Episode 544 | Annual Raises, Finding Good Startup People, and More Listener Questions with Josh Pigford

Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m Rob Walling. I’m your host today, and I’m excited to have Josh Pigford back on the show. We run through listener questions covering topics like annual pay increases, should my B2B SaaS write a blog post about our price increase, whether offering discounted plans in exchange for people to have your powered by link or your branding is a good idea, finding good startup people, and all kinds of other stuff.

We actually chat about Josh’s new effort, which is called Maybe at maybe.co. I’m pretty excited for him. You’ll hear me bust his chops about getting started with something so soon.

Before we dive into our questions, Startups for the Rest of Us has 905 ratings across 47 countries. Our most recent is from DABOOM1234, the title is Gateway drug for starting a company. “This podcast inspired me to start my own company and changed my life for the better.” Awesome. Love to hear it.

If you want to give us a rating or review, log in to your podcatcher and give us five stars. Really appreciate it, and that’ll help me get to the 1000 rating mark that I am trying to achieve by some unknown date, but I definitely would appreciate it. There are very few podcasts with four figures of rating, and I think that we can get there.

With that, let’s dive in to my conversation with Josh Pigford. You may remember him from an episode within the past couple of months where we talked about him selling Baremetrics for $4.7 million and he dug through all the details of that. He had run Baremetrics for years and hired up to 12 people, so he has a lot of thoughts on these topics we’re going to talk about today. I had a great time chatting with Josh. I hope you enjoy our conversation.

Josh Pigford, thanks so much for coming back on the show.

Josh: Hey, thanks for having me, Rob.

Rob: Why is your Twitter handle not your first and then your last name, Josh Pigford? It’s Shpigford, and I’ve always wondered about that.

Josh: The handle comes from instant messenger days. I think I was just 19-year-old Josh. It was one of those things. You would have your instant messenger handle so I had Josh Pigford just a single word, but you could change the spacing. You could put spaces and capitalization and change that stuff and it wouldn’t change the name. Because it was really funny, I changed it to Jo Shpigford one day, and then the Shpigford part, people just started calling me Shpigford in real life so it kind of stuck.

Nobody’s got that handle at all. Nobody’s got Josh Pigford either, but it’s just a little bit shorter and it’s a little bit more unique than just my name.

Rob: Yeah, I was going to say, Pigford is not a common last name so I wasn’t imagining you were using […].

Josh: People are already going to butcher the spelling, so I might as well just make it more difficult.

Rob: Yeah, exactly. Well, that’s settled, and I feel better about that. It’s been bothering me. I woke up at 3:00 AM in the morning last night thinking about it for some reason.

Josh: Well that’s sweet. That’s cute that you’re thinking about me in your sleep.

Rob: I was thinking about you. I got to bust your chops, man. We’re going to answer questions, I promise. You and I on the last show, we were chatting, it was nice and calm, and I said good. If I only have one piece of advice for you, Josh, it’s take six months off. Don’t rush into anything else, and you yourself were like, man, I just don’t know. I’ve been making money in software for 15 years. I don’t know that I ever want to do it again. Then record scratch and suddenly, within a week of that episode, I see you tweeting, hey, I’m building software again. For folks who want to see it, it’s at maybe.finance or it’s company.maybe.co?

Josh: It’s maybe.co, actually. You just go to maybe.co.

Rob: Maybe.co. Maybe is modern, financial, and retirement planning. You have the best MVP ever. It is literally a notion document. What the hell is going on, dude? You said you weren’t going to do it? What happened though? I’m curious to hear this story.

Josh: I have an addiction to building things.

Rob: We all do.

Josh: We talked a little bit about this in my previous episode about a financial advisor. I can’t remember if we talked about it—if it made the episode, or if this was after the fact or something. The whole financial advisor taking X percentage of the assets that they manage. That cost me ultimately $2 million over the course of the next 40 or 50 years.

So then that jumped into me managing it myself. Then it was like, okay, the more I started reaching out to other founders who have had exits and been like, how are you managing all your money? They’d be like, man, it’s stupid—Excel spreadsheets, I try to use this thing but it’s terrible, or I just don’t even do anything with it because it’s there’s no good way for me to do this.

I was like, you know what, I’m just going to build something myself. It was one of those opportunities. It feels like there’s an opportunity from a market perspective where investing has become a lot more democratized. People want to have a better handle on their finances differently than say our parents who were optimizing for retirement. Now I would say most people are not optimizing for retirement. They’re optimizing for how can I do the things I want to do now and not wait until I’m 60 or 70.

I think that software can answer the what-if questions or the maybe. The whole name Maybe sort of revolves around you asking yourself like, hey, maybe I would like to open a coffee shop, maybe I’ll take an international trip, maybe I buy my dream house, and then we answer how that’s possible or show you how that’s possible.

Rob: Got it. I have a lot of thoughts on it because I’m concerned that you and I care about our personal finances. I’m like a nerd about it. It sounds like you kind of always have but really once you had more wealth after selling Baremetrics, you obviously have a concern about it. It doesn’t feel to me like the average person does.

Josh: I think the average person has been—culturally speaking, we’re taught, you work, put money into a retirement plan, you bust it for the next 30 years, and then you can retire. That’s the mindset, and I don’t think that that’s necessarily what everybody has to do. I think there are ways around that when you properly plan.

Maybe isn’t going to all of a sudden give you a million dollars right, but in the same way that a financial advisor can help you or would help you have a plan, Maybe is like replacing the financial advisor.

Rob: See I was hoping that you are building a tool for financial advisors because when I think about building a personal finance product and I think about selling B2B, I’m like, okay, I can get behind that. But if you’re talking about going B2C, can I just tell you please don’t? Please don’t do that.

Josh: Well, in the same way that you told me to not start anything after six months and I’m doing it anyway, same.

Rob: It’s very much on purpose.

Josh: That’s right. Part of this comes out of the fact that I was playing around with the financial advisor software that our financial advisor was using and it is truly terrible. That’s not to say that six months into this I’m like, okay, pivot, whatever. Maybe this does turn into some sort of B2B play. But I also think the whole financial advising world is also having a big overhaul. New fresh financial advisors aren’t billing in the same way that previous ones were. There are all sorts of stuff that’s happening in the finance space, I guess, or at least personal finance.

This is me getting my foot in the door and figuring out the best way to tackle that.

Rob: Yeah, I could see that. You and I’ve known each other long enough. It’s light-hearted ribbing, and I’m obviously rooting for you.

Josh: Sure. In reality, it’s a good thing to have people question what you’re doing, right?

Rob: Right. And that’s the thing is you shot the gap. With Baremetrics, you got in early in the Stripe ecosystem. It was a change that was happening where we had all these […] payment gateways and it was a […] nightmare, to be honest. Stripe fixed that and a bunch of us started using it. A bunch of us being SaaS founders. We all built custom dashboards, which is what I was doing at the time. You came in and saw that need and boom, within weeks, everything was going.

This could be that case again or it could not be. You’re trying to hit a trend that you think is happening because I think if you tried to build this (let’s say) even five years ago, I just don’t think anyone cares.

Josh: It wouldn’t happen.

Rob: Especially with millennials and folks who are younger than you and I, to be honest, they do think about finances in a different way. That’s your big risk here. You know you can build the software. You can do all the things. The risk is are you going to hit a movement as it’s happening, and that’s really the gamble here.

Josh: With Baremetrics, one of the things that I felt was this indicator that something was ripe for being built in the software space was that everybody was doing custom stuff—either actually programming their own stuff or doing it in spreadsheets. Everybody was hacking together tools. Now software has mostly just kicked that to the curb.

That’s also the case in this personal finance world where when I talk to people, well, how do you manage your investments or your finances in general? Outside of just basic budgeting, which this is not a budgeting app at all, everybody’s using spreadsheets.

Rob: Yup, Google Sheets for me.

Josh: Exactly, right? This is one of those cases where if the timing feels right and there are these clear indicators that people want something because they’re hacking together their own tools to make it happen. That’s where the timing part—instead of waiting another six months or doing this in a couple of years—timing feels right on that. That’s why I begrudgingly jumped into it.

Rob: I mean, I obviously wish you the best and I’m going to be cheering you along from the sidelines. I had two friends who sold businesses years apart and jumped back into something really quick within weeks where they were inspired. One of them wound up regret. Well, they both wound up regretting it but for different reasons. One of them burned out and he was like, I was still burned out and I didn’t recover. Because you had a few months off, right? I mean, you had four or five months off, I think.

Josh: That’s right.

Rob: I only took six months off after leaving Drip before diving—well, it wasn’t even six months actually if you want to know the truth. I mean, oops. Yes, it was definitely six months. Anyway, sir, maybe.co. If folks want to follow along, you have links to all the stuff, and I’m super excited to see what you build.

Josh: Thanks, man.

Rob: All right. Let’s dive into listener questions today. We have some really good ones. Our first one is about annual raises. This author or the question asker writes in quite a bit actually. He has to remain anonymous, but he’s doing very well. I think he sent me another email and I believe they’ve just hit a million ARR, to give you an idea of the size of his business. Mad props to the anonymous question asker.

His question is about annual raises and he says, “When we were a company of three to five people, pay raises were easy to figure out on a case-by-case basis. But as we grow, that’s getting harder. What rules should we put in place so that there are reasonable expectations on all sides?”

And this is a question that I would not have had an answer to until we got acquired because when we were eight full-time plus two contractors, it was all case by case. When we were acquired by Leadpages, which was 170 people at the time, they had all of this figured out. That is actually one of the advantages I think of seeing both sides. Basically, working in a venture-funded company, they had 38 million ventures, 170 people. I got to see way down the line of what Drip maybe was going to be 10 years from now.

I will weigh in after I hear your thoughts because at Baremetrics, how large did you guys get team-wise?

Josh: I think the largest is 12?

Rob: Okay, and how did you think about annual pay raises? Did you do it off the cuff on a case by case, or did you have some standards?

Josh: This was the thing that kept me up at night the most probably on a regular basis was I never really loved how we handled this stuff. We sold at the end of 2020. At the beginning of 2020, like Januaryish, I had just started really hashing out how we would not just raises but actually compensation. How can we standardize compensation so that (a) it doesn’t require negotiating and, (b) is repeatable and as fair as this can be?

There will always be some disagreement probably between what I think someone should get compensated and what that same person thinks as far as skill levels and whatnot, but trying to standardize that stuff.

The biggest help for me on how to figure out that stuff was Buffer’s salary formula. We didn’t use their exact formula, however, what that led me to check out was—that I had not really researched before was—Radford. They have the Radford surveys where they have compensation surveys that they run, and it costs a few thousand bucks to get access to it. But this lets you standardize base-level compensation.

Then what you do is you take the base-level compensation and then you have these different buckets for essentially how someone moves up in the company. But it’s different ways to figure out what someone’s skill level is or how they’ve improved. So you do basically biannual or annual performance reviews. Then talk directly with the employee about where do you think you are on this scale, here’s where I think you are, here’s how you can move up, et cetera, and then that is what influences your salary and not this, well, you always get a 5% raise every year or whatever.

You get a raise by becoming better at your job versus getting a raise just because you’ve existed at the company for a while.

Rob: We’ll try to find that article or we will find that article on Buffer’s site and link to it in the show notes. When we were small, I mean we were four or five people. I remember saying to a new hire, we don’t do annual reviews because I hate annual reviews or something, which is fine to say at five people. When you’re at 100 people, you can’t. It just doesn’t, you know what I mean? You can make any reviews not suck. You can make them to where it’s not so formal. I think of Microsoft, IBM—Fortune 500 company doing it, and you don’t have to do it that way.

So here’s what I saw and what I admired about what they did at Leadpages, and then of course, now at Drip now that Leadpages is no longer part of the company. The folks were hired and jobs were posted based on a market rate salary. The HR folks did salary surveys and they had paid for this expensive software. My salary surveys involved me going to Google and typing in a location and a role. Or if it’s remote, then I try to just wing it, but Glassdoor and salary.com usually come up so I have some idea of where the market rate is.

Here’s the thing, you can get people lower than the market rate if you have advantages. We used to have advantages as bootstrappers because you would say we’re a super small team and you’re going to make a big impact on the product, you’re really going to love your job, and you can be fully remote and work from anywhere. Well, that last one has been removed recently because everyone’s remote.

My hope is that it does come back because I do think some bootstrappers are having harder and harder times finding people at reasonable salaries because there are companies—now that all of Silicon Valley and most of the Fortune 5000 is hiring remote, they can pay a lot more bottom line, so it is harder.

If you’re paying below market like someone really either needs to have stock options or some other advantage that makes it worthwhile for them to do that because, over the long term, no one is going to work for your company for years for below-market-rate for no other reason.

What they did that was interesting too is every year someone worked, they would re-run the salary survey because sometimes (let’s say) you hire a senior developer in Minneapolis or a senior designer and that role is maybe $110,000. Within a year, that role may jump to $130,000. It’s possible that Target, Best Buy, General Mills, and a bunch of the other Fortune 500 companies here in town have hired a bunch of people and raised that rate.

They would actually adjust to the market, give or take, which again when you’re 5 people or 10 people, I don’t know that you have to do all this. But you probably should keep an eye on it because if you don’t, people will look at other jobs. It’s like the price of your house. You don’t always check the price of your house, but you just know how much it’s worth, we all do. I think that’s similar to salaries. I don’t have to really google what a senior software engineer makes in town if I’m a senior software engineer in town. I kind of know what my friends are making and you figure it out. That was an interesting thing they did.

Now they were venture-funded. They had the budget to do that. If you’re bootstrapped, maybe you don’t fully have the ability, but that was a thing. Then in terms of annual raises, it was 3%–5% based on performance, and if you were doing amazing, you got a 5%. That was just the cost of living raise. If you were getting 3%, you needed feedback, just like you said. You’re only getting three and here’s why. The annual review should not be breaking them this news. You should have had this conversation before that of hey, here’s where you’re not performing up to the level, or here’s where I want you to exceed this to actually get that full 5%. Any other thoughts on that?

Josh: No, I think that’s spot on. It’s not just about you figuring out, is this person performing? It’s also about they’re not going to be happy if they look back over the past year and are, oh, I haven’t actually improved. Or I’m not better at being an engineer, customer support rep, or whatever it is. That they also want to be better at their job than they were a year before, and they should be rewarded for that by getting paid more. But if they’re not, then you need to be able to tell them how to fix that.

Some people are really great at realizing, okay, I’m falling down on the job here. Here’s how I need to fix it. Other people have no clue. They have zero self-awareness. You can fix that by helping them see it, but you have to give them feedback and there has to be this set opportunity via (say) an annual review to talk about that stuff.

Rob: That’s right. The alternative to this because this sounds complicated like it’s going to keep you up at night. It is complicated and it does keep you up at night. It’s hard, and the alternative is I watch folks like Rand Fishkin who’s launched Sparktoro and they’re doing plenty of revenue to hire as many people as they want and they have no employees. They only hire contractors and consultants because they don’t want to deal with this aspect of it, and that’s your trade-off.

You might maybe pay a little more per hour, maybe people wind up taking the job, they don’t have time for you, they’re freelancers, or whatever. But going the consulting route is not a terrible way to go especially if you can afford it because it’s purely performance-based. If you want to hire a marketer full-time W-2 and they’re not performing, I feel like as the founder/CEO, the marketing manager, or whatever, it’s your job like you’re saying to bring them up to speed. Well, why aren’t you performing? Let me help you do that, let me help you with personal growth, and let me help you with business growth.

If you hire a consultant for a three-month contract or six-month contract and they don’t perform, you let them go and you find someone who will. It’s an interesting trade-off people should think about.

All right, next question. This question is from Steve McLeod, and he is the host of the bootstrapped.fm podcast. He says, “I recently made a substantial increase to the prices of my B2B SaaS. It’s called Feature Upvote. Instead of a flat $49 a month, I now have three tiers: $49, $99, and $249. Existing customers stay at the old price. I just implemented these prices without any announcement, was that a mistake or a lost opportunity? Should I have written an informational blog post about it? If so, what’s a good way to explain a large price increase?” What do you think, sir?

Josh: So to his questions, was that a mistake to not post about it? No. That’d be a really weird thing to write a blog post about. I think as the owner, developer, or whatever of your own company, you think people care and look at your pricing and see, they’ve changed their price or whatever. Nobody cares. Literally, no one cares.

If they’re using your software already and you’re not raising the price for them, again, they don’t care. And if they weren’t using your software, there’s a handful of people who may have been shopping and had seen the price, but a blog post probably won’t be seen by them nor will it help them. No, I don’t think there’s anything to say about price increases or changes at all, and the reality is you should be testing and changing prices all the time to be figuring out what’s the optimal price point, what are people willing to pay for. There’s no need to write anything every time you test out some new pricing.

Rob: I think I’m on the same page with you. There was one time where I increased pricing. We did it both on Drip, and this is when I increased pricing, not when the subsequent owner did and everything blew up. There were at least two times, probably three, where we did pricing overhauls during the time that we owned it, and then I did this with HitTail as well.

Here’s the thing, if you’re going to raise prices, people are evaluating the software, they’re doing a trial or they’re looking at it, then suddenly you raise prices one day, and they come back the next day and say, hey, your old pricing used to be this, I was about to sign up. The way I would do it is be like, cool, I’ll just honor that. I’ll give you the old pricing just because it doesn’t matter to me.

Since I’m going to do that anyway, before we raise pricing, we did send out an email to anyone on our marketing list and probably did a tweet or something. I don’t believe we did a blog post, but we sent it because that’s again that sticks on your—like you said, no one cares and it doesn’t need to stay on your site forever. But for us, it was a promotion and it was like, hey, pricing is going to go up next week, and it’s going to double or whatever it’s going to do. But if you sign up now, we will honor the old pricing. We’ll essentially grandfather folks. Not forever, we didn’t commit to that, but we did say for the foreseeable future. It did get a big rush of trials of people trying to get in under that wire.

Now, did I ever go back and analyze and figure out how many stayed around and how many didn’t? I did not, but I do remember having a good growth month. I’m not saying that you should do that all the time either though because we didn’t do it every time, and there were certain factors that we wanted to weigh in. Sometimes, like you said, we just wanted to test and play around, and we didn’t want to be so public about it because we wanted to be able to roll it back if it was a disaster. In that case, we didn’t do the big promotion.

Josh: It was probably two years ago or something where we were on our company-wide retreat for Baremetrics and one morning I was like, guys, what if we just literally doubled our prices? Did nothing except take every price and multiply it times two on the marketing site, let’s try it. So by that afternoon, we were A/B testing, doubling our prices for zero added benefit. Again, this is not for existing customers.

It would have been silly for us to write a blog post because a month later, we rolled that back where we stopped running that A/B test. You should always be testing out different prices and seeing what sticks and what doesn’t stick, and there’s no need to make a big to-do about it. Except for in your case when you can use it to your advantage like a marketing opportunity.

Rob: Right. Before I announced it, I was pretty confident that it was going to work and that we were going to stick with it and all that. That’s the thing, I agree with you. More founders should be messing with pricing constantly and testing. It’s just so scary to do so. I remember how terrifying it was to think I could just decimate my funnel. You just have to push through it.

When folks come into the Tiny Seed batches, within the first few weeks, I mean, that’s the biggest lever in SaaS is pricing. You don’t need to build new features, you don’t need to get more leads. You can double growth if you were to double pricing and keep the same conversion.

We do talk through a lot of price increases too to early founders in Tiny Seed. In fact, usually within the first couple of calls, I will do a call for hand raises and say, who on this call thinks that they’re either underpriced or they’re mispriced—their value metrics are off. Usually, it’s about 70%, 80% who have a gut feel their pricing’s off, but they don’t really know why. So then we do a bunch of deep dives, analyze, and chat them through. Pricing, it’s no fun but you got to deal with it.

All right. The next question is from Adam at paidmembersapp.com. He’s asking about free or discounted plans in exchange for branding. He says, “What do you think of a discounted tier that includes branding i.e. my customer will get my brand at the bottom of emails sent from my app to their customers. Fairly unobtrusive but still present, and they would have to upgrade to remove the branding.” I’m going to cut in right here and I’m going to say this is fairly common like Drip head, powered by Drip on the widget. Mailchimp on their free plan I think there’s a powered by Mailchimp badge at the bottom of the emails. E-signature apps like a doc sketch back to his email.

“If my main plan is $49, I was considering offering a $29 plan which shows branding, given that I am essentially offering a discount in exchange for the customer providing marketing about my SaaS. Does this seem a valuable enough trade-off to be okay with people being on the less expensive plan forever? I was going to add a higher transaction fee to move customers up to my higher plan, but then I thought maybe just having someone on a lower plan is fine if I get a lot of clicks from the branded emails, footers, or links on their website. How valuable in general is having branding like this? Is it worth the trade-off of lower MRR from the customer?” Do you have any thoughts?

Josh: Yes. I think there are a few ways to tackle this. On the base level, should I offer a lower price plan and the only difference is adding branding? No. Instead, I think of it this way. Someone who’s that price-conscious that they’re like, I’m going to save $20 so that I can remove the branding, probably isn’t going to send you anything anyways. They’re too small or too early in business or whatever for wherever they’re including a link—nobody’s going to see it so it doesn’t matter.

However, what you’ll typically see is this called white label or they’ll have a white label plan where you actually pay a lot more to remove the branding. Basically, all your lower plans—whether that’s $29, $49, $99, or whatever—have branding by default, then offer a $100, $200 a month plan that removes branding in addition to other things.

I don’t think you can do pricing just to remove branding, you’re not going to really see that big of a difference, but having that grouped into a higher paying plan I think can push people over the edge to be, okay, sure. I’ll pay the extra $50 a month so I can also remove the branding in addition to getting all this other stuff. But I think if you’re going to do the branding bit included on all your sub $100 a month plans by default and then pay a lot more to remove it.

Rob: I would agree with that. I don’t think branding should be the only difference, and in fact, back with Drip, we had a powered by Drip link in our email capture widget people could put on their site. Our lowest plan was $49 and that included the link, you couldn’t shut it off. At the $99 plan, you got whatever it was double the subscribers, some other integrations, and you could turn off the powered by Drip link.

I mean this is when we’re at 200, 300 customers versus later when we’re 10X, 20X that. In the early days, there were some people that complained about it at $49, and I believe it was so small though that we just added a little checkbox in the admin dashboard and we just added $20. Will you pay $20 to remove it? If it bothers you that much, be on the $69, and it worked. But again, it was like most people didn’t care and most people didn’t ask.

The big thing I would say to Adam who’s thinking about this is, is there a way to test this without messing around with pricing? Because what you want to test here is the viral loop, is the virality. There’s a viral coefficient—you can google this, I won’t go through it here. But basically, if every one of your customers refers another customer within one month, that’s an amazing viral loop for B2B SaaS. That would be off the charts. That’s really what you want to test is how many click-throughs do you get, how many trial signups or customers do you get.

I would sit down and think, is there a way to test this? Maybe everyone who signs up for your main $49 plan—which is your main plan you have today—as of tomorrow, the branding just shows up and see if anyone notices and if anyone complains, and measure that for the next couple of months. It’s pretty easy. You’ll see how many customers have it, how many links, and how many trials.

You’ll quickly be able to calculate, is any of this worth it? Because I do think it depends on your customer base, their reach. To your point, if they have 20 website visitors a month, it’s not going to help. If they have 500,000 website visitors a month, there’s probably going to be enough traffic to make it worth it. That’s where it is.

I remember with us, we did look at it. We put Google utm params on the powered by link and we measured it. I remember it being, it was worth having it, but it wasn’t some groundbreaking marketing channel. The business wasn’t going to grow on autopilot purely with the viral loop, but I remember it was worth it enough to keep it around. But that’s my experience. It depends on a lot of things.

Josh: If you think about now versus five-plus years ago, I think it used to be really popular—especially with analytics tools especially Mixpanel doing this—where if you put a little Mixpanel tiny little graphic in the footer of your site or whatever, they would give you an extra 100,000 sessions or whatever for their free plan. That used to be more common I think, but now, from a technology perspective, people just don’t have websites as much anymore so there’s more just app-based stuff. These things that a lot of people have read or even seen in the past 5–10 years aren’t as applicable just based on the landscape now.

Rob: Yeah, I think that’s a good point. I agree with you though. It’s complicated, but I wouldn’t overthink this is the bottom line. I don’t think it’s such a big deal that you need to spend a bunch of time on it. I would just get out and test it, see what happens.

Josh: To some extent, if anything, it’s more about being a branding play for yourself where it’s like, man, I’m seeing this little widget everywhere. What is that? I think Intercom is a big one. Their icon itself in the little chat bubble is probably what people know more than a link that they’ve seen.

I think if you’re going to do it, make it a branding play in the same way that you’d be advertising or something. Think of it more that way instead of how can I get people to pay me more. There are lots of ways to think about it, and I don’t think there’s any right or wrong answer there.

Rob: Thanks for that question. I hope that was helpful.

Our next question is a long one. I’m going to have to summarize some pieces of it, and he asked to remain anonymous. He said, “I’m the co-founder and CTO of a tool that makes workshop planning easy. We’re a mostly bootstrapped fully remote business, and since we achieved product-market fit in early 2018, we’ve had steady 7% month over month MRR growth.” Which is not bad for three years. I mean, that’s pretty good. It depends on where they started from.

He says, “Overall, we still consider the business quite stable, and we have a lot of ideas on how to improve the business, but we need more resources, we need more hands, so we want to grow our team. About a year and a half ago, we started growing the team and went from two co-founders to our current team of six. We’ve realized we need to continue the process of hiring as our backlog is ever-increasing, and here comes the core of my question. Any advice on how to find good people that are a fit for working in small startups? Meaning they’re good at managing themselves, wearing many hats, and finding and learning new ways of doing something.

There are a couple of challenges. First of all, is there a good place to find such people? Second, how do you identify the versatility of skills and the small startup fit? I have a feeling most people tend to emphasize few specialties in their resumes so they may seem more professional rather than being all over the place, but is there something specific you look for? Are these kinds of people too busy building their own startups?”

No, I don’t think they are. Josh, sir, you and I have hired many people. I’ve hired them for big companies and for small startups, and I know you’ve hired for yourself and at small companies. What do you think of this question?

Josh: You skimmed over this in his email, but there was one part where he’d said that they had hired six people. He says, “I’m sure by now our overall performance as a company has increased, but there are moments when it feels it would just be easier to do all the work myself.” I get that feeling for sure, but I think he’s probably downplaying that their overall performance as a company has increased. When it comes to finding good people, you have to find people who you know will basically free you up to do other things that you’re specialized at.

He’s correct that you want to find people who can do lots of things or wear many hats. For us, one of the big indicators to me of someone being good at wearing lots of hats were people who were self-employed before joining the company. I optimized for finding those people or at least wanting to push through the interview process a lot more. Or people who are freelancers because running your own business, even if it’s as a freelance business, you are still wearing many hats to pull that off.

That was always a very quick indicator to me was have you ever been self-employed was a question that I would ask that I thought was pretty crucial to finding if somebody is capable of self-managing, doing lots of things, and not thinking, well, I’m only the JavaScript mobile whatever. Anybody who’s hyper-focused on a specific job likely wouldn’t be a good fit in the early stage because they’re optimizing for being the very greatest at a very specific thing, and that’s not what you need in those early small team days.

Rob: Yeah, we used to put the phrase “not my job” is not something you hear anyone on our team say. That was in the job description, and it was just a way of yeah, we wear a lot of hats.

I think to address his first question is where do you find such people? I don’t think they’re all busy building their own startups. A lot of people want the experience of working on a successful one. I definitely think that back to in-person events, if you come to MicroConfs or you find whatever else type of events, meetups, and such in your city, I do think that networking is a piece of it. It’s getting to know other people. MicroConf Connect is another example. That’s an online thing with about 2000 founders and aspiring founders. There’s a jobs and hiring channel, and people have hired other people in the Connect community who are still working the day job and doing stuff on the side.

There are some pretty good job boards for this. Weworkremotely.com, which was started by Basecamp and later sold, but it’s still up and running. It is a startup-minded, small team, remote people. Authenticjobs.com is one that I used back in the day. I believe they’re still good. Dynamitejobs.com from Tropical MBA guys. Remoteok.io, those are the four that I know about.

There’s one called Parachute List, parachutelist.com, which I believe was launched right as COVID happened and there were a bunch of layoffs. I don’t know how accurate Parachute List still is, but the other four are certainly places I would be thinking about posting.

Then identifying the versatility of skills was always a big question that I had. If we were going to hire someone who was currently working at a big company, I wanted them to really, really not like working at the big company. If they enjoyed that, they were not a fit because that shows that, like you said, they probably have a very specific job role and they like all the answers. They like having an HR department you can go to for that, which isn’t going to be at a six-person company. They like to go to procurement to buy their laptop. Nope, not going to have that. All this stuff we just have to handle you just have to do it.

If it was someone at a big company who really didn’t like it, if they had a lot of prior experience at small companies, or like you said, freelancers running their own business was a thing.

There was a good fit that I found which was someone who had worked at a startup or on their own, then had gone to work for a big company and just hated it, and they were trying to get out of it and they’re trying to go back. They had experience doing both, and that showed me they thought the grass was greener because big companies typically pay more. We call that combat pay where you’re getting paid because your job sucks, you’re getting paid more.

Again, a Fortune 500 company will probably pay 20%, 30% more than my bootstrap software company can pay, but your job sucks and you don’t enjoy it. That’s the trade-off that folks have to make.

Josh: This is less applicable now, or it’s probably not as good of a filter, obviously, as a remote company we wanted people who were comfortable they were going to work remotely. But people who had already been working remotely, similar skill sets I found as someone who was a freelancer and that they had already made the decision to work from home, and so they were already very good at managing themselves. They didn’t have to be in an office managed by someone walking around, looking busy, or whatever. That’s less the case now I think.

If they’ve been working from home for a long time even if they were working for another company, chances are they’re pretty good at managing themselves to begin with.

Rob: That’s a really good point because when I was hiring (let’s say) 10 years ago, trying to find people who had work from home experience was really hard. Nowadays, let’s say barring COVID. Let’s say a year ago, pre-COVID, it was a lot easier to find folks, and so I do think that’s probably a minimum requirement. The folks I’ve seen who try to transition from working in an office to working from home usually have a pretty rough transition, and that would be (I would say) at least a yellow flag for me if they didn’t have pre-COVID work from home experience.

He added two additional questions in his P.S., and I think we’ll answer these and then wrap for the day. He said, “Any advice on full-time versus contract developers when we’re trying to ensure continuity? So far we have only hired full-time.” I’ll let you take a crack at this one first.

Josh: I get the feeling of wanting someone full-time. That person, by default, is probably a little more invested in the long-term well-being of the company. But I think there are a number of times where I’d wanted to hire full-time but then I was like let me just try contracting with this person for a couple of months and see where we go. A lot of times those would not work out, not because the person was bad at it, but because that work that I thought I was hiring them for, there wasn’t enough of it there in the way that I thought there was going to be.

This happened a lot with data science roles where I was like, we definitely somebody who can do data sciencey things. I would hire someone as a contractor and then it’d be like, well, I don’t know what else to give you to do here. Having someone who can contract for say 3–6 months, knowing that they’re available to hire full-time, to me is the best of both worlds there where you both get to try it out and make sure that there’s a good fit. But you also aren’t asking them to go quit their job somewhere to potentially come on board full-time when you don’t have enough work for them.

Rob: Yeah, I think that’s a good point. I think in the early days, I certainly was all contractors because I just didn’t have confidence in revenue to be able to hire people full-time. But the question asker is not in that situation. They have a business that’s been growing 7% for three years.

At that point, if I truly am just looking at developers, I lean towards hiring full-time. If it’s just we need another Rails developer or we need a Rail/DevOps developer. It’s someone that I know there is absolutely full-time work available for them and we can just crank out features more or get there faster. I like full-time because there’s focus, there’s two-way loyalty. I think we’ll take care of you, you want to have our back, there’s ownership. Even if it’s not actually true equity, there’s that mental ownership of I work here, this is my company, I have pride in it versus I’m a hired gun.

I lean towards that direction if you’re going to build out a dev team. I like having camaraderie among the developers because, at certain times, it does feel—I mean, when the servers go down or […] hitting the fan, it’s nice to have that team that is cohesive and has a really good way of working together and a lot of respect for each other. I feel ensuring continuity is a phrase that he used, and so I do lean towards that. But again, if I was doing $10,000 a month barely paying my bills, I wouldn’t go out and do that right away.

Josh: You mentioned developers specifically. I think it depends on the role but specifically with developers, there can be a very long on-boarding run-up to them being really productive. It’s hard to bring in someone who can just jump in. A back-end engineer, especially if you’ve got a pretty complex product, could take them three-plus months before they’re contributing something that’s making a business impact. It is hard to do that on a contract basis.

Rob: And of course, the flip side of that is something I said earlier, which is the more W-2 folks you have, the more of them you have to manage, do pay raises, do annual reviews, and check-in with them once a week, once a month, and there are complexities there. See, I’ve felt managing developers specifically—I guess maybe I’ve gotten good at it maybe being a developer. I don’t know what it is, but I don’t feel it’s that hard. Our product is software and it’s like, I want the folks building that to be on the team. But if I’m going to look at marketing, sales, operations, or any of that stuff, I would be much more likely to consider having contractors or consultants in those roles.

Last question of the day. Still from the same asker, it’s in his P.S. He says, “Using recruiters, are they actually good at finding people?” Have you used recruiters ever, Josh?

Josh: I have not. Not passed. Well, not an individual recruiter. I’ve used a few sites where it’s like put in what you want and then the site guarantees that you’ll get X number of applicants or something, but not an individual going out and doing recruiting for us, no.

Rob: I had experience with recruiters (let’s say) 15+ years ago, it was almost 20 actually, and I was still a developer. They would find me, they’re contingency recruiters. I felt they didn’t know what they were talking about. They were not good at it. They took 15% of my first year salary. They didn’t take it from me, they took it from the hiring company. My sense of recruiters at that point was very negative.

As I built Drip in the early days, I did all the hiring, which was a mistake because I spent way too much time on it and took way too much headspace. Once we were acquired, they had two full-time recruiters on staff, and I resisted allowing the recruiters to get into the process because I was like, no, I know how to do this best. I’m the founder, I’m the CEO. You know what, I was wrong. The recruiters at Leadpages and then Drip were phenomenal. They took so much headache off of my plate.

They would post the jobs, they would do the initial scan of the resumes, narrow it down based on the criteria we talked about. We would work on the job description together they posted, then they would filter, and they would do an initial phone screen—20–30 minutes. They handled negotiation, they handled so much stuff. I will never go back. There are certain things that I learned that I just won’t go back on. But they were in-house, they’re full-time W-2.

So then, after I left Drip and we had to hire for our first role, we hired Tracy who’s the program manager at Tiny Seed. I contacted a recruiter friend of mine who does recruiting as a day job. I said, could I pay you a few thousand dollars to basically do all of that stuff for me just as a side gig for you? It’s an income for you, and I know that you’re good at this. That’s what happened, and it was absolutely worth it.

That’s been my new mindset. If I’m going to hire, I want to find a recruiter who is willing to do that thing—a flat fee engagement. I’m encouraging Tiny Seed companies to do this now. Again, you don’t lose control of your hiring process, you just hand off the stuff that you don’t need to do, which is posting to all those job boards that I just said, monitoring that, and filtering from 100 down to 10 resumes, which we can all do, but you shouldn’t be doing it as the founder, as a CEO.

I obviously am not going to give out the name of the person who I’ve used because they’ll get overwhelmed and they do it on the side, but dynamitejobs.com who I’ve already mentioned from Tropical MBA folks. Dan and Ian actually do some of this and I’ve been sending some Tiny Seed founders to them. I mean, they publish the rates on their side. It’s $4500. It’s a flat fee and it will take that off your plate.

Again, if you’re a bootstrapper, you’re hiring for your first role, you may not have that much money. But if budget allows, yes, I absolutely think that finding a reputable recruiter usually—I mean this is where I would ask in MicroConf Connect or another community or a network on Twitter or whatever who has used a recruiter that charges $3000–$5000 as a flat fee and will help me find this person in any country and is knowledgeable in this and that. That’s my current advice and current thinking on that.

Josh: You mentioned having somebody who’s doing posting on the job boards and filtering things down. I did have an administrative assistant at Baremetrics who would do that kind of stuff. If you’ve got someone who can just manage the part where you’re filtering things down or doing the stuff that doesn’t require your brain who’s trying to understand culture fit, there’s a lot of people who can actually handle a lot of the administrative minutia of hiring that takes up all your time.

Rob: Yeah. Did your admin assistant do initial screening calls, do salary negotiation, and that kind of stuff?

Josh: No, she would not do that. Though we very rarely did screening calls. We didn’t have to do calls that much. I did most, as much as I could, via text anyway. She would handle all that stuff.

Rob: There you have it. Those are our questions for today. Sir, thanks for taking a few minutes and hanging out with me. I had a lot of fun on this episode.

Josh: Yeah, man. This was fun.

Rob: You’re Shpigford on Twitter, and of course, maybe.co if folks want to keep up with what you’re doing. Awesome. I look forward to having you back, man. You’ve been on the show a couple of times, but I feel like I should have you back more often.

Josh: Yeah, any time.

Rob: Awesome. Thanks so much, man.

Josh: Thanks, Rob.

Rob: Thanks again to Josh for coming on the show, and thank you for listening this week. I’ll be back in your earbuds again next Tuesday morning.