is that coupling those two things—they’re multiplicative. When I look back at the businesses I built pre-Drip, they were all very direct responses. I like to call them left-brain engineer-y type stuff. I’m going to SEO this, I’m going to drive traffic and go through a funnel.
I started building Drip the same way originally but quickly realized that actually having a brand, telling a story, and having a community built around it—and of course, I was already part of the MicroConf community and had a voice through the podcast. But that gave us faster growth. I guess, maybe there’s some empathy, people like what you’re doing, and they like your product. I think that’s a big part of building a brand.
Then moving forward now, I’m working of course on MicroConf, TinySeed, and this podcast. All three of those are all about content, community, and of course, there are storytelling elements. I see people try to launch a conference event, an accelerator, a podcast, or even a SaaS app (for the most part), but I see folks try to do that without thinking about the brand, without connecting with a community. It’s really an uphill battle at that point because you’re just scratching and clawing. You’re more of a commodity player.
Does that ring true to you? I mean I interviewed a couple of founders maybe three months ago who do have a geolocation service API, and it is more of a commodity business. I’m not saying that’s a bad thing, but I do think that it puts a ceiling on your growth or on the level you can get to. For some people, that’s fine. Building a $300,000 […] SaaS Company that throws off $250,000 of net profit is a great business.
But in my shoes, I’m ambitious. I want to build 7-8 figure businesses. I think some folks out there want to too. I think it’s very, very hard to build something into the seven-figure run rate without some type of brand and community. What are your thoughts on all that?
Dan: I definitely agree with your last statement. I don’t tend to think there’s one way to do things. It doesn’t really ring true to me that combining the two worlds only because I’ve never really been able to the paid ads, direct response, and all that stuff. It’s just never been something I’ve been good at. I haven’t had any success with it. I’ve taken this other approach.
If you can do both then I think that’s probably good. I think that stuff can distract people a lot as well. I supposed you could say the same about content. Before WP Curve, I used to have a site that ranked number one in Google, and I bought it from a guy who was just mad about SEO. There was not content there. It was like a one-page website, just quite a while ago. It used to rank number one in Australia for website design, web developer, and all these terms. I bought it off him thinking this is going to really change my business.
At the time, I was paying for Adwords. I had a local consultancy, and I was paying $5 a click for some of these words that this guy was ranking number one in the free listings. It didn’t really change my business that much. I got a whole bunch of […] leads.
I tried to change the website so the brand was better on there. We have appealed to a higher-level audience, but it just didn’t really work. On paper, it looked pretty good, and it wasn’t a bad website for me to have bought, but it didn’t really realize what I thought its value would be because the quality of what was coming through there was just nowhere near what I was getting through my natural organic channels.
At that time, I think I wrote a post. A lot of the posts I wrote back in that time have all been removed because the WP Curve site is not there anymore, and neither was my old personal site. I got rid of it all. I wrote a post at the time about SEO, which was basically called Content Driven SEO, My Approach to Content Driven SEO, or something like that.
I basically just completely gave up on this idea of SEO. You mentioned Travis when we’re talking before. I was talking to Travis. I was doing the kind of stuff he used to do with all of the active legitimate SEO-type things that used to be what SEO people did. I just ditched all of that and just went all-in on content. That was my approach with WP Curve, and that’s my approach with the current business.
My business now is ranking better. It ranks for all kinds of weird words that you never would expect a small brewery to rank for. If you type in stout in Australia, stout in […] brewery, or local […] brewery—any of these terms, we rank first for. It’s not because we’ve done any SEO. We haven’t done anything analytically. It’s just doing the content. For me, that’s a better approach. I think if you can do both, it can be very powerful.
But there’s also no one way to do something either. I’ve always just been a fan of doing what works. If you’re listening to this and you are doing direct response stuff, you’re doing paid ads, and you’re crushing it, I wouldn’t change anything. I would just keep doing that. The only thing I would say in the defense of what the way we build our business is—and this is going to change over time. I think we’re going to do some more paid things because I think if you never do it, when you do, do it, you probably get a fair bit of benefit. But I think if you do it all the time, it kind of waters that down.
To date, we haven’t really done any paid ads at all. Our industry is one where, on average, companies are spending about 11% of their top-level turnover on marketing. For us, that’s over well over $1 million and we’re finding almost zero. In a business where the margins are just so tight, if we were to spend $1 million a year on marketing, we would go from a company that’s comfortably profitable to one that’s break-even, and it’s not something I want to do. It is an enormous advantage to figure out a way to market a business where it doesn’t cost you 10% of your turnover.
Rob: That makes sense. You’ve really taken some high-leverage, capital-efficient marketing approaches that you’ve learned from the startup world (I would say) and brought them into this industry where that’s not really the way it’s done.
Dan: It’s changing too. It’s really changing the way that people do things. It’s actually a really good industry to craft beer. There’s a hell of a lot of innovations, a lot of smart people, a lot of really creative people. A lot of other people are doing what we do now which is great. It’s really helpful for other people getting into the industry.
If we can help other people, it grows the industry as a whole, and that grows our business as well so that’s been really good. But then you see other businesses just take a completely different approach that works equally well for them as well which is cool, and with a lot of creativity and applying some things from other worlds. There’s another brewery down here where the guy used to work at Billabong in the surf world. He’s brought a lot of that stuff across the branding, video content, and those sort of things. They are absolutely crushing it as well. I think all of that is great.
Rob: Through TinySeed, we’re invested in one business that is a lot of SEO. They have 425,000 uniques a month that is pretty targeted. If a founder doesn’t want to create content and build a community, he wants to do SEO and he’s really good at it. He’s in a space where that works.
For you, for someone who’s written six books, used to run a Facebook community, has been really transparent with businesses he’s building, that’s your superpower because that’s hard to do. You and I take that for granted, but a lot of people either don’t know how or don’t feel comfortable doing that. They don’t feel comfortable sharing it. It feels weird to them or they’re not very good at it. It’s hard to create compelling content. You’ve really learned to do that well.
Dan: I’m glad you said I’ve learned to do that well because everything’s hard and people can learn to do it, that’s for sure. It might be easier for me to write a 2000-word blog post than it is for the next person. But if you’re going to be a founder, you’re going to have to figure out some way of marketing your business that works. You’re probably going to end up trying 1000 things like me and choosing 1 that works.
The one thing with content that I like, when I used to do the SEO stuff—way back in the day, I had a Twitter account. Remember Tweet Adder? That way, you do like to add or follow and you do like paying for links, this kind of link farms—this is all just not good for anybody. It’s just pointless and it doesn’t make you feel good. There’s a more organic approach.
If you’re going to do a lot of content that helps other people, the worst thing that’s going to happen is you’re going to use up a bit of your time, but as a founder, you got to spend your time on something. Something’s going to be hit-and-miss.
That time, I don’t really count too much, but you’re going to help someone else. Even if the marketing doesn’t work at all, even if it’s a complete disaster, which you probably want to be because if it helps someone else, ultimately will come back to your brand. Let’s say it’s not particularly good for you, it’s going to help someone else, so it’s a good way to spend your time.
Rob: I want to switch up the conversation. You tweeted a few days ago when you booked this time that we can get together you said, “Just booked in for a chat with the Oracle @robwalling – what should we talk about?” Why are you calling me an oracle?
We got some responses to that. I just wanted to talk through a few things, see where the conversation goes. Dustin Overbeck said, “Talk about what life is like post-exit for each of you, and what you’d have done differently knowing what you know now.” What are your thoughts on that?
Dan: I’ll talk about that. The reason I call you the oracle was because when I used to want to be a software startup founder—I do still currently secretly want to be a software startup founder—when I really wanted to be back in the day, I would just listen to all of your stuff and be like, Rob knows everything. That’s why I started calling you the oracle.
One thing I would do because this comes up with current business, ours is the kind of business that it’s really, really rare. I suppose you said the same about software where it’s really rare, very difficult to build it past a certain size without selling it.
There are not many companies that have been able to build breweries in Australia that are bigger than ours that are independent. There’s one family-owned one that’s been around for 150 years, so let’s not count that because that’s a really different story. There’s another big one that I can think of that’s had a few good investors. All the other ones that I can think of have got VC money or they’re sold. It’s just a difficult thing to do. It costs so much money. It’s hard to get the money together unless you reach the start with which we want.
The idea of exits comes up all the time. I don’t want to sell this kind of business mainly because I enjoy doing it, but also because I just really worry about what I would do if I wasn’t doing this. I felt it when I sold my agency between an agency and WP Curve. That year, I was so lost. I didn’t know what I was doing. I started so many different things. It was just scary.
A lot of people probably look at a founder that had success and be like, oh, they’re just going to do the same thing again. I just don’t believe that. I just think that we have an enormous amount of luck with the current business. We had really, really good timing. It’s going incredibly well. I just want to keep doing it and I do worry about what I would do if I wasn’t doing it.
I had the same thing with WP Curve. It was really, really lucky that I had Black Hops. It turned into a business that could support me and loads and loads of other stuff. At that time, I thought it was just going to be a fun little, local bar thing, and I wasn’t even working in the business at all.
I started doing all kinds of other things. I have tried to buy into an accountancy business. I started these explainer videos. I thought maybe I’d do my personal content, which ultimately, I didn’t feel like I really enjoyed that much when I didn’t have anything to talk about because I wasn’t working on anything. I was lost there for six months.
Listening to Josh on your show the other day reminded me again—without being offensive to him—it just seems like that should be working on stuff. I just feel like you sell something and you’re just going to be lost until you stumble across something else.
I’m super nervous about that, so I probably wouldn’t want to sell and the money wouldn’t change anything. I really think the money would not change anything. I got my enjoyment out of working on these projects, going into work every day, working with people, doing fun new things, and that kind of stuff. I’m not going to go, buy a big yacht, and spend all down a yacht. That’s not going to make me happy.
What I would change or what I would consider if you were looking at it would be I guess the two points. One is this idea of life-changing money. I’d call you out on that a little bit because I don’t think a quarter-million dollars is really going to change your life, depending on who you are. If it’s $1 million, $2 million, $3 million, I don’t really believe that’s going to massively change your life. If it’s tens of millions, maybe it will, but then I worry about what you’re going to do you don’t have anything productive to work on. I’ll be thinking about those two things.
Rob. Yeah. That’s good advice. For me, when I used the life-changing term, someone who grew up solidly working-class, not enough money to do a lot of stuff we wanted to do as kids. Money has always been a big concern. The first time I ever had $10,000 in the bank, that was a huge sigh of relief. The first time I ever had $100,000 in the bank, it was life-changing to me.
It wasn’t in the sense that I went out and bought a car. It was that I looked and I said, I could live for a really long time on that. I’m becoming less and less beholden to anyone else. At the moment, I have enough money in the bank, sold Drip. I have enough money in the bank. I don’t have to work again. For me, that was a life-long goal. It sounds like that wasn’t your life-long goal, but for me, I wanted to know that I could work on whatever I wanted whenever.
Dan: I don’t trust myself enough for that to be a good idea.
Rob: Yeah. I’m relatively Type-A. I am pretty motivated. I’ve always worked on things, on side projects, or main projects since I was a kid. I wrote booklets when I was a kid and sold them. I’m that weirdo.
When I think about selling a company and being like, I never have to work again, I always plan to work. I knew I’d do something else I just didn’t know what it would be. But whatever I did, I knew it could be risky and more ambitious because I had the backstop. That’s what I mean.
TinySeed will not pay off for years and years. My first investment was in 2011 I believe in WP Engine. We got all cashed out in a big private equity round. I believe it was 2018, maybe 2019. I think it was seven years. I’m just seeing the first dividend check from a startup that I wrote a check for in 2013. That was seven or eight years. But now that it’s happening, a lot of it is happening all at once. There’s a lot of them selling and there’s a lot of them starting to kick off dividends—the ones that decide to do that.
When I look at TinySeed, I literally took a stipend. Einar and I both did for the past 2 ½ years. It was not something I could have done if I didn’t have money in the bank. I couldn’t have started TinySeed, or I would have needed to be single-living in an apartment. I couldn’t live with my family in the house that we have in Minneapolis without the money.
For me, it’s made a difference, I got to be honest. If you talk to anyone who knows me, I don’t buy stupid stuff. I don’t buy expensive crap. I have a nice car now, but I bought it used. I buy $200 watches even though I want the $2000 watches.
Dan: You find it tells the time, right?
Rob: Exactly, but I like watches because it’s the only thing I can accessorize.
Dan: It sounds like whatever you sold Drip for was a lot more than I sold WP Curve for. That aside, the second part of the equation where you’ve got something else to move onto sounds like that fell into place for you very nicely, whether that was by design or by the fact that you were in the position that you’ve very happy doing this new thing with your time. That’s perfect.
For me, if I wasn’t doing this and my fallback option was writing books and doing the entrepreneurial community—that’s what I thought I would do after WP Curve. But then when I did it, I was like, I don’t enjoy this. I’m just one guy out of a sea of millions doing this stuff. It’s not really for me. I don’t really like it. I enjoyed telling stories about stuff I was working on, not just becoming a full-time business coach guy. I hated that.
The money itself is interesting. I didn’t grow up with a lot of money either. I just thought about this the other day. When I went on my honeymoon—I think I wrote this in one of my books—I read that Think and Grow Rich book. It said, write down, state your goal. I wrote down $100,000. I wanted to turn over $100,000. This was when I got married. I’ve been unmarried since then, so I’ve forgotten the day. It is no longer important as it once was. It was probably 2010 or something like that. It was a while ago. Maybe 2008, 2009.
The number I wrote down was $100,000. This was, to me, a very, very big number. If I could have my business turn over $100,000, that would be the end-of-the-book goal where you state this goal that sounds impossible that you achieve and it changes your life.
Our business last year turned over over $10 million and I didn’t even notice. I’m doing a presentation for investors now because we’re raising more money and I went back through the finance because we do the financial year. We don’t do calendar year. But I went back through the calendar year finances, and we passed the milestone of $10 million. I was just reflecting and I was like, my God, I used to be excited about $100,000. Now, I’ve passed $10 million in revenue and I don’t even notice. It’s crazy.
You just get used to whatever the number is and you get used to whatever the thing is. I might be living in an awesome suburb now but I’m just used to it. I don’t know if I’m any happier.
Rob: There are two things. There’s the arrival fallacy which is thinking, I will have arrived once I have $100,000, $1 million, once I’ve launched this company, or once I make it right. It’s a fallacy because you do get there. Then if you’re ambitious, you want to end up for the next thing. I’ve come to grips with that, and I feel fine with it now.
When I was younger, it rattled me more like, why am I never happy? You are happy for a month or two and then know that you’re going to do the next thing. Don’t kid yourself that you’ll actually have arrived because you’ll arrive for a month or two and then want to do something else.
Dan: It’s hard to just not fall into the trap of being like, oh, what’s the point of achieving something if you’re going to get there and not actually arrive?
Rob: Yeah. It’s different for everybody. For some people, it is that safety. I’ll give my career as an example because I’m an expert on it, I lived through it. I remember being like, I just want to have a job writing software that supports me. Boy, if I had that, that would be amazing because I just want to write code all the time.
I got that job. Do you know what? It was really cool for about six months, then I was kind of bored. Now, I wanted a job where I could work from home. This was in 2001 before work from home was a thing. Sure enough, I was able to work from home, and then it was like, well now, I want a software product revenue. That took five or six years to get to. It was enough that I could quit my job, and on and on and on. Then enough that I never have to work again. These were the milestones.
Early on, I would achieve them and think, man, then I’m going to be happy forever. What I realized, later on, is I’m not going to be happy forever but, (a) I will be happy for the short term and (b) I’m making progress along the way. It’s doing something that helps improve our life as a family. It helps improve the lives of those around us if you start a company and employ people. Otherwise, it’s like, why should I even start a company then? If I’m never going to be happy or I’m never going to arrive.
But there are reasons to start companies, right? To give back to the community, to create value for people, to create wealth for investors. I think everybody has their reasons. Legacy is another thing. I’ve started talking about that recently. I’m getting up there in the years here. I do look ahead and think, hey, someday I’m going to die, what do I want the world or the startup’s space to think about me? What do I want people to say when I’m gone? What do I want to leave people with? What is the legacy that I’m creating?
It’s way too early looking back at my 29-year-old self. It’s like, slow down. Just figure out how to make enough revenue that you could quit the day job that you hate so much. Just because I didn’t arrive at these steps doesn’t mean that it didn’t leave me better off and happier personally. I have been happier longer-term at each of these steps than if I was still working that same W-2 full-time job back in 2000.
Dan: Yeah. I guess happier in between if you know that you’re not going to get this big burst of happiness at a certain point.
Dan: I want to ask you not so much legacy. Legacy isn’t really something I really ever think about, but when I’ve heard you talk about the sale of Drip—and I’ve been through this as well—it sounded like there were just nights where you just stay awake and not just think man, you’re leaving so much money on the table. You could’ve been in a position that had multiple millions of dollars, now you’re in a position where you’ve got zero, and you’re just not going to be able to live with that. Is that accurate? That was part of the thinking?
Rob: There was thinking, which I regret a little bit.
Dan: That was going to be my question because the downside is you see the people who pushed through that and ended up building up to something way bigger than that they could’ve imagined. Do you look at that and be like, maybe I should’ve pushed through that?
Rob: Here’s the thing. I have never, never regretted selling Drip. I’ve never woken up a day and thought, oh my gosh, I wish I was still running that. I wish that was still my company because it was just a moment in my life and it was stressful. I didn’t sell because of the stress, that was a part of it. There were all these components.
The moment was like, I never have to work again, huh. Again, I never have to work again in my parlance is, I can work on whatever I want because that’s really what I want to do. There was a stress component. There was that component.
When you ask me about what I wished I’d done differently or what I regret, I think I stressed out too much. I was a little bit of a sky-is-falling person mentally. I’m not that way anymore but I would wake up and say, this could go to zero. All my entire life that I’ve put into this thing will go to nothing. But that’s really, really unrealistic that that would’ve happened. Even if there was a massive recession. Even if competitors continued to crank on us. Even if we got on the blacklist, which we did now and again. It wasn’t going to go to zero. It may be slowed down.
The bigger concern was that at the pace it was growing, it was worth a healthy multiple. A lot of entrepreneurs write it over the top. If you flatline, or you’re growing it 10% a year or something, the business just isn’t worth that much anymore. That was a concern for me, but frankly, it really wasn’t very healthy nor helpful for my mental health for me to be thinking about that all the time. It just wasn’t.
Dan: Sorry to bring this up. I feel like you’re getting grilled, but I am curious because you hear these entrepreneurs who go through the struggles really early on. Almost any big company you can think about like Facebook, the biggest. I think there was a point where they could’ve sold for $1 billion?
Rob: Yeah, something like that.
Dan: At the time, no one could foresee that it was going to be as big as it is now. The size of this thing just blows your mind how much attention it has gotten. Surely, Mark Zuckerberg couldn’t even see how big it is now.
What you were doing building emails, email is still so relevant. With the stuff that’s going on, they just seem more relevant than ever. These email companies seem to be going better and better. Do you ever reflect on how big these things could’ve gotten?
Rob: What’s interesting is I’ve watched for a year and a half when I worked there how big it got. With the venture injection of lead pages, it had raised $38 million. It started growing even faster than when I was running it. I don’t know the revenue today, but obviously, when I was working there I did. I saw that business triple the next year and triple again or whatever it was. It was fast growth.
It’s an interesting question, but dude, I don’t really want to run a big company. I don’t want to manage 50 people or 100 people. I had no desire to be the CEO of a 100 person company. I’m very much more a starter.
If you look at all these years with MicroConf, Producer Xander has helped us for seven years now. He got interviewed on a podcast. The host said, wow, you’re going to do seven or eight events this year. You do this in person. How big is your staff? Xander’s like, it’s just me and the founders. That’s it. That’s how I like it.
We hire some contractors […] same thing. The TinySeed team is just Tracy, Einar, and myself. Obviously, we will hire. We will get more people and stuff, but to me, I’m invigorated by building not by being on a large team. It’s that much of a detriment.
One could argue, okay, maybe you needed to grow more and then hire someone to manage everybody. Then you could just be the founder who’s doing stuff and no one reports to you. I have heard of founders. I think Dharmesh Shah did that with HelpSpot. I think maybe Jason Cohen was in that situation with WP Engine.
Dan: Your interview with Rand Fishkin was like that but almost like the downside of that approach.
Rob: Yeah, exactly. That’s what I’ve heard. I hear you. Would it have been interesting to take it further? Yeah. Do I feel like I made a mistake selling? No because I’m so happy with what has happened since then in my life. I would be stagnant right now. I wouldn’t have progressed, circled back, and doubled down so much on this podcast that I didn’t have the time to focus on that, on MicroConf, and then to launch TinySeed.
I got to be honest, Drip and all the apps before it was things that I enjoyed doing. They were definitely a means to building a better life for myself and my family. MicroConf, TinySeed, and this podcast really are so much more than that for me. They’re my life’s work if you think about it.
I’ve been doing them for more than a decade. The podcast has always been free even when we didn’t have a conference, we didn’t have any way to make money off of it. We’re just doing it because I enjoyed it so much. Same with MicroConf. We basically broke even the first few years we’re doing it. I was essentially working for free on it. We have to charge to pay for stuff.
That’s a long answer but that’s how I think about it. If I had stuck around another couple of years and sold it for 10 times more, I would like that more money, of course, but if there’s no difference between doing that and regretting it, I don’t regret that I didn’t do that.
Dan: Right. You feel like you got the balance right where you’ve gotten out at a time where it’s a life-changing amount. You’ve been able to do other things. It’s worth it.
Rob: That’s how it feels anyway. It’s hard to know.
Dan: It is hard to know. It’s something I think about because this business that we’ve got is difficult. It can be really difficult. We’ve been doing it for six years. It’s been a long time. It’s big now. We got 60 staff, we got 3 sites, about to be 4. It’s not a small thing, very complicated to run a physical products business. There’s always so much going on.
When COVID hit, we just got to the point where things were going well. We literally just sat around with me and my two co-founders and we’re like, I don’t know what to do. We had these things on our agenda to talk about. We tried to talk about some of them, but literally, our three top rooms and all of our customers’ businesses were shut down overnight.
It was like there’s nothing we can talk about that’s going to help at all. We’d probably get out of business at this point. We’re going to lose the money of our 600 investors. We’re going to lose all of the money we’ve put in. All of this is going to get a zero.
The crazy thing is that in the 12 months of 2020, we grew by 100%, which we’d done every year in the previous 6 years. We’ve maintained our really high growth, which is tough for the physical products business. We became profitable and very comfortably profitable. Our brand went to a whole new level.
It ended up being the best year we’d ever had by a mile, which we obviously couldn’t predict at the time. I felt like at least I’ve been to the brink where it’s like, I know what this feels like if I’m about to lose everything.
I also think that selling, to me, is in a way a bit of a failure as well. I want to just talk about breweries because I got a question for you as well. With the breweries that I think of, there are success stories where the breweries had become profitable, listed on the stock for hundreds and millions of dollars, and then sold. That’s a great success story as far I’m concerned.
But the ones that sold—these breweries started as independent breweries because they want to compete against the major multinational corporations. The independent breweries don’t feel like the majors are doing a good job. They don’t feel like they’re making really good beer. They don’t think they’re community-friendly. All that stuff. They’re fighting against them.
What almost always happens is they end up selling to them and then at the end of that say, oh, it’s been a good run. This company is the right fit for us. It’s like, that’s […]. You’re selling to them either to get rich which, to me, I don’t think is the normal reason. I think the normal reason is you’ve just gotten to the point where you can’t do this anymore financially or maybe psychologically. Probably 50-50 in that. To me, that’s a failure.
My question to you is, I’ve always wanted to be a software startup entrepreneur and the dream really is to start a business, it’d be profitable, it’d not be so stressful that you have to sell it, just make money and create software. There must be tens of thousands of people or more who listen to this podcast who want to do exactly that. Is that even a realistic dream for people?
Rob: To build a business to sell it?
Dan: That to not sell it.
Rob: Oh, to not sell it. Absolutely. I will say, for the record, I don’t view building a business and selling it as a failure. I think you and I don’t view that the same way. I think that building a business for the long-term, especially a software company, absolutely. Most people don’t. What’s interesting is most people don’t. They see the example of Basecamp or, let’s say, Mailchimp and they say, you can bootstrap a business and I’m going to do it forever. That’s cool.
Dan: That’s the thing. Basecamp is so often brought up as an example of how to do this, but they’re just such a random example. They were literally the first people to do it. Is it even something you can do? With your decision to sell, how much of that was motivated by the fact that there’s so much competition out there, there’s so much pressure on the process, and all of that?
Could you even keep doing this without getting VC money, which introduces a whole new level of complication? I meant much of those things. Could you have just kept running it and been comfortable, happy, profitable, and just done that forever?
Rob: Yeah, we could have if I did not have aspirations beyond it, for sure. One of the other things that if I have any regrets or I would have done differently is I think we were a little undercapitalized. I should have raised an angel round. I would not have raised venture capital. I have no desire to go on that treadmill, but I probably could’ve raised $300,000–$500,000 pretty early on at a good valuation. That would have made things so much less stressful.
I saw, once we got acquired, how much money actually helps make you less stressed because you can just pay for problems to go away. That was one thing I would have done. Absolutely. Drip was growing. It was bootstrapped, growing, and profitable. There is no doubt.
There was competition. I don’t even remember what our growth rate was when we sold but it was 10%, 15% a month. It was a healthy growth still. Are there plateaus? Yeah. You can look at anybody on that Baremetrics public metrics thing where you got to demo.baremetrics.com. Is Baremetrics actual metrics? But convert is on there.
You can see their plateaus, but you can build a great SaaS business, and they’re highly profitable. Growth is expensive. The faster you grow, usually, the less profitable you are, but once you start to slow that growth down, that’s when a SaaS company—even at scale, with 20, 50, 100 employees—can throw off 30%–50% net profit, gross margins 80%–90%, and net profit can be that.
If you built a business to $10 million, do we know examples of it? Absolutely. Come to MicroConf.
Dan: Do you know examples of it? The other piece of that is the funding piece. I remember when I used to listen to your podcast and other podcasts in this world, I didn’t know anything about raising money. I still never ever raised money until we started Black Hops because we just couldn’t afford to build a brewery ourselves. Could you do this without raising money?
There are probably a lot of people who are listening to this who don’t even know where to start and don’t want to get into that world at all.
Rob: Absolutely. Most people don’t. We do a State of Independent SaaS Survey through MicroConf and we just put the report out. Of all the people in that survey running SaaS companies with revenue, I believe 12%, 13% had raised some type of funding. The other 87% had not.
Yes, I absolutely know people doing seven and low eight figures who have bootstrapped and who are shockingly profitable. Again, 40%, 50% net margins. You can move faster with funding. The way that you do it if you don’t raise funding? You just move a little slower. You have to be happy with that.
That was something I always struggled with is, I was in so much of a hurry. I wanted to get big, get faster. Not at VC pace because I didn’t want to do it recklessly. It was still organic, but I was like, I want to be $1 million, I want to be $2 million, I want to be $5 million. I was a little more impatient. I don’t know if it was healthy or not. Yeah, absolutely.
Dan: I’m the same with that. I’m fearful of no growth because that actually happened to us with WP Curve. We didn’t really have any plateaus at all until we got to about $1 million in recurring annual revenue. Mostly recurring, we had some one-off stuff but it was almost all recurring. Then we didn’t really grow from that point on. That’s scary.
In that case, it was a profitable business. It was comfortable. We didn’t have to do a lot of work to keep it going. It was great. Slowing growth maybe is not as scary, but the idea of a business stops growing to me is super scary.
Rob: It is because it affects a lot of things. To put a pin on it because we’re running long, when I think about can you build a SaaS company, bootstrap it to profitability, and then run it for 10 or 20 years? Absolutely. There’s no doubt and I know a bunch.
Again, if you come to MicroConf, get in MicroConf Connect—for folks listening if you want to meet other folks doing that. The interesting thing though is if you want to do that, great. That’s actually one of the reasons we started TinySeed so that you can take TinySeed money. You’re still mostly bootstrapped. Taking $120,000 doesn’t change most businesses.
You’re doing $20,000–$40,000 a month and you take $120,000, it just doesn’t actually change your business that much. The money doesn’t change it, but we’ve supported companies both that want to run it for the long term and pull dividends out or companies that do eventually want to sell.
A lot of founders think they want to run it long-term. That’s cool and you can do that. Let’s say you’re running this business and it’s doing $2 million a year and a SaaS company. It’s throwing off a 33% net margin. What is that? About $678,000 a year in net profit. That’s awesome. It’s a great business.
If you were growing, you could sell that business in the realm of $10 million, $8 million–$12 million I would say. $12 million may be high but let’s say $8 million–$10 million. If you really want to run it and that’s your thing, then obviously do that. But it’ll take you 15 years to make that much money off that business as it stands.
Obviously, it’ll probably grow some more. You’ll make more money than that over time so it won’t really be 15 years. That’s the point where a lot of SaaS founders find themselves and then they realize, oh, I thought I wanted to run this forever. Either you get tired of it, it’s stressful, there’s competition, you don’t have the passion for it anymore, or maybe it’s just like, man, my husband or wife really wants me to take six months off, spend more time with my family.
That’s the decision point that some founders find themselves in. It’s a hard decision. It depends on who you are and what your goals are. That’s how I think about it.
Dan: That’s a good point. Wanting to do something different is just a huge thing. If you are an entrepreneur or a founder, you’re attracted to the idea of doing new things. That’s something I’ve always struggled with.
After I do something, sometimes it could be weeks, it could be months, it could be years, but eventually, I just get sick of it. Thankfully, it hasn’t happened. I have ups and downs of motivation with my current business, but it hasn’t really happened with this business. Maybe as you get older a little bit, you lose a little bit of that hustle. Maybe that’s what’s going on.
Rob: There’s hustle but I also think maybe you get wiser and you start doing things that you think will make you happier long term rather than doing them perhaps for short-term gain, for monetary gain, for it’s just a great business idea so I’m going to do it. Then you get in, two years in and you’re like, it was a great business idea but now I don’t care about the business anymore.
You didn’t start a brewery for that. You started it because you’re passionate about it. It feels like you’re living a pretty good life, man. I’m super happy for you just having watched you on this journey for all these years.
Dan: Thanks. I feel incredibly grateful. Really, really amazing. I miss this online startup world a little bit, but you’ve given me some hope because one day, when I sell my brewery or get someone else to run it, I can get back into my dreams of being a software startup founder and I’ll come to MicroConf.
Rob: That’s awesome. You are @thedannorris on Twitter. Folks can check out your new book, Compound Marketing, as well as The 7 Day Startup if they haven’t read that. I’ve read both and really enjoyed it.
If folks want to drink some beer, Black Hops Brewing. Is Black Hops only available in Australia, or do you sell in other countries as well?
Dan: Yeah. Just Australia. We got a very, very healthy local market of beer drinkers in Australia so there’s no need to get outside of Australia.
Rob: Totally. Thanks again, man, for coming on the show. I really appreciate it.
Dan: I enjoyed it. Thanks, mate. Good to talk to you.
Rob: Thank you again to Dan Norris for coming on the show. I really enjoyed that conversation. I hope you did as well. It’s about time to wrap this one up. I’ll be back in your earbuds again next Tuesday morning.