In episode 656, join Rob Walling for another solo adventure, where he revisits a few topics from earlier episodes. These topics range from balancing having taste while shipping consistently to the only two keys to being remembered for something.
Topics we cover:
- 1:39 – What founders need to know about the Section 174 tax change
- 5:03 – Balancing developing taste with shipping
- 10:47 – If you want to be remembered for something, you either have to be the first or the best.
- 17:13 – Lifestyle bootstrapper vs. ambitious bootstrapper vs. the billion-dollar entrepreneur and why you need to get clear on the path you aspire to take.
Links from the Show:
- Small Software Business Coalition Letter To Congress
- Episode 652 I Mixing No-code with Code, Developer Superpowers, $5k Angel Check, and More Listener Questions
- Obviously Awesome: How to Nail Product Positioning so Customers Get It, Buy It, Love It
- The SaaS Playbook
- MicroConf Youtube Channel
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.
But at a certain point, no matter your taste, no matter how high your taste is, you do have to balance that with shipping things into the world. And this is a really tough balance I think for a lot of people. What I think it comes down to is knowing yourself. If you are the type of person that sits and works on something for way, way, way too long, you need to ship way earlier than you think. And if you’re the type of person that ships stuff too early, then you need to wait longer and you need to perfect it and make it better. And if you’re shipping a lot of things and none are resonating, you probably need to ship fewer things, not more, but you need to spend more time on them and make them better.
Welcome back to Startups for the Rest of Us. I’m Rob Walling, and this week I’m walking through a couple Rob solo topics. I’m going to revisit that concept of having taste and what that means and how to balance that with shipping. I’m going to talk about being remembered for something or being the best, and I’m going to talk about getting clearer about what each of us is seeking. All of these, of course, with a bent on building software companies or really just being an entrepreneur and trying to change our lives in our little corner of the world. Before I dive into those topics, I have a special guest correspondent, my remote correspondent, Michele Hansen, who many of you may know from the Software Social Podcast. And she is campaigning to get awareness out about the change to the US laws around Section 174, which greatly impacts software companies. So with that, let’s hear from Michele.
Hey everyone, it’s Michele Hansen. You may have heard Rob and Derek talk recently on this show about the changes to Section 174 of the US tax code, which make it so that software development and other research and experimental costs may no longer be expensed and instead have to be amortized, which is to say spread out over many years. Now, you may have heard about that and said, “Well, I don’t have any employees, so that probably doesn’t impact me, or I don’t file for the R&D tax credit, so this doesn’t impact me.” The more I talk to experts about this issue, the more it becomes clear to me that Section 174 as it stands right now is an existential threat to any business that builds and sells software. This is not only about new product development but also adding features to existing products. It’s not just about salaries, it’s also about the staging server that you use while you are building a new feature.
This stands to have catastrophic impact on the software community in general and especially our community because many of us cannot stomach a tax bill that is all of a sudden hundreds of times higher than we would’ve otherwise paid. The thing about this is that Congress never intended for this to take effect, and there is broad bipartisan support for fixing it, but they don’t feel any urgency about it. It’s been seen as a big business issue and people assume, you know what? A big business, they can manage an extra 10, 20 million in taxes for a year or two. While we sort this out. Small businesses can’t. Small businesses are seeing their tax bill go from $75,000 to $225,000. This is a massive impact on small businesses and we have to do something about it because as long as this stays a big business issue, it’s not going to have any urgency.
But this is impacting indie founders right now who are putting their taxes on their credit card, taking out lines of credit, scrambling, laying people off, freezing their hiring, doing everything they can just to pay this tax bill that Congress didn’t even intend for them to have in the first place. So what you can do about it is go to ssballiance.org and sign the letter that we are sending to Congress about this. These coalition letters are incredibly effective. A group of 500 small biotech companies sent one to Congress recently about Section 174, and a senator mentioned it in a hearing recently. This letter is going to get delivered directly to Congress people and will help them understand the impact that it is having and help our supporters in Congress bring more people on board and communicate that this is an urgent issue that small software businesses and other small businesses need a solution to. So if you are a US citizen with a US software business, go to ssballiance.org and sign the letter. Thank you so much everybody, and together we can fight this.
Thanks so much to Michele for chiming in on this critical issue. And again, that URL if you want to sign this letter if you’re a US citizen is ssballiance.org. I want to revisit this concept I talked about a couple episodes ago in my last solo episode where I talked about having taste and I talked about that quote from Ira Glass. Where he talks about each of us developing taste over time, and I talked about how to develop taste and why you may or may not want to do that. And then he talked about how when you first start creating things, it’s below your taste. And either someone asked me on Twitter or maybe I just thought of this randomly because I have it here in my trustee Startups for the Rest of Us solo topics Trello board. And it says, “I talked about taste, but how do you balance that with shipping?”
And I think that’s a really important thing to call out is that you can develop your taste to the point where you care so much about the details, you’re overly perfectionistic and it keeps you from ever shipping anything into the world. You endlessly tweak that one blog post and never hit publish. You endlessly tweak and edit this single podcast episode and never go live. You endlessly tweak and edit your book and never put it out into the world. That actually reminds me today when I’m recording this is the day that my Kickstarter went live and what an adventure. It’s been quite a journey already. I had a funding goal of $20,000, which made it worthwhile doing a print run of hardback books. And we blew past that in under three hours. We just passed 32, 33000 and I’m really excited about it. So if you haven’t backed that, it’s at SaaSplaybook.com and there’ll be a link to the Kickstarter.
I believe when this episode comes out, there’ll be a few more days to back it and it’s called the SaaS Playbook: Build a Multimillion-Dollar Startup without Venture Capital. And it’s pretty much everything that I could think of that you need to do that. So I hope you’ll check it out. Now, back to taste versus shipping, really the balance here is to not be overly perfectionistic. And I think of examples from artists and musicians who talk about how they put something into the world that everyone likes and then they point out that it has mistakes or that they no longer like it, that they screwed up x, y, z part. I’ve heard an interview with Kurt Cobain talking about how Smells like Teen Spirit, which is certainly one of the most popular songs of the nineties, and I would say change the course of music from hair bands to more of the grunge sound and is still a song that is played on the radio today.
Where he talks about not liking Smells like Teen Spirit, that the arrangement was off, that he’s written songs that are so much better than that, and yet that was the one that became popular. And you can imagine that if he didn’t love that song that he could have kept it to himself, not pushed it out in the world. I think of The Beatles, I believe it’s the last verse of She Loves You. Where the two of them, John and Paul, sing a lot in harmony and they say different phrases at a certain point, and they’re supposed to be one voice, right? They’re supposed to be saying the same words and they just kind of left it and they knew they didn’t want to do a retake. And George Martin, who was their producer, said, “You know, life’s too short. It’s good enough.” Or I think of the person who writes a book and ships it to the printer and gets it all ready to print, maybe me. And then they reread it and they realize, you know what? I want to add more to it already.
I really do. I’ve finished this book maybe three months ago, four months ago, and already I feel like, well, I have more to say about that. Or I would say that slightly differently, and this had been happening for the two years that I was writing this book. That when I would revisit a topic, I’d realize I could go deeper on that. I can add another example. I can add more thinking or different thinking to it. And every time I would do a YouTube video or another MicroConf talk, I would realize that that should really be pulled into the book and it would change that section of the book. But at a certain point, no matter your taste, no matter how high your taste is, you do have to balance that with shipping things into the world. And this is a really tough balance I think for a lot of people.
What I think it comes down to is knowing yourself. If you are the type of person that sits and works on something for way, way, way too long, then you need to ship way earlier than you think. And if you’re the type of person that ship stuff too early, then you need to wait longer and you need to perfect it and make it better. And if you’re shipping a lot of things and none are resonating, you probably need to ship fewer things, not more but you need to spend more time on them and make them better. People all the way from the greats like Beatles, I’m sure Picasso. I haven’t heard of him commenting on this, but you know that the story I told of being in the Picasso museum where he had 20 or 30 different takes of the same subject. So 20 or 30 different paintings that were basically all the same and just redo and redo and redo. So you know he didn’t think any of them were perfect. It was never done for him, and yet it was done eventually, right?
Eventually he stopped painting it and one of these paintings would sell for a jillion dollars and he’s known as one of the greatest artists of all time. But for him, given his taste in art, it was never done. And yet he would ship his paintings into the world even though to his taste, he knew they weren’t perfect. And that’s what I encourage you to do as well is you’ve probably developed pretty impeccable taste on certain elements of your craft and that’s great. And you have a name that you’re tying to, you’re tying your name to the product that you’re putting into the world. Whether that’s a podcast, whether that is a video on YouTube, whether it’s software, whether it’s marketing copy, whether it’s a support response, whether it’s a book. Whatever it is that you’re shipping into the world as your art, be proud of it, but don’t be such a perfectionist that you’re not shipping things into the world that frankly can help your business or can help other people.
You kind of owe it to the world to get them out there. My next topic comes from a quote or a sentence that was said on a podcast I’d listen to. The podcast is called Comic Lab, and it’s where two comic strip artists talk about their craft. These are not folks who write and draw for newspapers, but they are independent comic artists. So they sell on the web and they do Kickstarters and they have Patreon and they make their money being entrepreneurs. And one of the hosts, Dave Kellett was quoting someone and he said, “If you want to be remembered for something, you either have to be the first or the best.” And especially in, I’ll say, imagine being an artist or being an actor, you either have to be the first with that style. Think of it like James Dean or an Arnold Schwarzenegger, right?
They’re remembered because they were very unique when they came on the scene. I said, very unique. It’s funny, unique onto itself is as unique as it gets. You don’t need very, but you get the idea. They were unique individuals. No one had seen folks like them before, that archetype. Or we can think about folks who are the “best” actors that we might think of, folks like Dustin Hoffman or Robert De Niro, Kevin Costner, if you like his style. I mean, those folks maybe weren’t so unique that folks like them had existed before in Hollywood and have since, but they were so good that they’re memorable. And this instantly clicks something in my mind because I thought about the three unfair advantages for faster SaaS growth that I’ve brought up many times. One is being early, one is having an audience and one is having a network.
And so this kind of fits in at least the being first part fits in with being early, right? And in SaaS probably is with being an actor or an artist, there’s quite a bit of luck involved in being first or being early. I don’t think you need to honestly be the number one, but if you’re in the first few, that probably counts pretty well. But I was trying to think of the metaphor of like, well, what does it mean to be the best in SaaS, in software, in entrepreneurship? And I think a big part of that actually is not only execution, just getting there and building a great product and marketing well and doing all that. I think that’s a big part of it. I think that’s part of being the best, but I also think part of it is positioning. It’s this underrated thing that is so amorphous and hard to understand.
And even after April Dunford’s amazing book, which is Obviously Awesome, even after she’s defined it for us. I think a lot of people still miss this and don’t fully understand what positioning is and how it allows you to communicate that you are the best for people seeking X, but anyone who’s not seeking that, you’re not the best. That’s how I view positioning is you can enter a super crowded space of CRMs, ERPs, email service providers, whatever it is, but as long as you carve out a corner and you say, for anyone who wants the low-priced really easy to use version, that’s our position. Or if you are a realtor and you want this type of software, that’s our position and we are the best for that. And I think as bootstrapped and mostly bootstrap founders, we can’t compete head-to-head with these big behemoths that have raised a gazillion dollars.
And if you think about, let’s look at being first, let’s look at email service providers. MailChimp was super early, right? And they’re huge and they didn’t need to raise funding, and you could also say they’re one of the best. They executed very well. Now the product these days, yes, it’s a 23-year-old product or something. So is it the best product? No, no, it’s probably not. But realistically, they were first or very early and they executed well, and you could say that about Basecamp too, right? They were early and there’s a bit of luck in that. But also they did some things right. Now, if you come 10 years or 15 years after MailChimp and after Basecamp, you can’t just build what they’ve built and expect to succeed. This is where the idea of being first is gone and you have to think about, well, how can I be the best?
Well, can you be the best against MailChimp, against that brand, against the strength of what everyone knows about MailChimp? Can you compete with a decade’s worth of software development and tooling and all the stuff that they have built into their product as a bootstrap or mostly bootstrap founder? It’s unlikely. So that’s where we have to think, maybe head to head, I can’t beat MailChimp or Salesforce or HubSpot or Basecamp or insert name of a dominant player in a dominant space. We’re not going to be first. We can’t be the best head to head, so how can we be the best in our little corner of this market? And that’s positioning. That’s where we think, I’m going to be lightweight marketing automation that doesn’t suck because my corner is, we don’t need heavyweight marketing automation. Those exist out there, but we’re a lighter weight version of that.
And also we’re fun and easy to use and easy to interact with, and that’s the corner that we carved out with Drip, and I see the same thing in a lot of TinySeed companies that come on the scene into competitive spaces. Think of [inaudible 00:15:50] competing against all the other scheduling links that have come before them. Think of GymDesk competing against all the other gym and martial arts studio management software that has come before them, including some pretty large companies. These are folks that have carved out an angle. It’s a unique position. It’s every time Mike Taber comes on the show. What do I ask him about Bluetick? I say, are you marketing enough and how are you different? How are you different? And not only how are you different, how are you communicating that you’re different? That’s a huge part of positioning.
I don’t shy away from competition. I actually have a section in my book that says, how do I compete head-to-head with larger competitors? And I talk specifically about this, about using their weight and their motion against them and looking at their biggest weaknesses and saying, how can we be not that? How can we be the opposite of that? If you are the same as other large competitors and they have more money and more brand name recognition and a stronger brand, you will be a commodity. You will not grow. Just because it’s a huge market doesn’t mean that anyone will sign up with you. It means people won’t stick around. They’re going to go for the big player unless you carve out some type of unique position in the space that you are known for and that people say, you know what? This tool is the best for X within this broader ecosystem.
Last topic of the day is actually spurred on by another quote from Dave Kellett, who is one of the comic artists on Comic Lab. We should give him a shout-out on Twitter when this episode goes live. But he creates, writes and draws couple really good comic strips. One is called Sheldon, and we have all the books. I think there’s like 10 books. And I tell you, if you haven’t read these, they are hilarious. There’s one that is Sheldon’s take on pop culture, and it’s just all the pop culture strips and there’s a bunch of stuff about Microsoft and there’s stuff about Lord of the Rings and Star Wars and all this nerdy goodness, that one’s amazing. Then the other strip that Dave focuses on more now is called Drive, which is science fiction slash fantasy epic, but it’s amazingly well drawn and really funny and humorous as it goes along.
And so he has a successful career who is working for himself, making a full-time living, and it’s everything he’s always wanted. But on a recent episode of Comic Lab now it’s probably three, four months ago, but he said, “I have friends who’ve won a bunch of awards that I have not, but I would much prefer my career than theirs.” And he’s talking about a couple of things. One, he’s talking about his financial success, but he’s also talking about his creative freedom because he owns his characters and he owns his own destiny and doesn’t have to work for anyone else. And he also was talking about his closeness to his audience because I think, I don’t remember the context, but I think some of these friends are newspaper columnists and they’re kind of beholden to the syndicates and they aren’t close to their audience in the way that Dave Kellet is.
And this made me think about the lifestyle bootstrapper paradigm versus being a more ambitious bootstrapper versus wanting to change the world, so to speak, and become a billion-dollar startup. There’s all these different paths, and if you’re not clear on what you want from the start, it’s easy to copy the wrong person. That’s the thing is if you think, I want to build an amazing business that does half a million dollars a year and travel the world and just have incredible amounts of net profit going into my bank account, then don’t look to Silicon Valley, right? Don’t listen to inventor capitalists say, “Oh, it has to be a billion dollar market.” Or don’t listen to Y Combinator talking about how to start a company, how to build the company, how to find great ideas, because those ideas and those paradigms won’t apply to you because they’re talking about a completely different type of company.
Likewise, if you want to build a SaaS company and mostly bootstrap it to 5 million or 10 million a year, you probably don’t want to listen to the lifestyle business folks. I mean, truly the folks who are like, “Look, I just want 20 grand a month and I’m going to go travel Europe.” Usually those two business types are not the same. In fact, start small, stay small. My first book covers lifestyle businesses and it’s older now. It’s 13 years, he’s looking a little haggard. Don’t make fun of him. But frankly, it holds up and people still buy that book. And probably 75% of what’s in that book is still valid today for that true lifestyle business entrepreneur. And that’s where I was in 2009 when I wrote that book versus my new book, The SaaS Playbook, is about building that 5 million, 10 million, 20 million SaaS app, and it’s very different.
If you compare these two books and the focus and what’s in them, they’re not just different because they were written a little more than a decade apart. They’re very different because the approaches from the start have to be different. And if you don’t have an idea of where you want to go, and I’m not saying you need to know where you want to go with your whole life. I just mean with this single startup you’re working on. If you don’t, you may chase the wrong things. You may model yourself or listen to the wrong people. You might do the whole, you chase the audience when you really want money, or you might chase money when you really want the popularity or you might chase funding when what it really is you just want an amazing bootstrap business that provides you with freedom. I’ve talked about it on this show in the past, but my own rule for when I will listen to someone on social media and follow them and follow their advice is if they’ve done something that I want to do, and usually if they’ve done it twice.
So in terms of I want to start multimillion-dollar companies, have they done that a couple of times or am I pretty confident they didn’t get lucky with the first one? So if I want to build a $5 million company, do I want to listen to the person who’s spouting off about startups where the only thing that they ever did was build a company that quarter million dollars a year and sell it for whatever, 750,000 or a million or whatever the number is? No, I don’t because they don’t know what they’re talking about. They think they do, and they might sound like they do, but I’m not going to listen to that person. I’m going to listen to people who’ve been there and who’ve done it at least once, and who I see have a pretty methodical approach and who don’t rely on luck and who do things that are repeatable and are teachable.
So much of what some folks do when they have a success as they get lucky and then they try to teach what they did, but it turns out you can’t teach luck. But the other thing I want to add to that criteria of who to listen to is are they talking about the type of business that you want to build? Because again, the person who says, for example, something we hear a lot, which is build an audience and then sell something to that audience, that’s amazing for information products. If you want to write a book about building a SaaS company, if you want to start a YouTube channel and a podcast and then you want to sell courses or you want to sell whatever, and it’s information, build an audience by all means. But if you want start a SaaS company, look around at the people who have started successful SaaS companies and how many of them had an audience before they started.
So with TinySeed, for example, we have, I believe it’s about 107 companies that we funded, and I think we’re going to fund another 20-25 here in the next month or two. It’s a lot of companies, and less than 5% of them had an audience before they launched, less than five. And even of those handful of companies, the audiences were not huge. It was folks like Derek Reimer, he’s one that I counted as having an audience. And of course, did his audience help him in the early days in certain ways? Sure, it probably helped him get better feedback and get some guidance, but I’m going to tell you, Derek Reimer was going to be successful with or without that audience. It’s just something that I know in my bones, having worked with that guy for more than 10, 13 year, whatever the number is. I’ve known him since he was a wee lad. Derek would’ve been just fine on [inaudible 00:23:32], whether he had his podcast audience or the Twitter audience or whatever else he has.
But put that aside and realize that whatever it is, four or 5%, it’s a very small number of TinySeed companies had an audience. I’m not saying an audience is not an advantage, but it’s not worth the time to build if you’re going to build a SaaS company. There are so many other ways, so many better ways to spend your time than to sit down and write the blog posts and tweet. Look, if that’s in your wheelhouse and that’s what you want to do, that’s who I am. I had to start blogging. I didn’t blog and podcast because I wanted to. It’s because I had to. That’s just the person I am. So if that’s you, that’s cool, but what I don’t do is tell everyone that they need to be doing that because not everyone wants to do that. And in fact, I don’t think it’s the best use of time.
When I look at the thousands and thousands of hours that I’ve spent podcasting and blogging and tweeting and whatever, if I had invested all that into SEO in a hugely competitive space, I would be worth 10 times what I am now. No joke. There are so many better ways to use your time. So again, if that is in your wheelhouse, then by all means, feel free to do it. But if it’s not or if it’s not something you’ve already done, then I would not be following this, build an audience thing. I like to think that we pick companies that are successful or are going to be successful in TinySeed. And again, the super, super vast minority, less than 5% built an audience before they built a SaaS company. So that’s the kind of thing where try to get clear on what you’re seeking and figuring out who to listen to in order to get there. So that’s going to wrap us up for today. Thanks so much for joining me again this week and every week. I’m Rob Walling, signing off from episode 656.