Startups For the Rest of Us

Rob Walling (00:00): Imagine this: you’re about to close a massive deal. You’ve been grinding for it, you’re pumped. And then your customer’s legal team decides to make things interesting. What happens if you get hacked? How do you protect our data? And your brain just goes blank. That’s the nightmare founders deal with all the time. That’s exactly what Ysecurity solves. They are 40 security engineers who’ve actually done security at Apple, Uber, Microsoft, Robinhood, Brex, and more. And get this: you don’t hire them, you rent them by the hour. No massive salary, no expensive consultants, just real experts embedded in your company helping you get SOC 2, ISO, whatever you need. Set a monthly cap, know exactly what you’re spending, and close the deal. Head to ysecurity.io/startups and book your free strategy call. Your first eight hours are free. 40 engineers, one full working day, totally free. Go take it. 

(00:57): ysecurity.io/startups. That’s the letter Y: ysecurity.io/startups. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode I’m going to talk through some solo topics. The first one is about how a TinySeed founder who found they didn’t have product-market fit just started generating $10,000-$15,000 a month in quasi-consulting revenue. It’s really customer development mixed with project-based work, and I was impressed with how quickly they pulled this off. I’m going to talk about what separates Nobel Prize winners from forgotten researchers, and one or two other topics as time allows. Before I dive into those topics, tickets for MicroConf Europe are going fast. We will sell this event out. We’ve sold out all our events for the past several years. MicroConf Europe is in Reykjavik, Iceland from September 21st through the 23rd of this year. We have incredible speakers coming to this event, our world-class hallway track. 

(02:05): And of course, producer Sonya is lining up some amazing excursions to hot springs, thermal spas, and a distillery. microconf.com/europe if you want to check that out and grab your ticket. Tickets will never be cheaper than they are today. And if you or your company are interested in supporting the event and getting in front of a couple hundred founders, mostly focused on B2B SaaS, you should consider sponsoring. Shoot us a note at sponsors@microconf.com and my trusty team will get back to you ASAP. 

(02:46): My first topic of the day is about a TinySeed company called BlinkMetrics at blinkmetrics.com. I did get permission from the founders to tell this story. I was going to anonymize it and then I was talking to Nathan Tyler, one of the co-founders, and mentioned I was going to talk about this on the podcast and he said, “Oh, just use the name. Tell them what we’re up to.” And I really appreciated that because the story is an interesting one. So we accepted BlinkMetrics into TinySeed earlier than a lot of other TinySeed companies. Nathan has had a nice exit under his belt, so he’s a serial entrepreneur and someone we put faith in to execute alongside his co-founder. And so they were building BlinkMetrics, purely as a B2B SaaS, and had some early traction. They came into a batch, I don’t even know if it’s 18 months ago. 

(03:41): I lose track of it these days. And what they found is that what they were selling wasn’t resonating. Their product-market fit was very weak or non-existent, and they were struggling to make sales and struggling to retain people, tweaking with the pricing. But in true entrepreneur startup founder form, they have iterated so quickly, tried a lot of things, and been right on enough of them that they’re starting to see some traction. So Nathan in particular and I have gone back and forth with Loom videos and Slack voice messages, having these async conversations about approaches that he and his co-founder are trying. And one of the things he eventually decided to try, he was asking me what I thought about it, was the approach of: look, I want to do some consulting and project-based work to serve both as revenue for the company, because the company wasn’t really making any money, but also as customer development to find out what people really need. 

(04:42): And before I continue, BlinkMetrics, the H1 today is “Take your business reporting out of spreadsheets for good.” You know the data is somewhere in your CRM, finance, and operations tools. BlinkMetrics pulls it all together into live dashboards that finally answer the questions your individual tools can’t. And as I’ve talked about on this show, building analytics dashboards is a tough space because they’re often vitamins, not aspirins. And that’s what BlinkMetrics was running into. And so they decided to take a pretty bold move. If you go to their custom dashboards page today, you can see they have just three pricing plans and they are effectively one-time. They have a $5,000 custom reporting dashboard done in 30 days, done for you, with a lot of custom code and custom integrations with apps. There’s a $10,000 one if you need a few more things, and then there’s a custom one starting at $25,000 and going up from there. 

(05:39): And I’ve seen founders both inside TinySeed and out try to do the consulting-to-product path, and it is challenging. There are a lot of challenges that go along with it. If you can’t see commonalities between all of the projects, then you’re basically just a dev shop. And if you can’t charge enough to make really strong margins, you find yourself on a hamster wheel of never-ending code writing and you can’t productize it. It’s a trap that a lot of consulting firms and agencies fall into and they’re never able to get away from that instant infusion of cash when you can charge $5,000, $10,000, or $25,000 for a few weeks of work. It makes it hard to then go try to build a business on $50 a month. 

(06:24): And so Nathan and I had a lot of conversations about this. The interesting thing is he came back, a month or two after one of our conversations, and said, “Well, I’ve been generating between $10,000 and $20,000 a month in this project work and we are learning a ton.” And I thought to myself, and I realized both he and I had been talking down about it, being like, “Yeah, it’s kind of not working and you have this consulting stuff you’re doing.” But then he said, “Well, some of it is turning into recurring revenue.” So some folks are paying $500 or $1,000 a month. It’s a pretty substantial amount of MRR with most projects. So the MRR is actually starting to build. Talk about customer development. Most people don’t do customer development to this level, where you are truly building mostly custom software and then able to find the commonalities. 

(07:23): But the really interesting thing was just how I was like, “Yeah, it’s not SaaS, so the revenue isn’t worth much.” That was kind of the way I was talking about it. And then I realized it’s pretty incredible. Think about what they’ve done: within a month or two of deciding to do this, they’re bringing in between $10,000 and $20,000 a month in project revenue. But it’s cash. It’s cash that allows them to pay the bills and to keep the company going. And I just had the realization at a certain point that as entrepreneurs, we often just make things out of nothing. From nowhere, suddenly this business is a six-figure ARR company that will support both founders until they can figure out how to turn this into recurring revenue. And it’s such an incredible luxury that we are able to do that. I asked Nathan, “Ten years ago when you were working a day job, did you ever think you could just spin up a business doing $10,000-$20,000 a month effectively overnight?” I mean, they had a website, that was it. 

(08:31): They didn’t have a bunch of incoming leads or anything, and all of a sudden this business is doing this. And he said, “No, I kind of take it for granted these days.” And that’s the thing when you talk about entrepreneurs who execute and just get it done: they kind of take it for granted. And I was doing that in our conversations as well. I actually asked him, “I don’t think you have a ton of traffic, but how are you finding these new clients?” And he said in a Slack message, “Nothing secret. LinkedIn, networking groups, coffee chats. I did 104 coffee chat type calls in Q1, which yielded 24 sales calls, which landed enough deals.” So it’s just putting in the work that has led to this. And I’ll say it’s not about never giving up. I don’t mean you should never pivot. This is in fact a pivot. But the fact that they’re keeping this business alive, learning things, and seeing commonalities between these dashboards, they discovered a whole new customer type. 

(09:20): There are partners, agencies, and fractional CFOs, EOS integrators who want this type of thing, and they don’t just want a $100 or $200 a month dashboard. They want something that’s pretty complicated to set up. But Nathan is technical, he’s a developer, and so he’s able to get this going. The other thing he pointed out to me is that back in the day this would be a lot of manual, grindy work, but AI makes it way faster. He said, “The fundamental economics have changed.” The API connectors to do new integrations, AI is actually really good at building those and writing all the unit tests and smoke tests. He was telling me, “I think this could go from 30 days down to delivering in seven days. 

(10:25): And there are some I think we could get to the point where we could deliver in a day or two, in essence.” And so that’s obvious once he said it, but it hadn’t occurred to me just how valuable this model might actually be. And so you might say, “Well, can’t anyone just spin up AI and do this?” And it’s like, yeah, but these fractional CFOs and EOS integrators don’t want to do that and they don’t want to host this software. And if you just use AI without a bunch of controls, it will hallucinate, data can be wrong, code can be buggy and insecure. And effectively BlinkMetrics is taking care of that. So not only are they generating revenue and discovering new customer channels and picking up on commonalities, but they are also turning a significant number of these projects into more SaaS-based subscriptions. 

(11:11): And if someone paid $5,000 or $10,000 upfront to have custom software written, think of how sticky that is. They’re not going to cancel in three months or six months. The LTV on this is going to be high. The churn is going to be very, very small, if not net negative. And so I wanted to call out the BlinkMetrics case study for a couple reasons. Number one, being a founder and being able to just make something out of nothing is so impressive. And I think a lot of us take that for granted. If someone came to me and said, “Yeah, I’m doing $20,000 a month in consulting work,” my initial thought would be, “Oh, I’m sorry,” because I am so immersed in the SaaS space where everything’s recurring and that’s where the value is. And that’s true, but also let’s just take a moment and be grateful. 

(11:56): If we can support ourselves with our own products or whatever we’re doing, just how impressive that actually is. And how the version of us from 10 years or 20 years ago would be so impressed and so happy with what we’re building. And then secondarily, I wanted to maybe give a bit of inspiration. If you’re out there doing consulting work and trying to get into a more SaaS-based model, I think BlinkMetrics is going to make this work. They really are on that trajectory, and that wasn’t the case even three or four months ago. It changed very quickly with a lot of focused effort: 104 coffee chats, 24 sales calls, executing with AI, and just grinding through a lot of stuff that’s probably not fun at this stage. 

(12:47): But my hope is that BlinkMetrics is going to build an incredible business. My next topic is what separates Nobel Prize winners from forgotten researchers. This is a tweet that I will link up in the show notes, and this tweet effectively tells a story of Bell Labs and a man named Claude Shannon who gave a lecture in 1986 that explains why some people win Nobel Prizes and other equally smart people spend their whole lives doing forgettable work. He had spent 30 years at Bell Labs observing those who succeeded and those who didn’t. And he talked about several habits that the Nobel Prize winners had. The first one was that most scientists deliberately avoided the most important problems in their field because the odds of failure are too high. So they would pick a safe, adjacent problem, solve it cleanly, publish it and move on. But because they never took swings at hard problems, they never knocked it out of the park. 

(13:48): That’s what it takes to win a Nobel Prize. The second habit was about doors, like the doors to their offices. He noticed that the scientists at Bell Labs who kept their office doors closed got more done in the short term because they had no interruptions. But the scientists who kept their doors open got more done over their careers. The open-door scientists were interrupted constantly, but they also absorbed every new idea passing through the hallway. Ten years in, they were working on problems that the closed-door scientists did not even know existed. The third habit was inversion. One example is a scientist who Bell Labs refused to give a team of programmers. So he flipped the question and asked why machines could not write the programs themselves, and that single inversion pushed him into the frontier of computer science. 

(14:40): So it’s thinking about the same problem in a different way. The fourth habit was that knowledge and productivity compound like interest. Someone who works 10% harder than you do does not produce 10% more over a career. They produce twice as much. The gap doesn’t add. It multiplies, and it compounds silently for years before anyone notices. This last one hits me the hardest, because over my career I’ve seen founders who show up wanting that instant quick hit of success, and sometimes they get it. Sometimes you get lucky. But I don’t want to base my approaches or my advice on getting lucky. The founders I see who show up day after day, year after year, shipping and thinking in terms of years, not months, as I often say on this show, are many of the folks who have outsized outcomes. You can look at my product career in the early days, just plodding along, making nothing for several years, then making a few thousand dollars a month, then maybe $10,000 or $20,000 a month. 

(15:43): And then suddenly, after 11 years of grinding, having this massive, successful multimillion-dollar company in Drip and having that exit to where I didn’t have to work again after 2016. It seemed to come out of nowhere, but it didn’t. It was shipping software for years. It was learning marketing for years. It was shipping this podcast 52 weeks a year, running MicroConf. It was a lot of things that compounded to contribute to that success. And then even beyond that, if you look at MicroConf and TinySeed these days and the success of this podcast and the YouTube channel, all of that has taken years and years to build. So this idea that 10% harder produces 10% more: it doesn’t add, it multiplies. And obviously if you get lucky and knock one out of the park early, good for you, but that shouldn’t be your expectation going in. 

(16:45): Going back to the second habit, keeping doors open, I think of that these days as being in community with other founders. And I hesitate to say social media because social media is such fake community. I think more along the lines of actually meeting folks in person at in-person events. And not just because I run in-person events. I also think of private Slack channels where it truly is community. I’m in a few private Slack channels with other founder groups, and I think consuming content like this podcast, where there is a community of folks sending in questions and guesting on the show to give back, whether they’re being interviewed about their experience or answering listener questions, to me that is keeping your door open. 

(17:38): It allows you to absorb new ideas as they pass through the hallway, so to speak. And it’s not just this podcast. There are other podcasts that I think are good for bootstrappers and SaaS founders. And then the first habit was about not picking a safe, adjacent problem and solving it cleanly, but taking bigger swings. I think this could be looked at two ways. We could say if you’re not building a billion-dollar company, you’re being too safe, but I don’t think that applies in our space. That’s not how I think about it. I think of this as just generally staying in your comfort zone versus being willing to fail and get uncomfortable. And sometimes that means having a nice, safe business doing $10K a month and pivoting that into something that is much bigger, or at least has bigger potential, but is going to be hard and scary. 

(18:28): And that is exactly what we did with Drip: the story of the early days of plateauing at $8,000 or $10,000 a month and then pivoting into a multimillion-dollar business. That was tough. It was a lot of work and it was not glamorous, but that was the big swing that we took. I also think about it as, in your business day to day, are you working on the safe stuff? Are you staying in your comfort zone, writing the code or whatever it is that’s predictable and certain? Or are you doing the scary, risky, uncertain things: trying the new marketing approach that may never come to fruition, making cold calls and cold emails, doing the grindy thing that, if it works, has asymmetric upside and will change the course of your business and potentially your life. 

(19:16): But doing that makes you uncomfortable. It’s unlikely that the biggest risk in your business is something you can safely fix while staying in your comfort zone. And that’s what I like about this first habit. So I hope you enjoyed that walkthrough of Nobel Prize winner habits. My next topic is also a tweet. It’s from barretto@tiiny.com, but it’s T-I-I-N-Y.com. I’ll link that tweet up in the show notes. Someone had asked them, “It’s been years since you started. Most builders are launching apps like there’s no tomorrow, within 48 hours and the like. But you, years in the making. What’s your take on working on a project until it’s really successful versus launching several apps quickly?” Barretto has built Tiiny Host, which is tiiny.host, the simplest way to host and share your work online. I believe it’s bootstrapped and he’s the solo founder, and it’s doing more than a million a year. 

(20:19): And I enjoyed his response. He said, “This is one of the reasons indie hackers are not succeeding. I picked one idea, but in reality one problem space, and I dived deep into it for five-plus years. The idea didn’t instantly work out, but I learned a lot, navigated, and found product-market fit.” And then you see folks below, of course, chiming in, a thousand percent. Posted about this recently: vibe coders, focus on one problem or sector over a long time so it can compound. So obviously this depends on your goals. If you want to get a lot of things into production and potentially get lucky, then you probably want to build a bunch of things and see what sticks. But I continue to see evidence from folks who have built great things without a lot of luck and without a huge social media audience, but got in, solved a problem, and had to focus on it for a long time. It doesn’t need to be five years for you, but this continues to support that thesis. 

(21:06): And my last topic for today is around an Instagram post featuring several pro basketball players warming up on a court. Steph Curry takes two shots and misses both of them and he says, “The rim is off.” The measurements of the rim, it’s supposed to be exactly 10 feet. It’s not right. He has such confidence in his own ability and feel that he’s questioning the height of the rim. In the video they measure it and it’s off by, I don’t know, like an inch, maybe an inch and a half. 

(22:00): It’s kind of hard to tell. A very, very small amount that no one else could tell, but he is such a professional with such incredible feel that he was able to detect that with almost pure intuition. And then there are a couple other clips of folks dribbling on a court, the ball bouncing slightly different than they expect, and they say, “There’s an issue here, like under this board, it’s like a dead spot.” You see them just being really puzzled by it, and then people come out and they realize there’s a dead spot on the floor. Watching these clips on Instagram actually reminded me of when I used to run track. I ran track for nine years in high school and college and we used to run a lot of 200s in practice. In a given week, depending on the workout, you might do 10 or 15 200s, or maybe 20 or 30 in a given week, to build up speed and endurance. 

(22:49): And I could tell within about a half second how fast the 200 I just ran was. We would run as a group and I remember running a bunch of 200s with my dad timing and my brother there. We’d run one and I’d say, “28.5.” And he said, “Yeah, 28.7.” I said, “Cool.” Then we’d run another one and I’d say, “28 flat.” And he was like, “Yeah, it was 27.9.” And he said, “You really have a good feel for this.” And I remember it was just something I did so much. I wasn’t even thinking about it. It just felt that way. 

(23:31): And the idea here is that when you do something so much, you gain an expertise and an intuition, in quotes, an intuition that looks like magic to an observer. Part of it is pattern recognition, a bit of repetition, and you learn how that vibe is. How many shots do you think Steph Curry has made from the three-point line? He knows when it leaves his hand if it’s going to go in or not. He knows way before it hits the rim whether it’s going in. And so when he feels it and he’s like, “Yeah, that’s going to go in,” and it doesn’t, he’s like, “Oh, that’s weird.” He does it one more time, he’s like, “No, something’s off here.” It’s the same with any expertise. As a chef, you get the feel and taste for things. As a startup founder, you start to get the feel of where you should be focusing in your business. You start to get this feel of, “Ooh, this part’s making me uncomfortable. This is probably where I need to be focused right now.” 

(24:13): People ask, “What do the best founders you know do differently than those that fail?” And a lot of it is figuring out where they should be focusing their time and how to execute on that. And so if the biggest bottleneck in your business is marketing and sales, but that makes you uncomfortable, or you just want to post on Twitter, or you get into marketing and sales but you kind of half-ass it and you don’t really focus on anything, you don’t really do the parts you don’t want to do, you’re going to find that you’re never going to get better at those. 

(24:58): You’re never going to get this expertise that looks like magic. When you ask Derrick Reimer, “How did you decide to build that feature or not build that next feature?” it might look like magic. How do you make such good product decisions? Well, it kind of looks like magic, but Derrick’s been building products for at least 17 years, maybe more. You ask Ruben Gamez how he knows what to focus on next when he’s working on SignWell: he has a process. He looks at the business and gets a gut feel of where the bottleneck is, and then either focuses on that himself or hires someone to do it. He doesn’t half-ass it. He goes all in on it to figure it out, and he knows that if he puts effort into it, he’s just going to make it work. He has that confidence. 

(25:48): And if it doesn’t work, it’s okay, because he’ll do the next thing, and you don’t have to be right all the time. You can be right 60% of the time and be pretty well off. When you look at some of the founders who’ve come on this show who have bootstrapped to $50 million exits, $80 million, $100 million exits, literally bootstrapped with one or two co-founders, and you listen back to what they did, they generally worked on the right things. They got a lot done and they generally worked on the areas of uncertainty, and they up-leveled their skills. They didn’t say, “Well, I don’t really know how to participate in a Reddit forum or a Facebook group. I don’t really know marketing. I don’t know how to do sales. Maybe I need to read a bunch of books about it.” Maybe you do, but you also probably need to dive in and just figure it out while learning from those who have done it before you. Just having that confidence and building that repetitive muscle of doing these things often. 

(26:50): Doing new things that scare you often, and that ability and willingness to learn new things and get outside your comfort zone will build expertise in you that looks like magic. When I started Drip, I had a lot of confidence that it would succeed, and a lot of confidence it would succeed very quickly. The latter part was not true. It took us a lot longer than I thought. But I did have this confidence that I could figure it out because I’d figured out a bunch of smaller things along the way as I’d stair-stepped up. Then after Drip, I had even more confidence that whatever I did next, even if it was bigger, scarier, more stressful, with more on the line, I would be able to make it work because I had built that muscle and a bit of expertise that to an outsider might feel like magic. 

(27:42): But in addition to the 21, 22 years that I’ve been thinking about this stuff and writing about it and launching really poor ideas in the early days, I’ve been recording 833 episodes of this podcast and three or four hundred YouTube videos over the past five years, writing five books. I actually just completed the manuscript of my sixth book. And I haven’t always been right, far from it. But if you show up every day and you think in terms of years, not months, and you put in the work and work on the things, some things that scare you, doesn’t always have to be, but the areas of uncertainty in your business, I have a hard time imagining you’re not going to build some incredible expertise that looks like magic. Thanks so much for joining me for this episode. It’s great to be able to talk into a microphone and know that tens of thousands of people will listen to it, and some will be impacted and some will be inspired, and for some it will change your life. 

(28:44): This is why I keep doing this: shipping podcasts, YouTube videos and books, starting TinySeed, running MicroConf. It really is the best job I’ve ever had. So thanks for being part of that. Thanks for listening this week and every week. This is Rob Walling signing off from episode 833. 

Rob Walling (00:00): Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode, I’m going to do a lightning round of listener questions. In fact, I’m going to take as many of the written listener questions, the text questions that we receive and crank through them with probably shorter than usual answers. The challenge is we get a lot of questions here at the show and it’s great. It makes for great content. It allows you as a listener to hear other voices and to hear what folks are working on. And frankly, they may ask questions that you’ve never thought of. And that can help make us all just a little bit smarter and get there a little bit faster. But I tend to put audio and video questions to the top of the stack. Every now and again, I fudge that rule. 

(00:48): But as a result, our text questions pile up. And I have some questions here from 2024, from two years ago. So I apologize to those folks, but I kind of wanted to crank through a bunch of the backlog. There’s an awesome range of questions from reducing risk with my startup to go full-time, when to register as a business, design audits, how to calculate TAM for a step one business, how to know when to pivot, all kinds of things we’re going to get into. But before I dive into that, I’m doing a live Q&A and AMA on May 20th, and it’s only available for MicroConf Connect members. MicroConf Connect is our online community for founders just like you. Folks who are bootstrapping or mostly bootstrapping and building incredible SaaS companies. MicroConf Connect is highly curated and it is one of the higher signal-to-noise forums or online communities that you can be part of in the space. microconfconnect.com. 

(01:51): If you want to check it out. And again, I’m doing a live Q&A/AMA where you get to ask questions and hear me answer them, only for members of Connect on May 20th. Sign up before then to get access. 

(02:15): Let me dive into my first question. This one’s about reducing risk with my startup to go full-time. It’s actually a Reddit thread, and we’ll of course link that up in the show notes. A user was sharing their salary information as they went from an intern making $15 an hour in 2017 to a tech company product strategist in 2025 at 28 years old, making $440,000 a year. Now, caveat this: they probably have to live in the Bay Area or in a very expensive place in order to make that. So I’m guessing they do not live in a low cost-of-living city. And one response to this thread said, “Congrats, man. I have a question for you. I earn $400,000 via my base salary. I work at a Fortune 50 company. I have a side hustle that is the one-man army of me and freelancers, of course. 

(03:08): The salary I pull for the business is good. My thing is, how do I get over that hurdle to go all in on the business? It’s not that the salary I draw from it is bad. It’s the unknown future factor. W2 is safe. I’m well known within my space, so jumping to another company isn’t hard for me, but that fear of the company fizzling out in a few years gets me. I’ve had successful businesses that ran into scaling issues before and those fizzled out. This one I think has longevity, but no way I can scale it to where it needs to be without cutting the W2. So what do I need to just do it?” Now, I actually think this person thought that the original poster was a founder and they’re not. And so there’s a bunch of people in the thread that are like, you mistakenly asked this question and there’s no good answer to it, which is one of the reasons I wanted to address it on the show. 

(03:53): Building a business when you have a really high salary and taking the jump is very hard. This is why it’s easier to basically take this leap when you’re younger, because when you’re in your teens, 20s, even early 30s sometimes, I guess this 28-year-old is making almost half a million dollars, but you get the idea. The younger you are, usually your earning potential is lower. And the further on you get in your career, the harder it gets. So one thing to note is if you’re listening to this and you’re still early in your career, now is probably the best time to start a business if you want to do this eventually. The other thing is that these high salaries are like golden handcuffs. And the only piece of advice I can imagine for someone making $400,000 a year as a W2 employee who wants to take the leap is to save a bunch of that money. 

(04:41): If you are spending 390,000 of that and only saving 10K a year, then yeah, it’s a huge risk. But if you’re making 400K and you can stock away 200 grand a year, then in a couple years you have two full years of living expenses. You already have a business that’s doing something. You said the salary you pull for the business is good. So you should actually be able to save more than 200K. The biggest problem I’ve seen with folks making this much money is lifestyle inflation. They or they and their spouse just live it up and that’s great, unless you want to leave to start your business. That’s when it’s a problem. So having the discipline and the optionality of stocking a bunch of money away in the bank is a big way to maintain your optionality. 

(05:26): You have a business. If you get to the point where it’s not scaling and it fizzles out, you go back and get that W2 job again. You said you’re well known in the industry and it would be easy for you to switch companies. Obviously that goes down a little bit over the years. If you get 10 years into the business and you try to go back, yeah, there’s probably going to be a little bit of a challenge in getting the old job back at that rate. But it feels to me like you have to make that decision of when is it worth it. I remember I was making between $250,000 and $300,000 a year as a consultant. I was a micro-agency where I was doing a lot of the work, but I was outsourcing to freelancers and making a big cut on those folks. 

(06:08): This is the 2007-2008 timeframe. And I quit all of it when I had about just under $100,000 in product income. I was able to do that for a couple reasons. Number one, we did not let our lifestyle inflate to consume all of the business revenue that I was generating. Number two, I saved a lot of that business revenue. And as I was growing the products on the side and had the consulting business running too, I was stocking away as much of my product income as well. And so we had enough of a cushion because I am risk averse. I never bet anything that would have meant we lost the house, never did credit card debt. I was always pretty disciplined. I say I’m risk averse, but I’ve obviously taken risks in my life starting companies and angel investing and buying crypto in 2016. 

(07:01): I’ve talked about this a little bit on the show in the past, but what I did do was be pretty disciplined about it. And if you don’t want to be disciplined, then you will reduce your optionality. If you want to live it up and spend that 400K, that sounds like a lot, but you’re in the Bay Area and you kind of do have to spend it if you buy a house. This is one reason I don’t live in the Bay Area. I was born in the Bay Area and I will likely never live there again because of this. Making adjustments to your lifestyle and not consuming everything that you make is a big way to maintain your optionality. I said lightning round and then I gave a long answer to this one. I’m going to try to be a little faster when I answer these other ones. 

(07:43): Next question from February of 2024. James L. says, “Hey Rob, I can’t promote your YouTube and books anymore than I do. Love your content. Myself and my co-founders are bootstrapping a property app and wanted to know when is it a good idea to officially start the process of being identified as a business? As we are looking to first validate our idea using a landing page, I want to know what the next steps would be after we get our first five to 10 customers.” The answer is it depends. It’s kind of about risk tolerance, because if you set up an LLC it reduces your liability. But as loose guidance, you don’t need one when you have a landing page. You don’t really even need one when you have some revenue. In a perfect world you would. Personally, I would use Stripe Atlas and set up, what do they have, LLCs or C Corps. 

(08:33): If you really want an S Corp, you can talk to a lawyer, but Stripe Atlas gives you clean docs and it’s pretty inexpensive. I would consider doing that once I was convinced it had some legs. Is it making $500 or $1,000 a month? That’s a decent business. I will admit, I bet I was doing $100,000 a year before I switched away from a sole proprietorship. And a sole proprietorship, for those who don’t know in the US, just goes on something called a Schedule C on your taxes. So you don’t have a business entity. Now it meant all the liability was on me. It wasn’t an external entity that could be sued if something went sideways, but I didn’t want to deal with all the accounting and potentially payroll depending on the way you set it up. So I would say if you really want to do it clean, you do it when the first dollar comes in. 

(09:22): Very few people do that. Most people just leave it on somebody’s Schedule C and put it into maybe a separate bank account and track it. But I think you can do this a little later than you think. If you’re doing $5,000 a month, yeah, I would definitely have an entity set up by then because the business starts to convince you that it has traction. One thing to be careful of is once you set up an LLC or a Corp, you do then have some bookkeeping and accounting and additional tax filing. So there is some additional ongoing cost once you set that up, as well as annual fees to your state. It’s just a little more admin paperwork and headaches. So that’s one reason why I would prefer not to set one up until I felt like the business has legs, or you can include it under an umbrella corp. 

(10:14): I had a consulting LLC and I would throw my products under there until they were making enough revenue that I spun them out on their own. Next question is from Matt. And Matt says, “First off, I absolutely love your book, The SaaS Playbook. I’m in the early stages of founding a SaaS product to give financial advisors access to pre-built charts with the ability to build decks, create reports, and record videos over slide decks they make.” Generally it’s to help them better communicate crucial investing ideas with their clients, visually. Every chart tells a story and answers a common client question. “My question is on pricing. At first, I thought seat-based pricing made the most sense with an enterprise tier, but after reading your chapter on pricing in your book, I’m now conflicted. Users will sort of see the same thing when logging in, except the colors, logos, and disclaimers on each chart will be different. 

(11:06): But if five advisors who are all associated with the same firm log in and have the same branding on their charts, they will see the same thing. I’m trying to effectively price this service and would love your advice. For context, I’m 24 and have limited experience in the startup world. I quit my traditional Wall Street job earlier this year and now I’m working on this.” Sorry for the delay, Matt, but I do have thoughts on this. Number one, with AI, seat-based pricing is getting kind of a bad rap because people are saying agents are going to take all that over. So we’ll put that to the side for now. If you can do seat-based pricing, if people see something different, generally I would use seat-based pricing. 

(11:45): In this instance, I would think about whether there’s any type of feature I could build, such as messaging or putting the advisor’s name on the decks. Maybe have a conversation with ChatGPT or Claude and explain this exact issue and say, “What are 10 ideas for features that are commonly used to justify seat-based pricing?” And then you want to build one that is actually useful. You don’t want to just build a feature that no one’s going to use, but that is probably the number one thing I would think about. The other option is to not use seat-based pricing and instead base it on the number of decks created or reports created. Pick a different value metric. I don’t know enough about this business to help you with that exactly, but you would want to pick something where when they get more value from your product, they pay more. 

(12:37): Thanks for that question, Matt. I hope it was helpful. Next set of questions. These three come from Neil Magnuson. And I think Derrick and I answered this one before, but I’m going to weigh in again just in case we haven’t. At how much MRR should you have a design audited from a professional designer? I don’t think it’s about MRR. I think it’s if your design is causing issues or confusion, or people are telling you it’s crappy and you think it’s dragging the brand down, then I would consider having, I don’t know that I’d do an audit, just having a designer redesign the thing. I mean, maybe if it’s close they can make tweaks, but usually you just redesign it. And if you’re doing $20 a month and people are complaining, would I have a designer redesign it? These days, would I have Claude maybe redesign it or something? 

(13:27): That’s probably more of what I would do. But I don’t think there’s any MRR mark. It’s more about whether it’s causing you headaches and losing you business. Because you can do it at $10K MRR, $50K MRR, $100K MRR and get that audit or redesign done. I will caution you: I see a lot of makers and designers who build a product and then just redesign it over and over. “I’m going to redesign the landing page again. I’m going to redesign the homepage again.” Instead of actually doing marketing and doing the hard thing, they just want to keep redesigning. So be careful of that. 

Keith Shields (14:12): Thanks, Rob. We’re hearing from a lot of founders right now who are avoiding parts of their codebase because something might break. And honestly, that’s the sign that your product isn’t ready to scale yet. AI development leaves behind hidden security issues, fragile architecture, and features way more tangled than you’d expect. That’s not a knock on AI, it’s just reality. So we built the engineering intensive. In just two weeks, our senior engineers do a deep audit of your code, stress test your infrastructure, uncover vulnerabilities, and hand you a prioritized roadmap to get scale-ready. We get full clarity on your product’s health back with a money-back guarantee. So if you want to keep your AI tooling but add professional oversight from senior software experts, book your engineering intensive at designli.co/for-the-rest-of-us. That’s D-E-S-I-G-N-L-I.co/for-the-rest-of-us. 

Rob Walling (15:04): Second question from Neil. What’s the best way to calculate the total addressable market for a step one business in the Shopify app store? I don’t know of a tool that allows you to do this. It would be a guess. Frankly, I would try to look at non-step one businesses. So are there any businesses doing this thing for non-Shopify apps? If it’s a shipping or label printing service, can you look at how big they are and just take a guess? I think all of this is going to be a guess. And to be honest, do you care what the TAM is for a step one business? A step one business in the stair-step approach, what do you want it to be? $5K a month? That’s a pretty good step one business. $10K a month is awesome. I don’t know that I care about the TAM. 

(15:46): Obviously if the TAM is $1,000, that’s too small, but it feels like anything you’re going to build is going to have plenty. TAM is not going to be the limiting factor. It’s going to be total reachable market, the market you can actually get in front of. And more than that, it’s just going to be: can you rank for this term in the Shopify app store? Can you try to get to number one for the search terms? That’s a much bigger question than the total addressable market. Trying to figure out how much the existing apps that are doing it are making, or trying to guess how much it will make if you launch into a gap in the market, for that second question I would just build the thing. Use AI, crank it out, build it, see what you can rank for, see what the traffic’s like. 

(16:29): Back in the old days of SEO, maybe 2009 to 2012, I would buy exact match domain names. I’d put up a single landing page with a bunch of content that I would either create or hire someone to create, just to see where it could rank. I would frequently rank on the first page. These were for longer-tail keywords, obviously not amazing head terms, but I would just try to get an idea of what the volume actually was. For a step one business, I might consider doing the same thing today because the code doesn’t take that long with AI, and I think it’s a good learning experience. Now, please don’t quote me and say, “Rob said you no longer have to validate anything.” 

(17:15): That’s not what I’m saying. I talk about the 20/200 framework. The 20 is the very quick keyword research. I would still do that here. To try to estimate how many people in the Shopify app store are searching for something, couldn’t you look at any keyword tool? The Google Ads keyword tool, any search tool you can get anywhere, and just kind of guess: Shopify has how much of the market? That’s a question to ask Claude or ChatGPT, and then get a ballpark number of how many searches you think are there, and are there other competitors? I would do a couple hours of research before I built a step one business. I don’t know that I would do the full 20 hours of landing pages and customer conversations, though customer conversations I could actually see doing, to validate whether this solves a real pain point. 

(17:59): Going on to Reddit or other online forums and having conversations so that you do in fact get five to 10 people that are interested in this before you build it, because just because the building is simple and easy doesn’t mean you should skip validation. Now, 200 hours for a step one business, 200 hours with AI actually sounds like a bit too long. I feel like you could potentially build a step one Shopify app in less time than that. That doesn’t mean I would jump straight to building. The third and final question from Neil is, how can you know if your step one business could break free of its marketplace and be standalone? I’m not sure you can. Ways I would think about it are a couple things. If you’re going to build a Shopify app, I would look around at what other platforms are out there. 

(18:47): There’s WooCommerce, there’s Magento, there’s BigCommerce. It’s interesting. I’ve heard from a lot of people that Shopify is a dominant player and has the vast majority of the dollars being spent, and that’s probably true. But the idea I would be asking myself about is twofold. Number one, if I build an app for Shopify, can I build it for the other three or four major platforms and how far do I think that could extend my growth or my top-line cap? The other question is: if I build a Shopify app that does something, are there other custom-made shopping carts on the internet that would really want this functionality that I could somehow integrate with? 

(19:43): The problem there is integrating with truly custom-built carts is going to be custom work for each one. So unless you’re charging a lot, or there is some type of standardized way to hook into all of them, such as it hits an email inbox or sends an SMS, that part is much harder. Beyond that, I don’t think you can really know from the start. Until you get something live and get people using it and see how fast it grows and see where it plateaus, it’s going to be really hard to answer all these questions. There’s just not publicly available data on this topic. Next question is from X/Twitter from June of 2024. 

(20:28): I did a call for questions on the podcast. Igor Beneck asks, “How do you know if it’s time to pivot? If it is, how do you know how to pivot? Are there general strategies that can be applied to such situations?” Kind of. How do you know if it’s time to pivot? When what you’re doing is not working for long enough that it’s just not working, and that’s it. It’s when you’re out of ideas or out of motivation on the current product. Now, knowing what or how to pivot: you go with your founder gut, there’s market pull, there’s guesswork. I don’t think there are generalizable strategies. It’s always going to be muddy. If you have 50 customers that are not really paying or are churning and you ask them what you should do differently, they’ll tell you 47 different things. 

(21:16): And as the founder, you have to make the hard decision with incomplete information to figure out what and how to pivot. I did a talk about the big Drip pivot we did. We’ll link it up in the show notes, but you can search Google for it. The title is “I Grew This SaaS by 13% Every Month for 13 Months.” It’s the inside story of the early stages of building Drip and how we plateaued. We did not have product-market fit, churn was super high. I talked about all the feedback and input we were getting and how messy it was, and there were two or three steps I used to make that decision at the time. One was my founder gut, and another was getting advice from people I trusted and then sitting with it and just trying to decide whether we should pivot into marketing automation. 

(22:08): I have a really tough time generalizing any of that. The early stages of any product you’re building are the fuzziest by far. It’s really hard to know when and what and how to fix things unless you’re getting some type of input and you’re taking some type of leap of faith. Next question is from Michael. His question is about episode 720. That episode was titled How to Prioritize Your Focus in Both Your Startup and Personal Life. In it, Craig Hewitt and I talked about having kids and trying to build a startup when you have young kids. Michael says, “I lit up at the quote. If you have four kids under eight, that’s me.” One, three, five, and seven. And then Craig said, “You’re screwed.” It is very challenging. I’ve definitely had to learn to prioritize ruthlessly and delegate things I could do better myself. That’s the key. 

(23:03): Somehow I’m making significant progress despite all the craziness. You said it gets better as the kids get older. Does this mean I’m going to be unstoppable in a few years? The answer is: I think so. If you are able to make progress, I’m assuming you’re working nights and weekends. Whatever you’re doing with four kids, yeah, I would say you are going to have a superpower of being able to prioritize and delegate ruthlessly. And most people don’t have to learn that. Look, if I was single and 24 years old with infinity time, let’s say I do have a day job but I work 40 hours a week and then I have another 40 hours, you can stay up late and do all the things you can do when you’re young. You don’t learn how to prioritize and delegate. You have been forced to. So I would actually take that as a good sign. 

(23:57): Back to Michael’s email. Any tips for making it through this time of life and for best leveraging the additional bandwidth as it becomes available? I would say you’re pretty good at leveraging your bandwidth and you will probably know exactly what that next priority is. If you have 20 things you should be doing and you’re working on the top two, it’s the third one that gets the attention once you have the additional bandwidth. It sounds like you’re doing a really good job on this so far. Tips for making it through this time of life: enjoy it as much as you can. That’s the tip. There’s no silver bullet. You don’t have as much time as you need to grow as fast as you want. But for me, it’s about getting to the point of having enough revenue that I can quit the day job as soon as possible, because that is the biggest recapture of your time. 

(24:43): A caveat to that: if you can make a couple grand a month, two, three, or $4,000 a month, and you can step your full-time work down to 32 hours or 24 hours, you’re only working three or four days a week. This is what I did at my development job. My boss really liked me and I said, “Hey, I only want to work four days a week because I have this other thing that’s doing enough revenue that I don’t need the money anymore.” You buy out your time. That’s the whole point of the stair-step method. So my tip is: don’t bite off something huge that you have to work for years to get out there. You want to get something to revenue that can help you buy out even if it’s one or two days a week of your time. 

(25:21): And if you can buy it all out, great. That is the point where you have the maximum hours to dedicate to what you’re working on. Thanks for that question, Michael. I hope it’s helpful. And my last question of the day in this lightning round is from Nim. This one’s from 2025. Nim says, “Hi Rob, longtime listener and fan. Thanks so much for your work and your wisdom. I use Start Small, Stay Small as a reference.” For those who don’t know, that is my first book. startsmall.com if you want to pick up a copy. Nim has two questions. The first is: the common advice when starting out is to talk to 10 people who match your ICP. However, I found that unless you have a deep network in a vertical, it’s extremely difficult to talk to that many ICPs outside of conferences. 

(26:03): Number one, this is why I say build your network, not your audience. If you have an audience, you’ll probably get people to talk to you too, so either a network or an audience would work, but I think it’s easier and quicker to build a network and it’s a lot less work than building an audience. Back to Nim’s email. “While as a software developer I have the advantage that I can build whatever I want, I don’t have the experience or network from another vertical that I would have had if I’d worked in a different field, for example home inspection or senior care. For entrepreneurs entering a market cold, do you recommend flipping the book a bit and starting by building something small?” Maybe. Senior care is a great example. I interviewed the co-founder of Senior Place on this podcast. 

(26:44): They didn’t have a network in senior care and they made cold calls, and that was it. And people talked to them. So there are spaces where you can cold call. Cold email is a little harder, but you don’t necessarily need a network. You’re doing it the way a lot of people start out. When you first start out, you don’t have any network, audience, or customers. As you build products and assets, you get to be known a little bit. I don’t think most people should build an audience, but you do build a reputation and can become known, at least on the internet. Maybe it’s not in a particular vertical, but just by launching stuff you can make a name for yourself. I don’t know if that will do what you want here, because for senior care or home inspection, doing stuff on the internet is less relevant unless you’re doing it in a Facebook group. That could be interesting. 

(27:31): A Facebook group or a Reddit group, where you start without a product yet and you’re just hanging out. If you think you want to go after this vertical, you start posting and kind of become a helpful name in the group. That is one way to build a network. But the other thing I’ll say is when Jason Cohen did this to validate WP Engine, he contacted a bunch of WordPress agencies and consultants and freelancers and said, “I will pay you for an hour of your time. I want to talk to you about hosting. I have an idea.” My memory is that he got 40 yeses before he built it. I’m trying to remember if at one point he said that no one actually asked for the consulting fee, maybe, maybe not. 

(28:13): It doesn’t really matter. He was willing to pay them their typical consulting rate for that hour. And when we were building Drip and I wanted to talk to some ex-salespeople and marketing people from some competitors of ours, I similarly contacted them via LinkedIn and said, “I’d love to talk to you, I’ll pay you whatever your consulting rate is.” In that one, I only talked to about five people, but none of them charged me anything. They wanted to meet me and hear about the company we were building and potentially expand their network. So there are different ways to do this, and sometimes throwing money at it is what works, or at least being willing to throw money at it can work. And Nim’s second question is: your advice is to not throw everything at the wall and see what sticks. 

(29:03): That is, not to build 52 startups in 52 weeks like a Twitter SaaSpreneur, but instead to actually follow a method. My question: what counts as working on something? Seems to me that if you’re at the early stage where you’ve just identified a market and a pain point, it makes sense to validate three to five ideas at once if you can do so cheaply, and pick one to actually invest 100% in if you manage to get some paying users for it. Is that wrong? I don’t think that’s a bad idea. Coming back to the 20/200 framework again: for the 20, I used to have 10 ideas that I would sketch out, research, and try to get a general idea of how much demand there is. How competitive is it? 

(29:43): There are not going to be any amazing high-demand niches with no competition. That doesn’t exist anymore, but just to get a top-line idea of demand and think, “Can I play the angles?” I would do that for 10 ideas at once over a weekend. Then to build out landing pages or have conversations with potential customers, I could see doing that with multiple ideas. Sure. That’s the 20 hours, roughly. The third part where you’re doing 200, this is where you’re building these products. That’s where it gets a little tougher. Do you want to build and launch three to five products? I think I would probably be whittling down at that point. Even if you have five landing pages and you’ve tried to have conversations in five niches or with five ICPs, it feels like you’re going to have more traction on one or two of them. 

(30:37): And these days with AI, if you’re building a step one business or a pretty simple MVP, maybe it makes sense to build two of them. I could be convinced. What I don’t want to do is give you permission as a builder or maker to spend a ton of time on this step without being more certain. But I definitely understand the desire to get more validation by actually building something and getting it in people’s hands. I would almost say: let’s say you started with five landing pages and talked to a bunch of ICPs and that gets down to maybe two or three you’re kind of iffy about. What if you then tried to pre-sell them or tried to get pre-commitments on those two or three? 

(31:21): And whether they write you a check you don’t cash, or you do cash it, or there’s a Stripe link and they pay for the first three or six months, I think that’s what Jason, the co-founder of Senior Place, did when he made those cold calls. He got checks that they cashed and said, “Pay for the first three to six months and we’ll cash it. Once you have it, you’re prepaid.” Pre-payments are still not 100% validation. Nothing is 100% until customers are paying you and not churning and you have a full product. But I do find it an interesting thought experiment to whittle it down using each of these steps. Each of them is a hurdle and it’s a marketing/sales funnel. 

(32:05): And you’re trying to get signal in a super muddy, messy, cloudy time with this product. This is when you have the least confidence that you’re doing anything right. You don’t know if your ICP is right. You don’t know if your copy is correct. You don’t know if you’re selling it well. You probably aren’t. You don’t know if your pricing’s right. It probably isn’t. You don’t know if you built anything anybody wants. This is the hardest, or at least the cloudiest, part for sure. It is the least certain part where you have the most variables that aren’t working. And that’s all validation is trying to do: take a few of those and get you just a little more certainty before you go off and build a full product. So thanks to everyone who sent a question in. 

(32:51): As always, we can use more video and text questions. I think I only have five audio or video questions right now. If you send one of those in, the odds of you getting answered in the next couple episodes are pretty high. With text questions, there are still a couple dozen, but I’m going to continue to work through those. If you want to ask a question, you can email questions@startupsfortherestofus.com or even easier, go to startupsfortherestofus.com and click Ask a Question in the top nav. I recently recorded a brand new video of me asking for your listener questions, so you can go there and see that instead of the old one where I think I had a Beatles baseball hat on, no facial hair, and I think no glasses. It barely looks like me, but that was from several years ago. 

(33:33): You click Ask a Question, you can record video or audio on your phone or laptop, or you can enter a text question. As always, I love getting questions from listeners. I would never have thought to cover the range of topics we covered in today’s episode, and I really appreciate everyone who sends in their question. I’ll continue to answer them and try to answer them as quickly as possible. So thank you for listening this week and every week. This is Rob Walling signing off from episode 832. 

Rob Walling (00:00): Their feedback while valuable, it’s not anywhere close to how valuable your software can and will be for them if you solve a desperate pain point. And what you really want is you want customers, even if they’re customer zero, to be desperate to pay you for what you’re building. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I answer questions from listeners just like you. I have a great range of questions today, including whether to have my customer zero pay me or whether I should comp them, kind of in exchange for all of the work that they’re going to put in helping me figure out what to build. Whether writing ad copy to be spoken, like on a podcast, is different than writing written copy, metrics for a transaction fee-based SaaS that has no subscriptions, and more listener questions. 

(01:02): Before we dive into that, I built a course. It’s called the SaaS Launchpad, and it is by far the best course I have ever built. I spent months architecting and creating the content that was the basis of this course, and then producer Ron and I spent almost six months diving deep and flushing out all of the modules. It has almost 10 hours of video content, and it is the best course I know for early, early stage SaaS founders. It’s called Launchpad because the idea is that if you have no idea for a product you should build, it helps you look at ways to generate ideas. It helps you look at ways to validate ideas, to pre-validate them so that you don’t go into a basement and build for six months and regret your life choices. Even with AI these days, can’t I build it in six minutes? 

(01:53): Maybe, but should you build it in six minutes? Or should you spend 20 minutes doing some type of Googling to see what the competition is like? So it’s called SaaS Launchpad. It’s at saaslaunchpad.co. And if you haven’t checked it out, I highly recommend it. As I said, it’s kind of all of the wisdom and knowledge that I’ve learned over the years, both launching products and watching founders launch products. And so it has the biggest mistakes. It has a list of, I think it’s like 18 factors of what I would see in a perfect SaaS business that effectively almost no SaaS businesses actually have, but it gives you an idea of things to watch out for and a path to take if you want to bootstrap a SaaS. saaslaunchpad.co. And with that, I want to dive into my first listener question. 

(02:42): This one is actually not a question. It is a thank you email from a longtime listener who asked to remain anonymous. And they said, “I just went full-time on my business. I just wanted to write a quick thank you for your guidance, both direct and indirect, that has helped me build my SaaS to the point where I can quit my day job. Four years ago, I tweeted you asking about one-time payments versus subscription payments, where you obviously, in parens, directed me to charging an annual subscription versus charging one time. Ironically, I emailed DHH around that time and he told me the exact opposite. I’m glad I listened to you.” That’s the point the business really started to grow and compound. While I did get rejected from TinySeed when our revenue was smaller, we also chatted last year about going full-time and how best to get there beyond just raising cash. 

(03:34): The reason I’m reaching out to say thanks now is two weeks ago, I quit my job and started working full-time on my product. Six years to overnight success. $35K MRR and growing four to 6% a month. Wouldn’t be here without your recommendations, both in person and via books and the podcast. So thank you. Keep up the good work. I love emails like this. I read them on here because they bring me so much joy and they’re honestly the reason that I keep doing this. I could sail off into the sunset and sit on a beach in the Caribbean, but it’s so fun to have an impact on people’s lives. It really juices me up. What I like about this email too is there’s a PS at the end. Open source freemium funnel numbers are brutal. Low annual contract values and low conversion rates. 

(04:24): Probably should have taken your advice and started a different business, LOL, but thankfully I’m making it work. So it just goes to show you can make it work, but this is the whole, I’m going to go against the advice, and then once I get there, I’m going to be like, “Oh yeah, I should have listened to the advice.” But either way, this longtime listener and their six years to overnight success is something that we can all celebrate. And with that, let’s dive into my first listener question. 

Luke (04:55): Hey, Rob. My name’s Luke. I’m a super big fan of the podcast and listening to it has really helped me begin my journey in entrepreneurship. I am starting a SaaS company that is an ed tech product aimed at secondary schools. And the nature of such a product is that I think it really needs a trial on a secondary school before I start delving into sales, marketing, et cetera. Should I have the trial school pay for this product or should I give it to them as a service for free as they’re participating in a trial? I know from what you’ve said on the podcast, I’m likely to get better and more real feedback if they’re paying, but I do feel as though there’s a chance that issues arise in terms of what the product is providing when tested on a live school environment. Thank you. 

Rob Walling (05:46): Yeah, so Luke, you mentioned that I have commented on this in the past, and my default is always to charge something. Even if you give them a significant discount, you want them to have some skin in the game and you want to know that this is something that they are willing to pay for. I knew an entrepreneur who built a launch list in a small niche of like 10 or 20 emails and he was in touch with them. And when it came time to kind of launch into what he called beta, I said, “You should call it early access.” But when it came time for him to do that, he comped all of them, I think for life. And I was like, “No, those are your…” Let’s just say of those 20, you could have gotten 10 to become customers. I don’t remember what he was charging, but even if you were charging $250 a month, so $3,000 a year, if you could have gotten half that, that’s still $15,000 a year. That would have been a great little kickstart. 

(06:40): $1,000, a little more than that of MRR for an early stage bootstrap SaaS is a big deal. So I would have a really, really tough time not charging something for this. Now, if you have an idea of what your pricing is going to be ultimately, whether you see competition out there that you are not competing with per se but basing your pricing on, or if you have some idea and you’re like, “It’s going to be $5,000 a year or $20,000 a year,” whatever it is, even if you give them 50% off, 60% off, getting someone to pull out a credit card is really quite a bit of validation that they actually want that. I think it’s a trap to comp them. How much buy-in are they going to have when they’re not paying? How much confidence do you have that anyone will pay for this? But also, their feedback while valuable, it’s not anywhere close to how valuable your software can and will be for them if you solve a desperate pain point. 

(07:39): And what you really want is you want customers, even if they’re customer zero, to be desperate to pay you for what you’re building. Now with that in mind, of course, there’s going to be issues during development. And it’s kind of like, well, if they’re not paying anything, then I can say, “Oh, sorry about that bug. Remember, it’s free.” Or, “It’s taking a while, but remember you’re not paying for it.” Don’t do that. I think you own up and be very clear early on that, hey, this software is early access. There might be bugs. We’re doing the best we can, but there might be issues. It might take us a week to build a feature. We can’t necessarily build every feature you want, et cetera, and couch it upfront instead of hiding behind this shield of free. 

(08:21): Therefore, they can have low expectations. I’d say set their expectations realistically, but then ask them to pay. So thanks for that question, Luke. I hope it was helpful. My next question is about written marketing content versus spoken marketing content. 

Dave (08:42): Hey, Rob. I’ve got a marketing question for you. I’m considering sponsoring a season of a podcast that is listened to by my exact ICP. The way the math works out, if I only get a single sale at the price of sponsoring the season, it’ll end up being a 15% ROI on my investment, and I feel very confident I can get at least one sale out of it, but of course I want to have multiple sales. My question is, do you have any advice about writing copy or marketing materials for something that’s going to be read out loud as opposed to read on a website? Also, knowing that I have a very specific audience for this, is there anything I should be doing or advertising that takes advantage of the fact that it’s not a generalist audience that’s listening, but rather people who I really believe could be champions for purchasing my product? 

(09:45): Any help would be really appreciated. Thanks for entertaining my question. 

Rob Walling (09:50): So this is a great question. The answer is yes, it’s different. It’s very different. I mean, the one thing I learned early on, I remember the first time I read something that I wrote, is that the word “probably” is hard to say. Probably, probably. You just stumble over it and now I almost always write “likely” because they’re basically synonyms and I’ve just gotten in the habit of writing “likely” instead of “probably.” That’s just one tiny thing I’ve learned writing copy that is going to be read aloud and not written. On this podcast and the YouTube channel, I believe we have 40 or 50 different sponsor ads, maybe more than that, that we have coordinated with sponsors on and either written the copy or certainly worked with them to refine and hone it. And so the expert on that topic is actually our very own producer, Ron. 

(10:41): The Startups for the Rest of Us written ad copy remote correspondent. Over to you, Ron. 

Ron (10:46): Thanks, Rob. So first off, I think it’s worth calling out that podcast ads are voice, right? They’re not going to be read silently. They’re being spoken out loud. So whatever you write needs to flow off the tongue naturally. So after you’ve written your script, read it out loud to another human, or at least record it on your phone and play it back. You’ll find where there’s natural stumbles and words that don’t flow nicely. If you’re using Claude or some other AI to help write the script, then actually even in the prompt, say, “This is going to be spoken out loud by a host.” And that generally helps with the outputs. With written ads, we get to rely on things like headings and bullet points and visual formatting, and you don’t actually get that in a podcast ad. So I think it’s important that things flow and that it makes sense as you’re listening through. 

(11:34): You’re kind of building towards that CTA at the end of the script. I think leaning on a scenario or a story works better than just listing features. For example, something like, “You know that moment when you’re struggling to juggle three clients and you realize you forgot to send an invoice,” you’re trying to put the listener in those shoes so they think, “Yeah, that’s me.” You want them to raise their hand and recognize themselves in the ad. Just like written content, if there’s a testimonial you can wrap into the ad, that can work really well too. Imagine something like, “Derrick at SavvyCal said conversions went up 18% when they started using our plugin.” I think this is extra powerful when the testimonial is coming from somebody that the audience would recognize within their industry. I like to keep it to just one simple, easy-to-remember call to action. 

(12:18): A lot of people are walking or driving or doing something else while they’re listening to a podcast, so help them out. Use a vanity URL. Same goes for promo codes. Keep them short and simple. Depending on your web address, it might actually make sense to have your host read out the URL, especially if you’re not using standard spelling. So if your product is called Sendly but your domain is SNDLY.com, you probably want to spell that out for people, otherwise they’re just going to type in whatever they heard and end up somewhere else. I think it’s worth offering something special to folks who are coming from a podcast ad. So don’t just send them to your website and say, “Go to CRM.com and learn more.” Give them some reason to act. So maybe that’s an extra month free or $1,000 off their first contract, or whatever makes sense for your business. 

(13:07): And it doesn’t always have to be a discount either. You could do a bonus offer like a free onboarding call or access to a special resource that you put together for the audience. That incentive gives the listener a reason to actually use your link and it also helps you track whether the ad is actually working. Since you mentioned that you’re sponsoring a whole season of the podcast, you have some extra options. You might consider mixing up your message from episode to episode. So if you have a six or eight episode series, maybe you have two or three different messages that you can test out over the course of the season. Since you’re committing to a full season, I’d recommend building out a dedicated landing page just for that podcast audience. On that landing page, you can give a little hat tip to the show, something like, “For Startups for the Rest of Us listeners, we’re offering an extended free trial plus priority onboarding,” or whatever it is. 

(13:57): It makes the audience feel like they’re getting something special and it reinforces the connection between your brand and the podcast that they already trust. I’d also ask the podcast producer or host if they’ve seen any good results from anything in particular. They know their audience better than you do and they’ve probably seen what’s worked for other advertisers. Maybe it’s a certain type of offer that converts better, or maybe their audience responds well to a particular style of ad read. At the very least, you can ask them if they would recommend tweaking the script at all. There might be something that the host would never say, but they’re willing to do it if you put it in the script, but they would tweak it slightly and then it’ll just sound more natural as they’re reading it. I think the last thing is that it’s worth matching the energy and tone of your ad to the podcast itself. 

(14:43): Some shows are going to be more buttoned up for a professional audience and while you might get away being a bit more casual with other industries. All right. I hope that helps. Best of luck with the sponsorship, and now back to Rob. 

Rob Walling (14:57): Thanks for that, Ron. I really appreciate you weighing in, and thanks for sending that question in, Dave. I hope it was helpful. My next question is about metrics for a transaction fee-based software company. 

Sean (15:14): Hey, Rob. I’m Sean, the co-founder of a B2B SaaS platform for outdoor rental and experience operators, things like bikes, skis, kayaks, and tours. We charge a percentage-based booking fee instead of a monthly subscription. The upside is our average account generates roughly five to 10 times what operators in the space would be willing to pay for a flat subscription. We have zero churn and steady account growth, but the trade-off is the seasonality. Comparing month to month and calling it MRR doesn’t really work because it’s not recurring on a monthly basis. It’s recurring annually. So our main pulse check has been month-to-date revenue versus the same period last year normalized to our active accounts. Net negative churn has been built in: as our shops grow, our revenue grows. What other metrics should we be watching for a transaction fee model? And as a follow-on, do you think MicroConf would still be valuable for someone not running a traditional subscription SaaS? 

(16:07): Thanks. 

Rob Walling (16:08): Yeah, it’s a good question, Sean. Thanks for sending it in. I guess first of all, I don’t consider you SaaS because SaaS to me is subscription software. If you refer back to, gosh, what was it, four episodes ago where someone asked, are they SaaS? And I said, SaaS is subscription software where the majority of the value comes from the software itself. And since this isn’t a subscription and it’s just usage-based, I wouldn’t call it SaaS. That’s kind of a nitpick and I don’t know how much it matters, but I did want to clarify that upfront. Not only do you have this monthly revenue that isn’t recurring, right? It’s not an agreement where it happens every month, it’s usage-based, but you also have seasonality, which makes it even harder. Before the seasonality, I had a whole diatribe I was going to give on this. 

(16:54): And then when you said, “Oh, it’s seasonal,” it’s like, yeah, you kind of have to look at the prior year. So of course, month-to-date revenue numbers versus the same period last year, I think is a great way to go. Is it truly seasonal, or is each individual month different? Meaning, is June, July, August all approximately equivalent, or does June map to June, July to July, August to August? That’s one thing that gets me thinking about this: are there shoulder seasons, like spring and fall, where revenue is half or a quarter of the peak summer season, but June, July, August should effectively be almost approximately the same. I would give some thinking on that, but if truly it is really individual months, then yeah, you just have to look at the growth from the last year. 

(17:51): I don’t know what else you would look at. The other thing I’d be thinking about is the customers that you have who are paying you. You can look at churn. It’s not churn in a traditional sense, but it’s churn as in: which customers paid us last June that are not paying us this June? That shows they churned because they’re not using you anymore. I would be thinking about how to set up customer success to reach out to them and nurture them if in fact they have not returned. I would also be looking at your top five, 10, or 50 customers in terms of the revenue they generate for you, such that the aggregate is great, but then knowing your individual customers is important too. 

(18:40): The other thing I’d be thinking about is that a lot of businesses started as transaction fee only, and they do eventually move to subscription plus transaction fee. And when you pay that subscription, the transaction fee goes down. So if you pay a couple hundred dollars a month, then instead of paying 8% of GMV, you only pay 6% or 5%. We saw Shopify do this in the early days. We’ve seen Gumroad do it. I’ve seen many companies think they’re going to make it with GMV only and they eventually do move to subscription. Of course, you’ve heard me talk on this show about how when you go to exit, subscription revenue will be valued at a higher multiple than just transactional GMV processing. I’ll add two other things. I do hear you on the fact that you can charge more on a percentage basis than you could as a flat subscription. 

(19:36): And so there’s a challenge there, but I feel like if you were charging an annual subscription, not a monthly one, and it gave them a discount or other perks, they get some special stuff plus the processing fee goes down, is that worth pitching? And lastly, you asked about MicroConf and whether that would be worth it. And I think absolutely. I mean, we have one-time download software folks, especially in Europe, who attend MicroConf. We have WordPress plugins, Shopify plugins, all types of businesses. And so while MicroConf, of course, is focused on bootstrapped and mostly bootstrapped SaaS, I’m guessing the challenges that you face are 80%, 90% the same as someone with a recurring revenue model. So I think you’d get a lot out of it and meet some great people to boot. My next question is about selling into low-awareness markets. 

Mark (20:38): Hi, Rob. It’s Mark here from Australia. My co-founder who is technical and I, as a domain expert, launched our B2B SaaS about 18 months ago. It’s a lightweight risk management platform that replaces spreadsheets and manual reporting and uses AI to guide non-experts through risk identification, treatment, and reporting. We’ve been deliberately learning the sales and marketing fundamentals. So thank you so much for The SaaS Playbook. We’ve read Traction as well, and we’ve been running through a mix of content and SEO, LinkedIn outbound, some paid ads. We’re looking at some conferences and sponsorships later this year. We’re seeing some engagement, but we’re struggling to turn that into consistent meetings. Specifically, what I’m noticing is that the market is generally low in awareness of risk. They have limited internal capability and the people who are responsible for risk are typically wearing multiple hats, and risk might not be their core capability. 

(21:41): That was really a key part of why we built the product in the first place, but now it seems to be turning into a sales hurdle. So I guess my question is, if you’ve seen this kind of situation before, do we just stay focused and continue executing consistently in terms of those traction methods I mentioned, or are there other things that could work and help us get more traction at this early stage? Thank you so much. I really appreciate the show and everything you do for the community. Cheers. 

Rob Walling (22:11): Thanks for the question, Mark. Yeah, I mean, this is a tough one. This is where you are fighting an uphill battle. I talked a lot in Start Small, Stay Small, my first book, which I wrote in 2010, and I talked a lot about how as a bootstrapper, you really want to find demand. I wasn’t familiar at the time with the five stages of customer awareness, but in my experience at that time, having some successes and a bunch of failures, the successes had online demand. They had some type of search volume. Even if I wasn’t going to win the search volume challenge, it showed that there was demand somewhere. And if there’s demand somewhere, you can usually get in front of it by being on Reddit, by placing ads, by gasp, maybe building an audience, probably don’t want to do that, but maybe you do, by SEO, of course, cold outbound, all the 20 B2B SaaS marketing approaches. 

(23:09): I don’t need to go through them all here, but when there is that actual demand and the awareness that they have a problem and that there’s a solution, that’s the best place to be in. And of course, not all markets have that. And there are founders, mostly bootstrapped, who are making it work where folks don’t have the awareness that there is a solution, but usually they know they have a problem. And it sounds like in your case they’re not even problem aware, because they’re like, “I don’t really know what risk management is.” I can’t tell you to shut a business down or to pivot, but aside from becoming a media company, starting a podcast or YouTube channel to educate people, writing a lot of articles, or publishing a book, you’re essentially educating them that they have a problem. Because even a cold email is, “Hey, do you know you have a problem?” That’s going to be a brutal uphill battle. I have a tough time imagining enjoying building mostly bootstrapped SaaS if that were the case. 

(23:53): So while I can’t tell you to pivot or bail on the idea, I know of very, very few examples of bootstrappers who have been successful when folks don’t even know they have the problem that needs to be solved. At least if they’re aware of the problem, it’s still an uphill battle, but you mention it and then they’re like, “Oh yeah, I do have that problem. Oh, I didn’t know there was a solution.” And then you can kind of present that to them. But in the case you’re in, it really does sound like a tough situation. 

(24:46): And I’d be thinking about, are there any adjacent markets that are aware they have the problem, so that you don’t have to completely bail on everything that you’ve built? I mean, with AI these days, we can all build every app in what, 20 minutes? Obviously I’m being facetious, but realistically, if you have subject matter expertise in this space, I find that it can be a bit of a trap to say, “Well, there’s a bunch of products in this space for the advanced users, but there’s a lot of less advanced users who don’t use those because they’re too expensive or they need a simpler version of it.” I’ve heard this before. The challenge is that those folks usually don’t have a budget, or they aren’t actually that interested in solving this problem, or they don’t really know how to solve the problem, or the tool has to completely solve their problem in a way that is almost impossible for software to do. 

(25:46): So I say that to let everyone know who’s listening: just be careful with that assumption. There is likely a reason that the simpler version doesn’t exist today. You could totally give it a try. I’d love it if you’d prove me wrong, but I think it can be an easy trap to think of building for folks who don’t have the budget or the real interest. And this is kind of a side project for them, right? I don’t mean a hobby, I don’t mean on nights and weekends, but if their main focus of their job is X and then 5 or 10% of their job is Y and you’re like, “I’m going to build for the people where 5% of their job is Y and I’m going to solve that Y problem,” you’ve got to be really sure that they’re going to be motivated to care enough to invest any time or money into that solution. 

(26:46): So thanks for the question, Mark. Hope that was helpful. And our last question for today has two topics: one is about freelancers, about finding them and general thoughts on them, as well as the music for this podcast. Let’s roll into this question. 

Bernard (27:09): Hey, Rob, this is Bernard. I love the show, and as a small off-topic start, one thing that I also really like about your show that I don’t think many people mention is your intro music. You have multiple songs and I noted down that my favorite song is in episode 810, for instance. So please bring that song back more often. It’s a really good song, and maybe also talk about where you got the song from, who made it, give them a shout out. So my question is about freelancers. I would just generally like to hear your thoughts about freelancers, how you think about the topic when it comes to bootstrap founders. Some things I’m specifically interested in: first of all, pricing. How do you know what is a good price for something that you have maybe never ordered before? 

(27:55): Should it be hourly, result-based, or maybe a retainer, and just what is a good amount? Then also discovery: where do you find freelancers? Obviously Fiverr and Upwork are some options, but what else do you use? And then more generally, I would just like to hear your thoughts on the topic. Maybe you have some strong opinions that come up when you think about the topic. Yeah, that’s all. Thanks. 

Rob Walling (28:17): So I’m going to start with the music. And that particular song in episode 810, I’m going to drop just a little sample of that here to remind you. So thanks for noticing that. Folks have actually commented that the podcast kind of had a soft reboot in 2018 when I went from having a co-host to going solo. And at that point, I wanted to introduce some higher production elements. And I talked to my editor, Josh, who we’ve worked together for, it’s got to be more than 10 years, probably like 12 years now. And Josh has edited five or 600 episodes of this podcast. You think, dear listener, you think you’ve heard my voice for hours and hours. Imagine having to edit this podcast at 1X and hearing all my foibles and cutting all of the times that I misspeak. But all that said, I tasked Josh with just finding some royalty-free tracks. 

(29:32): And one of the tracks Josh brought, he actually wrote. And this track, Zellewave, he wrote back in 2013. And so I asked him to give me a little background on it. Josh himself is a musician and an engineer and a music producer. So he told me that in the early 2000s, many indie developers were creating their own mobile games. Me being just a few years graduated from college, I’d be checking job boards to see if there was any audio-related work out there. I found that many of these developers were looking for sound effects and music for their games, often looking for 8-bit or chiptune-style tracks. That’s an electronic style inspired by the sound chips of vintage computers and game consoles. When people say “vintage,” it makes me feel old, Josh, because that was me growing up. 

(30:24): I eventually got my hands on a chiptune synth plugin and Zellewave was the first track I created with it, really as an attempt to just get familiar with the plugin. From there, I went on to compose music and sound effects for several mobile games during that time. However, Zellewave itself was never used, as most projects required simpler, loopable, game-level music that fit nicely in the background. Fast forward to when we were overhauling the production level of the podcast and adding more music. In addition to the royalty-free music service you had, you asked me if I had any instrumentals and I threw Zellewave in the batch of tracks for you to review, and it made the cut. And it now lives on in the podcast as part of our music rotation. Not sure if your listener is interested in listening to the full version or not, but it did manage to find my old portfolio work SoundCloud account I created back then to host these compositions. 

(31:15): And of course, we will link that up in the show notes. In addition, at the end of this episode, after I sign off, I’m going to ask Josh to put the entire track because it’s less than two minutes long. Just append it to this episode. I had never heard the entire track. I’ve just heard the intro part, and it’s a cool groove. Yeah, it’s a jam. So thanks for asking that question, and thanks Josh for giving us all the background and for composing some awesome music for the show. Now on to the second question. This is about freelancers. So there were many questions in the voicemail: what is a good price, should it be hourly or results-based, should it be a retainer, what is a good amount, how do you find them? There’s a lot of questions here and we could probably spend a whole episode on it. 

(32:00): It just would be kind of boring, I think. So let me give you the 80/10 of what I’d be thinking about. Upwork is really where we go to hire freelancers. That’s where I’ve gone for a long time. I don’t know of some magical other place. I know that a lot of people go to Fiverr. I’ve used Fiverr a little bit, but really Upwork just tends to have a really good selection. You could also check out dynamitejobs.com. Dan and I have a good crew of contractors over there as well. For me, freelancers are to fill either a temporary gap or what I call a black box role. And what I mean by that is if I could put a black box on the desk and you could feed it some kind of input and you know the output you want, it’s a great role for a freelancer, especially if you don’t have that on an ongoing basis or don’t have a full-time amount of that. 

(32:55): So give you an example: Josh. Josh is a freelancer. He’s a contractor. Now we’ve worked together for ages. I mean, Josh may in fact be the person I’ve worked with the longest out of everyone. He basically takes in an audio input, my maniacal ravings, and he tightens it up. He cuts out all the misspeaks. He queues it and the end result, that output, is a black box result that we know we want. And just to give you an example, Josh and I have never met. Josh and I have never even done a phone call before. We always communicate in writing. It’s kind of a trip to think about that, right? Video editing is a great example for this. Copywriting can be this too. 

(33:43): I happen to know Leanna Patch, who writes a ton of copy for TinySeed and MicroConf and has done the copy for my Kickstarters. I happen to know her in person, but I have worked with copywriters in the past that I just find. And the end result I want is good copy. If I can feed in the information about our brand and, “Hey, this is the book or the whatever that I want you to promote,” and they write good copy, I don’t need 40 hours a week of copy, 52 weeks a year. I really just need an output, a result that we can take and move on. Design is another amazing use of freelancers. Whether it’s visual design for a slide deck or for a PDF or for your website or for your app or for your logo, most companies of our size don’t need a full-time designer. 

(34:29): And the good news about design is when you see the result, if you like it, that’s it. It’s done. There’s no legacy. There’s no technical debt with it. And the reason I bring up technical debt is the moment I start thinking about software developers building my core product, I start getting a little uneasy with freelancers. Now, if you don’t have the money, you don’t have the budget, you have the constraints, you might need to use freelancers. But if I were building a SaaS today, I would try to avoid it. I would want a full-time person dedicated to it, whether that’s me or whether that is someone I hire. There’s a certain amount of ownership of the codebase, and technical debt will screw you. I mean, you hear me talk about this on the podcast all the time. Getting three or four freelancers to come in and build three or four designs for me, or write the copy, or edit a bunch of audio, or design a T-shirt. 

(35:24): You can think of all these examples. If the results are good, it’s done. There’s no huge negative. But if I get three or four different developers, especially freelancers, to just pop in and build a little feature here and there and build this part of the app, and then we’re just going to tie it all together, that is a recipe for disaster. It’d be like hiring three or four different companies to pour the foundation of your building and then trying to, all right, you build this floor and you build the second floor with a different contractor, and you build the third and fourth floor, and expecting that building to have any type of structural integrity or to look halfway decent. So those are kind of the two buckets that I think about, right? These things that are easier to outsource where the results come back, but there can be some technical debt tied to it. 

(36:09): In addition, the big question is: what is your core competency as a company? What really are you selling? What do you want to do better than the competition and what are you selling to your customers? If you’re a SaaS app, your product is such a core part of what you’re offering. And so anyone building that product, I don’t particularly want a freelancer who’s flitting in and out of my life to come and build that. Now, there are elements to this, right? What if I want an operations manager who’s just going to do a bunch of admin work, or an executive assistant, whatever term you use? Could they be a freelancer? Could I do 10 hours a week with someone and either pay them hourly or just pay them a monthly retainer? 

(36:52): I think you could. In fact, I have done this. We have worked with folks where we have a 10-hour-a-week retainer and ongoing work, and as long as the results on a week-to-week basis take a lot of work off my plate and there’s no kind of legacy sitting around, I don’t think this is the worst idea. The question of hourly versus results-based versus retainer: it really depends. Retainer is if you need ongoing work, that’s it. If you need someone to write copy every month, if you need design work every month, we’re in a position where we actually do need a lot of web design work. Not a 40-hour-a-week web design work, but five to 10 hours a week. We’re launching enough stuff and tweaking it. And so we have had a web designer on retainer for a while. 

(37:39): We have a copywriter on retainer. And of course, the downside of not having someone on a retainer is you don’t have their availability and you may have to find new freelancers to do work that you need. So there’s a lot of questions. Pricing is so hard to say because if they’re in the Philippines versus the US, the pricing can be five to 10 times different. And of course, pricing is all over the place: what is a copywriter versus a designer versus an executive assistant versus an editor versus a producer? The pricing is just all over the place. The way that I know pricing is typically by looking at Upwork or Fiverr or asking ChatGPT or asking in my network. I would go into the TinySeed Slack and say, “I’m looking for this role. I’m thinking $40 an hour, $50 an hour. 

(38:24): Does this sound reasonable? What are people paying for this?” So it’s a market system, and sometimes you can be clever and pay under market with someone early who is more junior. Usually that means they’re not going to be as experienced and it’s going to be a lot more work on your part. And so you can be clever and be cheap. I used to do that when I didn’t have much money, but you want to break that habit at a certain point. I really these days do believe in getting what you pay for. And when we go in to post a job, I will not take the low-end bids on Upwork at all because I don’t think the quality’s going to be there. So if we post a job and we get bids in the $30s and $40s and also a bunch in the $10 to $15 range, I won’t even look at the $10 to $15. 

(39:11): And it’s not that we have infinite money or that I’m immune to cost. I’m really quite frugal, actually, but I just don’t want the headache of the $15-an-hour freelancer. But I like this question. Overall, I think freelancers are a boon for bootstrappers. I mean, I remember when I was first starting out, we were talking 2003 to 2005 and 2006, and there was no Upwork. It was really hard to find freelancers. I remember going to Craigslist and posting job ads and trying to get people. Remote work wasn’t a thing. It was a hassle and it was expensive. Anyone you hired usually was in your local city, and going overseas, even trying to pay someone in Canada or the Philippines, was really hard. 

(40:01): Therefore, it was really expensive to do all this stuff. So I see a lot of value in freelancers, especially as bootstrappers where we don’t have the budget to hire people 40 hours a week and we don’t have the work to give someone 40 hours a week of a given task. Oh, and that reminds me. The big trap I see some other people falling into is: cool, I’m going to be all freelancers because I don’t want any employees, or I’m going to have five or 10 different freelancers all doing different things. And it’s like, now you’re a project manager and you’re a traffic cop and your entire job is keeping people on task, reviewing work, herding cats, managing all these people who don’t really have loyalty or ownership. They don’t have loyalty to you and they don’t have ownership of what they’re building because they are just going to move on to their next thing. 

(40:41): That is a nightmare. So don’t overdo it. You do want core team members. This idea of not having any core team members is a mistake I’ve made and it’s a mistake I see some other entrepreneurs make. And once you make it a few times, you realize, oh no, I’m going to hire core for the things that I want to be really exceptional at and that we want to own, and then I’m going to have these ancillary resources for the other stuff. And they have the freedom to build an awesome life for themselves and they can provide great results, much like our editor Josh has been doing for the past 12 or 13 years. So I hope you’ll join me in celebrating all of Josh’s contributions to this podcast, because it would not be what it is today without him showing up consistently week after week. 

(41:26): I talk about shipping 52 episodes a year since 2010. That doesn’t happen on its own and it doesn’t happen without an extremely reliable editor like Josh. So thanks for all the amazing listener questions today. If you have a question for the show that you’d like to hear me or me and a guest answer, head to startupsfortherestofus.com and click “ask a question” in the top nav. I actually recorded a new video for VideoAsk because the old one was recorded with a backwards baseball hat on. I was unshowered. I didn’t really think we were going to keep VideoAsk around, and that was seven years ago. So we recorded a new one just a few days ago. You can check that out at startupsfortherestofus.com. And as a reminder, we are going to put the full Zellewave track after I sign off here in just a minute. 

(42:14): Thanks for listening to me this week and every week. This is Rob Walling signing off from episode 831. 

Rob Walling (00:00): Imagine this, you’re about to close this massive deal. You’ve been grinding for it, you’re pumped. And then your customer’s legal team decides to make things interesting. What happens if you get hacked? How do you protect our data? And your brain just goes blank. That’s the nightmare founders deal with all the time. That’s exactly what YSecurity solves. There are 40 security engineers who’ve actually done security at Apple, Uber, Microsoft, Robinhood, Brex, and more. And get this. You don’t hire them, you rent them by the hour. No massive salary, no expensive consultants, just real experts embedded in your company helping you get SOC 2, ISO, whatever you need. Set a monthly cap, know exactly what you’re spending and close the deal. Head to ysecurity.io/startups and book your free strategy call. Your first eight hours are free. 40 engineers, one full working day, totally free. Go take it. 

Rob Walling (00:57): ysecurity.io/startups. That’s the letter Y, security.io/startups. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode, Derrick Reimer and I talk about breaking through plateaus, Zero-Click marketing, attribution, being an AI doomer, and more takeaways from MicroConf 2026 that happened just a week and a half ago in Portland, Oregon. If you listen to this episode and you’re feeling FOMO because you missed it, you’re going to want to join us here in just a few months in September of 2026 at MicroConf Europe in Iceland. Going to have, I don’t know, 175 of your favorite bootstrapped and mostly bootstrapped founder friends, along with Derrick and I. microconfeurope.com. Check out the dates, September 21st through the 23rd and to buy your ticket. And with that, let’s dive into our conversation. Derrick Reimer, back for another MicroConf recap episode. 

Rob Walling (02:11): Thanks for joining me today. 

Derrick Reimer (02:13): Yeah, glad to be here. 

Rob Walling (02:14): It’s exciting. So we just got back, as you can tell from my voice, we just got back from MicroConf US in sunny and only partially rainy Portland, Oregon here in 2026. We had about 235 attendees from 12 countries and a really good turnout once again of folks with real businesses. I said from stage when I opened up, this room is different than any other startup room you’ve been in for a few reasons. One is that I think we do value freedom and purpose and relationships more than a lot of other startup conferences, but we also have a lot of folks who are really getting it done. And there was almost 25% of attendees doing seven figures, had at least $100K of MRR and that still blows me away. Look, pre-COVID, that wasn’t the case. And somehow after COVID, I think people that are really serious show up. 

Rob Walling (03:11): Now on the same token, I think it was 15%-ish had no revenue, 15 to 20. So it’s like still a chunk. So you get this wide swath of conversations from folks, again, with no revenue up to, I mean, there were several eight-figure founders that I spoke with. So as someone who’s come to 14 of these or whatever it is, you can’t even keep track anymore. What was your take this year coming into the event and meeting the attendees? 

Derrick Reimer (03:37): Yeah, I think it’s sort of been this compounding thing over the years where it feels like the caliber just keeps increasing. A lot of people having kind of deep conversations about gnarly problems in their business that happen at a later stage. I remember the earlier days of MicroConf, it was a lot of us just getting started. We were talking about how do you get from just writing code to actually marketing? And it was more early stage type conversations. And it always impresses me how now I can walk into the room and feel a little bit intimidated, even though I’ve been doing this stuff for a long time, in a good way. I’m saying it kind of pulls you up as opposed to the opposite direction, I guess. So I was impressed by all the conversations that I got to participate in. 

Rob Walling (04:22): It’s a mix each year in terms of first time and returning attendees, is probably the better way to say it. There were, I think it was around fifty-fifty, if I were to guess. We have that number. I didn’t look, but it is a nice mix. Getting new blood in there is interesting. There’s a lot of old timers. There were different waves of MicroConf. The first three or four years had a very similar attendee base. And then there was a shift to a second generation almost because in entrepreneurship, it seems, at least in SaaS, every three or four years there’s kind of a new generation coming up. And it definitely feels like that has been the case over the past few years, especially, I know I keep bringing up COVID, but it was such a watershed moment for events. 

Rob Walling (05:07): So many events went out of business. We didn’t do the US event for two years. And coming back, it was half the size. I mean, we had like 140 people the year after COVID. So it really has kind of built itself back. I won’t say from nothing, but from almost nothing. And so it’s got its own unique feel each year. And I will say this year, I came in the room and I just felt a lot of positivity. A lot of founders trying to help other founders was the thing that kept coming to me. And that’s been the gestalt of MicroConf forever, but I just really did feel it. I mean, when I got up on stage for the very first time, there’s always a little bit of nerves of like, “Well, here we are in a room. How’s the room going to feel?” And I was like, “This just feels good.” The welcome reception, a lot of positivity. 

Rob Walling (05:50): And that was something I kept hearing from first timers was like, “I can’t believe how helpful everyone is. I can’t believe how nice everyone is. I can’t believe so and so who I’ve idolized on Twitter for years. I just met them and they gave me great advice. I didn’t think that would happen.” And it’s like, well, in my head, I’m like, “Well, what do you think we do here?” That’s such a good description of MicroConf. But at the same time, if you’ve never actually been there and felt that, especially if you’ve been to other events, it can be pretty shocking. 

Derrick Reimer (06:15): Yeah. I think something you mentioned too, you talked about how you guys are experimenting with having some tickets for people who are there to provide services, right? But there still is this sort of special code of conduct, I guess, that everyone sort of agrees to around not pitching because I think that’s something that can happen a lot at a startupy type event where everyone’s kind of there to either sell their product or do networking in the more slimy kind of LinkedIn way. And I think there’s just this DNA in the MicroConf crowd that even if someone who comes in with those motives starts out that way, you’re not going to get very far trying to approach the room in that fashion. And I think it feels nice because of that. 

Rob Walling (07:01): Yeah, there’s that cultural momentum. 

Derrick Reimer (07:03): Where… 

Rob Walling (07:03): Everyone around you is being cool and not pitchy. And so it feels weird to be pitchy. Yeah. You mentioned this was something we’re experimenting with in MicroConf Connect, which is our online community. Folks can go to microconfconnect.com if they want to check that out. And also in the in-person event is like, have a ticket because we get asked constantly for service providers to come in, folks, both investors and folks who provide marketing services or whatever, SEO copywriting. And the reason we’ve kind of reconsidered this is we’ve actually had requests from folks inside the community saying, “Hey, it would be nice if there were some,” whether they’re vetted or whether they’re at least trusted that I can meet them in person and get a feel for them. You and I know a ton of service providers that are TinySeed mentors that have been coming to MicroConf for years that are great people that I actually do want to work with. 

Rob Walling (07:50): And so just having an arbitrary like, “You can’t come if you’re X, Y, Z,” I think is not the way to do it. So yeah, we experimented with it and it was a success. We had no issues, no complaints. And we did limit the number of tickets for that too because we don’t want it also to, and by limit, I mean, I think we sold eight out of 235 attendees. So it’ll be in that range, right? If we get to more than a couple percent of the attendees being service providers, it’ll obviously feel different. So let’s dive into some of the talks I want to talk through. We obviously can’t talk through all of them. I think there were like, was it five-ish main stage full length talks? There were a couple 20-minute talks and then a couple attendee talks. So what is that? 

Rob Walling (08:29): Maybe eight or nine talks, but attendee talks are 10 minutes and the 20 minutes obviously are shorter. So we packed the days not only with a few talks, but we really had excursions in the afternoon. The entire afternoon of the first day was us going out and about. And then we had workshops and round tables the second day to break things up. But I want to dive into our opening keynote by MicroConf favorite, Jason Cohen. He hasn’t spoken at MicroConf, I believe the last year was probably 2015. So I think it’s 11 years-ish, maybe 12. And he of course is known for the best talk about bootstrapping that has ever existed called “Designing the Ideal Bootstrap Business.” You can search for that in YouTube and watch it. Half a million views on my YouTube channel. And it is the number one video on my own YouTube channel, which Jason gives me no end of grief about how he dominates my YouTube channel. 

Rob Walling (09:19): But he was talking about breaking through growth ceilings and calculating plateaus and then how to think about breaking through them. So what were your thoughts and takeaways from his talk? 

Derrick Reimer (09:30): Yeah, it was great to see Jason back on the MicroConf stage. I feel like he’s always been a helpful guy, but now that he’s kind of moved on from day to day with WP Engine, he’s in his arc of like, “I just want to be around and help out.” And you can feel that. It’s genuine. And so yeah, it was great to hear from him. I think I always like reading Jason’s writings. He writes quite a bit actually on his blog and a lot of it is very, very rich with just ideas and he thinks a lot about strategy. I think most of his work and his career has been sort of around strategic frameworks and things. And it’s really hard to capture that in any given blog post or talk. So I feel like every time I get to hear him write or talk about this stuff, I get a little bit more understanding about how to think strategically, I guess. 

Derrick Reimer (10:18): So yeah, I think it was a good overview of like, this is the trajectory that you will see on revenue graphs of companies and it’ll show up in many different places, this sort of elephant curve as he calls it, where there’s the initial growth of things and then things sort of level out. And I think there’s a lot of us that have experienced that in our companies. So yeah, it’s just helpful to hear him sort of riff on different things you can do. He talked about optimizing your pricing. He talked about finding your ICP, people who love you for you. He was talking about making strategic choices and how ultimately that means closing some doors in service of other opportunities. And I got a chance to catch up with Jason a little bit in one of the mixers and I was just sort of telling him how personally this is something that I feel is one of the hardest things to do as a founder is actually having the confidence to say no to certain things or to hear certain advice and say like, “I understand that’s prevailing wisdom, but for specific reasons, that’s not for me.” 

Derrick Reimer (11:22): So I love that he gave a few examples of like, he talked about pricing and how the wisdom for 99% of people is to raise your pricing. Then he gave the example of Buffer who in service of their ICP lowered their prices in order to recharge their growth. So it was just a cool turn it on its head sort of example of like, “I just told you this is probably right for you, but then here’s what Buffer did.” So yeah, you need to be diligent in really analyzing what is true about your business and making the right calls for it. 

Rob Walling (11:53): Yeah. And one of the things I took away from his talk was kind of like learn the rules and master them so that you know when to break them. 

Rob Walling (12:01): Like he said, 99% of you in here are probably underpriced. And he did a whole little segment on that. You should probably raise your price. Now I’m going to show you one that just did the opposite just because it’s not 100%, maybe it’s 95, whatever it is. And I always like that about Jason’s takes. Every time I hear him when I have him on the podcast or just have private conversations with him, I learn something because he’s just so much horsepower in that brain of his. And so to have him up on stage talking about whatever is always just like, for me, it’s always like, oh, so that was the best talk I’ve heard on that topic just because he brings it and he’s thinking at the next level having built a couple unicorns now. But he’s still like a mostly bootstrap founder. 

Rob Walling (12:40): He raised money for sure, but he still thinks like one of us, like B2B SaaS, unit economics right from the start. Another great talk we had on Monday on the first day was Amanda Natividad and she has, I think, been head of marketing at SparkToro for a few years and she coined the term Zero-Click marketing. And that’s actually what she talked about, Zero-Click marketing and analytics. She talked about attribution and how hard it is these days. And with Zero-Click, there is basically no attribution. So folks listening, Zero-Click is, if you do a Google search and maybe at the top, whether in the AI summary or even in just a little box, it mentions your company, but there’s like no link or nobody clicks it, but they still have your company in their brain and maybe they go Google it or maybe they type it into the browser, the address bar or whatever. 

Rob Walling (13:31): She really dove into all of that stuff. And it was one, I went around asking attendees like, “Hey, what was your favorite talk?” And a lot of folks were mentioning hers. So what were your thoughts and takeaways there? 

Derrick Reimer (13:44): Yeah, I think hers was for sure up there among my favorites of the whole conference. I think the word attribution comes up so much at MicroConf and has over the years. And I feel like I’ve had many a conversation about that, like, how do we actually do this? Is it even possible? It was helpful to hear an accomplished marketer like Amanda just basically call out that attribution has been broken forever pretty much and is more broken than ever, and particularly because of this problem of search. The nature of search is changing, right? People used to type into Google something related to your website and you would show up in the search terms and then someone would click that. And now it’s dominated by AI summaries and ads and everything else. So the way that people go about searching and finding you and learning about you is in flux right now. 

Derrick Reimer (14:35): So it was good to see that called out from an expert and just the fact that all the platforms are penalizing outbound links. I think X/Twitter took a lot of heat for this like, Elon did this thing that’s like, what? Now everyone has to post the link in the comments below. But the truth is like they’re all doing that because all the platforms want you to stay on platform, which really makes sense if you think about it. They don’t want you to click an outbound link and go somewhere else. And so a lot of the strategy here now is to think about crafting native content, I think was the term she used, and think about like, all right, you’re posting for this platform in the way that the algorithm will reward this post. And you need to be thinking about kind of building awareness. 

Derrick Reimer (15:21): And ultimately the hope is that they will still land on your website, but search is generally the last touchpoint. So maybe if they see your native posts on the various social platforms, learn about you that way, engage with your content as they say, and then eventually search for you maybe as a branded search once they know your company name and end up landing on your site. So she talked a lot about the wisdom in building on rented land, which is, we’ve talked about owning your channels for many years. So it was interesting to think about how it’s probably wise to embrace the rented land and to maximize your benefiting from the algorithms, but then still keeping one owned channel, which is email. Email will never die. And so still trying to obviously keep at least one channel that you own, but also recognizing that you got to play nice with the algorithms if you want to benefit from them. 

Derrick Reimer (16:21): She talked about some practical advice on what a founder can do the next time you’re at your desk, what kind of habits you can start to build on, like pick two to three channels, publish one to two Zero-Click assets per week, review monthly. So she gave some high level notes on how a founder can think about applying these principles to their day-to-day, which I thought was helpful because a lot of times these things can feel overwhelming, especially if you’re a really tiny team. How do you go about producing these assets in a rigorous way that’s measurable and all that? So I think she brought it down to an approachable level even for the small team, which was cool. 

Rob Walling (17:00): Yeah, I really appreciated her take on all of that. I mean, it was just a very informative talk. It was a talk by someone who is in the trenches and you can tell and who thinks about this all the time. This isn’t a fluff talk. It was really a lot of nuts and bolts. And I liked her talk, the pieces especially about attribution because I still believe in attribution, but it’s just becoming less and less and less. They’re just signals. It’s kind of like sampling. When you want to poll or get a signal about the entire United States, you can get a statistically significant sample with, I think it’s a thousand or 2,000 people if you choose the right demographics. And I think of analytics that way these days. It used to be, especially before Google did not provide it, you could get like 80 or 90% accuracy, or at least that’s what I believed. 

Rob Walling (17:51): And that number’s just going down and down and down. But I always wonder, what is the sampling rate of that? And of course, there are certain things that fall apart and she didn’t talk about sampling, but she talked about how all this is kind of like it’s better than nothing, but also there’s, as you said, search is the last thing. And so you’re going to weight that a lot higher. Yeah. 

Derrick Reimer (18:12): And you’re going to recognize that if you think about the path that someone would take, and even if they say they go to ChatGPT and your name is surfaced there, odds that they’re clicking a link from ChatGPT to your site so that ChatGPT will literally show up in analytics is pretty slim. It’s generally like, see you over there, hop over to the browser, then maybe do a direct Google search. And she also talked about how a lot of the platforms are not even passing through referral data at all. 

Rob Walling (18:41): There was one attendee, MicroConf first timer, I was talking to her and I said, “Well, how’d you hear about us?” And she said, “I asked ChatGPT what events I should go to for entrepreneurs.” And I’m like, “What?” And that is just happening at this point. It’s not like we’re targeting it. So in the early days of MicroConf, we did a lot of talks, a lot of talks. We had 12 talks the first year, which was too many. And then we went to 10 and then we went to nine full length talks. And it was a lot of information because we were trying to get strategies and tactics. And what we realized in the late teens, it was around 2018, 2019, we started reworking the event and kind of had a MicroConf 2.0 moment where we said, look, half day in seats listening to these interesting talks, like the ones we’re talking about from Jason and Amanda, but in the afternoon of the first day, we tend to do these excursions where we get out and about. 

Rob Walling (19:30): And then the afternoon, the second day we do workshops and round tables. So you mix it up, there’s more interactivity, et cetera. The excursions each year depend on where we are. So in Dubrovnik, it was like sea kayaking and the Game of Thrones tour of the old city. But in Portland, of course, we had two hikes, not one, but two hikes. We had a pizza and ice cream tour because Portland has awesome pizza and ice cream. And then we had the retro arcade and you and I hung out at the retro arcade. Any games that brought up a history for you that you were like, “Yeah.” 

Derrick Reimer (20:08): Yeah, I played a little Mario Kart. I played some pinball machines. They had a bunch of cool kind of retro pinball machines, which was just sort of fun to zone out for a few minutes and stare at a pinball machine. It was good respite for the brain. Yeah. I did some other games where you just walk up next to a founder and you start shooting guns at a screen and you’re standing there for a while and then you start just kind of organically talking about business and… 

Rob Walling (20:34): That’s the point. It just gets us together. The speakers are just an excuse to get us together in a room. And I walked up and played Time Cop 2, the foot pedal. Yeah, you do the foot pedal to reload. And I was talking to a founder for a while there and yeah, I really enjoyed it. So it was cool. And I heard one of the hikes… So we learned what easy… Easy hike is kind of a term, easy, intermediate, hard. I don’t know what all of them are. But I guess what we learned in Portland, that easy Portland is like hard everywhere else because Tracy led a hike and was like, “This was six miles mostly uphill.” It was brutal. I had to chuckle at that. Classic Portland, right? 

Derrick Reimer (21:14): Yeah. It’s like spicy in Minnesota is not the same as spicy in California. 

Rob Walling (21:21): No. Got a lot of good feedback about the excursions, as we always have. I remember the first year launching them, I was like, “Oh no, this is such not a MicroConf thing. We’ve never done these,” and just have never received any feedback other than, “Yeah, let’s do them” or “Let’s do more of them” is what we get. And I’m like, slow down. We could do MicroConf excursions as just an event, but we do need some grounding content. So moving on to the second day, I kicked us off with my talk about AI and I had given it in Istanbul six months ago and then adjusted it. AI is changing so fast as we know and what I wanted to do… Okay, so I really didn’t want to do a talk about AI. I just didn’t, I don’t know. There was something about it. 

Rob Walling (22:01): I was like, there’s plenty of AI talks. We really need this. But when I asked on X/Twitter and in the TinySeed Slack, people were like, “How should I be thinking about this as a SaaS founder? How can I implement it in my app?” All that stuff. So I did put together a list of three different ways or tried to create categories of how you could use it. And then as I got more information from founders, I was like, “Oh, there’s actually five ways.” And I gave the talk in Istanbul and someone came up after and said, “Ooh, here’s a sixth.” And I’m like, “Oh man.” So I did this talk with six ways that you can be thinking about implementing AI in your SaaS. And there might be some folks in the Q&A brought up other ways, but I think most of them fit under the umbrella of the six. 

Rob Walling (22:41): I think it’s pretty mostly complete at this point, but it was a fun talk to give to that crowd and I’m glad that I did it and my next talk will not be about AI because I’m feeling just a little AI saturated at this point. 

Derrick Reimer (22:54): Yeah, no, I mean, I thought it was a good classic Rob Walling talk in the “let’s categorize this stuff” because that is always helpful. And I think you have a particular skill in kind of identifying how to bucket things so that it demystifies it a bit, right? I think you mentioned at the top of the talk, just thinking about how do I add AI to my product if I want to be a product that has AI can be daunting and you can, it’s like, where do I even start to think about this? So I think it was clear that this is obviously very top of mind for a lot of founders in the room and not in the room. I think the Q&A after your talk was pretty crazy. It’s… 

Rob Walling (23:35): Like 20 minutes. 

Derrick Reimer (23:37): Yeah. It… 

Rob Walling (23:37): Went long. Yeah, I know. And people were really thinking about it. Well, and could you feel the tide turning a little bit in a way that I thought was really fascinating? The gestalt, I think, of the way we’re all thinking about it started to be, what about should we maybe not do AI? What if customers don’t want their AI touching their stuff? They don’t want it in an LLM? Well, how can you… There started to be, I won’t say anti-AI, but counterpoints to this. And I was like, “Oh, let’s do this.” I wasn’t shying away from that at all like, “Well, let’s talk about that.” 

Derrick Reimer (24:07): Yeah, I think it’s like we’re still in the phase of it where it’s like, “Oh my gosh, this is incredible. We should use this everywhere if at all possible.” And as an industry, we haven’t really stopped to slow down yet and think about like, “Okay, what are the negative ramifications of this stuff? Or where should we think about not applying this for X, Y, and Z reasons?” So yeah, I mean, this is the sense that I got from conversations in the hallway as well. Just a lot of people thinking about what’s the right way to use this? How do you get your team on board with it in the way that you want them to be? Should we invest in adding it to our products now? I mean, this is something I’ve been thinking about for a year and a half. I obviously want to be early on this stuff. 

Derrick Reimer (24:53): I want to use my bootstrapper advantage of being able to be nimble and do this stuff faster than the large incumbents, but also there’s a risk in being too early with it and implementing a bunch of stuff that is now obsolete or has become a part of the core Claude app or whatever. I don’t want to build something now that’s going to in two months just be a skill and now I don’t need it in my code. So I think it’s obviously an ongoing thing that people are spending a lot of mental cycles on and it was good to swap notes with people about AI. 

Rob Walling (25:26): That’s how I felt too, where it’s like, I think I said a few times in the talk, I’m trying to create a close to definitive categorization for how you can implement it in SaaS, but for sure this is not the whole conversation, especially not in 35 minutes. This is a starting point. Now, maybe it gives us all a vocabulary to talk about it. The categories I’ve talked about, several of them on here, but it’s like generation, like the AI can generate stuff in your app, right? It can categorize things, you can have a chat interface. We talked about it this time, I added MCP and CLI and just how muddy that is, how few even TinySeed startups that are like bleeding edge, almost none of them have MCP and CLI and the ones that do have two users, three users. It is not, we are not nearly as far as Twitter would have you believe, right? 

Rob Walling (26:16): We’re like, “Oh, just everyone’s building MCP and you’re behind if you’re not.” And it’s like, “That’s not what I’m seeing across the 209 TinySeed companies.” So that was part of the conversation. 

Derrick Reimer (26:26): Yeah. I think the number of times that Formspree came up. So Cole, founder of Formspree was in attendance at the conference and I got to talk to him a bit, but he kept coming up from the stage as an example of like, for example, I just signed up for Formspree from AI. I was rebuilding my website and I needed a contact form and AI, Claude was just like, “Use Formspree.” And they just basically provisioned the service really without looking at the marketing site. Now, maybe this won’t be everyone’s product, but it does make you wonder, okay, how much of this agentic commerce, or I don’t know what the right term is for it exactly, but basically agents doing most of the buying for you, how much of that’s going to be happening over the next year? And what does that mean for us as we think about building marketing sites and building signup flows in a way where an agent can just provision an account instead of a human typing in the box, really fascinating stuff. 

Rob Walling (27:27): And MicroConf wouldn’t be complete without a talk about jobs to be done. Gia Laudi, her title was “The GTM Moat No One Talks About,” jobs to be done. There was positioning and a lot about your customer and the job they’re trying to get done rather than who they are, because I do often think in terms of, we think of our ICP as like demographics, psychographics, and she was kind of adding more depth to that and being like, “Yeah, maybe it’s a little more.” 

Derrick Reimer (27:58): Yeah, no, I think that reminder of it’s why they buy and that’s not equivalent to who they are. So going too far down the path of thinking in terms of like personas or something can be limiting. I think she also talked a bit about how it’s easy for bad data to leak into the thought process as well. So I mean, I feel like the big takeaway was like talk to your customers, but of course, what’s much more nuanced around that on how to do it. And she talked about how the cascade of things is like growth at the top, then it’s messaging, but then it’s positioning, then it’s the customer, then it’s the data. So data needs to be the foundation of it all, but the devil’s in the details on how you go about getting that data. So it’s always helpful to hear kind of an expert talk about jobs to be done because that’s another topic that has a lot of nuance to it, a lot of contours, and it’s helpful to hear just examples and case studies that they have from real world client engagements and things as they help kind of fill in the gaps on that. 

Rob Walling (29:00): In the afternoon of the second day, we had our workshops and our round tables, and then we moved on to the final talk, the closer, Craig Hewitt, “AI Doomer.” That’s what I’m going to call him. He’ll appreciate I said that about him. No, it was cool because he and I both talked about AI and Anthony Eden had an attendee talk about AI, but Craig falls, I mean, he’s really, as he kept using the term, he’s cloud pilled, he’s token maxing. He started using these terms. I’m like, “Oh my God, dude.” It was fun to hear him. So his take is different than mine. I’m much more of an, what am I? I think AI is changing things, but not as much as most people are making it out. I’ve done enough of these hype cycles with crypto and these other things. I’m not saying this is like crypto, but I’m trying to be more moderate about it. 

Rob Walling (29:51): I’m excited. It’s changing a lot of things. It’s probably the biggest technological change I’ve ever seen since I’ve been an entrepreneur, so that’s saying a lot. But I try to be at the leading edge of the present. What is actually happening right now versus what’s going to be in a year or two or three or could potentially be? And so I appreciated his take, which is like, oh, he’s all in on it and his entire staff has a huge AI budget. Did he say it was $1,000 a month or $2,000 a month? He… 

Derrick Reimer (30:16): Said uncapped actually. 

Rob Walling (30:17): Uncapped. It’s like if you’re using AI, you can just all in, everyone on the team has to use AI. I mean, he was talking about, “Hey, if your folks on your team are not adopting it,” he’s like, “I would fire that person.” So just really interesting hard takes from Craig who traditionally has been, he’s pretty chill, but AI, he has strong opinions on this one. And I appreciated that. And the interesting thing about MicroConf is all the speakers don’t have to agree. The point is to get some perspectives on these things. And so yeah, I’m curious what you thought about Craig’s talk. 

Derrick Reimer (30:51): Yeah. I think he mentioned at the start, he was like, “This is as close as I’m going to get to giving a talk on religion or something because it’s that level of controversy, I guess, or just certainly not everyone’s going to agree.” And he sort of named that upfront that these are some hot takes. These are some things that are not necessarily universally believed. But yeah, he sort of dove into it. I mean, sort of the case on, I think he said he expects the next two to five years to be really tough for the economy. And he sort of cited the, Anthropic puts out a lot of stuff where they’re like, “Here’s the graph of all the industries that AI is going to be able to automate.” And it’s some shockingly high number, like 90-something percent of jobs or something like that. 

Derrick Reimer (31:37): So I mean, you have to take all that with a grain of salt and run it through your own filters on like, “Do I actually believe this? Is this just marketing from an AI lab?” But he sort of named the case of like, this is the worst case scenario of how things might play out. And then he promised the audience that it wasn’t going to be all doom and gloom. There was going to be some things we could do as bootstrappers. But I did find it really interesting. The kind of summary of the bootstrapper advantages he named were like speed, finding niches and relationships, like forging those human connections. And as I reflect on it, I’m like, “I feel like these have always been the bootstrapper advantages.” So in a sense, it’s like, even though so much is changing in our industry, I think ultimately what allows us to succeed and set ourselves apart is kind of staying the same as it’s always been, which I thought was a good thing. 

Derrick Reimer (32:34): It’s not like, even if you think about worst case scenario, how things might change, fundamentally we have been working on the proper skills and the proper ways of operating that are going to hopefully set us up for the most success in this new economy. 

Rob Walling (32:53): And we didn’t even talk about our evening receptions, hanging out, playing video games on the final night, throwing some bowling balls over at Punchbowl Social. And yeah, just a lot of time to get together in the hallway track, which is, I think, as valuable or more valuable than the talks and the information. It’s something, I mean, I come away with it as tired as I do sound and I feel right in this moment, my battery, my energy, my entrepreneurial battery gets charged up being around other ambitious founders, some of whom are crushing it, doing eight-figure businesses and some who are just getting started. But the energy is palpable. And you’re coming back for our Europe event here in a few months. 

Derrick Reimer (33:39): I am. I’m so excited. 

Rob Walling (33:41): Iceland in late September, I think it’s 21st through the 23rd. If you’re listening to this and you feel like, “Man, this event sounds awesome.” Derrick and I will both be there. You want to come hang out with two tall gentlemen? 

Derrick Reimer (33:53): Taller than I appear on the internet is what I like to say. 

Rob Walling (33:56): This is what everyone tells me. Yeah. People come up, “You’re taller than I thought.” And it’s like, “I’m not that tall.” But yeah. So we do still have some tickets, but it’s selling fast. I know it’s going to sell out, I don’t know, in the next month or two, I would guess, but microconfeurope.com if you want to buy a ticket there. And then we announced that next year, I think it’s, is it March or April? We didn’t announce dates. 

Derrick Reimer (34:18): I think it was April question, question. That’s what it is. Yeah. 

Rob Walling (34:20): We don’t have exact dates, but we’re about to sign in Austin, Texas for MicroConf US. So of course, if you’re interested in potentially coming to that, you should head to microconf.com and just enter your email. Find a text box and you’ll hear about it. I think microconf.com/emails or /subscribe. We’ll get you there. Derrick Reimer, founder of SavvyCal, best scheduling link on the internet. 

Derrick Reimer (34:42): You’re too kind. 

Rob Walling (34:43): Thanks for not only joining me at MicroConf a few days ago, but for joining me on the show again. 

Derrick Reimer (34:48): Of course. Thanks for having me. 

Rob Walling (34:49): Thanks again to Derrick for coming on the show and helping me recap MicroConf for you. And I want to send a special thanks to YSecurity whose ad was at the top of the episode. They also put on an excellent workshop at MicroConf around security and compliance and several other things that I know many folks attended and had good things to say. So if you’re getting serious about your cybersecurity and compliance, head to ysecurity.io. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 830. 

Rob Walling (00:00): This podcast is brought to you by Mercury, the banking solution I use across all of my businesses. I manage half a dozen Mercury accounts from my personal single member LLC to MicroConf, our seven figure global events and education platform to TinySeed, our venture fund and accelerator. Mercury handles every one of them. Traditional banking forces you to duct tape tools together and work around slow processes. Mercury doesn’t. The dashboard shows me exactly where each business stands at a glance. The interface is simple enough for daily banking and paying invoices, but can also handle the multi-step approval processes we need when wiring large sums of money to the dozens of companies we invest in each year. There’s a reason more than 300,000 entrepreneurs have made the switch. Anytime founders ask me where to set up their accounts, I send them to mercury.com. It’s free to get started with no in-person visits and no minimum balance. 

Rob Walling (00:54): Visit mercury.com to apply online in minutes. Mercury is a FinTech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and Column NA, members FDIC. This is the difference between being a developer and being a product person. A good product person would never do this. Whereas a developer says, “Oh, I have these tools and email’s the easiest one and I have this whole class already built to send emails, so why wouldn’t I just do that without thinking through the ramifications for your end users?” Another Tuesday morning and another episode of Startups for the Rest of Us. As always, I am your host, Rob Walling. And in this episode, I tackle a few solo adventure topics. I revisit the core four SaaS skills and talk about what AI can do and help you with in terms of the core four and what it cannot do and what I’m not convinced it will ever be great at. 

Rob Walling (02:05): I talk about a terrible user experience decision that a local Minneapolis app has made, and I want to walk you through why it’s bad so that potentially you can learn from that. I want to talk to you about a few success factors in companies. According to Bill Gross, he studied 200 different companies and has several factors in order. And maybe I’ll finish with a little anecdote about the Beastie Boys. Before I dive into the meat of the episode, I want to thank you for listening, whether you’ve been listening for a week or a year or 10 years. Startups for the Rest of Us just recently hit its 16-year milestone. So on March 30th of 2010, my former co-host, Mike Taber, and I launched the first episode of this show. And that was obviously just a few weeks ago here, 16 years ago. And after the first few months of getting started where we shipped some episodes every other week, past those first few months, we’ve shipped an episode every week since 2010. 

Rob Walling (03:12): And the reason that I’ve continued shipping, even when it’s hard or when I’ve had a lot going on, or when I was building a company, selling a company, leaving a company, questioning whether I wanted to stay in the startup space at all, as I did in the 2017, 2018 timeframe. But the reason that I kept shipping is because you kept listening, is because it was obvious that this show impacts a lot of people. And as people have told me, it punches above its weight class. In terms of having a relatively small audience compared to someone like Joe Rogan, Tim Ferriss, even My First Million. And yet the impact that it has on people is significant. The tens of thousands of listeners of this show, I think, get a lot of value from it because of how focused it is on SaaS, on startups, on software, on bootstrapping, and mostly bootstrapping. 

Rob Walling (04:09): But really it all comes down to entrepreneurship, right? And it’s how each of us is able to change our lives through starting our own companies. And this is not something that would have been very possible at all 20, 30, 40 years ago. And that’s why I think it is, in fact, the best time ever to be an entrepreneur. So thanks for listening this week and every week, as I have to say in my sign off. I look forward to continuing shipping these episodes every Tuesday morning. I’m going to dive in to my first topic in a moment. Before I do that, I want to let you know about my premium coaching program called SaaS Institute. SaaS Institute is where we’ve gathered together world-class SaaS coaches. We have a list of seasoned mentors and we’ve curated a community of SaaS founders doing seven and eight figures of ARR. 

Rob Walling (05:06): Our goal is to give you the support and the connections that you cannot find anywhere else that can help you continue to grow your company and to help you feel a lot less alone than you probably feel today. So you get one-on-one coaching, you get direct access to subject matter mentors, you get a curated peer group, not only a mastermind that meets once a month, but our Slack channel that I think is one of the best in the world for SaaS companies. If you’re interested, head to SaaSInstitute.com to apply. As I said, we have a curated group in there, so you do have to qualify to become a member, but it’s an incredible group, SaaSInstitute.com, if you’re interested. My first topic of the day is which parts of the core four do I think AI can do? So to briefly recap, the core four are development, product, sales, and marketing. 

Rob Walling (06:01): And of course, we know that AI is making development easier and faster. Now, it’s especially working for people who already know how to write code because you can then look at the code and say, “This code is not good because AI doesn’t write great code.” Sometimes it does, but it’s very hit and miss. So we can obviously say that AI augments development. It can make that faster. It can also create a lot of AI slop that will be unmaintainable and insecure and have a lot of bugs in three, six, nine months. But realistically, AI is not terrible at helping with development. AI can also assist you with sales. It can craft outbound emails and DMs, and it of course can automate sending those. The real job of sales though, that’s just lead gen, right? The real job of sales happens when someone wants a demo and they want to have a conversation and they want to pay you five, 10, or $50,000 a year. 

Rob Walling (07:03): And that part, while AI can help you improve, it can record your sales calls and help you improve on those, it’s not doing it for you in the same way that it can with development. So AI can augment sales, but realistically, as a founder, you still have to learn to do it. You still have to learn the core skills until you are at the point where you’re doing a couple million dollars a year, and then you can potentially hire someone to take that over. And of course, you can bring on sales assistants before that, but I’ve talked about that in a prior episode, so I won’t beat it to death here. Marketing is an interesting one. I always talk about how marketing is three separate roles. It is strategy, project management, and then being the individual contributor who actually goes in and clicks the buttons in the interface. 

Rob Walling (07:47): And similar to sales, AI can obviously help with marketing. It can help generate first drafts of content, of blog posts, of social media posts. Anyone who’s publishing AI content directly to the internet, I think is making a mistake because even well-trained GPTs or Claude chats still need massaging. It’s not there yet. So is it augmenting marketing? It is. Will it do marketing for you? The way that we’re seeing these companies on social media talk about how they just clicked a button and this whole Kanban board of all these tasks happened. And then this AI, whether it’s OpenAI or one of these others is just doing it all for you. And that as of today, as I’m recording this in early April of 2026, is still a pipe dream. It’s doing mediocre and usually pretty bland work. And I’m of course using AI. 

Rob Walling (08:45): My whole team is using AI to generate stuff, but we never publish 100% AI generated stuff directly to the internet because with sales and marketing, it’s a nice augmentation. It can get you started, but you do still have to have an editorial eye, right? You have to have taste to realize that the code that this AI is putting out or the copy that this AI is putting out or this cold email it’s putting out in terms of dev, marketing, and sales, that it’s not great, that it’s okay. It’s fine. It’s passable. If I don’t know anything about cold emails, when I have AI generate a cold email for me, I might think this is amazing. And a lot of the takes that I see on the internet where it’s like Jason Cohen, I had him on the podcast a while ago and then we published some snippets of his interview on my YouTube channel, youtube.com/robwalling. 

Rob Walling (09:32): If you’re interested in following along there, it’s brand new content every other week, except very occasionally, like every six months we’ll pull something from this podcast. And in this case, we did. And Jason Cohen was talking about how AI isn’t perfect. It’s not there yet. Maybe it’s 80% there. And there were all these comments that were like, “Oh, you just haven’t tried Opus 4.6 yet.” Well obviously this was recorded before Opus 4.6. You know what? I’ve been using Opus 4.6 since it came out. It’s still the same. It’s not 100%. And the people that I see saying that AI can do all this stuff and it’s magic, they don’t have taste. They don’t have an editorial eye to realize that the marketing copy it writes is fine. It’s not great. That the cold emails and the recommendations it makes for your sales process are fine. 

Rob Walling (10:14): They’re not great. And the development, the code that it writes for your product is fine. It’s not great. You’re seeing the pattern here. No, I’m not saying it’s never going to be that way, but as of today, it’s just not there. And so as an augmentation, great, use AI, but you somehow magically pushing a button and having it generate a product that then it goes market and sells, it’s a pipe dream. It’s someone trying to sell you something if they’re saying it’s this easy that AI is just going to do it for you. Now you’ll notice of the core four, I’ve mentioned three: development, marketing, and sales. I haven’t touched on product. And of the core four, I think AI is by far, far the worst at product. It’s just not good. It’s just not good. Remember, product is not, “Oh, I want to write code. I want to build a product.” It’s what should you build? What should you build? How should you build it? What should it look like? How do I listen to my customers and give them what they want without just building everything all of my customers ask for? 

Rob Walling (11:02): Just because you can build it faster doesn’t mean you should build more into your product. We’ve all seen these Franken products that are hundreds and hundreds of features because a developer went into their basement for a year and built all this stuff and that usually isn’t the product that wins. You have to be opinionated about what you build and how you build it. And again, as of April 2026, AI is not going to do this for you. And is there a point where AI will be good at product? I don’t know if it ever will, and it requires so much specialized knowledge. 

Rob Walling (11:48): I guess I can imagine a future where it takes in all of your support emails and all of your live chats and everything on the internet and it somehow knows your customer as good as you do. Yeah, it’s hard to say in a few years, the advances that AI will make. But here’s the thing, the interesting spin on that is if you are good at product, if you have a decent idea of really what needs to be in there, maybe how it should be built, I think that AI dev boom especially is actually a pretty big win for you because if you’re good at product, you can just get there a lot faster. I think back to how much faster we could have built the first version of my last SaaS app that took, oh, what did it take till we got our first customer? 

Rob Walling (12:30): It was like seven months. And I think that timeline could have been a month or two and we would have learned so much faster and the journey would have been less painful at least in those early days. So that’s if you’re good at product. If you’re bad at product, I think your product’s going to be a mess and a big tangled web of features that no one really wants. I think your positioning is still going to suck, that AI is not going to bail you out of that. So this is where if we’re on the internet, people say AI is the savior of everything and it’s the future. Or AI is terrible and it can’t do anything and it’s neither of those. It can do some of these things and it can augment you like a mech suit if you’re writing code or doing some sales or doing marketing. 

Rob Walling (13:10): With product, can it help you maybe make some decisions? Maybe. Every spreadsheet that I’ve ever seen by a product manager who is trying to make a case why we should build things, I’m always like, “Yeah, we’re just cherry picking data here.” There is no right answer. We don’t know. And we’re going to use our founder gut. We’re going to mix that with our understanding of our customer and we’re going to make the best choice that we know how. So those are my thoughts on AI as applied to the core four SaaS skills. My next topic is around the five factors in success across more than 200 companies. And this was a post put out by Bill Gross. Bill Gross is a venture investor and he has invested in hundreds of companies. In fact, he founded IdeaLab, which was an incubator that started companies. It’s not just an accelerator like TinySeed or Y Combinator. 

Rob Walling (14:07): They would start the companies themselves and I believe they’ve created more than 150 companies. So he has just a lot of experience doing this and he looked across 200 companies that he’s involved in. And this is from October of 2025. It’s from a few months ago. But the top five in order in terms of the success factors, he has number one as timing, number two as team/execution, number three, idea or truth outlier. Number four is business model and number five is funding. And the reason I want to call these out specifically is as I read these, I realize that these apply to venture backed startups because timing is so critical when you’re trying to hit the gap and become a billion dollar, 10 billion, 20 billion dollar company. If it could have been built five years ago, it would have been. And so you have to hit things at just the right time and shoot that gap. 

Rob Walling (14:59): But guess what? If you want to build a $3 million SaaS company that’s growing fast and could sell for 20 or 30 or more million dollars, you don’t need to be so worried about timing. Even if there is already a big player that owns a big space and you jump in and you figure out why people are leaving, we used to call them refugees, whether they are leaving that platform, whether it’s price gouging, whether the product sucks, whether their sales and support isn’t great, you don’t necessarily need great timing. Now you do need team and execution. To me, that is often the number one. And you’ve heard me talk about how it’s like team times the idea, times execution, and then I probably throw in times luck. Luck always plays a factor. It almost goes with that saying, but team times idea, times execution. The business model that Bill Gross talks about, I mean, we’re in SaaS. 

Rob Walling (15:55): What’s the business model? It’s a monthly, it’s an annual fee. Sometimes you add percentage of payments that you’re processing. It usually doesn’t need a ton of innovation, whereas in the venture space, there’s always like, “Ooh, we have this new two-sided marketplace thing where we’re going to charge the this and the that.” You know what I mean? So business model I think takes more into account there versus like, I’m going to build software that when it has one user is as valuable as when it has a thousand users. You don’t need scale because everyone is paying you a certain amount of money. And funding, of course, in our bootstrap and mostly bootstrap circles is not irrelevant because it can get you there faster, but I think a lot of the companies that we see in MicroConf, TinySeed, Startups for the Rest of Us ecosystem, they probably could succeed with or without funding. It’s just going to take them a lot longer. 

Rob Walling (16:42): So funding and business model, much less relevant for our kinds of companies and timing, which he names as number one, I also think is much less relevant for our types of companies. So team, idea, and execution are the things that I see over and over either causing SaaS companies to fail or to wildly succeed. And sometimes I’ll see a team execute really well and the idea is a so-so idea and they just grind, grind, grind their way into a great little million dollar business over the course of several years. Sometimes that’s because the idea wasn’t great or the niche, the industry, the space that you picked, it was a two or three out of 10 idea. And then other times you do see a great idea and a team that’s decent, but they happen to execute pretty well. 

Rob Walling (17:34): So you’ll see them have wild success because, again, it’s kind of a multiplier. So the reason I’m calling these out is I saw this all over the internet and I have a lot of respect for Bill Gross. It’s Bill T. Gross, by the way, because there’s another Bill Gross who’s like a bond guy who does bonds and stuff. The Bond King, I think he’s called. It’s just unfortunate they have the same name. But I saw this on the internet and it’s not that I disagree with Bill Gross or that I think his original ranking of timing and team, idea, business model, and funding in that order are incorrect. It’s that this is where you have to consider the source. This is where you have to think. Is he talking about the types of companies that I’m starting, types of companies I hear about on Startups for the Rest of Us, see at MicroConf, see at TinySeed, maybe over on Indie Hackers, or is he talking about the traditional venture capital chasing $20 billion outcomes? 

Rob Walling (18:27): Because those paths are very, very different and the success factors between them are going to be very, very different. So this is where you have to be careful not only with who is telling you the information, because let’s just say on the internet, I don’t know, 80% of people are full of it. Maybe it’s not that high, but it’s a lot, especially people trying to tell you business advice and tell you how you’re going to succeed and basically trying to sell you something along those lines. But in addition, even those folks who I think have done it, have been there and have a lot of knowledge like Bill T. Gross here, they’re often talking about their type of company or their type of approach. And if you’re not going to do that type of approach, you either need to ignore their advice or find out from someone how this is different in your space. 

Rob Walling (19:14): This is the same reason I cringe when people talk about reading Zero to One and then trying to apply that to bootstrapping or that that’s a big motivational entrepreneurial book when they’re starting, when they want to start a million dollar SaaS company. It’s like, I get it. I’ve read Zero to One. Or The Hard Thing About Hard Things. Like those are cool books. They’re interesting. They got me thinking, but I never once thought, “Yeah, the information in here is going to help me bootstrap my next SaaS company.” Those books aren’t written for us. They’re written for folks who want to start these, again, 10, 20, $50 billion companies. And so is the advice that Bill Gross was giving out here. For my next topic, I want to walk you through a little decision that the city of Minneapolis is making with their parking app. So one of the luxuries we have here in Minneapolis and St. Paul is that the cities are relatively well funded and the money tends to be spent, I would say, in productive fashions. 

Rob Walling (20:08): I’m from California where the taxes are high and everything’s broken all the time. And we can talk about reasons why that is in terms of just the sheer volume of people who live there and all other types of situations. The quality of life here in Minneapolis is high for a lot of reasons, but one of them is that things just work. The schools are high quality, the city has their act together. The bike paths are plowed in the winter and they have an app that you download to your smartphone to pay for parking and that’s so cool so you don’t have to carry a bunch of quarters around. And we were actually driving out in the suburbs and we were in a city and needed quarters. And I was like, “Whoa, I haven’t done that in a long time.” But they have this parking app that helps you not freeze your butt off when you are in the middle of winter and you need to pay for street parking. 

Rob Walling (21:00): But the interesting UX decision or customer experience decision they’ve made over the last few years is kind of befuddling me. And I’m guessing they have some third party who’s building this because when I look at it, I’m like, “Whoa, this is not good.” So originally you could log in and it would keep you logged in for a long time, for a month or two, because your parking app, does it really need to be super secure and log you out every time? Well, they then started doing that. So then it would log you out every single time. And so every time you go to pay for parking, you would need to log in and it wasn’t just Face ID. You would have to enter username or password, which could obviously come from the OS remembering that, or you could OAuth using Google and other things, which is eventually what I just started doing because I got tired of the passwords not auto-filling on mobile and whatever. 

Rob Walling (21:49): So that alone became enough friction that I have more than one friend who’s just like, “Yeah, I just couldn’t be bothered and I just paid for parking tickets if I get them.” It’s like that much of a frustration, that much friction does that. And I’m still puzzled why they just don’t add Face ID if they’re going to do this. If they’re going to make you log in every time and they think it needs to have bank level security, just add Face ID. But I saw the other day, there was a pop up when I went to pay for it and they said, “We’re adding two factor authentication.” And I was like, “Oh no, are you kidding me that in order to pay, oftentimes it’s 75 cents that I’m paying, $1.25. In order to pay that at a particular meter that’s locked to my license plate, I’m going to need to log in and then enter a code from an authentication app.” And it didn’t even say that. 

Rob Walling (22:38): It said that the second factor of authentication is that they’re going to send an email. So I can’t even with this, what are you talking about? Who thinks this is a good idea? So you’re going to log in and then it’s going to say, “We just sent an email to your address on file. Go log in to your Gmail or whatever else, pull that up, enter a code, click on a link, like what’s it going to be?” You know it’s on mobile. It’s not going to work well. It’s going to turn what should be a 30 second process into at best a couple of minutes every time for hundreds and hundreds, if not thousands of people every week who are doing this. And at worst, it’s going to turn into a 10 minute ordeal where the email doesn’t get sent. The email goes to spam. 

Rob Walling (23:24): The email has a delay because of mail servers and you’re sitting there waiting five or 10 minutes. People are just going to give up. I know that’s what I’m going to do. So maybe they’ll start sending texts, maybe they’ll start an authenticator app, but I don’t particularly want to flip into an authenticator app and enter a six digit code every single time that I want to pay for parking either. So it just feels lazy. It sounds like a programmer that’s not at all a product person or anyone who gives a crap about the end user. It’s just some developer somewhere or some politician somewhere who basically doesn’t know app design is being lazy to try to enforce some standard that I’m sure someone somewhere has sent forth to justify their own job. So if you’re building an app, this is the difference between being a developer and being a product person. 

Rob Walling (24:09): A good product person would never do this. Whereas a developer says, “Oh, I have these tools and email’s the easiest one and I have this whole class already built to send emails. So why wouldn’t I just do that without thinking through the ramifications for your end users?” My last topic of the day is about the Beastie Boys and their seven platinum records. So they’re doing some kind of promotional tour, I think, because they were on Conan O’Brien’s podcast and I somehow stumbled upon this given the YouTube algorithm because I don’t follow Conan. I think he’s funny, but it’s just not the type of stuff I watch on YouTube and I’m not particularly listening to the Beastie Boys anymore. I haven’t listened to them since, I don’t know, early 2000s, but I saw that there was a clip and I downloaded it just out of curiosity and it was fun. 

Rob Walling (24:56): And of course, it’s only two of the three surviving members because MCA passed away from cancer, I don’t remember how long ago it was now, maybe 10, 15 years ago. And so there was a part of this show that I enjoyed. I enjoyed the back and forth. So Conan O’Brien says, “You guys have seven platinum selling records.” And he’s saying it as a compliment. This is a rare thing. How many artists in history have seven platinum records and Ad-Rock, that’s a stage name, his name is Adam Horovitz. He turns to Mike D and he says, “What happened to the other albums? We’ve released more than seven. What happened to the ones that aren’t platinum?” And Mike D says, kind of shrugs and says, “Everyone’s got a couple duds.” And Ad-Rock says, “Well, I liked them.” I like six things about this interchange. 

Rob Walling (25:44): So first of all, it’s such a trip that had Ad-Rock never thought before about why every album wasn’t platinum. Is this the first time this realization had happened and he had to ask this question? Because I imagine as you’re cranking out albums, and I’m guessing the Beastie Boys had 12, 15 albums, not all of them are going to be platinum and that at a certain point you would pay attention to that, but maybe they stopped, maybe at a certain point you just don’t care anymore. And that alone is kind of an interesting, I think just an interesting side effect of just shipping, of just shipping. You ship your first podcast episode and you think about all the things you want to tune and optimize and you scour through the analytics and you spend every day waking up refreshing that. You write your first book and you ship it and you track the sales and the profit and the gross profit and all this stuff. 

Rob Walling (26:34): And then when you ship your fifth book and your 800th podcast episode or your seventh album or 14th album, I do think that at a certain point the process takes over and the desire to ship things into the world overrules or outweighs necessarily these ancillary feedback mechanisms. I’m not saying a platinum record is a vanity metric because it’s a big deal to sell a million records, but I think when you have 10 records, you probably just kind of stop caring. And that I think is demonstrated by this quote. And I have myself known founders who are on their third, fourth, fifth startup and they care about very different things than they did when they were building their first. Likewise, I care about very different things these days on this, my 829th podcast episode than I did on the first one or 10 or 20. 

Rob Walling (27:28): So I like that part about it, right? Just the realization of like they’ve shipped so much art into the world that not sure if he’d ever thought about that before this. Then the critical eye of like, “Well, what happened with the ones that weren’t platinum? What happened? Why aren’t we platinum for every album we’ve released?” And Mike D says, “Eh, you win some, you lose some.” Everyone’s got a couple duds, which I think is an interesting thing as well. It’s like the non-platinum records probably still very good. They just didn’t have the public sign off or the public sales to justify it, but then it comes back to Ad-Rock saying, “Well, I liked them.” And I think that truly is the sign of an artist or a creator, maybe is a better way to say it, who has come to peace with being who they are and come to peace with the art that they produce. 

Rob Walling (28:17): And while I don’t believe that this podcast is art, in terms of the definition, one might think of art being purely for enjoyment, not having utility. And obviously this podcast has utility because it helps people start companies, but there’s definitely a certain level of creativity and craftsmanship that I put into my YouTube channel and this podcast and the books and my essays, robwalling.com/subscribe if you’re not on my email list and getting my weekly essays that I’ve just recently started writing here in the past month or two, and I’m not alone, right? It’s like you look at the creators that you listen to and you can tell they really care about their craft and it’s the craft of imparting wisdom and knowledge. It’s a craft of sharing what they’ve learned, educating folks, and generally trying to make the internet a better place, or at least their corner of it, a better place. 

Rob Walling (29:13): And I think when you first start out, you are terrified and you over index on public feedback, especially the negative comments. And then I think over time, you come to the realization of, “Man, I’ve done some really good things and I’ve also had a few duds because everybody’s got a couple of duds, but I still liked them.” So I really enjoyed this analysis, this back and forth. Ad-Rock saying, “What didn’t work? What could we have done better?” And Mike D just saying, “Look, we’ve shipped so much stuff into the world. It’s just how the chips landed.” So thanks for joining me today as I walked through a few of these fun topics for entrepreneurs and founders. Next week, I’m going to be recapping MicroConf US in Portland, recording it just a day or two after the event with fan favorite Derrick Reimer. And we’re going to talk about the highlights, the takeaways, and all the fun that happened there in Portland, Oregon. 

Rob Walling (30:15): So thanks for joining me this week and every week. This is Rob Walling signing off from episode 829.  

Rob Walling (00:00): Problem with being all enterprise is that it can be a slog and you might not close a deal for three to six months and so you’re just flat. You’re flat, you’re flat, you’re waiting. Why is my MRR not going up? And then boom, a big deal drops in. It’s like, hooray, celebrate. And then you have five more months of drought. It’s another week, and that means there’s another episode of Startups for the Rest of Us. As always, I am your host, Rob Walling, and in this episode I answer listener questions from folks just like you. Questions including, here’s what I’m building, is this SaaS? And I’m going to talk through the key three or four components that I believe make up a SaaS app. And in fact, when I ask ChatGPT what it considers to be a SaaS app, we do not agree. So it should be an interesting debate between myself and an LLM. 

Rob Walling (01:03): Then there are other questions about serving both B2C and B2B or serving very small customers and enterprise, but nothing in the middle, as well as a question about pricing. Great questions today. I’m excited to dig into them. Before we do that, I want to let you know that MicroConf Mastermind matching is closing soon. We only run matches two, maybe three times a year. And if you want to jump to the end, microconfmasterminds.com. But if you haven’t been involved in a mastermind, they have been a critical part of my development as an entrepreneur. And I’ve been a part of a couple masterminds over the years, one of which has lasted more than 15 years at this point. The idea behind a mastermind is you have someone along with you on the journey. So as you run into ups, you can celebrate. As you run into downs, you can get consolation and advice and camaraderie with other folks who are doing the same thing that you are. 

Rob Walling (02:05): These are other founders. This is not your spouse or your parent or your uncle who will probably never truly understand what it’s like to be a SaaS founder. And that’s the key ingredient of masterminds. Issue with masterminds is they’re hard to form. It’s hard to find people to be in your mastermind. And we got this question so often, where can I find people to be in a mastermind? Because I’ve been talking about this for more than 10 years. We started offering mastermind matching through MicroConf, and we base it on a ton of factors like revenue, location, experience. And we have a human look at every single application. We’ve matched almost 1,800 founders across 64 different countries. Applications close in just a few days on April 17th, microconfmasterminds.com to apply. And if you’re listening to this after April 17th, make sure you get on the waiting list for our next round of matching. 

Rob Walling (03:00): And with that, let’s dive in to my first listener question. 

Helen (03:09): Hi there. My name is Helen from England. I just want to find out exactly what I would be classified as if indeed I am a SaaS business or not. So I have a product idea for equestrian trainers, people training horses in an arena, and it essentially works like satnav to read out the next step of a dressage test or a schooling plan as you ride around the arena. So in effect, you’re getting a real time coach or caller. And it relies on obviously some plenty of software, which I don’t do, and also a little bit of hardware for some cases in the form of small BLE beacons. I’m doing it entirely on my own or together with a company I’m using. I’m paying a company in London to do the software for me in the engineering because there’s no way I could do that. I guess I don’t know whether that makes me a bootstrap startup. 

Helen (03:56): Whether a lot of what you say is relevant only to those who are coding them for themselves or whether or not I can listen to your audios and sort of absorb it as if it were directly for me. If not, would you be able to advise me as to exactly what I am and where the best place to start would be? Thanks. 

Rob Walling (04:12): Thanks for sending that question in, Helen. My short answer is I think you are SaaS. I have a pretty short description. It’s basically a one sentence explanation of what I think SaaS is, and I’m going to say it here. It’s subscription software where software provides the value. So let’s break that down. Subscription. That implies it’s not a one-time fee. And I would argue that the old model of Microsoft and Oracle, the on-prem software providers, where they would sell SQL Server or the Oracle database, and you would pay $10,000 upfront, and then annually you would pay what they call the maintenance fee. And it was usually between 20 and 25%. So another two grand, $2,500 a year for patches, updates and all that. I would not call that SaaS. We could argue, maybe it’s an edge case, but I don’t consider that because you are not charging the same every month or every year. 

Rob Walling (05:15): You have this big upfront fee and then this maintenance fee. So it’s subscription software, meaning that someone is paying on a monthly or an annual or a quarterly basis, generally the same amount for not only access to software, but where software provides the bulk of the value. Why do I add that last part in? Because every time that I go onto social media and say that there are approximately zero B2C SaaS companies that are successful at scale, I get people chiming in with, “What about Netflix and Disney+ and Spotify?” Aren’t those subscription? They are. Isn’t it software that I download to my phone or my laptop or my iPad? Yes, it is. Does software provide the bulk of the value? It does not. What is the value that you get from Netflix or Spotify or Disney+ or HBO Max? The value is the content. So this is content as a service. 

Rob Walling (06:22): The way to think about it is if there was no software involved with Netflix and all they did was mail me every month a huge hard drive with their entire library and I could just plug that into my TV and watch it. That’s the value I would receive. I would receive the value of the content without ever needing to be involved with any kind of software. In fact, in the old days, Netflix didn’t mail out a hard drive, but they mailed out DVDs. So Netflix, Disney+, HBO Max, they are not SaaS because they provide most of their value from their content. Then there are a bunch of edge cases. One could ask, “Well, what if I don’t have a user interface at all?” And I am like Newscatcher, which is a TinySeed company that is generally an API for getting up-to-date information about news stories and really current things that are happening in different industries in a way that search engines can provide. 

Rob Walling (07:20): They’re generally an API. Well, my definition is, is it software? Yeah, an API is software, right? It goes down, hits a database, probably crawling the internet to pull in a bunch of stuff. Is it subscription? Yes, it is. People pay on a monthly or annual basis, and does software provide most of the value? It does. No one could say, “Well, what if they could just mail you a hard drive of all their news articles or whatever?” The difference here is you don’t just want to point and click and watch a movie. On the backend, the Newscatcher API is doing all kinds of processing and all kinds of querying and filtering for you to provide you essentially almost real time data about… I’m getting deep into the weeds. The idea is that it’s much more than just raw data. The software itself is providing a ton of value. 

Rob Walling (08:11): So in my opinion, an API that charges a subscription and where software provides most of the value is still SaaS. ChatGPT does not agree with me. ChatGPT says that SaaS has to have a UI, and I guess that’s fine. What if you are a mobile app only, but you charge a subscription? This is one where I would probably include it as SaaS because it is a subscription software. And if software provides most of the value, I think that’s probably it. I could see an argument where someone says, “Hey, mobile apps are not traditional SaaS” and that’s fine, but I’m not picky. You can tell I’m not picky about it having a user interface or how it’s done. I see the value in building an incredible business that is scalable based on it being software and it being the best business model in the world, which is where it’s recurring revenue. 

Rob Walling (09:02): So those are the components that I look at. When I think about this question, I think about would TinySeed fund your business if you were… And would we fund you if you were Netflix? If you were a company that is creating content generally, for the most part not. Now, if you were doing the content for compliance, there are some exceptions where we’ve considered it because you can build a great business there. But if you were doing B2C content like films and music and stuff, that would not be in the wheelhouse, probably more the B2C versus our B2B thesis. That would be there. If you had a mobile app and it was net negative churn and it was doing incredibly well with monthly and annual subscribers, heck yeah, I’d want to invest. API only, we’ve invested in several companies. So to me, those are included in SaaS. 

Rob Walling (09:51): Now, something else ChatGPT said is getting into the weeds a little bit technically is like, oh, it has to be multi-tenant, meaning the single code base and more importantly, the database has to serve multiple tenants. I also think that’s an edge case because would I invest in a company where you needed to have, you were deploying on-prem even? It’s not even cloud hosted, but it’s on-prem and you have that individual database for that customer and you’re charging a quarter million dollars a year, but it is a monthly or an annual subscription. I would say that’s SaaS. The bulk of the value is software. Now there’s also some services being added to that, but you get the idea. Software, that’s a subscription where software provides most of the value. So back to Helen’s question of having an app for folks learning how to be amazing at equestrian events, I would say if software provides most of the value, even if there’s a hardware component, you can obviously have sensors and things that are feeding stuff back to your software, but the software generally is charged a monthly or an annual subscription, even if it is B2C, right? 

Rob Walling (10:51): I know I talk a lot about B2B. That’s mostly my focus because B2C SaaS is brutal and churn is high. And you’ve heard me say, “Don’t do B2C too much on this podcast. I’m not going to rehash that here.” But based on what Helen has described, she didn’t say whether she’s charging a subscription and whether software provides most of the value, but I think so. I would say based on that assumption that it is in fact subscription software and not a one-time fee that Helen’s app TekItTrak, I think it’s pronounced, is in fact SaaS. One of the things that ChatGPT said is SaaS is hosted and centrally managed, right? And yeah, kind of. But again, back to my on-prem example, if you’re charging a bunch of money, that can be the benefit. If you think about HelpSpot, which is Ian Landsman’s startup and they still have on-prem versions, he came on the podcast, I don’t know, two years ago maybe. He has on-prem and the true SaaS version. 

Rob Walling (11:48): If someone’s paying a full subscription for that on-prem version, I don’t think hosted and centrally managed having to be in the cloud. I just don’t think that should be a requirement. So thanks for that question, Helen. I honestly have never given the definition of SaaS as much thought as I have in answering it, so I appreciate you sending it over. My next question is about serving both ends of a market, solopreneurs and enterprise. 

Tibo (12:21): Hey, Rob. My name is Tibo. I’m the co-founder of Colib.io, practice management software for mental health therapists and adjacent professions. We serve counselors, psychologists, social workers. Really love your content. I’ve been listening for over four years now and really like the community that you’ve started. I actually became a local ambassador for MicroConf in Vancouver, Canada. We’ve had two successful events of eight to 10 people. Your community doesn’t disappoint. My question is about serving different customer segments. We have a clear ICP and strong product market fit with solo therapists and small clinics. Most of our competitors are shooting for the juicy middle of that market, which would be clinics of 10 to 15 practitioners. They usually take the software, onboard, use it, no questions asked. And recently, we’ve been approached by what we could call enterprise clients. So those would be 50 to 200 practitioner groups. 

Tibo (13:16): They need customization and they tell us, our competitors are not really willing to have those conversations or consider customizing things. So that’s something we can do. Our system fits what they need and we are willing to have those conversations. Of course, we cannot have an unlimited amount of them, but just to start, it feels like a good idea. Of course, the willingness to pay is much higher. We could expect churn to be very low. The question really is, have you seen companies do this where they serve the lower end of a market and then jump to the complete other end, which is enterprise and obviously the sales cycle is much longer. We’ve been in conversation for a few months already and it’s going to take proof of concept and several steps. And is it possible to adapt? And if yes, how much more resources does it take and does it divide our focus? 

Tibo (14:05): So really love to hear your thoughts on this question. Thank you. 

Rob Walling (14:10): This sounds like a really interesting opportunity, actually. Sounds like almost a textbook dual funnel where you have that low end of the market. The solopreneurs, the one to five person teams, and then at the top end, kind of more enterprise, as you said, what 50 to 200, I believe. I think there’s a lot of opportunity for you here. The danger usually is that the same product will not work for both. That’s the biggest thing that I’d be concerned about is that the enterprise often and usually wants features that no one below them, no smaller players want. And so you might wind up having to spend six to, frankly, 18 months building things out, reporting and permissions and SSO, on and on and on, building features out to satisfy the enterprise. Now, if that’s not the case, and the product as it stands today, or with a month’s worth of work or whatever, can literally do both your one to fives and your 50 to 200s, this is an opportunity. 

Rob Walling (15:13): I would jump all over this because dual funnels are so incredible because you get the small players that are signing up and mostly self-serving. I’m guessing maybe you do a demo or something, but they’re mostly onboarding themselves. They’re a small team and you get a little bit of revenue growth from each of them and “Hey, I’m growing a thousand dollars. I’m growing $2,000 a month.” And that’s nice, keeps motivation up. And then you also, whatever, every quarter, you can close one of these enterprises and then it’s like, “Oh, we just grew 5,000 or $10,000 of MRR and that’s a huge win.” And that can really be a shot in the arm for your MRR growth. The problem with being all enterprise is that it can be a slog and you might not close a deal for three to six months. And so you’re just flat, you’re flat, you’re flat, you’re waiting, why is my MRR not going up? 

Rob Walling (15:58): And then boom, a big deal drops in. It’s like, hooray, celebrate. And then you have five more months of drought. And so this dual funnel, it evens that out. It smooths out the curve and it keeps the motivation going. As you hear me say all the time, funded startups fail when they run out of money, bootstrapped startups fail when the founders run out of motivation and our motivational runway or our emotional runway is a real thing to be thinking about and dual funnels help with that. So in addition to product, I’m mentioning that the product can be a hangup. The other thing oftentimes is, okay, I’m servicing one to five, one to 10 person companies in this space, but I don’t have any marketing that’s driving leads in the enterprise space. But if the enterprises are already approaching you, check that one off the list. 

Rob Walling (16:43): And maybe later you do some outbound or you do more SEO for it as you onboard one or two of these enterprises and realize that it’s a viable option for you. But for now, you’ve checked off two of the three boxes, which is product and basically leads is your marketing working for them. So then the third thing I think about is the sales process. And that includes, that’s all the way from first touch to the demos to having to provide collateral for them for the champion inside an enterprise to get everybody on board and rally the team. And then, okay, maybe we decide and three months later they do decide. And now you go through procurement and you sign up in their janky invoicing app that is totally custom and takes eight hours with a bunch of bugs to… I’m exaggerating, it’s not eight hours, but validation, verification that you’re a this, that entity, paperwork, redlining your terms of service and on and on and on. 

Rob Walling (17:38): And that’s the sales process. And so as I often say on this podcast, you just have to charge enough to make all that worth it. If you can close these deals, I would do it. It can be a bit of, obviously it’s a bit of a slog. And some, especially like bootstrappers, don’t want to do the enterprise sales process. Frankly, as a founder, I didn’t want to either. The only time we did these larger deals that required a lot of headache was once we had salespeople who were willing to do that for, of course, their commission. It was a cut of the deals. So I guess to kind of package all that up, in your shoes, I would do this. I think the biggest drawback is maybe it can take a lot of your time and not wind up closing, and therefore you have spent time doing something that didn’t result in any new revenue, and that’s a bummer. 

Rob Walling (18:30): But if you think you actually have a chance of closing them, this could be a very interesting additional growth channel for you. It’s not a channel technically, but it is just a growth lever to start taking enterprise in. The bigger question I have though is, can you also serve the, what is it, the 10 to 50, the mid-market that you were talking about? Because now whether you want to or not is another question entirely, but on your pricing page, if you have your… I’m not going to come up with a great name for it, small business plan. You call it solopreneurs, I think, but one to five is not a solopreneur, right? It’s just like your SMB plan, your mid-market plan, don’t call them that. Those are internal names. SMB, mid-market, and enterprise. Enterprise says starts at $35,000 a year, includes your SSO and permissions and blah, blah, blah. 

Rob Walling (19:20): You don’t have to say starts at two. You could just say nothing. And then at least if there are mid-market folks interested and you do want to serve them, if they do stumble upon your site and you feel like your product can service them well, I wouldn’t be turning them away. So that’s probably the only thing that I would update in terms of, you had said, “Can I just do solopreneur, the one to fives and the enterprise?” And it’s like, yes, you can, but if your product can service the middle too, why not have that on the pricing page? What you have to be aware of is you’re going to get some chucklehead who comes in with a team of 20 or 20 seats and they’re going to want an enterprise sales process and that’s not okay because the 20 person company is going to be paying you. 

Rob Walling (20:08): I’m making up numbers, but let’s say they’re paying you $500 a month or $1,000 a month. Well, that’s not worth all the stuff I said earlier, the procurement and redlining terms of service and all that. So if you do have procurement, redlining terms of service in the enterprise call us plan as a bullet, that means the moment that someone says, “Oh yeah, hey, we’re 20 people and we should pay you 500 bucks a month, but you have to do all this stuff to fill out all these security questionnaires and blah, blah, blah.” You can instantly point to the pricing page and be like, “No, that is only included in our enterprise plan. Happy to do that, but that starts at $35,000 a year.” So thanks for that question, Tibo. I think it’s a really interesting one. And the answer is, yes, I’ve absolutely seen companies do this. 

Rob Walling (20:50): Now, have I seen them skip the mid-market? Not really. And I’m not sure why you would, but I guess if… Why not? If you can close the lower end deals and the upper end deals and are willing to deal with the headache of enterprise, I think it could be a great lever to grow your business. So thanks for that question. 

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Rob Walling (22:07): My next question has a similar bent. It’s more about having a B2C and a B2B offering and how to think about that. 

Vance (22:20): Hey, Rob, longtime listener, second time question asker here. My question revolves around businesses that have a B2C aspect and a B2B aspect. I launched my business called BudgetSheet, which is just a Google Sheets and bank account integration. A while ago, I’ve been growing it. It’s a B2C business. I am getting some requests for some B2B-like features, some financial planners and smaller accountants asking to link sub accounts and stuff so they can pull their client’s finances in and analyze it. I’m wondering how you think about either layering a B2B like offering on top of the existing B2C offering, or if you would think about splitting the business. My concern is that it would kind of bifurcate the UI and the experience, so it wouldn’t be as targeted to the use case that it is right now with managing your own finances and financial data. There are some ways around that, but I’m kind of in this spot right now where I’m not really sure whether to try and layer B2B features onto my existing B2C business, which is growing well and doing very well. 

Vance (23:27): Probably hit 10K a month, first of the year. And I’m thinking about either doing that or starting something new. I like a different offering for B2B and then doing cross promotion with my B2C. If you need business, you can go over here and use this other B2B tool. So yeah, that’s the question. Just businesses that may have both a B2C and a B2B component and how you would think about when to split those or how to keep those in one product. Thanks. 

Rob Walling (23:57): First off, congrats on building a B2C SaaS up to almost 10K a month. That’s impressive. And I like how you’re thinking about this of certainly going B2B or adding a B2B offering is going to help with a lot of your metrics in terms of churn and growth. Similar to how I answered the prior question in this episode, I think there are three dimensions that I would look at this through. There’s product, there’s marketing and there’s sales. So in terms of the product, you are the best person to know whether you can add B2B features to the current iteration or whether it needs to be a completely separate code base. And you know what I mean by code base? Maybe it lives within the same repo, but it’s like really a separate app because you feel like the two serve such different problems that they shouldn’t be combined into the same app. 

Rob Walling (24:56): And I can’t tell you honestly what to do there, but what I’ll say is I don’t think that matters. Whether you include it as a single code base with a bunch of flags to include the B2B features or not, or whether you have two separate apps running independently of each other, maybe they share the same database, maybe they don’t. I don’t think that impacts the other two, the marketing and the sales. Because if you already have a brand name and search traffic and domain authority, and folks are hitting your website and you’ve already had, as you said, these financial planners reaching out to you, the B2B side, reaching out to you without you advertising that you have those features or that you are B2B, that’s a great signal. And in the business, we call that market pull. It’s where the market starts pulling you in a direction and you get to pay attention to that or not. 

Rob Walling (25:49): So whether you combine the product and the code and the techno, that’s all tech implementation details. Let’s ignore that for now and think about marketing, which is your website, your copy, your positioning, traffic sources and visitors that are coming to your site each month. I bet that there is a way, unless your app is named something that is so B2C that it’s just never going to work for financial planners, which I don’t think it is, I think that you can tweak your current marketing copy and positioning to support both. As long as it’s serving… It sounds like it’s generally the same product. It’s just going to have more on the B2B side, but the end result or maybe the job to be done is the same, but it’s for an individual versus someone’s clients. And the job to be done is the same. So the core of the app is the same and the name could be the same. 

Rob Walling (26:42): And then now you have your H1 that it does this thing, and this is for individuals and financial planners. And on your homepage, do you have your two selectors of, are you a consumer, are you an individual or are you a financial planner looking to implement this for your clients? Boom. On your pricing page, you have the same thing, right? You have the individual plan and you have your financial planner plan and you have your call us plan because you should always have that because you never want to have someone come who should be paying you $35,000 and they sign up for your financial planner plan, which is a thousand a year or 2,000 a year or whatever the pricing is. So for marketing, I think it’s totally doable. But really, I think of this as it’s kind of just two tiers of the same product. 

Rob Walling (27:26): Even again, even if technically it’s not the same product, only you know that, no one else will care. So can the marketing work? Yes. Can the sales do both? Well, you don’t offer any type of sales process for B2C, right? It’s all self-serve. They click, they sign up, because I’m guessing you’re charging $9 a month or $5 a month or $60 a year or something. They don’t get a demo. They don’t get the handholding and the custom onboarding and a customer success person who will probably be you in the early days. They don’t get any of that. And so there is the free trial, sign up now, whatever you have right now for your B2C offering. And then you do have the requested demo, financial planners only. Are you a financial planner? Request a demo now. So can a sales process, even if it’s a one call close, can a sales process be implemented for just the B2B side? 

Rob Walling (28:15): It can. So when I hear you ask this question, I think yes, yes, and yes. And again, whether the technical implementation of splitting or not, I just don’t think that matters. That’s a decision you can make based on your evaluation of those requirements. But similar to the prior question, this in a way, it gives you a dual funnel. Now it’s not the full on enterprise at the top yet, but it could be a way to get into those higher ACVs and lower churn customers. So thanks for that question, Vance. I hope it was helpful. 

Leanna (28:52): Hey, Rob. This is Leanna, founder of Just a Job App. I’m a developer behind a job search management tool that integrates with Gmail to give users a dashboard of their job applications, their interviews, and referrals. It’s open source currently in beta with a 100 user limit until I finish a CASA tier two security audit in the next couple of weeks, hopefully. I’m not marketing it really at all, but I somehow have one paying user at $5 a month, and I’m definitely rethinking that price point before launch, but I’m also exploring a B2B angle with career coaches who can pay to monitor their client’s job search activity. My challenge is how do I price this fairly so I’m not gatekeeping access for people who genuinely need help with their job search, but I also want to make this sustainable as a side project. At the very least, cover costs. 

Leanna (29:45): I’m a developer working full-time elsewhere, so I need to keep this lean. What would you suggest for a pricing structure that balances mission with sustainability? My goal is to go full-time with this project in a few years if it lasts. Thank you. 

Rob Walling (30:00): One of my favorite topics, pricing. And another question about kind of having a B2C offering as well as the B2B side of things. So I think that we have a theme this episode. So one of the challenges of talking about mission driven anything is that means different things to different people. And it also means that you might just build this, make it open source and give it away because it’s mission driven and it’s going to help everyone. And if you feel that strongly that it needs to exist in the world, you should do that, make it free, let people do what they’re going to do. But then on the flip side, someone else might say, “Well, my mission is to make this sustainable for me first, such that there’s enough revenue coming in that I can justify the time I’m spending on it and that my emotional runway keeps me going because if I lose motivation, the project goes under, well, then I’m not really accomplishing my mission.” So someone might say, “So I’m going to charge what I think I can, what I think it’s worth and the value that it creates.” I’m going to charge that to everyone possible. 

Rob Walling (31:05): And maybe one of my pricing plans is a student, nonprofit, or need-based pricing plan and it’s free. So you have that free and it’s on our system. But by default, and maybe that’s just a line below your pricing grid, but by default, you have a $60 a year or five or $10 a month, whatever. Monthly, you’re going to have crazy high churn because people, what do you have a job search every few years and you search for a few months and then you’re done. So that’s one whole concern, but I won’t go down that rabbit hole because you didn’t ask about that. But that’s one way to think about it. If you want to be able to provide access on a need basis, I mean, unless you’re going to verify they have need, you’re not going to do that. It’s going to be kind of an honor system thing. 

Rob Walling (31:51): That will allow you to collect your five or $10 a month from folks who can pay it. If I was looking for a job today, I would have the means to pay and I would pay you. I see this all the time. I buy games like tabletop games, print and play games, and they will say, “Hey, suggested price is $5 or $10 for this PDF.” But if you don’t have the means, you can get it for free. I always pay because I have the means. And I’m not saying everyone’s like me, but some people will comply with that. Another way to think about it, an alternative is to not do what I just said, which is to have the honor system plan that you can get it for free and charge everyone in the early days to prove to you whether this is actually a need because people put their money where their mouth is and that will prove some product market fit. 

Rob Walling (32:36): It will provide revenue and motivation for you to keep going. And if you get this up, whether through the B2C or the B2B side, if you get this up to thousands of dollars a month, then it’s really easy for you to say, “You know what? I have revenue coming in. I have motivation. I want to keep doing this thing. And I want to offer it to folks who have a dire need for this who maybe can’t afford it.” When I think about having a company that’s doing, I’m going to jump ahead, but like a million dollars, two million, three million a year, don’t you have a ton of leeway there to now offer something free or very, very low cost to a lot of people because you have a business now that can support that. I’ve been involved in a lot of charitable giving and donating and just generosity since I became an adult and had the means. 

Rob Walling (33:23): Sherry and I have both given away a lot of money and a lot of time to causes that we believe in. And I believe a way to be generous and give away a lot is to earn a lot. It’s to provide a lot of value to the world in a way that people pay for that and then you can then be generous with that. If you think about my path, like imagine if we launched Drip as kind of a nonprofit, open source, mostly free, and there would be a lot of people using Drip to probably do good things, right? But how much value would we have created in the world? How much motivation would we have had in the long run to keep going and would it have been sustainable? And for me, the answer’s probably not. So I like to think about getting some stability first on your own by providing value for people who are willing to pay for it and then potentially offering this, as you said, the mission driven side of it, or you could do it alongside of it. 

Rob Walling (34:22): I mean, I guess my first suggestion was to just do it all at once and kind of make it an honor system. I definitely would not launch it and ask for donations. That’s the opposite, right? That is the opt in where people have to opt in versus, oh no, the default is you pay for this unless you have a need-based thing, so they kind of have to opt out. And honestly, if you want this to exist in the world and you feel like it can do good for people, the best thing you can do is make it sustainable, is to make it so that not only are you yourself compensated for working on it and therefore will want to work on it for years and years, but just the project itself has users who have some skin in the game and are offering feedback on an ongoing basis. 

Rob Walling (35:06): And then of course the B2B side, yeah, that’s exactly where I’d go. That will be so much more sustainable. Your churn will be a fraction of the B2C side. And I don’t know that I can even comment, you kind of asked for pricing ideas. I think I’ve given you pricing ideas around the B2C and the free-ish plan. The B2B would maybe be seat-based. I don’t know if they’re all solo. There’d be a software access fee. And it depends. If you need to do a demo, like at least one call to close, probably need to charge about $300 a month for it to make it worth it. But if it’s no demo, you can charge less than that. 50 or $100 if people, even the B2B side is able to basically self-serve. So I appreciate that question, Leanna. Thanks for sending it in. My last question of the day is about healthcare costs and startup runway. 

Rob Walling (35:57): This is a US-based question, just so folks know. And Charlie writes, “Big fan of Startups for the Rest of Us. One topic I would like to hear you cover, the impact of healthcare costs on early stage startups. For small teams, traditional group insurance can run 15 to $20,000 per employee per year, which materially shortens runway. If founders skip it, hiring and retention get harder fast.” Feels like one of those boring but critical expenses that doesn’t get discussed enough in bootstrap circles. There are some newer options out there that could seriously benefit many of these startup businesses. I’d love to hear your take on how founders should think about healthcare pre and post product market fit. Thanks for all you do. Thanks, Charlie. Yeah. I mean, oh my gosh. The fact that here in the US, there is, I guess, a group of the population that really rallied to have the right to go bankrupt from healthcare costs feels catastrophic to me. 

Rob Walling (36:56): And just the state of our healthcare system here is insane. And it is one of the biggest headwinds to entrepreneurship, in my opinion, in the states. And again, if you’re in Canada or Europe, you guys got this part locked. There are obviously some other headwinds in terms of entrepreneurship. There’s a lot of laws and such that are not in your favor, but it is catastrophic to me. And for all the lip service that the politicians pay to wanting to create jobs and entrepreneurship and all this stuff, they’re not doing anything about our healthcare costs and it is catastrophic. So the impact of healthcare costs on early stage startups is a huge deal. It’s a huge deal. And you’re right, 15 to $20,000 a year per employee, absolutely shortens runway, absolutely increases the cost of hiring. People wonder why bootstrapped startups in the US want to hire in Canada or overseas, and it’s because that cost is significantly less. 

Rob Walling (38:01): So the approach that I’ve seen bootstrappers take is they often give a stipend, which I think is legal. It used to be not legal to do this, but you give a stipend of $500 a month or $1,000 a month and have people get their own insurance on the public exchanges. And yeah, you’re not going to hire super senior talent. It’s going to be harder to find super senior talent that way. There’s another issue, which is you get a solopreneur who is building a great business and they get it to five or 10K a month, but they don’t want to quit their day job because the healthcare at their day job is $30,000 a year that they’re not paying, that their big employer is paying. And so therefore they don’t actually want to go all in because they don’t want to lose their benefits. And the fact that healthcare is tied to employers is a relic. 

Rob Walling (38:53): It’s a remnant of, I think, what is it, post-depression era. It shouldn’t exist that way. I do not think employers should be involved or needing to be involved, but that’s where we are. And so yeah, I guess that’s my take is like, if you’re pre-product market fit, you don’t need to worry about this because you’re not hiring a bunch of people and you don’t really have the money to do any of this. If you’re post-product market fit and you’re bootstrapping and you’re growing, I’ve seen folks do things ranging from, well, I guess I’m only going to hire people in their 20s and 30s because they need less insurance and they’re cheaper to insure. And maybe you set up a group plan and maybe you don’t. I know a lot of folks that don’t set up a group plan. And as I said, they give some type of stipend towards the public exchanges. 

Rob Walling (39:36): It is an interesting argument for raising money and I don’t want that to be… I want the argument to raise money to be because it’s the best tool for the job right now. It will get you there faster. It will save you years and it will lead to more success in a shorter timeframe. What I don’t want it to be is, “Oh, you need this so that you can hire good employees because the healthcare cost is so high.” But it certainly changes the game if you raise 250,000, $500,000 to where it’s not that this goes away, but it just has a lot less impact than if you are truly, truly bootstrapping. And every dollar of MRR that you earn has to go to pay that employee who, oh, maybe their 60 or 70K a year suddenly becomes an 80 or 90K a year employee because of healthcare costs. 

Rob Walling (40:25): So I don’t know of a silver bullet beyond those options. That is what I’m seeing folks do. But Charlie, you mentioned there are some newer options that could benefit startup businesses. I’m all ears to hear them if you have other options beyond what I have named. And I appreciate that question. Something we’ve touched on over the years for sure on the show, but given how expensive it is and how big of an issue it is, at least here in the US, I think it’s always worth a discussion. So that’s going to wrap me up for today. Thank you so much for joining me this week and every week. And as another reminder, MicroConf Mastermind Matching is closing in just a few days on April 17th. Head to microconfmasterminds.com if you’re interested. This is Rob Walling signing off from episode 828. 

Rob Walling (00:00): This podcast is brought to you by Mercury, the banking solution I use across all of my businesses. You already know traditional banking is broken, slow wires, clunky interfaces, tools that feel like they were built in 2005. Mercury is what banking should feel like in 2026. Everything just works. At TinySeed, Mercury keeps surprising me with features I didn’t know we needed. Like ACH fraud alerts, we used to manually review every ACH to catch unauthorized pulls. Now we have a list of approved vendors and if an unfamiliar one comes through, we get an email. One click to cancel or let it proceed. We went from checking every transaction to only seeing the ones that matter. Whether it’s daily bill pay or wiring large sums to the dozens of companies we invest in each year, Mercury handles it. Simple when I need simple, robust when I need approvals and controls. 

Rob Walling (00:48): Over 300,000 entrepreneurs have made the switch, and when founders ask me where to set up their account, I send them to mercury.com. It’s free to get started with no in-person visits and no minimum balance. Visit mercury.com to apply online in minutes. Mercury is a fintech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and Column NA, members FDIC. Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode, I sit down with Einar Vollset to talk about his new book, The Definitive Guide to M&A for B2B SaaS between two and 20 million ARR. And the entire book is available at discretioncapital.com/guide. You can read it online. Or as you hear Einar and I bandy around in the interview, he is looking into getting paperback copies printed as well. And I believe there are going to be hard copies available at MicroConf in Portland if you are hearing this. 

Rob Walling (01:44): I think this comes out maybe the week or two before Portland. Speaking of that, MicroConf in Portland is sold out. You can get on the wait list at microconf.com/us in case any tickets open up. It’s going to be an incredible event here in just a week or two after this episode goes live. In addition, MicroConf Mastermind matching is open. Masterminds have had a huge impact on my entrepreneurial journey and we have matched almost 1,800 founders in 64 different countries into these peer groups. These are four or five person groups that are often hard to form. And that’s why we started offering matching based on a lot of factors like revenue, location, experience, et cetera. And this isn’t just AI, right? We have a human on our end looking at every single application. I’ve been part of two or three masterminds over the years, one of which has run for 15 plus years, and they’ve had a huge impact on my journey. 

Rob Walling (02:44): They are folks that you’re going to go through the trenches with who can help you think through problems and be a sounding board. Applications are open until April 17th, just head to microconf.com/masterminds. And if you’re curious about what goes into creating a great mastermind, you can check out our free playbook at microconf.com/guide. And with that, let’s talk to Einar Vollset about his founder’s guide to selling your SaaS for what it’s actually worth. 

Rob Walling (03:19): Einar Vollset, welcome back to the show. 

Einar Vollset (03:22): Thank you very much. Thanks for having me. 

Rob Walling (03:24): So you are most widely known across the internet as one of the panelists on Startups for the Rest of Us Hot Take Tuesday episodes. That’s 

Einar Vollset (03:31): Right. 

Rob Walling (03:32): But some of your… 

Einar Vollset (03:33): Claim to fame. 

Rob Walling (03:34): Yep. That’s it. Some of your lesser contributions include co-founding TinySeed with me and being the founder of Discretion Capital, which we’re going to chat about today and folks who listen to this show know the story there, but we’ll get into it. And in addition, maybe this is another thing, accolade that you’re adding. You have written a book, you’re following in my footsteps. 

Einar Vollset (03:57): Yeah. I saw the glory and riches that came your way because of this authorship stuff. And now that SaaS is dying, this is the jam. I’m going to become an author, a published, successful author. It seems easy. 

Rob Walling (04:09): It is so easy and so lucrative as everyone knows. Yeah, 

Einar Vollset (04:13): That’s what I hear. Everyone knows this. Yeah. 

Rob Walling (04:15): You’ve written The Definitive Guide to M&A for B2B SaaS between two and $20 million and… 

Einar Vollset (04:22): Just rolls off the 

Rob Walling (04:24): tongue. It really does. Have we not workshopped that? It’s 

Einar Vollset (04:26): a classic. 

Rob Walling (04:27): But yeah, so you’ve written this book. We’re going to have hard copies at MicroConf here in Portland in just a few weeks. Big question. Why? Why did you write this book? 

Einar Vollset (04:37): Why write it? 

Rob Walling (04:38): Yeah. Why write a book? It’s painful. I’ve done it. 

Einar Vollset (04:41): It is. It actually took me significantly longer than I thought. So actually what ended up, what started was it was one of my partners, Dan Shapiro, who’s like, “Dude, you should just write a book. You should write a book or a guide or something because you’ve been doing this for nearly a decade now and people don’t know.” And I was like, “Oh yeah, I probably should.” And look, it’s sort of obvious. It’s obviously content marketing for Discretion Capital and that’s the reason to write it and to spend all this time on it. But also it is true that it’s such a weird opaque market, this sort of two to 20 million of ARR. And even pretty sophisticated founders who may have even raised tens of millions of dollars or feel like they understand the space they operate in are sort of noobs when it comes to M&A. 

Einar Vollset (05:26): And so look, obviously I would prefer if you’re doing eight, 10 million of ARR or less or more, I prefer you come to us and at least talk to us and maybe become a client. But a fair few people are going to DIY this often just because somebody emails them or a strategic gets in touch and all of a sudden they find themselves in an M&A conversation. And quite often, it’s startling really how often basically all this value gets created by these founders. They sacrifice so much. The reality is if you could build a five or 10 or even two million ARR business, you could probably also go work for Facebook or Meta or whatever they’re called now and make bank, but instead you’ve sort of sacrificed for that and you maybe worked nights and weekends and taking the smaller salary than you could. 

Einar Vollset (06:16): And now it’s time to get paid. It’s time to cash out and get liquid on this. And it’s not unusual that I hear about situations where I’m like, okay, well, yeah, but you left like 60 or 70 or 80% of the value of the company on the table because you didn’t know what was going on here. Like you didn’t understand the universe of buyers, what market pricing is like and what things are worth in the market. And so look, yeah, you should probably come talk to us, but even if you’re not going to, at least read the guide and so you’ll get a sense for like, these are the games that people play and this is where it’s at and this is what moves the needle in terms of price and what things are worth. And these are the kinds of buyers that are out there. 

Einar Vollset (06:54): Yeah. 

Rob Walling (06:54): And the Discretion Capital website, so folks know, discretioncapital.com, it says M&A advisory for B2B SaaS between two and 20 million ARR. Don’t settle for the buyers in your inbox. We routinely add 30 to 300% to initial offers for B2B SaaS founders selling between two and 20 million. Through a structured process targeting more than a hundred strategic and private equity buyers, we create competitive tension that drives your price up. So this is different than something like Acquire.com or like a brokerage that has an email list of potential buyers where they say we have 20,000, 40,000 person email list and we sell websites, content sites and SaaS, usually at an EBITDA multiple or an SDE multiple, right? Isn’t that profit, let’s just say multiple. You operate in this space that I really had almost no knowledge of before you and I connected in, I guess it was after the Drip sale. 

Rob Walling (07:49): So it was probably 2017, 2018, and you told me, oh, private equity is moving down market. Because that was the thing I always heard. Dude, when we were selling Drip, I asked a founder who had sold and I said, “Did you get an advisor or an investment banker or an M&A advisor or whatever to help you?” And he said, “Oh no, for deals this small, bankers don’t come down below.” And he named a number, $30 million or $50 million. And I was like, “Well, then I guess I can’t get a banker.” But then suddenly I met you and I’m like, wait, what? You do this? So what happened there? Why did the market shift in the mid 2010s? Talk us through that. 

Einar Vollset (08:22): Yeah, I don’t exactly know when, but it certainly was like, I’ve heard numbers, 20 million in revenue in ARR, like we’re talking ARR numbers here, not sort of outcomes, 20, 50, certainly at like 10 million for the longest time. They just weren’t interested. It just wasn’t worth their while for the bankers to do it because, and the reason for that is the buyers weren’t there. And so what happened is private equity moved down market. So prior to, certainly prior to 2010, private equity wouldn’t even touch anything sub certainly 10 million. And like your acquaintance said, maybe even 20 or 30 million. And so because of that, there wasn’t really a very liquid market. And that combination of things meant like, okay, well, if I’m a banker, it takes me as much time to sell a five million ARR business as it does and probably more because it’s harder to find the buyers than a 50 million. 

Einar Vollset (09:13): So what am I going to get the highest fees on? The 50 million one. So you ended up in this weird… I sort of just kind of lucked into it actually. And really what happened was private equity moved down market to the point where they were buying at least tuck-ins to their portfolio companies for one to two million, but really like no proper investment bank boutique in even the lower end of the middle market would do deals that size versus that’s what we started doing. I used to joke like Discretion Capital, when I started, I was like, Discretion Capital is the world’s best investment bank between one and 10 million of ARR, which is what I used to cover when I just got started. And that was true because we were the only one really who was doing it. You ended up in a scenario where basically you either had to try to convince some of these boutique banks that, “Yeah, yeah, I’m definitely big enough, please take me on.” 

Einar Vollset (10:02): And they would maybe do it as a favor at the higher end of the ARR range, but you’d still end up with… Yeah, you might get to talk to the partner before you sign the deal, but then you get handed off to some junior guy because it’s the smallest deal they’ve done in 20 years, right? You were just doing it as a favor. So that was one end of it. And then the other side, you had your, like you mentioned Acquire.com and some of these other more sort of generic, you’re not just selling B2B SaaS, you’re selling info products and drop shipping websites and all this stuff. And those guys are, they’re good. They’re very good. They’re very good at what they do. And I sometimes talk to people who have businesses in that size and I’m like, look, you probably want to talk to one of these guys because I don’t know how to get to the kinds of buyers that will buy things that are doing 500,000 ARR, for example. 

Einar Vollset (10:46): But the flip side of that also is like, typically those kinds of brokers aren’t great at understanding like this is the universe of buyers that are buying five million ARR or two million ARR, 10, 15, 20 million ARR businesses. And so their sort of frame of mind and their go-to-market just isn’t right. And so you quite often end up in a scenario where if you pick the wrong kind of broker, like you still, “Hey, I hired a broker.” But one of the stories I tell at the start of the book is like you end up with scenarios where maybe your broker is pushing you to take an offer that is 50% of what it should be because you have the wrong kind of broker. So there’s all sorts of issues to deal with. 

Rob Walling (11:24): And tell me that, the wrong kind of broker, what do you mean by that? 

Einar Vollset (11:30): That’s what I mean. It’s like, look, the fact of the matter is in this revenue range, about 70% of the deals are done by private equity, either directly, like they are buying it because they want to use it and build around it, which is basically what’s called a platform acquisition. Or particularly commonly on some of the smaller deals is like they already have a platform, they already have a portfolio company that might be massive. We sold one business to Blackstone, biggest private equity company in the world. They had taken this 1.3 billion public SaaS company private, and now they bought like a four, five, six million ARR business that we were representing as a tuck-in. So you end up dealing with these enormous banks and things like that. And so that’s the challenge. If you’re used to, like you have a large list, like Acquire.com is a good example, right? 

Einar Vollset (12:19): Blackstone’s not going to sit on Acquire.com and be like, oh yeah, let’s just pay the fee and connect. That’s just not how Blackstone operates. And so if you’re not able as a banker or broker, if you’re not able to put the deal… I mean, this is the most important thing I think that your banker does, is that it figures out and understands the universe of buyers out there, who owns what, and puts you in front of the people that will pay the most, i.e., the people for whom you are the most valuable asset. And the fact is, if you’re just used to blasting an email list and selling info products and things, you’re just not going to be able to do that effectively. 

Rob Walling (12:55): I want to keep going with this thought because I have the, as you’re talking about it, I want to ask you in a second about how does this actually work? You’re talking about Discretion doing outbound and having an auction process and we’re going to come upon this statement of aren’t businesses sold, not bought, right? They’re bought not sold. And so I want to put a pin in that. First, I want you to define, you’ve used the word tuck-in, the phrase tuck-in twice. I know what it means. I bet a lot of people in our audience don’t understand what that means. 

Einar Vollset (13:22): Yeah, yeah, yeah. So in the private equity world, there are basically two kinds of purchases, two reasons why a private equity company will buy a SaaS company. One is what’s called a platform, and this is the thing that they want to build around. So taking a step back, it’s important to understand the incentives for these buyers, right? These buyers, typically a private equity fund, a buyout fund, is looking to three to 5X their investment in three to five years. If they can do that, if they can 5X in three years, they’re doing super well. If they can 3X in five years, they’re still doing pretty well. And so fundamentally, those are incentives. And so for a platform purchase, they’re thinking to themselves, we’ll buy this asset and then we’re going to be able to both grow it and maybe buy some other assets to tuck in to that larger platform in order to have an asset that we can sell for three to 5X in three to five years. 

Einar Vollset (14:13): And so those are the two kinds of businesses. And so when you’re operating in the space that we are, it’s kind of rare for like a two, three, four, five million ARR business to be considered a platform. Maybe some of the smaller, lower middle market private equity funds might do it. And there are some specialized funds that definitely go as low as two, but most of the time you’re going to need to be at like 10 or maybe even 15 or 20 to be considered a true platform. So probably most of them end up being tuck-ins to the larger platform portfolio companies that they already own. So this Blackstone thing is a good example. The company was like an events SaaS company and the company that we were representing, they were handling scanning of business cards and things at physical events. And they didn’t have, the larger billion dollar company didn’t have this capability. 

Einar Vollset (15:01): Now they bought this SaaS that we were representing and cross-sold against their entire customer base. And so it was worthwhile for them to be doing it. The nice thing about this too is people hear the word tuck-in and they think, oh, small, not great, like just a tuck-in. But actually tuck-ins often outcompete strategic bids because it’s so valuable to them. So we kind of think of it as like almost the best of both worlds. The problem with dealing with a strategic buyer, and by that I mean like a public company, large one that wants to buy you. That’s what everyone wants. This is the whole like be bought, not sold kind of thing. You’re just doing your own business and here comes Google and they’re like, “Here’s a billion dollars, just let’s buy it.” But the fact of the matter is often these kind of deals fall apart, they get retraded, they’re often personality driven. 

Einar Vollset (15:50): It’s like someone’s promotion, that’s why you’re getting acquired basically. And if they leave or get fired or get promoted even, then it could be dead in the water versus dealing with private equity is easier in the sense that these guys are deal makers. That’s what they want to do. And so if you can have that combination of dealing with folks that are willing and able to act quickly and will outbid strategics, that’s sort of the best of both worlds. And so that’s why you can have five million ARR businesses selling for 15 times ARR to an asset that maybe the private equity company bought for 3X ARR because it’s strategic to them. But you need to know that and you need to be able as a banker to put the asset, the company in front of the buyers at the right time. 

Einar Vollset (16:37): And so, look, I can get really geeky about this. It’s to the point where like, look, when are they most likely to buy a tuck-in? Well, it’s when they’ve had it for six to 12 months and whatever, and not when they’ve been holding it for five years. And so that’s the whole timing of the company. And then you got to think about which fund is owning this asset and where is that fund in its life cycle. And it’s not just like, oh, this would be a good fit. It’s like this would be a good fit and it fits in with typically what are these guys’ life cycle hold times for all these assets. 

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Einar Vollset (17:59): Hopefully. Hopefully. 

Rob Walling (18:00): Yeah. Okay. Yeah. 

Rob Walling (18:02): So if they want a print copy, potentially that’s a thing. But for now, something I was reading through the first few chapters and you talk about how with B2B SaaS between two and 20 million ARR that is growing at a certain minimum amount, 70% of the deals are private equity and about 20% are strategics and then 10% was other. And this is the opposite of what I understood as a software founder, as a SaaS founder myself. When I talked to, again, when we were selling Drip, I talked to several founders who had sold because there was no one like you doing what you were doing and no bankers would talk to me because the deal was too small. And the founders that I talked to were like, “Well, who are all your competitors?” And go talk to them, right? So it’s like, of course, as Drip was like, “Well, I’m going to reach out to HubSpot and to Mailchimp.” You know what I mean? 

Rob Walling (18:51): And it did so happen that we got acquired by a strategic, right? It was Leadpages. It was another startup and it made sense. It wasn’t private equity. But what I’ve learned is actually the exception to the rule. And it sounds like that is a recent thing that’s over the last 10 years really that they’ve come down further, but if someone’s not paying attention to private equity and they don’t have the kind of system or auction in place, this is where we’re going to get to. But I thought, Einar, that startups were bought, not sold, right? And why is that? You come out really strong against that. Yeah, I do. Yeah. Talk us through that. 

Einar Vollset (19:24): So I think fundamentally, I think that’s a misalignment of incentives that mostly arises from the VC world. That’s what I think. So if you think about it, what are the incentives… And this is where you end up with a scenario often where your investors, if you have them, particularly if you have VC investors, what are their incentives versus what are yours? So often with VC investors, they are really only investing… I mean, TinySeed is the exception here, but they’re only really investing because they think it can eventually be worth $20 billion or more, right? That has to be the goal. You’re not going to write a check unless you think there’s a small, but still a decent chance that this will happen. What is the fastest way to make sure that doesn’t happen is doing M&A, right? So if you have a portfolio company as a venture capitalist and it’s growing well and it’s doing great and all these things, and then say they’re at 10 million of ARR and growing crazy fast, then you’re going to be pretty much like, look, definitely don’t run an auction process and sell now because then you’re guaranteed not to get $20 billion. 

Einar Vollset (20:31): The chance that you get to 20 billion might still, even at 10 million might still just be 1%, but as a venture capitalist, that’s what you make your money on. You make your money on these outlier, basically founders being crazy enough or sort of ludicrous enough to be like, “Yeah, I’m definitely going to go public or sell for $20 billion and I will take no less.” Versus as a founder, most of the time, let’s be honest, we would survive with $50 million cash, both of us. You know what I mean? We would have to make some sacrifices, but even me, we could make it work. So that’s the situation where your incentives and your VC investors aren’t aligned anymore. And so that’s where it’s at. It’s like, don’t talk to bankers, don’t think about selling. And this is where that whole meme came from. 

Einar Vollset (21:15): It’s like, oh yeah, the businesses, startups are bought and not sold. And what they mean is like, look, the only kind of M&A that I am interested in as the venture capitalist is if a strategic comes to you and begs to buy it and is gaga for it and will pay a crazy price. That is the only kind of M&A a venture capitalist will care about. And so that’s where that comes from. That’s what they mean versus for you as a founder, particularly if you don’t have any investors either, if you’ve been doing it for five, six, seven years and you’re at 10 million and you’re growing well and chances are this is where all your money is. Most chances are among your net worth, the majority is in this business now. What do you want? Do you want to sell for 50 or 60 or 70 million in cash or do you want that two, 3% chance that you’re going to IPO in another five, maybe 10 years? 

Einar Vollset (22:06): And so that’s my reaction to it. It’s like, it makes sense if what you’re optimizing for is maximizing a still small chance that you’re going to get an enormous outcome. But the actual lifestyle for most founders is not actually… Most people would take a fifty-fifty chance of $50 million over a 2% chance of $20 billion. 

Rob Walling (22:27): And we hear these stories of wasn’t Instagram supposedly bought in a weekend because Zuckerberg really wanted it. And for a billion dollars as an example. And then WhatsApp, I believe was bought for $18 billion or something like that. And it’s like neither of those companies were worth, and I’m doing air quotes, that money, but they were worth what, especially specifically Zuckerberg was willing to pay them. But the reason I can name two of them is because there have only been two in the past 10 years. I mean, there’s been a few more, but there are not hundreds or thousands of deals that happen like that. There are like six that we can all name, right? 

Einar Vollset (23:00): And that’s great. If it happens, awesome. Fantastic. I’ll do that. But most of the time it doesn’t. It actually relates back to an article. We wrote a blog post article we did years ago now when we started out TinySeed. We did that whole based on the Patrick McKenzie, Patio11 tweet, which was the iceberg of deals, right? This notion that there’s all these deals. And in fact, I think the math, if I remember correctly now, is like only about 7% of actual acquisitions get any kind of even tech, mainstream tech press mentions. 

Rob Walling (23:32): Yeah. Because a founder, like a TinySeed founder who sells their business, let’s say two co-founders, they sell for $15 million in cash or a single TinySeed founder sells for 25 or $35 million. That is generational wealth. But guess who doesn’t give a crap about that? TechCrunch, Mashable, VentureBeat, they… 

Einar Vollset (23:53): Then you have a guy on this podcast that has sold for hundreds of millions and no big news. 

Rob Walling (23:58): There’s no pressure. Retired founder. 

Einar Vollset (24:00): Hundreds of millions. 

Rob Walling (24:01): The last exit was at $600 million. It was fully bootstrapped, him and his co-founder. I mean, think of Kevin with Spectora, who’s now a TinySeed investor and mentor. He and his brother bootstrapped just the two of them. First exit was they sold a majority stake at $90 million and the next one was at like $150 million. But we never heard of them, never heard of them. So there are so many, so many more deals happen like this, right, that this is the way things really happen. And that is the helpful part of your book. That’s the helpful part of John Warrillow’s writings. I remember reading that and being like, “Oh, this doesn’t happen the way I thought it did. This is all…” The whole magic, the VC industrial complex… 

Einar Vollset (24:40): Very opaque market. 

Rob Walling (24:41): Yeah, no doubt. And so some folks might be wondering the difference between Exit Strategy, the book that Sherry and I wrote, and The Definitive Guide to B2B SaaS M&A. And a big thing is, A, you are focused solely on SaaS. Sherry and I talk about other business types. We also talk a lot about the mental side of it, of thinking it through, the before, the during, the after. What do you do with the rest of your life? It’s very much a higher level picture. And in fact, I interviewed you, you’re quoted in six or seven of the chapters, talking about specific mechanics. And that’s what your book focuses on is a lot of what an LOI looks like and what you should look out for, right? 

Einar Vollset (25:16): It pains me to say this, and you shouldn’t really, but you could take this book and you would do a much better job at DIYing your own M&A process. We just released chapter seven today, but I think the next one is chapter eight, which is the anatomy of an LOI. So it goes down to extremely nitty gritty detail about, okay, you have an LOI, but what do all these terms mean in this thing? Where are the gotchas? Where are the retrades hiding? That kind of thing. So yeah, it’s quite different. 

Rob Walling (25:48): I want to ask about valuation drivers when you’re selling in this price range. I remember you gave a talk and I don’t think it was at MicroConf. Did you ever give this? The growth is number one and churn is number two. You gave it somewhere else. I saw you in a video. 

Einar Vollset (26:02): Yeah, yeah, yeah. I’ve given that a couple of times. 

Rob Walling (26:04): Okay. And what I remember is, look, again, it’s once you’re in between that two and 20 million ARR range, growth usually is the number one driver of valuation and churn I believe was number two. And I don’t remember what number three was. 

Einar Vollset (26:21): ARR is obviously the same business, just that a bigger business is going to be a higher multiple. 

Rob Walling (26:27): Okay. So why is growth so important? And churn is so important. Why is it so important? Because we see founders online who are like, “Oh, I have 8% churn. It’s not that bad.” Or 10% churn. And I got called being old school. Oh yeah, no, Rob’s dated. Rob has dated advice. Maybe when he grew Drip, you could have net negative churn, but 8% churn is the new normal. And I was like, “You’re out of your mind. That’s not normal. That is a business that’s on fire.” 

Einar Vollset (26:51): Yeah, yeah, yeah. So growth is definitely the thing that drives multiples more than anything else, for sure. And really like why? Well, it boils down to this. Like I said, 70% of buyers are private equity and what are private equity looking to do? They’re looking to three to 5X in three to five years. And if you have a five million ARR business growing 100% year over year, unless it has a ton of churn or you mess it up, then chances are you’re probably going to maybe grow into 3X just doing nothing else. And so you would want to pay more for an asset that’s five million ARR growing 100% than even a 10 million ARR business that’s not growing because as most founders and hopefully listeners to this know, it’s significantly harder to get a business growing that has stopped growing than it is to do anything else in this entire business, I think. 

Einar Vollset (27:45): And so that’s why, because they’re looking to three to 5X in three to five years. And the reason why churn is so important secondarily is think about, again, private equity. And the reason I mention private equity so much is because the other players in the market also think about private equity and what those guys are bidding, right? That’s why if you’re a strategic and you’re in an auction process, you’re not going to bid 100X ARR just because you’re going to figure out where’s the market at and then bid slightly more or even a little bit more than that. That’s your incentive. And so everybody sort of thinks about that. And so the reason why churn is so important, particularly to private equity and thus by analogy becomes important to everyone else in the market, is because if you are only three to 5X in your investment, it’s important that you don’t lose. 

Einar Vollset (28:32): You can’t lose money. That’s again, opposite of VCs. VCs care the most about increasing the small chance that they can get 10,000 times their money or a thousand times their money or a hundred times their money. Whereas private equity, they’re like, “If I can 5X in three years, that’s great, but I have to protect my downside.” And churn is the downside. Churn is this like, every buyer thinks this, they worry about it explicitly or not. They worry about, if I buy this asset, give this founder all this money and he walks away and retires and then the business falls apart, I don’t want that. And churn is that risk, right? It’s like if you have 8% monthly churn, you’re going through your entire customer base in less than a year. And so then the risk becomes like, well, I mean, I hope the growth channels are working well and they aren’t to do with just this particular founder’s special relationship and that’s why the business is what it is and all this stuff. So that’s why. 

Einar Vollset (29:30): It’s basically like growth makes it easier to sort of model out like, “Okay, this is how we 3X this asset or this business and then sell it.” And churn is like, A, it also obviously sustains the growth story as we know, but also it’s like, how do I protect my downside here? I can’t go in front of the investment committee or whomever’s making the decision to actually allocate the money and be like, “Yeah, yeah, yeah. Yeah, I know we’re going through, reacquiring our customers every year, but don’t worry, we probably won’t need to.” It’s not a good angle. 

Rob Walling (30:02): I get this question on the podcast periodically, and I actually got a very specific one. It was maybe a month or two ago, and it was someone saying, “Why do so many people talk about ARR multiples and top line instead of profit?” And I think the guy’s question said, “A SaaS company doing two million and making a million a year in net profit. Shouldn’t that be more valuable than if you’re at two million a year breakeven, but you’re growing at 50%, 60, 70% a year versus a slow growth more profitable business?” And I said, “No, it’s not worth more.” And counterintuitively, why is that? 

Einar Vollset (30:43): It’s because the net margins on SaaS, at least until AI tokens started, are so high, right? The gross margins even. It’s like 95%. And so the argument is always like, look, what are you doing here as the asset? If I’m reinvesting all my profits so that I’m breakeven, then I’m doing that in order to grow faster so that I can at a later point optimize that piece. And okay, if I can grow to five million of ARR and then switch that balance between growth and profit, then I’m going to remake the money fundamentally a lot faster. And then also some of this is just that’s what the upstream market is valued at. If you get to 100 million ARR businesses and all that stuff, they often think about it in terms of revenue multiples. And so often these acquisitions are made in order to accelerate the growth or increase the revenue and do all this stuff so that that multiple goes up for them. 

Einar Vollset (31:40): That’s why fundamentally. 

Rob Walling (31:43): Yeah. I’m going to tell a story and I’m allowed to tell it in public because I interviewed Kevin, co-founder of ScrapingBee on stage at MicroConf in Istanbul. And the story is this. Kevin and Pierre started ScrapingBee and applied to TinySeed. And I think they were doing maybe $2,000 MRR at the time, very, very early stage. And they grew it to several million in ARR. I believe the last public number was $5 million that they… They put that on Twitter, so I can quote it. And then they exited for an eight figure cash sum. And it’s the two of them and TinySeed. And it was all obviously life-changing outcome for them. But I asked Kevin on stage, I said, “Do you remember when it was just the two of you and you guys were doing more than a million ARR?” And Einar and I were like, “You need to hire people.” 

Rob Walling (32:33): Because they were optimizing for profit and for like, they didn’t want to manage people. There were a bunch of reasons, but we were like, “You’re going to burn out, number one. And number two, if you go to sell, let’s say you hit two million, two and a half, three million, nobody’s going to want to buy you because everything relies on you.” And I asked Kevin specifically, I was like, “Would you do that again or would you change it?” And I was actually waiting for him to say, “No, it was fine. We did it.” He said, “No, we should have listened to you guys.” And the crowd laughed. I was like, “That’s not what I expected.” But that gives you an idea of like, yeah, that business was wildly profitable with only two of them. They had almost no other… They had some server expenses and stuff. 

Einar Vollset (33:08): Exactly. And it also ties back into the different kinds of buyers that you’re reaching. If you’re doing a SaaS business that’s doing 250,000 ARR, the kinds of buyers of that are typically going to be operators. There are people who are like, “I’ll quit my job, I’ll buy this thing, maybe get an SBA loan, do all these things, and then I’ll run it and I’ll take my profit out of that salary.” So the salary then profit is what comes out of it for me. That’s what I care about versus a bigger buyer, a strategic, a private equity company. Really anybody larger than that, they’re going to look at it and be like, okay, so this company is like the two founders and three contractors and bailing wire and duct tape. And again, what is my downside protection here? Is this all going to fall apart after I buy it? 

Einar Vollset (33:55): And chances are, yeah, it will. If you give a bunch of cash to two founders who only, like the whole business is run with contractors and you give a bunch of cash and say you can walk away, chances are the business does fall apart. So it’s much more valuable to you as an acquirer if those two founders have sat down and actually put a team in place and made themselves less of a key person risk for the acquirer. And that’s why it’s, yeah, you might have been a lot more profitable when you were just the two of you and contractors, but you’re worth less than when you’re maybe just breaking even because you have all this team around you that you’re paying. 

Rob Walling (34:34): I want to close this out with this question and it relates to a topic I have talked about on the podcast in the past. In fact, I had Ruben, founder of SignWell on to just discuss this idea of founders who run it over the top, meaning, well, I’m going to give an example and throw out some numbers. You can correct me if my ranges are off, but I think Ruben and I specifically in that episode, it was four or five months ago. Myths founders tell themselves was one. One of them was I’ll never sell. And I say, everybody sells, everybody sells. You know who doesn’t sell? Basecamp. They’re the only one that hasn’t, but everybody else sells. I didn’t think Mailchimp was ever going to sell, blah, blah, blah. That’s my rant on here. But I think Ruben and I were talking through and I said, “Yeah, let’s say you’re at two million ARR and you’re growing 100%, 100% year over year.” I think you can sell for between 10 and $20 million if your churn is good, if your stuff’s in line, right? 

Rob Walling (35:23): That’s a big range. Maybe it’s 10 and 15, 12 and 20, whatever. You get the idea. And then let’s say you get to three million ARR and your growth slows to 10% a year. Let’s say you’re at four million, you’re twice as big and you’re at 10% growth or zero, right? And I was saying, I think you’re going to sell for one to 2X. I think you get four to eight million. So suddenly you are doing double the revenue, you’ve grounded out another year or two. We all know that every dollar and yet you’re worth… It’s not a little discount. It’s not like, oh, I lost 20%. You dropped eight figures. So I mean, I guess we understand why that is because growth is number one. And so once growth slows, that’s the problem. But why is this so common? Why do you think founders do this so often? 

Rob Walling (36:06): Because we see it. 

Einar Vollset (36:08): So it’s a couple of different things. It’s one, fundamentally not understanding A, that growth is the number one factor. This is not realizing that’s what the multiples are based on and what the valuations are based on. The second thing is they end up in a scenario where they convince themselves that increasing the ARR number is always going to be better. And they’re basically like, “Look, I have this number in mind. I just want to get to whatever number. It could be three million, it can be five million, it could be 10 million.” And they’re just like, “I just need to… There’s all this low hanging fruit around me. I just want to go and pick this and then I’ll sell. I’ll be ready then.” The problem is then you’ve squeezed out all the growth of the company. And the reason why it’s so problematic is because there’s sort of this weird… It’s I think the one place in SaaS valuation where there’s a discontinuity and it’s right around 20, 25% yearly growth. 

Einar Vollset (37:04): If you go above that, then higher growth is usually higher multiple. So there’s a reasonable correlation there. If you go below it, it drops. So it can easily be like, you could sell a 35% growing ARR business probably for four times, maybe five. Depends a little bit on everything else. Obviously profit’s better, lower churn’s better. But if that same business, like if you just let it run another year or two, growing at that slower rate, because pretty much all growth decays. And so this is our friend Jason Cohen’s point, you end up like, okay, now you have a bigger business, but it’s growing 10% per year now. Maybe that the growth channel, the new customer acquisition channel is the same size. It’s just a smaller percentage of the larger business now. The kinds of buyers change. And so the kinds of buyers that are looking to buy 10% or 0% or 15% ARR businesses are sort of the value buyers end of things. 

Einar Vollset (38:02): And basically what happens is the bigger growth firms and the folks that are buying tuck-ins and interesting assets and all that stuff, they just go away because they look at the growth and they’re like, “Nah, this is going to drag down our portfolio business. It’s much harder to turn around.” And so you’re then dealing with sort of extreme value buyers, what I call steals in the guide, and turnaround shops and things like that. And then the fact is, it’s just like, yeah, you go from like four times, five times, maybe even six times to like, you’re lucky to get 2X. And it’s fundamentally because the kind of buyer changes. 

Rob Walling (38:34): Einar Vollset, thanks so much for taking time to join me on the show today. As I mentioned earlier, discretioncapital.com/guide if folks want to read the full book, if they want to keep up with you on Twitter, you are Einar. They may not want to do that, but Einar, E-I-N-A-R, V-O-L-L-S-E-T. We’re laughing because if you don’t like what he’s posting about the San Francisco Giants, you may want to not follow Einar. 

Einar Vollset (38:59): I got somebody today, I think, or maybe it was just yesterday pointing out like, what was the response? The response was like, “I hope that AI therapists or whatever get good enough that they can help you with your anger issues.” 

Rob Walling (39:14): Ease. 

Einar Vollset (39:15): I don’t feel very angry, but okay. Achievement unlocked. 

Rob Walling (39:17): Yeah. Oh, that’s funny. And if folks want to reach out to you directly, if they have a SaaS that is growing at seven figures and they’re thinking, “Man, maybe I want to sell in a year or two even. I’m thinking about how to get going. I’m growing.” What’s the best way for them to reach you? 

Einar Vollset (39:33): Yeah, either go to discretioncapital.com and there’s a form there all over the place that goes to my inbox and I’ll get in touch or you can just email me einar@discretioncapital.com. 

Rob Walling (39:43): Awesome, man. Thanks again for joining me. 

Einar Vollset (39:45): Thanks for having me. 

Rob Walling (39:47): Thanks again to Einar for coming on the show today. And again, that URL is discretioncapital.com/guide if you want to read the entire book online. Thanks to you for listening this week and every week. This is Rob Walling signing off from episode 827.  

Rob Walling (00:00): When I first started my career, I was a task level thinker. I just couldn’t do multiple things at once. I couldn’t prioritize. I couldn’t manage it. I couldn’t keep all the plates spinning. And then over the course of the first five-ish, six-ish years, I remember getting to the point where I was really comfortable running projects and I think I became a solid project level thinker at that point. And then as I dipped my toe into becoming an entrepreneur, I wasn’t an owner-level thinker because I needed too much certainty. I couldn’t make hard decisions with incomplete information. I didn’t know how to do that. And then it took me another five to eight years to really feel into it and to be confident in my own ability to trust my founder gut and to develop my founder gut to the point where I was making good decisions because that’s what being an owner level thinker requires. 

Rob Walling (00:58): Welcome back to another episode, Startups for the Rest of Us. I’m your host, Rob Walling. And in this episode, I’m going to dive into themed listener questions. So if you don’t know, I’ve recently started writing again, publishing essays for the first time really since about 2011. And I’m doing that over at robwalling.com. If you enter your name and email in any of the forms on that site, you can start receiving a weekly thought from me. And some of these are mental models, they’re frameworks, they’re questions that I’m often asked by founders, whether that’s from TinySeed on this podcast, in the MicroConf community direct via email. And most of these are concepts that I have not covered in a prior book. Some of them are concepts that I’ve developed here on this podcast or am developing on the podcast. And I realized that I’m putting out a ton of audio content every year, a ton of video content on youtube.com/robwalling, but I haven’t really done serialized written content in quite a long time. 

Rob Walling (02:05): And I decided that I wanted to double down on that modality this year because I feel like there are a lot of folks who maybe don’t want to listen to audio or video and the way they learn best is through written content. So if you head to robwalling.com, you’ll hear a new thought from me every week. As I’ve been doing this though, it’s been this great feedback loop because I’m sending out these emails and receiving a lot of questions about them. And when it’s as easy as just hitting reply to an email and shooting me a question, I feel like I get a lot more questions about the topics. I’m also getting a lot of thanks and I’m glad you’re writing again, which makes me feel really motivated and makes me feel grateful to have such an awesome community. But recently I sent out an email about task level, project level, and owner level thinkers. 

Rob Walling (02:53): And in response to that, I received a lot of questions about how to find them and how expensive are they and how do you identify them and so on. And so I wanted to spend a good chunk of this episode talking about how to do just that. And if you’re not on the list yet and you missed that email, don’t worry, my friend. I’m putting all of these emails into a sequence such that if you sign up today, you will receive the emails that I sent a few weeks ago. But if you aren’t already on my email list, you should head to robwalling.com. Just look for any email opt-in. There’s one in the footer, there’s one in the sidebar of the blog. And I’m also publishing some of those emails as new essays at robwalling.com/essays. And finally, if you are on YouTube and you’re not watching me, youtube.com/robwalling, I’m putting out a video every other week and it’s completely new content that is not done on this podcast and not sent out via email to my list. 

Rob Walling (03:53): So you get just a lot more of my thinking by hitting all three of those avenues. And with that, let’s dive into my first reader question. Since I didn’t get permission in advance from everyone who responded to me, I’m going to leave folks anonymous, but my first question asker responded to, again, to this email about task level, owner level, and project level thinkers. And actually, let me do a quick definition of those three levels in case you haven’t read the book or you missed the podcast episode. So I have a mental framework about different levels of ability with folks who you work with. Most people, especially when they start out earlier in their career are task level thinkers, meaning you hand them a task and usually you have to give them some guidance around it. And sometimes you don’t and they can figure it out, but they work on that task, then they return the results to you and then they move on to the next task that you’ve assigned them. 

Rob Walling (04:50): Project level thinkers are a level above that. And those are folks who can manage an entire project with potentially conflicting priorities, a lot more going on, and they can keep it driving forward. Sometimes they’re managing task level thinkers or at least driving, even if they’re not directly managing, they’re driving one or more task level thinkers to help deliver the project. There’s obviously a lot more complexity and a lot more skills needed to manage projects. And I think most people, again, when they first start out on their career and they’re an IC or an individual contributor, they are there to do tasks and at a certain point you get good enough that you can start managing projects. A lot of people though, I don’t think they make it to this next level, the third level, which is owner level thinkers. You could call this a founder level thinker. 

Rob Walling (05:41): You could call this an executive level thinker, but I call it owner level. And I think of it like a task level thinker probably thinks ahead a few hours or maybe depending on the task, a day or two. I think a project level thinker is thinking ahead weeks, maybe a few months, again, depending on the size and complexity of the project, and an owner level thinker might be thinking ahead six months, 12 months, two years, thinking about everything that’s going on at a company, coming up with brand new ideas and then weighing them, not having entrepreneurial ADHD and shoving that all to their team, but actually evaluating thoughts and ideas that are coming up and opportunities and then getting the team on board to implement those. It includes not only management of people, but management of priorities, saying no to a lot of things, a lot of decision making as an owner level thinker, making a lot of hard decisions with incomplete information versus as a task level thinker, you don’t have to make hard decisions and you usually have very complete information. 

Rob Walling (06:47): And as a project level thinker, you might have to make some hard decisions, but for the most part, you have most of the information. And then as an owner level, it’s your whole job. Anything that comes up to you is a hard decision with incomplete information. And so to wrap up the definition, owner level thinkers obviously are managing a lot of priorities and a lot of people, and they are painting a vision, keeping everyone accountable and moving the whole team in a direction. But you can have an owner level thinker who doesn’t manage anyone, and you’ll still know that they are their kind of next level. They just think and execute at a level that is seriously advanced compared to the other folks you’re working with. So with that definition, my first question asker said, “This was very well framed and laid out. Would you say owner level thinkers are typically more senior and experienced or is it more of a personality type and a mindset?” And in my experience, I think it takes years to learn it. 

Rob Walling (07:51): I can’t think of someone who has just the personality type or the mindset and is in their first couple years thinking like an owner because owners think strategically, they think long term. You need a lot of information, you need really, really good founder gut, really good intuition, you need to be making good decisions. And I just think without quite a few notches on your belt, quite a bit of work, quite a bit of mistakes and successes and seeing what works and what doesn’t and all the scar tissue that comes from working your way up, it sounds like a weird way to say it, but I think it is generally more senior. Now that doesn’t mean just because someone is more senior that they’re an owner level thinker. I guarantee you, there are folks who are 15, 20, 25, 30 years into their career who are still task level or project level thinkers. 

Rob Walling (08:41): So it doesn’t mean everyone gets there, but I have a hard time imagining an owner level thinker that hasn’t been working for at least a few years. Now, I do see some startup founders that are in their mid to late 20s that are really sharp and there are some TinySeed founders that are executing like crazy, doing millions a year in ARR, and they’re like 28 years old. And so there’s something there, but I think it’s extremely rare. I think generally, and I will speak for myself in this, when I first started my career, I was a task level thinker. I just couldn’t do multiple things at once. I couldn’t prioritize. I couldn’t manage it. I couldn’t keep all the plates spinning. And then over the course of the first five-ish, six-ish years, maybe a little longer, I remember getting to the point where I was really comfortable running projects and I think I became a solid project level thinker at that point and I remember getting better at it. 

Rob Walling (09:32): And then as I dipped my toe into becoming an entrepreneur, I wasn’t an owner-level thinker because I needed too much certainty. I couldn’t make hard decisions with incomplete information. I didn’t know how to do that. And then it took me another five to, I don’t even know, five to 10, five to eight years to really feel into it and to be confident in my own ability to trust my founder gut and to develop my founder gut to the point where I was making good decisions because that’s what being an owner level thinker requires. So to recap that, I do think generally it’s more senior and experience. If I was going to hire someone, I would generally be thinking about years on the job as at least a proxy. And of course then you have to evaluate because again, someone can be 15 years in and still be a task level thinker. 

Rob Walling (10:16): Second question is, in your experience, what is the compensation range for US or North America? Because obviously in Canada, someone might be 20 or 30% cheaper. And this is the compensation range for owner level thinkers. This is really hard to answer because it depends. So you can get someone who has the raw material, who is a great project level thinker and is itching to be an owner level thinker and really run their own thing, but they’ve never been allowed to. And so they’re right on that cusp. It’s hard to tell. We’re going to talk a little bit later about how to evaluate or how to identify project and owner level thinkers, but if you get someone right on that cusp who becomes an owner level thinker within the first year or two of working for you, then obviously you can get them at a certain salary range. 

Rob Walling (11:03): And if I think US or North America, I mean maybe $80,000, $90,000. But if I think of someone who has the experience and has been allowed to stretch their legs and really drive an org and really be an owner level thinker and they were kind of paid commensurate based on their value, you were definitely looking at low to mid six figures. However, it depends on where they live. I know task level individual contributor developers living in the Bay Area who are making $500,000 a year, that includes stock grants and such. And then I know folks living in a very low cost of living city or working remotely who are doing a very similar job and making $100,000. So when we say the US, that’s a big spread in Canada as well, but you get the idea. Could some owner level thinkers be making $250,000, $350,000 a year? 

Rob Walling (11:53): Absolutely. I just know most companies listening to this podcast and most folks that I deal with, you don’t have the budget to hire folks like that. And then I think the last question is, is it possible to hire these owner level thinkers without payroll/W2 or when you say full-time is the payroll/W2 assumed? Perhaps you could do a mix of 30 hour pay plus some kind of bonus structure based on goals since W2 payroll can create additional tax liabilities depending on the state or location. I mean, it depends, maybe. I’ve never heard of this. If someone is this good and they’re this valuable, they will be full-time W2 with healthcare if you offer it, any other benefits you have. Think about it this way. How do you get someone who’s this good to come work for you? Because they can work anywhere they want if they know their value. 

Rob Walling (12:41): And so 30 hours a week plus other stuff is, I don’t know. I mean, it’s a scrappy bootstrappery way to do things and maybe you’ll get lucky, but owner level thinkers are hard enough to find in the wild anyways. They’re hard to find. And if you find them, hopefully they know their value and they can kind of go anywhere. So I can’t imagine someone wanting to come on board and work for 30 hours a week pay unless that really fit their whole lifestyle and they were like, “Oh, I only want to work 30 hours.” There are some folks who do want that lifestyle and they want that freedom of that extra 10 hours a week. And in that case, yeah, maybe it would work. Maybe you could hire them. Here’s the thing, maybe they want to work as a contractor because they do want to maintain that freedom and flexibility of their lifestyle. 

Rob Walling (13:24): And in that case, I guess it could work. It just generally, I think if you want someone in your org, this owner level thinker will likely become a pretty pivotal part of your org and potentially be managing a whole area or department, managing the whole thing. They maybe should get equity as a retention motivator. And so yeah, I think those are my thoughts there. W2 creating tax liabilities depending on state and location. Yeah, it’s just what happens. I mean, there are certain states I don’t think I would hire in because of that. So thanks for those questions. And so I think that question begs another question that you really have to ask yourself is, do you have the budget to hire a project or owner level thinker? Because back in the day when I was bootstrapping nights and weekends, I just didn’t have the budget. 

Rob Walling (14:13): And this is why I developed some bad habits of doing everything myself and only hiring virtual assistants or really inexpensive resources and really junior resources and training them up and giving them SOPs. And it was fine and it was what I needed at that time, but it came back to bite me later because it was a bad habit that I developed and it took me a long time to get to the point of like, oh no, at a certain point I need to spend more money on my team and I need to hire more mid-level and senior people so that we can move faster and that all of the decision making burden is not on me. So being realistic with yourself about budget, do you have it? And if you do, hire project if you can, project level and owner level if you can, but obviously it can be pricey. 

Rob Walling (15:01): Every founder I know dreams about what an exit might look like, but if you’re doing between two and 25 million in ARR, you’ve probably realized you’re in this weird middle zone, too big for the online marketplaces, too small for an investment bank to care. That’s exactly why my good friend Einar Vollset started Discretion Capital. Einar is my co-founder at TinySeed, and he’s helped companies you’ve heard on this podcast have life-changing exits. If you listen to the ScrapingBee or GymDesk episodes, you heard those founders talk about what Discretion did for them. Those were massive outcomes. His team has helped Segments.ai exit to Uber and SparkLoop to ConvertKit. Whether you’re just trying to understand what your company might be worth, you’ve got an offer on the table and you’re not sure if it’s any good, or you want to run a full process and get maximum value, head to discretioncapital.com and have a conversation with Einar’s team. 

Rob Walling (15:53): Another question though is, do you need owners and project level? Need is I think a difficult thing for me to define, but I would say that my life has gotten so much easier as an entrepreneur since we have hired more mid-level and senior folks who can take these big tasks off my plate and it frees me up then to think longer term and to think about new initiatives and to stay in my zone of genius, which is not day-to-day operations of a company. Of course, I can operate one. I’ve done it many times. TinySeed is my sixth company and I can operate. It’s just not my favorite thing. And day-to-day operations and management and being in the weeds is perhaps not say the best use of my time if I can find someone who can do it as good as or better than me. And that’s the thing. 

Rob Walling (16:42): There are a lot of folks who manage people and motivate people better than me and they should be doing it. And so that’s the way to think about it is, do you need and do you have the budget? Then another question I received complimented my essay, robwalling.com/essays if you want to subscribe and get those emails. And the question, well, it’s two questions. Where do you find? Where did you find is the question. Where did you find your owner level thinkers and how long did it take you to find them and integrate them into your company? So I’m going to generalize this. Where do you find folks who are thinking at this level? Obviously, if you have an incredible network, this is where you should build your network, not your audience. If you have an incredible network or an audience for that matter, you look there first because warm introductions, even second or third hand are going to be some of the best folks that you work with. 

Rob Walling (17:36): But here’s the thing, every time we’ve hired, we have created a job description and we have posted it all over the internet. We’ve hired Remote First Recruiting to help us promote the job and then to screen candidates so we’re not doing all the work. And I definitely recommend it’s Dan and Ian’s Remote First Recruiting, a bunch of TinySeed companies use them and TinySeed and MicroConf have used them for almost every hire we have ever done since they’ve existed. But that’s where we start. And the reason I’m saying we start there is we post on the job boards, we promote it through our socials and our own media. We put it through our email lists and we go to the TinySeed Slack, but then we start working our network and asking folks, “Do you know folks who might fit this description?” And the owner level thinkers that I work with now have come through a mix. 

Rob Walling (18:28): Some of them were known previously by me and folks on my team. So Tracy Osborn, who’s the head of product and does a lot of the heavy lifting at MicroConf and TinySeed, spoke at MicroConf in 2016, I believe. And she was a startup founder of Wedding Lovely and had gone through 500 Startups. And we hadn’t stayed in touch, but when we posted this job description in, I think it was what, 2019? Yeah, 2019, 2020, she was interested. And I was like, “Oh, a former startup founder interested in doing this role.” That’s instantly a good sign. No, it can be a bad sign. Take it on the flip side, some folks, startups fail because they kind of drive it into the ground and they’re not good at it. And then some folks, startups fail because most startups fail and that’s just the way it goes. But it’s not as if there’s some secret place to find these folks. 

Rob Walling (19:23): I mean, for us, it’s literally just job boards and the key is screening, right? It’s getting down to the folks who are really executing and who have a role that is similar or have the raw material, and this is where it gets tough, is you’re investing in someone to become that. Because when Tracy started working with us back in 2019, she was a really solid and exceptional project level thinker. I think that’s my evaluation these days. It’s funny, I haven’t really thought about this, but she’s developed into an owner level thinker over the years. And there’s a couple other folks on our team that have done that. And so I think there’s a certain amount of seeing the potential in people, but that can be dangerous, right? Because you can see potential that they never develop into. And of course, being able to actually evaluate project and owner level thinkers is something we’re going to talk about in a second. 

Rob Walling (20:16): But this second question of how long did it take you to find them a normal amount, whatever it is, a couple months from posting the job until they were hired and starting two months, two and a half months, whatever, until they gave notice and all that. So it was a normal amount, but then the question is how long to integrate them in the company. And that’s the big thing is I think a lot of folks become owner level thinkers when given the ability to stretch their wings and when given the responsibility, and they have to earn it, but a lot of folks have worked at other companies and they’ve potentially been constrained by management or lack of responsibility or there’s just not room for them. There’s no growth opportunity there. And so I guess what I’m saying is a lot of folks you hire like this, I think are going to be more project level, but it’s the question you’re asking yourself as you talk to them is, do I think they have the ability to become, to grow into this role as an owner level thinker? 

Rob Walling (21:11): And the interesting thing is I have no guess on timeline, could they become one in six months or maybe it’s three years? I think either is fine, as long as they can do their current role as a project level thinker and they’re kind of evolving over that time. To me, when I look at small companies especially, and I see people evolve, it’s like you’ve heard this thing about how you’re the average of the five people that you hang around with. So that’s a friend group analogy. You see it with musicians where like The Beatles or Led Zeppelin or any incredible group that develops, they lift each other up almost unintentionally. And maybe there’s a friendly rivalry or there’s certain things that they kind of rub off from one to the other and one person who’s exceptional at something, everyone else recognizes that. This person’s exceptional at sales or exceptional at decision making or exceptional at moving things forward, exceptional at management. 

Rob Walling (22:06): You see that person, you’re like, “Man, they’re really good. I’m going to kind of do a little bit of what they’re doing.” And everybody gets better if the raw material’s there and everyone’s interested in learning. And I see the same thing on these small teams. And so if you start hiring people that are exceptional and they’re getting better and they bring someone up kind of underneath them, maybe they’re managing them and they start getting better as well, the whole team, all the rising tide, it raises all the boats. And the hard part is if you hire someone who isn’t as good and it’s noticeable, it’s tough. It kind of drags the team down, drags the morale down a little bit and it can put a damper on that. I almost think of it like this exponential ascending. Another analogy is like these scenes, right? 

Rob Walling (22:49): You had the Seattle music scene in the 90s and every couple years there’s, well, there used to be like a new scene in a city and there was the punk scene in the UK in the 1970s. And it’s like, well, why does this happen? And it’s because these bands see the other bands around them and they’re influenced by them, but they’re all kind of rising up together. And there’s this momentum and there’s this interest and there’s this curiosity and maybe they’re intentionally helping each other out or maybe it’s unintentional, but whatever it is, everyone’s getting better and it’s this virtuous cycle. And so that’s also how I think about, especially small teams. And I think you could be small teams within a larger company, people really impact each other. So if you get exceptional people working for you, and if you are able to just keep feeding that, then new people who come in realize what the expectations are of this company, everyone is very, very good at what they do and none of us drop balls. 

Rob Walling (23:47): And we’re all kind people, but man, we execute and we ship and we punch way above our weight class in terms of what we get done and the impact we have on the world. Tiny team, think of MicroConf and TinySeed is nine full-time people and two part-time. And we have invested in 210 B2B SaaS companies in the last seven years. We run all the MicroConf events in addition to Mastermind matching and Connect. We push out this podcast and YouTube, we run SaaS Institute premium coaching. We run a full SaaS accelerator. We have $59 million, almost $60 million of assets under management. There are teams that are two or three times the size of us that don’t do the number of things that we do and the way that we’re able to do it is because we have a lot of exceptional folks on the team. 

Rob Walling (24:40): Another question that I got a lot was how do you identify folks? Is there a specific job title or job description? I think that’s where you start, right? If you want an owner level thinker, you don’t put a job description for an office manager, right? I mean, you may get an owner level thinker at that, but when the hierarchy of job titles, these things have meaning, right? There’s entry level, then there’s individual contributors, and then there’s supervisors, and then there’s managers, directors, vice presidents, C-level folks. And I think generally, if you want someone who’s really going to take control of an entire area, entire business unit, entire whatever, you want them to take ownership, I think you’re talking at director level or above. And typically a certain salary is equated with that as well. So identifying folks who are project or owner level thinkers really comes back to asking them questions about what have you done to drive projects in the past, right? 

Rob Walling (25:38): And what have you done to take ownership and grow something beyond what it is? Like have a vision when you’re looking ahead six months and have the incredible autonomy and decision making power and potentially budgetary power to drive things forward. You’re not just asking them, but you’re actually looking at their resume, like what have they actually done? And then digging into, oh, you were on a team of 300 people and you say that you drove these results, what did you actually do? What did you personally do versus the rest of your team? Your marketing copy and your design is amazing. Did you have a whole team doing that and you basically just project managed everything? That’s okay too because now you’re a project manager, but you get to know their skills. There’s the unspoken when you’re speaking to someone, right? It’s how much energy do they have for something? 

Rob Walling (26:24): How much interest do they have in the position? Because the more interested someone is, the more likely they’re going to love what they do and want to really drive it forward and take ownership. Here’s the other thing, project level and especially owner level thinkers, they can work anywhere. How do you convince them to work for you? That’s the other thing, right? Is to build something that’s so interesting and whether that’s just your culture, whether it’s the product you’re working on, but something that is appealing and interesting and you’re painting a picture of the vision of where’s the company going to be in two years, three years, five years or whatever. When I get asked that when I’m interviewing candidates, I mean, tell me I can’t paint the picture of where I want MicroConf and TinySeed to be in three, five years. We are impacting founders at a grand scale and I want to keep doing that. 

Rob Walling (27:13): I want to keep running these events and you’re surrounded by ambitious entrepreneurs who are executing every day like those are the people we’re dealing with. This is the best job I’ve ever had. Literally the best job I’ve ever had is working at MicroConf and TinySeed. And so our ability to recruit folks of this level becomes a little easier because we do have something interesting we’re working on. But back in the days of Drip, when it was just Derrick and I hacking away on a little email service provider and went to hire our first developers, everybody wanted to work with us because A, it was remote work and B, because it was really exciting. It was super exciting to be working on a project like that in the Central Valley of California. And then even once we hired remotely, people were interested because they saw the traction we were getting. 

Rob Walling (27:55): And the product itself was beautifully designed thanks to mostly to Derrick Reimer. And the code quality when we went to hire engineers was beautiful and it was so well maintained. And Derrick had been an amazing gatekeeper of that code base and that helped us hire really picky engineers. It was such a selling point to them. And then when we went to hire customer success, well, I was like, “You get to work directly with me. Is that interesting? I’m going to train you on everything I know about customer success,” which isn’t that much, but it’s probably more than you know right now as we were hiring, that was a selling point, right? Then we went to hire the next one. It was, by that time we had built momentum, there were five, six of us and the team was awesome. And everyone who knew people on the team were like, “I really want to be on that team.” We were the most desired employer, at least in the bootstrapped software space in our area. 

Rob Walling (28:43): And that doesn’t happen by accident. And if there were project or owner level thinkers that we could have afforded, which we couldn’t, I think they would have come and worked with us. But it’s something to think about. You have to recruit these people. Even if you’re in a conversation and they’ve applied to your job, folks who are great are going to get multiple job offers. And so you’ve got to be thinking about, how do I sell this job to them just a bit? And then I think lastly, in addition to the title of, let’s say director or VP or whatever you’re going to do, obviously you have to have bullets in there in the job description itself, right? You need the nitty gritty of what they’ll be doing that communicates the level of responsibility you’re looking for. And I’m not saying just having them in the job description means that they are going to magically have that when they apply because we all know that’s not true, but having them in there then is this great reminder of, I need to evaluate for these as I’m in the interviewing conversations. 

Rob Walling (29:38): And look, are you going to be 100% correct with hires? No. And that’s why the old adage is to hire slow and fire fast. And whatever on the hire slow, if someone’s not working out and you have misidentified them, the willingness to let them go while it sucks and it sucks for you and it sucks for them, you’re doing everyone a favor in this situation. They’re not going to be perfect. No matter how hard you try to find owner level thinkers and as much as you screen for them and as much as you offer them the right pay and you have an amazing environment and they want to come work for you, everyone you hire will not work out and you will misidentify some folks and that’s when you do have to make that change in order to keep that virtuous cycle that I talked about earlier going. 

Rob Walling (30:23): There are many things you can evaluate during job interviews and then there are certain things like long-term follow-through, ongoing communication that you just can’t measure in an interview. And you can ask about past experience doing this. You can get references and talk to folks who they worked with, which is important. But there are just certain things that are pretty much impossible to identify in a job interview. And that’s where potentially you can do just a sample project or you can bring them on for a 60 day trial and see how they really work day to day. And frankly, they get to try you out as well. So thanks to everyone who asked me questions about task level, project level, and owner level thinkers. And again, if you are not on my email list, robwalling.com/essays and there is an opt-in. On the right-hand side, I email about once a week with new thoughts, frameworks, and ideas, and it gives you an opportunity to hit reply and get directly into my inbox. 

Rob Walling (31:25): So thanks so much for listening this week and every week. This is Rob Walling signing off from episode 826.  

Rob Walling:
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I’m your host, Rob Walling, and in this episode, I welcome Adam Wathen, co-founder of Tailwind CSS to the show. And in this show, we actually talk about two very disparate topics because I had originally invited Adam on to talk about founder fitness or just staying fit as a founder. This isn’t about lifting a bunch of weights and spending two hours in the gym every day. It’s actually about how to do it as quickly as possible and staying in half as decent shape as you’re running an all encompassing company that takes all your energy, time, and focus. And I invited him on, and then in the meantime, he has posted about how they had to do pretty dramatic layoffs at Tailwind. And so in this episode today, we dive into those two topics. First, an update on Tailwind Labs and how they’re doing as a company and everything that went down there. 

And then we switch it up and head into Founder Fitness. Before we dive into my conversation with Adam, MicroConf Europe tickets are on sale. This year, MicroConf Europe is in Recyvec, Iceland at the stunning Harpa Concert Hall. Dates are September 21st through the 23rd of 2026. We’ve already announced our first couple speakers, but I would guess we will sell out long before we announce all the speakers. Two speakers in addition to myself include Agnes Giannisane of Agelics and Corey Haynes of Conversion Factory. You can head to microConfEurope.com to grab your ticket. Tickets will never be less expensive than they are today. And as you know, ticket prices go up every month or two, and we’ve sold out every event for the past several years. So if you want to come hang out with me and I don’t know, about 150, 175 of your favorite bootstrapped founder friends, should head to microConfEurope.com. 

And with that, let’s dive into my conversation with Adam. Adam Wavin, thanks for joining me on the show.  

Adam Wathan:
Thanks for having me, sir. How’s it going?  

Rob Walling:
It’s going really well, man. I can’t believe … Is this the first time you’ve been on startups  

Adam Wathan:
For the rest of us? Yeah, I’ve never been on this show  

Rob Walling:
Before.That’s an oversight on my part. You’ve spoken at MicroConf, we’ve hung out, we’ve had dinner, we’ve had drinks and talked email for years, but I just sometimes it’s  

Adam Wathan:
An open- Yeah, no. Well, I’m excited to be on because I’ve been listening to the show since a long time before we ever met or I got to speak at MicroConf or even attend MicroConf. So it’s definitely awesome to be on.  

Rob Walling:
And there’s a kind of coincidental timing because producer Ron had told me, “Hey, we should do an episode about founders and fitness,” because there was a TinySeed Slack thread that kind of went wild. People talking about getting in shape and not just about lifting weights, you can get that anywhere or fitness, but it’s like as a founder, usually with a family, how do you do this? And so I went on X and said, “Who should I invite on to talk about this? ” And several people mentioned you. So I went to invite you around the holidays, and then within a few days, you had that podcast episode where you’re like, “We laid off 75% of our engineering tier, whatever.” And I’m like, “Oh my gosh.” So it’s brutal. It’s usually the worst day of a founder’s journey when that happens. And I feel like I want to talk about both basically. 

It would be an oversight not to talk about your experience. And then I want to hear an update too, because there was such a public outreach and that podcast episode is called Adams Morning Walk, and I think it’s episode three or four that basically went viral. And I think Jason Fried was commenting on it and it just blew up and there was this whole people wanting to sponsor. And people in Slack groups I’m in were like, “I’m buying … I don’t even use Tailwind and I’m going to buy a license right now.” So it was like a  

Adam Wathan:
Real- Yeah, it was crazy. Yeah.  

Rob Walling:
So we’ll get to that point, but take us back to, because when I think of Tailwind CSS and Tailwind Labs, which is I think your company around the open source project, last I heard publicly, you’re doing millions a year in revenue. It’s not recurring, but it is one-time purchases, right?  

Adam Wathan:
Yeah.  

Rob Walling:
And you had a small team of six, seven, eight people, so something like that?  

Adam Wathan:
Yeah. We’re eight people kind of at our biggest. Yeah.  

Rob Walling:
And so plenty of budget to handle people, but then you described this slide in revenue that you’ve seen over the past, what is it, 12 to 18 months. You want to talk people through what happened?  

Adam Wathan:
Yeah, like two years. Yeah. I guess so. I mean, I don’t know how far back we go, but basically tailwind, obviously a really popular project kind of becomes sort of a de facto standard it feels like for building new front ends for websites. We sort of hit a peak, I would say, in revenue at the beginning of 2023. So this was kind of like right before ChatGPT first came on the scene and people started getting excited about AI. And also just right at sort of the peak of tailwinds, I guess you would say growth, it sort of feels like it’s sort of saturated the developer market at this point. Everyone’s heard of it at this point, whereas kind of back then people were still coming into it and switching to it from other things. So right around that time is like when we were sort of doing the best and I think there was a bunch of factors there. 

Again, our business model was like one time sales. So the more new people are finding out about it, the better for us versus just like the market saturation sort of point. There also wasn’t as many people building like competing products, which that never lasts forever, but that’s like a nice spot to be in, especially not as much like free open source competition. And yeah, the AI stuff hadn’t really happened yet. And then, I mean, we were doing like really, really well at the beginning of 2023. We’ve always tried to pay people more than they’d probably get somewhere else. That’s something I’ve taken a lot of pride in is no one ever asked for a raise at this company ever and everyone got them multiple times. Yeah. So we were doing really well then and then things like started to sort of slow down gradually over time. 

But the way I described it on the podcast is it really felt like a sort of boiling the frog scenario because it was just happening so gradually that in my mind, like every month just kind of felt like, “Oh, we’ve sort of hit the bottom.” You know what I mean? Yeah, we had like this really booming period, but it’s like dropped off and we’ve sort of hit like a stable floor. And it sounds like sort of silly to say that and even just like talk about me passively making assumptions about that. But I think probably like a lot of founders can empathize with just like, you’re not primarily like a CRO at the company or a CFO or whatever, right? It’s not like I’m spending all day every day analyzing spreadsheets and doing forecasts. I’m like working on the product, trying to figure out what we should do next, whatever. 

As long as you can pay the bills and it feels like there’s money left over in the bank account at the end of the day, I didn’t analyze it that deeply. And eventually towards the end of last year, I decided, you know what, I should really just make sure that my assumptions about things being like stable are correct. And when I actually like plotted out the trend, I realized that revenue was dropping like pretty consistently by say like 15 grand a month and it kind of dawned on me that like I’m not really going to feel this until like we crossed that threshold where it’s like dropped enough to be like a real problem. It feels like a very black and white thing. It’s like everything’s fine and then all of a sudden you don’t have enough money to pay people. And I realized if the trend continued, like we weren’t going to be able to make payroll within about like six or seven months. 

Yeah. So that’s when it kind of became sort of a bit of an emergency and I realized, okay, so what are my options here? I can either keep trying to sort of like turn things around and get back to the point where we can still afford the team that we have, which obviously that’s what everybody wants. That’s what I wanted regardless of what I did, but ultimately decided like no matter how hard I try to do that, that’s what I’ve been trying to do for the last two years and none of the things that we’ve tried have really like fixed it and turned us back into sort of growth mode. No matter how hard I tried to do it, I don’t actually have control over it. You know what I mean? All I can do is try to affect it as much as possible. So it kind of felt irresponsible to me to just not try to make changes that sort of planned for the worst case scenario because the last thing I wanted to do was not be able to turn around and then one day just have to tell everyone, “Hey guys, sorry, we can’t afford to keep everyone around and we don’t have enough money in the bank to kind of provide you with a solid severance for transitioning to the next thing.” I wouldn’t be able to live with myself doing that because I just know how stressful that would be for people. 

So instead just made the decision, okay, well, let’s cut the expenses now while we can still give everyone a really healthy severance and make it not like a stressful situation for them and help them find their next thing and then figure out how to turn it around from there. And in terms of like what I sort of thought happened, it sort of blew up because it was like a GitHub issue where someone was trying to add support for like markdown LLM endpoints to our docs and I had sort of like not prioritized it because I was busy trying to like make the business work. And one day someone just posted like a sort of rude entitled comment in it just saying like, “When is someone going to look at this? It’s been this many months or whatever.” And that was like the same day that I’d laid everyone off and it just was like the perfect storm of like, “Okay, this has just gotten under my skin.” So I just replied to it and I just sort of explained like, “Listen, this feature that you want to add is going to just make less people come to our website and traffic is already down by like 40%, which means revenue is down by a lot because our website is the distribution for our product.” And me spending time working on this feels like it’s in like conflict with our own business model. 

And right now I’m already in this situation where we just had to lay all these people off. So how can I justify spending this time on that, right? Yeah. So that’s what ended up blowing up into the big news story was like, okay, Taylor Labs just laid off a bunch of people because of AI, which I don’t think is necessarily the whole story, but I do think is like a big part of the story. And what we’ve been trying to figure out ever since then is how can we sort of swim downstream instead of upstream because AI has basically been our competition ever since it showed up. And I don’t really want it to be that way because I’m hugely excited about it and I use it every day and it’s like changed the way that I work. And so it’s really just sort of like, ah man, it sucks to feel like this technology that I’m personally excited about is in competition with our business. 

And surely there’s got to be some way to like reimagine what we do to sort of work in this new world. And that’s kind of what we’re kind of working on now. But yeah, when I put that podcast out, it really, I don’t even know why I put it out. I’ve been doing this podcast where I just sort of candidly talk about what problems I’m working on once a week or something like that. And I don’t think I had tons of listeners at the time because it wasn’t really intended to be that. It was really just like what’s on my mind, I’m walking the dog using like a little battery powered lav mic, you know what I mean? It’s not a highly produced thing, but that ended up really blowing up and tons of companies kind of came out of the woodwork to sort of sponsor the project, which we’d been having trouble sort of finding sponsors for the project before then. 

And yeah, like honestly really changed the direction of our business financially. Now there’s enough coming in from just company sponsorships to cover our expenses without us even worrying about the products. So that was nice. But yeah, it was really just a crazy, unexpected sort of whirlwind … It makes me think of like the whole just luck surface area thing. You talk about things, you put yourself out there and like things can happen. But yeah, there was no strategic goal when I released that podcast. I was just venting about something, you know? But yeah, so anyways, whatever. I’m all over the place with this story here, but that kind of gets us to today.  

Rob Walling:
No, this is good. You recapped it. Yeah. I was going to joke that in your Morning Walk podcast, I love your Foley work and how you insert fake footstep noises and fake leaves wrestling in the background because I know you’re in some studio. Saying hello to fake neighbors and- Exactly. It’s great. You got AI go. We’re good for you. Yeah. I mean, there’s a few things I want to touch on and we’re also going to talk about fitness and how you’ve really reworked your body in the latter half of the podcast, but there’s a couple things that I’m wondering, and I’ve heard you talk about them over the years that I’m wondering if you and I could Monday morning quarterback them and say like, if three years ago you had tried this, do you think as the founder or as a co-founder, I guess, and most knowledgeable person on this, do you think this would have changed things or not? 

And there’s a couple things. One is recurring revenue.  

Adam Wathan:
Yeah. No, let’s talk about it.  

Rob Walling:
Yeah. I heard you talk about it on your podcast because someone wrote in to start to the rest of us and said, Adam Wathen was talking about this and Hackers Incorporated, I think was your show.  

Adam Wathan:
Yeah, yeah.  

Rob Walling:
And you were talking about how it wouldn’t work being recurring. And then Ruben and I, here answered the question of like, here’s how we might think about. We have like 23 years. I didn’t hear that 

One. Oh really? Oh, I should send it to you. It’s probably like a year old now, maybe more. And all that said, when you posted the episode about how you had to lay people off, there were some private Slack groups I’m in where founders were like, “Oh, I wish she just charged a subscription because I would pay a yearly and annual fee for it. ” And look, I’m not saying that three people saying this in Slack groups means you should have or anything, but of course I’m the recurring revenue guy. I believe I’ve done one time sale businesses, I’ve had them and I remember how swingy they were because in the 2008 financial crisis, I lost 90% of my revenue from one month to the next. And I was like, “Fuck, it’s because it’s not recurring.” And I think you’ve commented that you’re down maybe 70% from peak revenue. 

And so the thought I have, and I know it’s dicey because you have, it’s tricky because you have a developer component and should you charge, because what is it like three or $400 one time? Is that about what it is?  

Adam Wathan:
Yeah.  

Rob Walling:
Could you charge that? The question is, could you charge that every year or would you charge 400 upfront and then charge $100 or $200 a year as a maintenance fee, something like that. Do you feel like looking back to four or five years, do you wish you’d done that or do you … I guess what are your  

Adam Wathan:
Thoughts on it? Yeah, that’s a good question. I honestly don’t think so. There’s some things that I maybe would’ve done differently. I think we probably could have done subscriptions for team licenses from day one, which would’ve honestly probably been enough to make a pretty substantial difference because I just don’t think businesses are as sensitive to the one time versus subscription thing, especially if it was just like an annual thing as maybe individuals. And I think there’s more justification for it too, because you have different people joining the company and leaving the company and you want to keep maintaining access for those people, whatever. But sort of like the strategy for us when we picked the one time pricing model was, it was really thinking about how value is delivered in the shape of the product at the time. It’s a bunch of website templates and components and stuff like that and you could subscribe and download everything and then cancel and have everything and then come back six months later, subscribe for one month again and download anything new and then leave. 

And that just felt like it’s not the same as like a SaaS product where you’re coming in there and using it every single day. I think like an annual subscription could have maybe worked, but I still believe that like our conversion rate was a lot higher because there wasn’t that like subscription friction. And a big part of our mentality for it too was like, oh, I don’t know how long Tailwind’s going to be popular for all this developer tooling goes in cycles. It really feels like capitalize on the moment and basically just like sack away as much profit as we can as a company in case one day this all goes away. And maybe that decision contributed to that outcome in some ways, but also at the same time, like I did get what I wanted out of it. I’ve never made it a secret that like the business has done really, really, really, really well for the founders while paying people extremely well and creating I think a really fun and relaxed and interesting place to work for the people that work here. 

But at the same time, like, okay, even if I’ve put away enough money that it feels like I’ve basically gotten an exit out of this business in a lot of ways, that doesn’t mean that once the cash flow and expense balance is like out of whack, we still have to make changes at the company, which sucks because it doesn’t make sense to personally subsidize a business that’s not working on its own, of course. And I think that’s like a topic that I think the general public hasn’t run a business, I think maybe does have a little bit of a hard time empathizing with, but any business owners I’ve talked to, of course, understand that. You wouldn’t invest your own money into a business that’s not working, which is basically what you’d be doing then. And then you’re also stringing people along, like keeping them in a job at a company that isn’t working, you know what I mean? 

They should be taking different opportunities than doing something else anyways. I guess I believe that we would have had to figure out a way to make it feel more like a subscription product to really justify a subscription. And maybe that’s like what we should have focused on. And I’ll say like the next thing that we’re working on, we are planning for it to be subscription revenue, you’ll be happy to hear. But yeah, I don’t know. I guess I just feel like if we went back in time and made a subscription for everyone from the beginning, I still have those same concerns about really high churn, like the sort of churn that people have on subscription education products, which I think is a historically really challenging thing. I also just think like we would have just made less total in revenue along the way. And if we found ourselves in this current environment where like people are still choosing to use AI to like generate UI stuff instead of paying for a product, they would have canceled anyways. 

So I obviously, I can’t go back and AB test it, you know what I mean? But I guess my point is, I don’t really look back with regret as if we made a mistake because like obviously it sucks to lay people off and be in this situation where revenue is dropping. When I really zoom out, I still feel like it’s still been a really great outcome for me and I’m still like really grateful for how things have played out. So I don’t know, but I’d be really curious to hear like what you think for sure. Well,  

Rob Walling:
And there’s two things. You said it’s a great outcome for you. I actually would argue it’s been a pretty good outcome for your team. Even those that got laid off were paid, I believe above market salaries and you gave them generous severance and yes, it sucks to be laid off, but you took care of those folks.  

Adam Wathan:
Yeah.  

Rob Walling:
So, but yeah, let me weigh in on the subscription. I think an annual subscription would have worked. That’s my gut. You think so? Yeah. And that it would have given you … Well, here’s what it would have done. You’re right. You would have had probably less of the boom, boom years when you were making loads of money, but I think it would have been more stable. It would have grown, grown, grown, grown, grown, and then maybe if anything, it would have plateaued. And it’s just recurring revenue is so, especially annual, it slides so much slower than any type of one time.  

Adam Wathan:
So do you think we should have just done like the same kind of get your foot in the door price and then either recur at that same price annually or maybe like a lower amount to sort of …  

Rob Walling:
Somewhere in there. I probably gut feel would have been like, look, if it’s 399 upfront, you get updates and stuff as long as you pay the 399 every year. You can use it in perpetuity, but you don’t get what, updates or support. I mean, that’s usually what comes with an open source project and then every year everyone gets to evaluate. And you’re right, I do think your churn would be higher than like enterprise SaaS or Salesforce, but I think it would have been significantly low. Monthly would have been a disaster. I don’t think you all would have done monthly.  

Adam Wathan:
Yeah. Monthly, I don’t think would have worked. I guess in my head, I had pictured it as like, “Well, if the lifetime is this, then the annual has to be less than that. ” And you’re kind of saying, “Eh, not the case.”  

Rob Walling:
I would be super curious to see. And even if you were to do a 399 upfront and then it’s 199 a year, it’s still something, but I don’t know why you wouldn’t just do 399. That’s probably where I would have leaned, but the other thing is, and I want to ask your opinion on this because I don’t know the business well enough, is one thing I see working, there’s only a couple tinySeed companies that are dev components. I mean, maybe it’s two or four, it’s very small. They’re also seeing impact by AI, being heavily impacted by it by the way, because people aren’t thinking about a component anymore when AI can just go write all the code as you’re seeing. But one of the ways that they make quite a bit of money is they do have their developer two to $400 thing, but then they have their mid-market, five or 10 grand thing a year that’s for, we’ll call it enterprise. 

Usually enterprise is more like 35K and up and maybe you could have that too, but even just a five or $10,000 package that is, it’s for teams, but it’s also when they want more support and they want … There’s stuff you throw in that enterprises care about. And the churn on those, I think would have been very, very low would be my gut.  

Adam Wathan:
Yeah. Yeah. Once you got in the door there, those contracts, they collect dust in some folder for  

Rob Walling:
Years,  

Adam Wathan:
I  

Rob Walling:
Guess. They do. And if you had to go through procurement, then you make it 35K and up. I mean, that’s kind of a rule of thumb. But I’m wondering, aside from just not wanting to do that, because enterprise is not fun and may hiring a manager, aside from that  

Adam Wathan:
Reason- Well, honestly, we’re doing quite a bit of that now with the partner program.  

Rob Walling:
That’s what I was guessing. Yeah. I was wondering if you wished you’d done that earlier, if you think that would have worked, because that was always something I thought, man, I think these orgs would pay a lot more than 300 a month.  

Adam Wathan:
Yeah, we probably should have, honestly. I think I took an irrational amount of pride in trying to build an open source thing that was sustained on real profits from making a real product that delivered actual value. And I hated the idea of feeling like we were making it work on donations. I wanted it to feel like the market was making it work, which I think I’ve changed my opinion on that a little bit in the sense that I think we are providing real value to the companies that are part of our partner program. Yeah. I don’t think people tend to just give people money for nothing. If they’re choosing to give you money for what you’re offering, then they’re seeing value in it. Whether that’s like the exposure that they’re getting from the website or just having a more direct connection with our team to kind of like skip the line when they have bug reports and stuff like that.  

Rob Walling:
And wanting it to exist, man. I mean, there are companies I’ve worked at where when we would implement a technology sidekick, for example, when we were like, “We can only give him,” Mike Perham who runs it, right? We can only give him $1,000 per Sidekick instance. I was like, I actively want to support this more because we had so much infrastructure built on Sidekick. I think there’s that. I want this to exist. I don’t want it to be abandoned. The Twitter puts out a UI framework and we were using it at drip and guess what? Two years later, nobody’s maintaining it. And so I think there’s more value. To me, it was never a donation. It’s A, we do get priority support and I remember that being important for us because we had some downtime or some glitches on a Saturday.  

Adam Wathan:
Yeah. I mean, for a product like Drip, your Q is-  

Rob Walling:
Incredibly important.  

Adam Wathan:
That is some of the most critical infrastructure for the whole product, right?  

Rob Walling:
And so for you, I think if there’s a company, I mean, if there are companies that want to pay 10 grand or 35 grand or whatever the number is that’s significantly more than 400, I don’t see it as a donation, man. I see it as them. And it’s not just like, “Oh, let’s support this project.” It’s like, no, this product is critical because it’s in our application and thousands, if not tens of thousands of lines of code and we want it to exist. So that’s more of what I was thinking.  

Adam Wathan:
Yeah. And a lot of people see that, which is good. It’s like an insurance policy, which I think … Yeah. So I mean, I’m glad we ultimately did that. That’s like worked out really well, especially with that podcast that came out. It just created this perfect storm where we had magazines writing articles about the impact of AI on our business and other businesses now kind of wanting to be on the good side of that PR and sponsoring us and stuff. So yeah, that really was a welcome surprise, of course, just having all that stuff set up to even be able to take advantage of that moment. So really grateful that that worked out the way it did, for sure.  

Rob Walling:
That’s great to hear. I’m glad. It’s kind of a happy ending for now.  

Adam Wathan:
Yeah. Yeah. And we’ve got stuff that we’re excited about now. Now we’re working on, we kind of pre-announced this like Ui.sh is the product that we’re trying to build now, which is the idea is to basically augment the AI tooling that people already use to be able to produce better front end code, better design, sort of take all of what we’ve learned building stuff over the years and sort of teach the robots how to do that so that you can get some of those benefits in the stuff that you’re doing. And I mean, it seems like an obvious thing for us to work on. And it seems more obvious than ever now that I’ve been working on it for a while and feel like I’m making it work and know how to make it work. But the AI stuff really is such like a black box full of so much trial and error that until you feel like you have the secret passphrase to get it to do exactly what you want, sometimes it feels like, how am I supposed to make this thing even do what I want? 

But I think we’re going to be allright for sure.  

Rob Walling:
Glad to hear it. Well, let’s wrap up that thread and move on to founder fitness. Thanks for talking us through that, man. I know it can be hard. Yeah. I think to talk about stuff that isn’t working or hasn’t worked, and I appreciate your openness and honesty both before this and on the show.  

Adam Wathan:
It’s good to have places to talk about it, honestly, and to have the opportunity to talk to people with tons of experience like yourself that can help with ideas. And I think suffering in silence is the wrong play when you’re in these situations. You need that outside perspective.  

Rob Walling:
Yeah. I’m really glad it turned around. I was definitely rooting for you. I  

Adam Wathan:
Appreciate it. There were a lot of  

Rob Walling:
Replies to your Twitter threads, but I was in there. I was like, “Man, I hope you pull through.” Well, let’s switch it up and talk about founders and fitness. And it’s a total right turn. Yeah.  

Adam Wathan:
Total 180s. This is  

Rob Walling:
So much easier to talk about. Realistically, the reason you came across my radar I think is because you talked about it on your podcast, Hackers Incorporated, former podcast. I don’t know that you do it anymore, but you talked about it, you lost 70 pounds, you got to about 12% body fat and you still, do you still bench 315? Dude, that’s a lot of  

Adam Wathan:
Weight. I can still bench 315, but I’m not a 12% body fat.  

Rob Walling:
Yeah, which is fine. We’re not holding you to that. But the idea is that you are a co-founder of a business, you care about it a lot. You work on it hard, you have a family, you’re a dad, and most of us are like, “How can we fit this in? ” And you’ve talked about having really short workouts. And this is the thing I want to start with because I’m most interested in this because I’ve recently … I don’t like working out, but I like being in shape. That’s just how I’m working. Some people really enjoy working out too, and I envy them. That’s not me. So I’ve recently dropped from like three sets of whatever to … I’m doing two sets with higher weights to failure, whatever. It’s stuff that I’ve heard on the internet and my 15 year old tells me to do. 

And so I’m trying to cut it down. I’ve been getting it down to about 20 minutes and it’s twice a week for me, man, of three. Three is big victory, but twice a week is like plenty. I’m six foot two and I’m pretty slender. It’s not like I need to work out all the time. But you’ve won upped me. You didn’t just six minute abs. You seven minute abs to me because you have 15 minute workout sessions.  

Adam Wathan:
Yeah. So I’m actually not training that way right now, but I can talk about a lot of different stuff. So stop me whenever, but I’ll explain sort of what I was doing there. So when I was like, I really made this commitment to sort of like shed a bunch of weight because I was very overweight and I think like anyone who’s ever been overweight, once a week they have that day where it’s like, “Man, I’m going to turn this around. I got to get in shape, whatever.” And for me, how I got that process started at the time that really made it happen was I knew like I need to find some way to basically be spending money on this so I am taking it seriously. I know what a lot of people do. A lot of people who have a hard time going to the gym like signing up for like classes at the gym or like group classes because it goes in your calendar and it’s not just like something that you’re going to make time for like, “Oh, I think Tuesday afternoon, I’m going to go to the gym and get in an hour or whatever.” It’s on your calendar like a dentist appointment. 

And for a lot of people, they That’s enough to get them to go. I wanted the same thing for just eating healthier and controlling my portions better and all this stuff because ultimately that’s what the losing weight comes down to. It’s hard to just exercise that away. A lot of that is changing bad habits and bad relationships. You have food and stuff. So I found this service called My Body Tutor where it was a couple hundred bucks a month and you worked with a coach who would basically, you do a phone call once a week, but they would also text you every single day. And you had to fill out a log at the end of the day and send it to them with like, “Here’s a picture of every meal I had today, a bunch of really interesting questions. How well did you sleep?” There’s gratitude journaling in there. 

There’s a lot of stuff that’s just all kind of comes together to sort of get you into a more positive, healthy mindset and helps you sort of maintain these habits. And for me, it was just like, okay, if I need to send pictures of what I’m eating to someone who I don’t know every single day and I’m spending a couple hundred bucks a month on it, my hope is that that’s going to be enough to get my ass in gear. And it worked really well for me in that sense because it’s really hard to send a picture of like a blizzard from Dairy Queen to some really in shape fitness coach that you’re working with and not feel like an idiot. So that was sort of like the first step for me that really helped me sort of like get into that habit. And once you sort of have that chain going, it’s a lot easier to be like, “Okay, well I’ve eaten well and stuck to my calorie budget for the last two weeks. 

Do I want to throw that away today?” It’s like the Jerry Seinfeld don’t break the chain thing. So that’s like the summary of really like what worked well for me there. And of course there’s like a lot of different strategies that you can actually implement to do better with your eating. Things like eat super, super slow, take a drink of water between like every bite. Don’t do anything while you’re eating. Make eating as boring as possible so you don’t, so you want to be done with it and get back to what you were doing. If you’re sitting there eating lunch and like browsing your phone, it’s way easier to like eat more because you’re sort of entertained. But if it’s like, no, it’s just me and this plate and I just want this to be over with because I want to get back to those interesting project I was working on. 

Yeah, you tend to not eat as much. But when it comes to the workouts, historically I’ve done like a lot of heavy weight training because I used to compete in power lifting and I kind of got into that because through a bunch of different attempts at getting into like working out, I think like most people get into working out because they want to look better. I think that’s generally why people do it. And it takes a lot of time to see visual improvements there. So it can be hard to sort of stay motivated to stick with it. But then I sort of got into strength training over just like working out to look better and now you’re like keeping track every day of like, “Okay, I did this many reps or I lifted this much weight.” And you can actually see improvements there like day to day, week to week. 

And that’s actually really motivating because you can see, okay, well, I benched 185 for 10 reps last week and this week I got it for 11. It’s like, “Yeah, this is awesome. I’m making progress.” You sort of get addicted to it because that feedback cycle is so much shorter versus like taking pictures every day and hoping that you start to look like you’ve put on some muscle or something because that could take months and months and years and years really, right? I just really got into that. And I’m sort of an extreme person with like most things that I do and sort of like the extreme version of going to the gym doing strength training is like competing in power lifting and trying to like lift more than everybody else and lift as heavy as you can. So I kind of got into that. But that form of training didn’t really work well when I was trying to cut down a bunch of weight because no matter what, unless like you’ve never been to the gym, if you’re trying to lose weight, like you’re going to get weaker in the gym because your body doesn’t have as much fuel as it did before and your body isn’t this perfectly efficient machine that can burn only fat and not lose like any lean body mass or any muscle or anything. 

So if I was going trying to squat heavy and bench heavy and whatever at the gym, my numbers were going to go down and I worried that that was going to sort of like hurt my excitement and motivation. So I wanted to restructure my workouts into something that felt like getting lighter and losing fat was going to like make my performance at those workouts better. So I started doing these like weighted vest circuits and it’s something I picked up from this guy, Jim Wenler, who’s like anyone who’s like been into power lifting will know who this guy is, but he’s just like a really longtime well-known strength coach guy. And I’ve read his stuff for years and he talked about doing this stuff. And basically I just threw on like a 20 pound weighted vest and I would do like three to five rounds of a circuit where I was doing like some planks, which I incorporated because I’ve had a lot of back injuries over the years and I found that kind of really fixed that for me. 

And then like weighted pushups or weighted dips with the weight vest and then just body weight squats with the weight vest or maybe holding a kettlebell or something like that. And then like chin ups if you can do them, which I know not everyone can, especially with the weighted vest, but I would do like say 15 squats with like a kettlebell plus the weight vest, 10 pushups and then like five chin ups. And I would do three to five rounds of that. And the nice thing was like, as you get like lighter, all those movements get easier, which means you can sort of complete it in a faster time. So I was like tracking the time that was taking me to do this and it was maybe taking me like 15 to 17 minutes to do five rounds and eventually got that down to like eight or nine minutes to get through five rounds. 

And I would just go for a walk with the dog in the morning for like 30 minutes with the weight vest on and then just go straight to the garage to the gym after and do that workout. And I would do that like five days a week. And I felt like, honestly, I felt better than like I’ve ever felt in my life like doing those workouts. And it’s not as heavy and I don’t think you’re going to build as much muscle as you’re going to build doing like heavy squats and stuff like that, but you can make it harder for yourself just by just like trying to increase the velocity, for example, that you’re doing a pushup. If you push yourself up kind of at like a comfortable pace versus like try to really throw yourself up as hard as you can, you can make like a set of 10 pushups like way harder, you know what I mean? 

And you can increase it to up to 10 rounds or something if you really wanted to. But I found like for me, the sweet spot was like three to five, depending on how much time I had that day. And maybe on the last round I would do like more reps of each exercise and just really try to get like a pump or something. It was really awesome and I felt like it really improved my cardio too without having to do like kind of more traditional boring cardio. Well, I find it boring anyways. So yeah, that really worked well for me because it worked with the weight loss goal that I had. It kept the workouts nice and short and they’re not like super intense workouts that you get super sore from. So you can kind of do it every single day, which is good for kind of building that habit, same with like the eating. 

It’s so simple and it just, it worked really well for me.  

Rob Walling:
What I like about it is it crushes the, I don’t have time peace because that’s always for me is I don’t have time to do this for an hour or whatever. We have dumbbells up in the … We have a rooftop deck and there’s an area there where we have dumbbells and the three of us who live here now, because we have a 15 year old and Sherry and I, we share them. And so I don’t have a weighted vest, but I do similar circuit workouts that are just … And I’m breathing heavy. And again, by the time I get to about 20 minutes, I’m usually like, “Man, I’m so done with this. ” And I always feel guilty about that because I used to. Look, when I was in high school and college, I was an athlete, I ran track, played football, and I mean, I’d work out two straight hours, like four days, four or five days a week, alternating legs and everything. 

And there’s just no chance I’m going to do that. And so I always feel like a failure. So it kind of made me feel a little better of like, because I’m fine with my results, you know what I mean? Again, I don’t like working out, but I like being in shape just because I like feeling that. So I find it really fascinating because I haven’t heard anyone else talk about doing … I mean, you’re talking about doing an eight to 12 minute workout and that’s pretty amazing.  

Adam Wathan:
Yeah. I do think like the 80 / 20 on that stuff is a lot … You can get a lot more results and a lot less time than I think people think they need. And that type of workout too, you don’t need to go to a gym to do that. You don’t need any equipment except for like chin-ups or something, but you can find some … I mean, you can get a doorway chin-up bar that you can put over the trim and throw a resistance band around it or something if you’re not strong enough to do a chin-up to make it a little bit easier. And that’s basically all you really need. You’re not going to get into like competitive bodybuilder physique or anything doing that, but you’re going to be in the 1% if you’re consistent with it.  

Rob Walling:
Did getting in shape, do you feel like it made you a better founder? Did you notice a difference in your energy or your decision making, how you handled stress?  

Adam Wathan:
That’s a good question. It’s a little tricky. I think yes overall, but I’ll caveat that by saying at that specific time period in my life, I was so focused on dropping all that weight and getting in shape that it actually made it hard for me to give the business as much attention as I was just giving that mission of just trying to fix my health. For me, I’ve always struggled with eating my whole life. So the amount of discipline and sort of willpower that it took really sort of drained my battery personally. So there was kind of two elements to it there. I definitely, I slept better, I felt better, I definitely had more energy and I’m sure all that was good for me. But yeah, to be perfectly honest, for me specifically, that became like my obsession at that time. I don’t think it needs to be that way for people, but I was in a situation where I just had a problem and I just really needed to focus on solving it. 

And that became sort of my focus at that time. So  

Rob Walling:
Wrapping us up on this topic and then I’ll let you go, you’ve mentioned a couple times that you no longer do that workout style, you’ve changed. What are you doing now and why?  

Adam Wathan:
So mostly out of just like, it’s nice to do something new once in a while, but now my business partner, Steve, works with me at my house like three days a week. That’s something we started doing at the, maybe mid last year or early last year. And I have a really nice gym set up at home and he likes to train, but doesn’t do a good job of sticking to it by himself. So now that he works here with me, me and him will go down to the basement and work out in the nice gym doing real weight training with barbells and stuff for an hour, two or three times a week. And it feels like we have the time for it because we’re down there doing it together and we talk shop the whole time. And I think both of us end up coming away from that with lots of new ideas and stuff. 

It never feels like something that we’re trying to make time for. So we’ve kind of transitioned back to sort of that type of training. And I think like I do have a hard time doing it by myself. I think like that’s the other tip that I would give anyone who’s trying to like … It’s similar to doing a class. If you can find like a training partner, both of you might not feel like working out that day, but unless both of you come out and say it, you’re going to expect that the other person’s expecting you to be there and say, you know what I mean? So that accountability, I think really helps. And also just like makes it, I don’t know, maybe not everyone’s this way, but I just find it so much more fun to just have someone to chat with and to sort of … Yeah, it creates like a little bit of a competitive atmosphere. 

Not that you’re competing with each other, but it’s almost like someone’s there watching you. You want to put in some good work because like someone’s sort of observing you and you want … Yeah. So I think that’s been huge for us is just like being able to actually work out with your co-founder is awesome.  

Rob Walling:
Yeah, totally. That’s a nice luxury you guys have, that you live close enough. Well, man, thanks so much for finally coming on the show.  

Adam Wathan:
Yeah, no, thanks for having me.  

Rob Walling:
Folks want to keep up with you on X. You are Adam Wathan, W-A-T-H-A-N. And of course, if they want to rapidly build modern websites without ever leaving their HTML, tailwindscss.com.  

Adam Wathan:
And without ever leaving your terminal now-  

Rob Walling:
That’s what it is. That’s our H1, I’m just reading it. Thanks again for joining me, man.  

Adam Wathan:
Awesome. Thanks, Rob.  

Rob Walling:
Thanks again to Adam for taking time out of his busy schedule to come on the show and tell us about his experiences, both growing, tailwind labs, having to make the hard decision of letting some of his people go and about how he’s been staying in shape these past couple years. Thanks to you for listening this week and every week. This is Rob Walling signing off from episode 825. Much like the track, Her Majesty by the Beatles, the hidden track at the end of Abbey Road, this is the hidden track of this episode of Startups for the Rest of Us. In it, I ambush Adam Wathen with trivia questions, five of them. Oh God. And I’ve picked a topic that I don’t know if he knows anything about, but I asked ChatGPT to give me 10 trivia questions. We’re only going to do five of them. 

I’m going to pick them about tailwind CSS.  

Adam Wathan:
Oh God, all right. And  

Rob Walling:
I am  

Adam Wathan:
Fascinated.  

Rob Walling:
Me too. I’m fascinated. Well, sometimes ChatGPT pulls out such random crap that it’s like, what is the this? You know what I mean? It can go so detailed, but I asked it for difficulty. Normally I go difficulty one to 10, 10 questions, and then I kind of pick through and the last one is a 10. I said difficulty three to 10 because I didn’t want any gimmes, any gimmes for you.  

Adam Wathan:
Okay. No, all right. It’s going to be like, what is the commit hash of the 90%?  

Rob Walling:
Yeah, totally, totally. And you’re like, 9A, four, B.  

Adam Wathan:
Yeah. Oh, I know  

Rob Walling:
This.  

Adam Wathan:
I got a tablet too on my wrist. All right, let’s go.  

Rob Walling:
I have ambushed many a person with this. It’s always people I feel comfortable with that I like, that I’ve met in person, and so I hope you consider it a privilege and not a  

Adam Wathan:
Dick  

Rob Walling:
Move by me. All right, first question, difficulty three. And if you say these are wrong, that’s the other thing is there’s a chance that ChatGPT is just wrong. It’ll be interesting. All right. What core philosophy differentiates tailwind CS from to traditional CSS frameworks like bootstrap?  

Adam Wathan:
I don’t know how you give a correct answer to this, but I would identify, I would say the core philosophy is heavy reliance on presentational classes and building things out of tiny utility classes directly in your markup.  

Rob Walling:
That’s what ChatGPT says it’s a utility first framework instead of prebuilt components. It provides low level  

Adam Wathan:
Utility  

Rob Walling:
Classes. So nice. Difficulty four. So you’re one for one. What configuration file is typically used to customize a tailwind projects design system, colors facing and break points?  

Adam Wathan:
Yeah. Okay. So prior to January 2025, this would be your tailwind.config.js file or tailwind.config.ts or whatever. But nowadays, you configure tailwind in a CS file, which can be named whatever you want. It’s just like whatever you decide to call your CS file.  

Rob Walling:
Dude, that’s a great answer. ChatGPT just says tailwind.config.js. So you nailed it. You gave the bonus answer. You’re like, get current. Two for two, man. All right. What feature introduced in Tailwind 2.1 allowed developers to write arbitrary values directly inside square brackets, like top dash square bracket 117 pixels?  

Adam Wathan:
So there’s two possible answers. One is just the feature was just called arbitrary value support, but the thing that enabled it was our just in time engine.  

Rob Walling:
Perfect. Its answer is arbitrary value support via the JIT engine.  

Adam Wathan:
Okay. There you  

Rob Walling:
Go. Dude, it’s like you know … It’s  

Adam Wathan:
Like I made it.  

Rob Walling:
It’s like you know everything about this. Okay. So for the last two, I’m going to go to difficulty nine and difficulty 10. We’re going to go nuclear because these feel way too easy and we’ll see if we can stop you. In tailwind, what directive is used inside a CSS file to inject base styles, components and utilities?  

Adam Wathan:
So it’s at tailwind base at tailwind components and at town utilities, but that’s also not really true in the latest version. In a ChatGPT world, that’s true. Yeah.  

Rob Walling:
I love this. You are nailing this dude. Does that seem like a difficulty nine to you? That  

Adam Wathan:
Seems prettyeasy. No, that’s not. That seems very  

Rob Walling:
Simple.  

Adam Wathan:
Yeah, that’s like a getting started documentation thing. You need to type that to make it work.  

Rob Walling:
Yeah. I don’t know what ChatGPT killing me. Oh, that one’s interesting. What controversial design decision did tailwind embrace that many early critics objected to?  

Adam Wathan:
Is it just the utility class thing in general? I think that was the thing that people really just … It’s not semantic, it’s not going to be maintainable. Separation of concerns. These are the terms that would be thrown around, I think generally. Yeah.  

Rob Walling:
That’s it. The answer, writing lots of utility classes directly in HTML markup, arguing that ugly markup was preferable to context switching into separate CSS files and dealing with naming abstractions.  

Adam Wathan:
Dude. There’s no harder ones. I don’t know that ever … Okay, so the content key is where you specify all the paths to all of the files in your project that might contain tailwind classes that we need to scan through to figure out what utility classes that you’re using. But it was introduced in V2.1, not V3. And the problem that it just … I mean, that’s the thing that makes it possible for Tailwind to just produce the smallest possible output instead of being like a multimegabyte CS file that contains every single utility possible in the framework, which really slowed down development speed and dev tools performance in browsers specifically.  

Rob Walling:
So yeah, you nailed that. And it says it replaces the old purge configuration from V2 and earlier. Is that true?  

Adam Wathan:
That’s true. That’s true actually. Yep. All right. I’ll give you everything. If  

Rob Walling:
I had said, what did it replace? I think you would’ve gotten to it.  

Adam Wathan:
No, you did say that and I literally forgot that that was called that before.  

Rob Walling:
Yeah. No, that’s good. I think let’s try one more. Why can’t you use @apply with every possible tailwind utility? For example, some responsive or pseudo class variants. What’s the underlying limitation?  

Adam Wathan:
Dude, that’s a super dated-  

Rob Walling:
Is it?  

Adam Wathan:
Question. Yeah, you can.  

Rob Walling:
See, I give up. We give up. That’s it. Oh, I love this, dude. I think you’re like seven out of seven or something like that. Congratulations,  

Adam Wathan:
Man. Well, the purge one, I feel a bit of shame in getting the purge. You’re  

Rob Walling:
Like,  

Adam Wathan:
“I get  

Rob Walling:
Maybe an A minus on this test.” No, that was great, dude. Thanks for playing along. Your prize is in the mail.  

Adam Wathan:
Cool. All right. Thanks, man.  

Rob Walling:
This podcast is brought to you by Mercury, the banking solution I use across all of my businesses. I manage half a dozen Mercury accounts from my personal single member LLC to MicroConf, our seven-figure global events and education platform to TinySeed, our venture fund and accelerator. Mercury handles every one of them. Traditional banking forces you to duct tape tools together and work around slow processes. Mercury doesn’t. The dashboard shows me exactly where each business stands at a glance. The interface is simple enough for daily banking and paying invoices, but can also handle the multi-step approval processes we need when wiring large sums of money to the dozens of companies we invest in each year. There’s a reason more than 300,000 entrepreneurs have made the switch. Anytime founders ask me where to set up their accounts, I send them to mercury.com. It’s free to get started with no in- person visits and no minimum balance. 

Visit mercury.com to apply online in minutes. Mercury is a FinTech company, not an FDIC insured bank. Banking services provided through Choice Financial Group and Column NA Members FDIC. Welcome back to another episode of Startups of the Rest of Us. I’m your host, Rob Walling, and in this episode, I welcome Jordan Gall back to the show. Jordan is a longtime fan favorite. And in today’s episode, we answer listener questions ranging from how to compete in a crowded market to what to do when your customers are only problem aware but not solution aware. Someone stealing someone else’s startup idea and more. Before we dive into the episode, do you know that I’ve written five books? You can get one of them for free by heading to robwalling.com and look for start marketing the day you start coding. But the other four books are really good and I think well worth the money. 

You can head to SaaSplaybook.com to order PDF or audio copies of the SaaS playbook and exit strategy as well as start small, stay small. These books cover different topics for SaaS founders and entrepreneurs. The SaaS playbook is my bestselling book of all time. It has crossed 50,000 copies sold. So if you’re looking to start somewhere, head to SaaSplaybook.com, grab the PDF or the PDF plus the audio. You can hear my Dulcet tones reading the book. And of course I like to do a little improv as I’m reading. It’s interesting when you sit and write a book for a couple years and then when you actually go to read it out loud, I’m like, “Oh, I have more to add to that. ” So I would riff a little bit on certain aspects of it. So that’s SaaSplaybook.com to learn about my three most popular books, which are exit strategy, SaaS playbook, and start small, stay small. 

Hope you pick one or all of them up if you haven’t read them. And with that, let’s dive into listener questions with Jordan Gall. Jordan Gall, thanks for coming back on the show.  

Jordan Gal:
Thanks for having me. Looking forward to it.  

Rob Walling:
It’s always good to have you here, man. With all your experiences, well, I mean, you’re kind of on your third SaaS startup if we think about it. And I like to have folks with your distinguished experience come and weigh in on some of these listener questions.  

Jordan Gal:
Yeah, I’m happy to do it. I’m living it every day. I read some of those questions and I’m like, “Ah, that’s happened to me.  

Rob Walling:
Yes,  

Jordan Gal:
I’ve made that mistake.”  

Rob Walling:
This  

Jordan Gal:
Exactly.  

Rob Walling:
No, totally. And this is why it’s great. I mean, you hear the episodes with Ruben Anum and Derek Reimer and Craig Hewitt and everything and Laura Roeder has answered questions. And it’s cool to hear everybody’s perspectives because we all have different experiences. But in general, the answers are relatively the same if you’ve been through this over and over. Don’t do this. Generally directionally, do that other thing. It’s fun to see the patterns.  

Speaker 3:
Right.  

Rob Walling:
So catch us up on what you’ve been doing with Rosie. For folks who maybe haven’t heard of you, which is probably a small subset of the audience, tell us what Rosie does. You’ve raised a series A. So you’re a bootstrapper at heart. I like to think of you as a … Like Jason Cohen was a bootstrapper and raised a bunch of money, Heat and Shaws like that. There’s a bunch of us that raise funding and you’re one of them. So talk it through.  

Jordan Gal:
Yeah. I think of myself and others like me as non-ideological. Whatever approach makes the most sense. Sometimes it’s bootstrapping. Sometimes it’s raising money. Sometimes it’s something in between, like a tinySeat or fun strapping or something. You just have to finance the business. One way or another, you put your own money in, customer revenue, debt, or equity. Those are your options. You can’t make money come out of thin air. So the options are relatively limited and depending on the situation, you take whichever one makes the most sense.  

Rob Walling:
And Rosie, what does it do?  

Jordan Gal:
Yeah. So Rosie is an AI answering service for small businesses. What that means is a lot of small businesses, think about your local service businesses like landscapers, pest control, small law firms, dog groomer, like the Fortune five million. They still do a lot of business on the phone. They advertise on Google, people see their phone number, maybe they do a bunch of research online, but then when it’s time to call the house painter, people pick up the phone and call. And so the phone is still this very challenging channel for small businesses. And a lot of times people miss phone calls. And when you miss a phone call, you’re either making a customer unhappy or you’re losing a revenue opportunity. So Rosie was built with this new AI tech that works over the phone on voice to answer the call when the small business owner or their team can’t answer the phone. 

That’s where it started. And over the last month, today actually is our launch day of our second communications channel. And so in 2025, Rosie was an AI voice product. And in 2026, Rosie’s going from a uni channel voice product to a multi-channel customer communications platform. So it’s the same rosy brain as we like to think about it that gets to know your business. And then there are just different channels. Someone calls over the phone, that’s a voice channel. Someone goes to your website, it’s chat or text. Someone sends you an email. So that’s our challenge in 2026 is to go from this very, very specific, very easily described solution to a very specific pain point to a bigger opportunity, but also slightly more difficult on the messaging and positioning.  

Rob Walling:
Well, thanks for catching us up, man. I know folks who are paying attention and followed your journey have known for the last few years, you pivoted your prior effort, rally into this. And then launching multichannel has got to be a big day. Not stressed at all, huh? Just hanging out? Everything’s good.  

Jordan Gal:
Sure. I found myself almost out of breath today. I would just catch myself like, “Whoa, relax. Take a breath here.” It’s just exciting. So far it’s going well, but we’re switching billing. It’s complicated and it’s scary. And like others, the big challenge right now is that roadmaps are like folding in on themselves because what we thought would take us a year to build out all these channels with this new tooling, we’re understanding, okay, we can probably build all these out in like three months. And if that’s the case, what should we do first? What does the roadmap look like? What does the difference between a front and a backend engineer look like? What does the product person do anymore? Why am I here as the CEO? What am I doing? So it is a confusing and exciting time.  

Rob Walling:
Confusing and exciting time I think should be stitched on a pillow and handed to every SaaS founder on earth.  

Jordan Gal:
Yes.  

Rob Walling:
All right. Are you interested in answering some listener questions today? Should we dive in?  

Jordan Gal:
Absolutely. All  

Rob Walling:
Right. Let’s dive in to our first question from Misha.  

Speaker 4:
Hi, Rob. Misha Manolas here. Got two questions for you. So we’re bootstrapped building distal EMR. It’s an AI powered medical chart review platform for outpatient clinics. Our ICP is CMO’s chief medical officers at organizations with 50 plus clinicians. My co-founder is an MD with the primary care relationships and we’ve closed several deals with regional and national organizations in our first eight months, which is incredible. But healthcare moves at the speed of trust, even with warm intros and name recognition deals takes six plus months to close and onboarding requires customization per client. So the first question I have is for bootstrapped companies in regulated industries with long sales cycles, how do you decide where to invest limited cash and engineering time when customer feedback is still sparse? And my second question, what are your thoughts on using bank loans or lines of credit against signed contracts where cash won’t arrive for 60 plus days, but we need capital now, for example, to fund SaaS two compliance. 

Any gotchas to be aware of for something like that. Thanks and appreciate everything you do.  

Rob Walling:
All right, Jordan. So Misha has two questions for us. The first one is how do you decide where to invest limited cash and engineering time when customer feedback is sparse, the classic SaaS conundrum, how do you think of it? You’ve never been in this situation, so you’re just going to have to pontificate off the top of your head.  

Jordan Gal:
Well, this situation scares me. This is scary. And I think the whole thing with Misha is that the market is a relatively slow moving market. It’s healthcare. And what he mentioned in his question was that they’ve closed some deals. So they’re not just building and guessing, right? They are building and people are paying. And so my immediate instinctual response to his question was, “Well, don’t build anything unless you’re getting paid for it. ” Because there’s an enormous amount of risk in bootstrapping into a market with long sales cycles. So unless you really know the space and you want to take that risk of, I’m going to build ahead of the market, the fact that they already have customers and each customer requires a certain level of customization, I would really wait for the market to push me toward the right feature set and get paid for it. 

I think it’s connected to a second question that we haven’t gotten to yet.  

Rob Walling:
Yeah. Well, let’s roll right into that. I mean, that was really around what are your thoughts on using bank loans or lines of credit against signed contracts where the cash won’t arrive for 60 plus days. You’re someone good to talk to about this because I don’t know that you’ve ever pulled debt or revenue-based financing, but you have certainly evaluated it because I remember having conversations about it.  

Jordan Gal:
Yeah. I’m evaluating it now also. And I have not pulled the trigger on it. I haven’t needed to, but I’ve put it in place and it’s kind of amazing what Stripe Capital does in the SaaS toolkit. The fact that you have access to debt at any time with the click of a button really changes that calculation because normally with debt, you have to go get approved. You got to go through underwriting, you got to do a song and dance for the bank. And oftentimes the bank, it almost doesn’t make sense for them to give loans to this type of a company. So I always encourage people, check out Stripe Capital to at least understand what that option looks like. So I have that in mind. Have you done any debt?  

Rob Walling:
No. And I mean, it didn’t exist when I was renting … I sold Drip in 2016. It was just coming up and frankly, it always scared me a little bit. And I think if I was going to try to raise money, I would have probably gone with an equity round at the time because we hadn’t raised any funding and so we could have. The debt was always like, then it becomes … Again, for me, the calculus was like, “Well, now it’s a drag on my growth because I have this money coming out every month.” And it just scared me a little bit because it’s like, how good am I actually at cashflow management? This is not my expertise. I’m like good at marketing and like recording podcasts and thinking about product and making those decisions. And everything else I did, I was winging it as we all are. 

And so when I thought debt-  

Jordan Gal:
Can’t wing it with debt.  

Rob Walling:
No, I know. That’s the one thing. I was like, “Dude, my finances, that’s like the worst thing.” So plus the amount I think at the time that you could raise just wasn’t enough to move the needle for us. And so it was always like, “Eh, maybe we’ll do it next month and maybe we’ll raise funding next month.” And then we had acquisition offers and I was like, “Why don’t we just do that? That sounds easier.”  

Jordan Gal:
The calculation that always stopped me from moving forward is that the payback is pretty short. And so it’s like, I’m going to take on $300,000 and then immediately have to start paying like 25 grand a month, which doesn’t feel right. It is really tailored for being put alongside an equity raise. That’s where it really makes a lot of sense. If you’re at three million in ARR and you want to get to five before you fundraise, you can pull a million bucks and you’re kind of going for broke anyway. And then you use the money and you push and you try to raise the next round. And if it doesn’t work out, like the whole thing’s coming crashing down anyway. So it doesn’t really matter as much. So it does feel like it works really well alongside the VC path equity raise to extend your runway to give you yourself a little more time so that you’re not staring down the barrel of a gun with three months of runway when you’re talking to investors, that’s a bad spot to be in.  

Rob Walling:
What do you think about Fermisha where he’s saying, “I have these contracts and it’s net 60 terms or whatever it is and I’m thinking of doing debt for that.  

Jordan Gal:
” So the first thing is I would only draw the debt under the assumption that contract is not coming through. And looking through that prism, if the contract does not come through, am I okay? I would not put myself in a situation where I am not okay if that contract doesn’t come through because then you’re piling risk on top of debt and that feels wrong. Now, at the same time, we started this conversation, we mentioned debt and equity and customer revenue. Those are the three sources of funding. And if you want to stay bootstrapped and you don’t want to sell equity, then you should at least be open-minded on debt. But with that said, you have to kind of go into it with clear eyes on what the payback schedule looks like. Usually the payback schedule is pretty tight on a bank loan.  

Rob Walling:
Or these Stripe capital stuff, it’s a good chunk. The interest rates on these are high because they know the numbers and they know how many will default. And there are obviously some predatory lenders out there, but I don’t believe most of them are. Ainar and I, at one point, this is six, seven years ago, talked about should we raise a debt fund and have tinySeed capital, I don’t know what we’d call it, but whatever, you get the idea, TinySeed RBF. And when we looked at the amount that we would have to charge the interest rate just to make any money and make it worthwhile with the defaults, it was like, “Gosh, that sucks.” I don’t want to do that. I know.  

Jordan Gal:
I like Stripe Capital because it is very, very transparent. You want to take 250K, you’re going to pay 24,000 bucks in interest, period. It’s a fixed amount of interest. So you borrow 250, you pay back 274. I like that clarity and not this two year period of what happens and then you have to send financials and if you get into a little bit of cash trouble, then you’re getting into a different category. Yes. So Misha, just be clear eyed about it and do not count on the contract revenue coming through in order to get you out of the gym.  

Rob Walling:
Yeah, I like that perspective. Now you’re saying even with a signed contract, until the money’s in the bank, don’t count on it, right? That’s essentially what you’re  

Jordan Gal:
Saying. Yes, because a sign-  

Rob Walling:
They could default. And what do  

Jordan Gal:
You can do? Sue them.  

Rob Walling:
Yeah. A signed contract is a  

Jordan Gal:
Piece of paper, right? Yes, that’s right. That’s right. A signed contract is very different from an enforced contract. And if you’re not willing to go out and spend the money to enforce the contract, then you don’t have the money yet.  

Rob Walling:
Well, thanks for that question, Misha. I hope our thoughts were helpful. My next question, I’m going to keep anonymous. It was someone who responded to my recent email newsletter. So Jordan, did you know? I have not published original content aside from books. I’ve not published original kind of blog/email newsletter content since it’s got to be like 2012. And I just decided I’m doing it, man. I’ve pushed three or four live, robwalling.com, if folks want to enter their email and hear from me once a week with a very thoughtful original essay. Some of the concepts are things that I’m thinking about. Some of them are from this podcast. Some of them are from five years ago that I never published, but so far I’m getting really good responses, positive responses to people like, “Hey, it’s good to hear from you in writing again,” because I publish a bunch of audio and I publish a bunch of video, but aside from books, I don’t publish written content. 

And so I sent emails to however many tens of thousands of people are on that list and I say, respond with your number one problem that you’re facing because it can help me answer it on the show or potentially answer it in the newsletter. And this person responded and said, “This is a rant, but my number one problem is that any idea I come up with is washed away with a sea of vibe coded apps promising to do the same thing, but probably not as well.” Customers are now reluctant to try any new SaaS app because everyone and their dog is making them now, so us experience builders get buried. The other issue is that any app idea now is labeled as a wrapper for GPT and therefore it doesn’t have any perceived value even if it does, which makes finding product market fit tough. 

I’m tired of hearing every 20 year old now shout on X that they have just created their own ZaaS in two weeks and they have already scaled to 10K of MRR. So while I don’t necessarily agree with this person’s takes of customers are now reluctant to trust any new SaaS app because everyone is making them-  

Jordan Gal:
Who are these customers?  

Rob Walling:
Yeah. And therefore there’s no perceived value, blah, blah, blah. I don’t necessarily wholeheartedly endorse that, but I understand that this person’s feeling that way, right? So have you thought about this in your space or how do you think about this more generally?  

Jordan Gal:
First, I too am tired of hearing of all the 20 year olds who gets a 10K number the first month. Sure. I think you have to build up some antibodies to the noise. Now, my very short answer is no, you’re letting the timeline get to you and you have to ignore it. You have to build what you think is valuable for people who need it. Okay. However, there’s a big difference in who the audience is, who the customer base is. If you’re building for the most hyper aware, basically if you’re building for the timeline for everyone who’s staring at the timeline and talking about it, then you do have an issue around, well, everyone’s there is just aware of everything happening and that does seem a bit high risk or low probability of success to just throw another thing in the mix. But for the most part, most markets are not just staring at the timeline like you and I are. 

We’re in like the top 2% of awareness.  

Rob Walling:
When you say timeline, you mean the X or the Meta, the Facebook, the whatever, any social media.  

Jordan Gal:
Yes. The noise, the 20 year olds claiming to get to 10K MRR in three days type of thing. So your customers, if they’re not staring at the timeline, that means they live in other environments. Maybe they’re even doing work, crazy idea. And in that case, they’re not aware of everything and you need to go into those environments to show them what you have. I mean, if we look at today, I mean, the number of competitors for Rosie is not good. If you were to look at that market today in voice AI, you would be convinced like this person is, that there’s no point at all because it’s taken and everyone’s got a million things and everyone’s vibe coding and nobody values it. I still think it would be wrong. If I were to try to give a little bit more valuable advice than that, I would say to look out into the future a little bit instead of what everyone’s building right now, I would try to be thoughtful about, well, okay, if everyone’s building this right now, what’s coming next? 

What has a logical progression from where we are today? An example would be like, okay, open claw, whatever the lobster thing comes out, and then you can kind of just squint out into the future and say, “Oh, people are going to need help.” Okay, so that’s what’s going to come next. So if you try to squint out into the future more, where is it going? And then yes, I would try to build out into the future a bit more instead of just what’s happening right now. And even then, you should expect it’s going to be an ocean of competitors. I think that it has been a relatively norm for a while in terms of a lot of competition with whatever you build that is on hyperdrive. Every market will have a lot of competition. It just is what it is. I don’t know if you need to care. 

You do need to care if you’re trying to build a billion dollar company because you kind of have to win the market. But if you aren’t and you’re trying to do a million ARR and get there as soon as possible, you have to be really good and you have to be good at finding your market and explaining to them why they should use your product. I think it’s okay to have a lot of competition everywhere’s going to have a lot of competition.  

Rob Walling:
I agree. And I think the thing that I tend to drive home a lot is like, he’s basically talking about building an audience or social media marketing. It’s like, I’m going to sell everything by posting on X. And it’s just like, don’t do that. Don’t do that. Most of your customers, no, none of your customers are there unless you’re selling to the same insular indie hacker crowd and you want Indie Hackers to be your customer and you want to be in the Indy Hackers and have them buy from each other. It’s like, stop. Yeah. No, of the 210 companies that a TinySeed has invested in, I think it’s just over 4% have any type of social media marketing or any type of audience. The other 96%, they just market. They do SEO, they do cold outbound, they do advertise, pay-per-click, they do in- person events, they do affiliate marketing, they go on podcast tours, they go on YouTube tours. 

There’s 19 other B2B SaaS marketing approaches and they’re listed in the SaaS playbook. And so you’re in a bubble. That’s how I feel, this anonymous person. You’re in a bubble and you think this is how you make it. And guess what? Almost no one makes it. How many hundreds of thousands of people follow Peter Levels? 450,000, maybe it’s a half million now. All of them probably want to be Peter levels. How many levels are there? There’s one. You know what I mean? It’s like trying to be, I follow what’s a big band today. All right, so someone who’s really popular today like Blink 182, I’m not dating myself at all. You know I’m kidding. But like any big band, it’s like you follow them and you’re like, dude, everybody wants to be like that. And there’s like one of them. It’s a different, it’s a hit based business. 

It’s a lot more of a luck. There’s some talent, there’s some skill, but it’s a lot of luck versus actually building a B2B SaaS that solves a problem for a real customer and a real market that is where money’s already going to, right? Where there’s budget line item for this is hard. I don’t know anything about those markets. It’s like, well, you partner up with someone who does or you work in a business that teaches you, oh, this is the problems that are being solved there. This is the money we’re spending and you work for other companies. There’s tons of ways to do this. Acting like posting on X Twitter is marketing or is going to build you some company is … No, that’s ridiculous.  

Jordan Gal:
The way I solved for this was selling to people who don’t care about the tech at all. So he wrote here, the other issue is any app ideas labeled as a wrapper and therefore doesn’t have any perceived value. That part is like very, very in the bubble because ideally your customer does not care at all about what you wrapped around. The only thing they care about is the problem. The way I solve for that is to sell to non-technical people. I want to take the magic that’s happening on the timeline and put it through this filter of, here’s your problem, here’s a solution. In our product, the concept of an LLM or a model or a prompt does not exist. There is no choose your model like absolutely not. It’s just the problem and here’s the solution for it. And at least that has worked to give me relief around having to be on the bleeding edge. 

I mean, I don’t really talk about Rosie on the timeline because our customers aren’t there. Anytime I post, it’s for peers and the general market and investors. It has nothing to do with marketing, not really.  

Rob Walling:
So thanks for that question, Ainan. I hope our thoughts were helpful. Next question comes to us from Bailey about whether to offer design partners advisory shares.  

Speaker 5:
Hey, Rob. My name’s Bailey and I’m a huge fan of the show and the SaaS playbook. Before I get into the message, I just want to say thank you. You’re in my ear week and week out and it’s been helpful whilst navigating this challenging solo founder journey. I’m the founder of UserSound, which is an AI voice survey platform for product managers at high volume product companies. So it helps teams capture qualitative customer insights at scale. I used to be a product manager myself running quantitative surveys. I felt that they lacked depth and customer interviews were really great, but didn’t scale. And so User Sound is designed to sit right in the middle of that spectrum as another tool for product managers to use. The product is live, but it still has some teething issues. I have one paid design partner client and two free design partner clients at large SME and enterprise companies. 

My target customers are scale ups and enterprise businesses with tens or hundreds of thousands, if even millions of customers. A big challenge I have right now is procurement. I have a strong UK network of product managers who want to use the product, but getting internal sign off and budget approval is slow and often is stalling my momentum. At the same time, I still need to be very hands-on with customers, so deeply understanding how they use the product and where it’s falling short. So my question’s about incentives. How do you feel about offering advisory shares to people in my network at these organizations that I’m very close with who actively use the tool and help push it internally? And I think my thought process is that the equity would be conditional on landing a revenue generating contract with their company or someone that they know in the network. 

Is this something you’ve seen work before or is this a naive attempt to shortcut proper customer discovery and long sales cycles? Thanks, and I’d love to hear your take.  

Rob Walling:
So Jordan, what was interesting is when I saw the subject line of this, I thought, oh, he means offering a freelancer who’s like doing design work or a dev shop. I was thinking, offering advisory shares in exchange for that. It’s not what it is at all. It’s like offering advisory shares for people to bring in customers or to at their own company become customers, which I’ve never heard of. So what do you think? Yeah, this is very interesting. What do you think about this?  

Jordan Gal:
Yes. Same as you as when I read the headline, I thought about my experience with a design team that I worked with that I did give equity and they stuck with us for years and they were amazing and we treated them like employees and yes, but then as soon as I started to read, I was confused and it all made sense as soon as I read the word UK. The buying process in the UK is not like in the US. That is an understatement. You basically need an in, a personal in that like requires a Guinness at a pub. And that’s how everything is bought there. And I personally was allergic to it and I have a lot of sympathy for Bailey that he has to kind of navigate this. So I’ve never seen equity be offered. I’ve seen basically bribes like, yes, if you help us get into your company, I will give you $5,000 or 5,000 Euro. 

I’ve seen that and I’ve done that on the rally front when we were selling into the UK. But I don’t think this is the right incentive mechanism for someone working at a company. I don’t think they generally think that way. And I don’t think there’s enough energy behind that incentive to push through a buying process that leads to like a closed deal. It’s like too distant.  

Rob Walling:
Because it’s shares that might be worth something in five years or 10 years.  

Jordan Gal:
Yes. Yes. It’s too far apart.  

Rob Walling:
So cash continues to be king and queen is what it sounds like. So I haven’t heard that. I totally believe you that like that’s the buying process there. I haven’t heard that firsthand, but now it makes me want to go talk to a few more of my tinySeed UK companies.  

Jordan Gal:
Yeah. And convince them to stop selling into the UK. That would be my advice, which is really tough.  

Speaker 3:
Yeah.  

Jordan Gal:
Okay. So cash seems like the obvious answer, but it’s not necessarily the answer. There are other incentive mechanisms. We found that status in the UK is very important. So letting the person be important in the process, take credit was just as important. And most people, they weren’t nearly as transactional as we expected them to be. We’re Americans. We’re like, “All right, how much can we pay you? ” And they were like, “No, that’s not what I’m looking for. ” So I think you have to find better incentive mechanisms and really the right incentive mechanism is that the solution is so good and important to them that that’s the actual thing, that they’re going to be the ones that bring it into the company and take credit for it. So that’s a bad answer to this question, but I don’t know what else.  

Rob Walling:
But it’s honest. Yeah, I appreciate that. So yeah, thanks for the question, Bailey. I mean, I guess I haven’t really weighed in, but my answer is I’ve never heard anyone do that and I personally wouldn’t. That’s really the end of the story. I think it’s not going to be super effective. And I also struggle to compensate with equity. I mean, I guess if there was someone in your network, it’s kind of almost like an affiliate deal at this point where it’s like, they’re not going to become the customer, but they know some people that they will refer to become customers and you’re going to pay them in shares, in advisory shares in a startup that may or may not work. And I think Jordan’s point is, I don’t know that anyone cares about Yeah. So I kind of am on board with his answer.  

Jordan Gal:
We had one person on the ground. We were selling into the UK and knew that because we weren’t going to the pubs in the events, it was never going to work for us. We paid a consultant on the ground in the UK who knew everyone in the industry and had kind of jumped out on her own to create this consulting company. And we paid her as a consultant and she basically evangelized our product at the events and the pubs. That was as far as we got into making it successful.  

Rob Walling:
Great advice. So thanks for that question, Bailey. I hope our advice was helpful. Next question is, it’s another anonymous one also from my email list and the person said, I’m bringing this one up because I just think a lot of people don’t think about this or they’re running into it as well and they don’t really know how to describe it. So this person says, “My number one problem is that my product is a solution that people are not yet looking for. They might be aware of the problem, but not of my solution.” And I would say, jumping in, they’re not even aware that there is a solution. And so if we look at the five stages of awareness from, isn’t it Eugene Schwartz? You can Google this. There is a problem aware audience who is not yet solution aware, who then are not going to be product aware. 

And then there’s unaware above that and most aware on the bottom. So I laid out a couple things in an email response to them that I can talk about. This is a hard way to go as a bootstrapper. It’s really hard. And it effectively means it’s mostly outbound. And usually you’re either good at that and that’s what you want to do and you want to do outbound and you want to do sales or you raise money to do this and you really kind of build it up. Start small, stay small. I know it’s 16 years old now. It talks a lot about building things for existing demand. And it says if people aren’t searching for this, don’t try to nights and weekends be a solopreneur and go after a space like this. Now, that was 16 years ago. Things are more competitive. There were more spaces back then that were not as crowded. 

So I don’t want to act like, oh, everyone should go for these greenfield markets. But I do still think that there are small little niches, 1000 to 5K MRR, 10K MRR, depends on how big you want to get, where people are searching for things. And if you learn a skillset like SEO or content marketing or whatever that you can get in front of them. So with that said, Jordan, what are your thoughts on this question?  

Jordan Gal:
So I have been in this situation with Rally. Outside of the Shopify ecosystem, people knew that their checkout was bad. They did not yet know that they could just replace the entire checkout from their platform for a different one. It was a really tough problem to crack. This person sounds like they need to team up with the person that’s in the bubble to throw products in that people are already clamoring for. Now with that said, if you have an existing product like this, it makes me think of a book I was given by our lead VC called Play Bigger, and it is about category creation. There’s some things in there that are related to this. Now, the only thing I’ve seen work is becoming the person known for the problem. So to articulate the problem well enough, you can buy yourself the attention to introduce a solution. 

So it’s like you need to become the company or the product that is most known for not the solution that you’re offering, but for articulating the problem most clearly so that when people hear your articulation of their problem and it’s so spot on, then they believe you’re going to be the one that has the solution. The challenge of that is you need attention. Attention’s expensive. It’s some way or another, you need to get them paying attention to you and that’s the hard part. And I guess that’s the part that the SEO and content and blog posts and videos and the media in general that you use to articulate the problem, that’s where the play bigger book comes in and it kind of assumes you have budget to go out and yell about the problem. So that’s a difficulty for a bootstrapper. You can articulate the problem really well, but if you can’t amplify it out there, then it’s tough to get attention. 

But if you shrink it down to a day-to-day bootstrapper problem, in the messaging, marketing, outbound emails, my YouTube videos, all that, I would be describing the problem really, really well and focusing on that 80% of the time and putting my solution at the 20%. That’s as good as I can do in this very difficult problem that I personally failed at.  

Rob Walling:
If they don’t know there is a solution that exists, a lot of it has, as you said, it has to be this outbound motion and that can be creating content and building an audience if that’s in your wheelhouse. Folks can go back and listen to my interview with Jay Klaus that went live in the last week or two where we talk about founder-led marketing and I say, B2B SaaS founders, maybe 10, 20% should consider it. I do not think it’s the majority. And he agreed and he said, “Yeah, if you don’t really want to do that to create content, to create YouTube videos, create podcasts, if it doesn’t fire you up, you’re not going to be good at it and you’re not going to enjoy it. ” And you can get good at something you don’t enjoy, but that’s also a recipe for burnout. But that is one way, right, is to build the audience. 

Another way is just with direct warm and cold outreach. I also, when I was emailing this person back, said, “You can show up where they hang out. ” So you do like Kevin Wagstaff did. He’s a co-founder of Spectora and he and his brother bootstrapped Spectora to multiple exits, but the first one was a majority buyout at $90 million. Just the two of them were the only equity holders. Yeah. He was on, I don’t know, six or eight months ago. They spent a tremendous amount of time, like an inordinate amount of time in Facebook groups because that’s where the home inspectors, where their customers lived. Today it’s what is it? Subreddits, Facebook groups, private Slacks, forums. It’s wherever your customers are. You can also do in- person stuff. You can go to trade shows, you go to industry events, and you can go on podcast and YouTube tours, right? 

And I’d recommend doing, if you can do those as a guest, pitch an interesting story and do … There’s five YouTube channels that are really big in this space. You can start building your own if you want, but learning how to guest will get you that reach without having to go through the pain of building an audience because take it for me, building an audience is a ton, ton of work. And so that’s it. If you’re in a problem aware space where people aren’t aware of a solution and you want to build a little Indie Hacker 10K a month business, I don’t know how you do that. It’s too much work. You don’t do it. It would be my advice. Go after something where that you can possibly get in front of some type of demand on an ongoing basis. But we talk a lot about, you and I about ambitious bootstrappers. 

It’s like, no, I want to be a seven figure or an eight figure ARR company. If I was in this space and we have back some, there are some TinySeq companies that are just like this where they are, they have problem aware audiences who don’t know there’s a solution and that’s approximately the playbook that they run and that we recommend.  

Jordan Gal:
Yep. Hammer on the pain.  

Rob Walling:
Got to do it. So thanks for that question. Ainan. Hope it was helpful. Last question of the day comes to us from Jason and it’s kind of a story. It’s about a collaborator using their idea to develop a competing … Well, it’s a kind of a competing or overlapping product.  

Speaker 3:
Hey, Rob. Jason here. I’m a full stack developer, dad, musician, and a huge Beatles fan. I like your hat. I’m building an EdTech product that fills a gap in a niche market. It’s customer validated, user informed, and will launch as a closed beta in the next couple months. Early on, I was introduced to a key player in the industry, a successful, respected specialist. He was interested in the product, so I had him sign an NDA and I gave him a tour, but the NDA did not have an explicit non-compete clause, just to foreshadow the future here. We’ve been in a shared telegram chat. I’ve shared updates, screenshots, product info. I’ve had conversations with other key players and potential clients, kind of developing somewhat in the open, using their feedback to make my product stronger. Twice last year, I asked him to get involved. I offered equity at one point. 

He declined. Earlier this week, he showed me something that he’s working on, some software and many of the features are comparable or exactly the same as an earlier prototype of mine. There’s some analytics that are also very similar to recent screenshots I shared in the chat. And he acknowledged that there’s some overlap and I suspect he was showing me this in fairness so that I knew that he was doing it, but despite whatever intentions he had, I feel crushed. I feel like my openness has been taken advantage of and my good ideas are being stolen. When he showed this to me, I said, “Hey, I prefer Confluence to competition.” And again, I brought up partnership. He said he’d think about it, but he’s a bit of a lone wolf. I feel stung. I’ve now deleted proprietary info from the chat. I’m keeping my head down and focusing on what I can control. 

And overall, my product remains largely distinct and I’m certainly much farther along in my development, but I’m wondering if I misplayed my hand somewhere here. So what do you think about this situation? Is his behavior as wrong as it seems? Should founders make their NDAs more ironClad in general? I try to be a trustful and collaborative person and I take that as a strength, but what lessons can I extrapolate beyond the obvious ones about him? What would you do? Thanks.  

Rob Walling:
Yeah, Jordan. So he had the guy sign an NDA, but it didn’t have a non-compete or something in it, which I think is probably the first thing we would say is obviously you need that, but even then, then you have to enforce it. You need a lawyer. It’s like, this is a heartbreaking story. And the weird part for me, I had to wrap my head around why he was giving this other person all of this information ongoing in a telegram chat. And I think it’s because he thought he might become a customer. I think that’s what was happening here, but what’s your take on this?  

Jordan Gal:
Or an influencer, right? Someone respected in the field that then talks about your product and you borrow that credibility is a great way to enter a market. Absolutely.  

Rob Walling:
Got it.  

Jordan Gal:
Unfortunately, this person seems to have seen the opportunity and decided to run with it on their own.  

Rob Walling:
Yep. And look, this is the biggest fear, and of course, biggest fear of every entrepreneur out there, especially early stage. It’s like, well, I can’t talk about my idea. I need to be in stealth mode so that no one steals it. And the advice is usually like, look, almost nobody’s going to steal it. And if they try, they’re going to do a poor job. You need to out execute about market them anyways because once you launch, and you have any success, people are going to copy you. What are you going to do at that point? That is the advice. Every once in a while, something like this happens that is gnarly. Like this person has unfortunately shared a lot. Before launching Drip, I had this email list and I was sending screenshots and kind of what we were building and what we’re up to. And someone could have taken that and built something, but they didn’t really know what we were building because it wasn’t like I was feeding them all this information. 

And in this case, it sounds like the person has a lot of it. So how would you think about this? I guess there’s kind of two questions here. How to avoid falling into this trap, even though you should probably be sharing stuff with people and then what you do now that he’s in this situation.  

Jordan Gal:
I don’t know if there’s much avoiding it other than using your radar. If things don’t feel quite right, then you should pay attention to that radar as early as possible. And other times there’s just nothing to do. This is just the big ocean full of sharks. This is just hardball and how it unfolds sometimes. I had this happen to me at CardHook with a marketing partner who just ripped everything off, just pixel for pixel. One of those jobs where you then look at the source code and it still has your copyright and your code in it 

Because they really just ripped it off and it’s emotional problem first to address because it is dispiriting. It is depressing and that is the enemy of running a startup. The confidence and the optimism is necessary. And to have something like this happen very early on is like dangerous because they can break you before you have a sense of confidence. At CardHook, we were up and running. We were probably somewhere in the area of like 100K a month at that point, but it still felt like this betrayal. Now, I do want to just inject into this that a very strongly worded letter from a lawyer can be very effective. It depends on the person, it depends on the situation and what the resources are of the other company, that sort of thing, but a very scary letter from a lawyer can be worth your time and the money that it takes. 

So I would incorporate that into my general response. Probably though, it’s not going to do anything. It might. So for the risk reward for spending 500 or thousand bucks with a lawyer and putting that out there, the on paper, on the record threat can be very effective. So don’t discount that. At the same time, if this had happened on the other side of launch, then it would be effectively the exact same thing, like another competitor in the market, but it wouldn’t have the same emotional issue or response. And so I would just think about it that way. Once you get through this, you’re going to launch and then people are going to copy the hell out of your product anyway. The market as it is right now, anyone can kind of build any product they want pretty quickly. If you get any traction whatsoever, you’re going to have competition. 

And so just pretend like this is after launch and a new competitor comes in and yeah, it sucks, but that’s just the reality of being in the market. So it’s a bit of a test on, do you really like this category? Do you really like the solution and product? If you do, then you have to ignore it and there’s room for everybody. And yes, it will absolutely annoy the hell out of you to watch this person succeed in the market alongside you, maybe even eclipse what you’re doing and that’s just part of the game. Sucks. And I’m sorry this happened to this person and I feel for them, but it’s a bit of a test.  

Rob Walling:
I really like that mindset, thinking about it of like, “Hey, it does suck and I feel the same way. I feel really bad for this guy.” I think the thought that this is like the one in a thousand that this happens. And so it doesn’t mean that everyone should take this as the one example. I see this on X Twitter where the bootstrappers pull out the article of like the VC founder who got who like raised money and then the VCs kicked him out or he left and then like five years later it sold for 300 million and the person got nothing because they were so diluted or whatever it is. Usually A, there’s more to this story. Usually that founder pulled out a bunch of secondary when they sold in their series B, C, and D, and they have 10, 20 million in the bank and usually they screwed themselves. 

But let’s just say, no, venture capitalist screwed the guy on this one. And then people are like, “See, you should never raise venture funding.” And it’s like, “Dude, your story is not my data. It’s not it. ” And so a single anecdote, but it does suck when it happens, right? In this case, especially, I feel bad for him, but I like your thought about the mindset of, “Hey, if it was post-launch, it’s going to happen  

Jordan Gal:
Too.” In business, there is injustice everywhere. Things that should have happened, the reward that should have been had, this thing should never have happened, Apple screwed you. It’s like it is a normal part and this does suck. Hopefully they can use it as fuel. The amount of joy I had watching Fast and Bollt implode after watching them dog smack for like two years, a little payback.  

Speaker 3:
Yep.  

Jordan Gal:
Look, if the person loves the solution and the space, then just keep going. Keep going.  

Rob Walling:
Yeah. Of all the people, all the founders I know though, you are exceptionally good at saying, what is it? Nobody cares work harder or something like that. I think that’s one of your things, but you mean it and I get you that you really feel that. I can say that. I still get super pissed when people copy me. Really mad. People copied MicroConf and our community in the early days. They copied HitTail, Pixel for Pixel. Definitely saw a few copies of drip, some which worked and some which didn’t. Copies of TinySeed, yes. I mean, it’s like everything I’ve ever done that’s had any meaning has been copied and every time it makes me mad and it hasn’t even been to this degree where it’s like I’m sharing something out of trying to give somebody a benefit of the doubt.  

Jordan Gal:
Yeah. It still bothers us. I mean, Rosie has been cloned- Oh,  

Rob Walling:
I bet.  

Jordan Gal:
So much. There’s like, “Hey Bobby, hey Josie, hey Julie.” There’s everything and we don’t like it. We don’t let it get to us too much, but Rock, my co-founder, CTO, he does get an enormous amount of joy at blocking people because we have a self-serve free trial. So we have one to five cloning competitor types signing up every single day and Rock gets a little hit of dopamine and blocked. No, I see the same IP address, different email, different … So he’s like, “He’s Gandolph. You shall not pass at Rosie.” It’s awesome.  

Rob Walling:
Oh, that’s good. That’s funny. It’s the game, unfortunately. So yeah, I don’t want there to be injustice in business and in the startup space. And it is a painful truth. So I appreciate you bringing that up. And obviously our feelings go out to the question asker here because it sucks and it would bother me too, but I think you’ve offered some pretty significant advice for him. So sir, thanks so much for joining me once again on the show.  

Jordan Gal:
Thanks for having me. Thanks for everyone that wrote in with the questions and got us going on these topics and hopefully it’s helpful.  

Rob Walling:
Yeah. And if folks want to keep up with you on X, you are at Jordangal, G-A-L. And if they want to see one of the best answers … I always say with Ruben, I always say one of the best electronic signature. But I’m trying to think of what is your … I need to go to your H1 and do this. All right.  

Jordan Gal:
Well, if you have advice for me, please give me because we’re about to change over from the best. The easiest is actually our positioning, the easiest AI answering service for small businesses, and now we have to talk about multiple channels. So that’s our challenge. And I’ll be on Brian and Justin’s panel podcast in the next week or so talking about all the development changes and challenges. It’s a wild ride right now in software. It is a trip and it does feel like an amazing opportunity. I think everyone’s kind of exhausted by the opportunity and not sleeping enough, but it’s so cool. It’s so amazing all these things happening. It’s great.  

Rob Walling:
And that’s heyrosie.com for the AI answering service for your business calls, the easiest AI answering service for your business calls. Thanks again, man.  

Speaker 3:
Thank you.  

Rob Walling:
Thanks again to Jordan for joining me on the show. In addition to co-founding Rosie, Jordan is also a coach with our TinySeed SaaS Institute. That’s our premium coaching program for founders doing seven and eight figures of ARR. If you’re looking for a highly curated community of SaaS founders, seasoned mentors, and top tier dedicated coaches, you should head to SaaSInstitute.com to get the systems and the support you need to scale from a million dollars to 10 million and beyond. Jordan is one of our coaches, as well as Taylor Hendrickson, Mark Thomas, and several other highly competent folks who know SaaS inside and out. So if you’re interested in that one-on-one coaching, direct access to subject matter mentors, a curated circle of ambitious founders and a private members only community, SaaSinstitute.com. Thanks for listening this week and every week. If you keep listening, I’ll keep recording. This is Rob Walling stunning off from episode 824. 

Listener, if you’ve made it this far, you know the drill here. Jordan’s my long-term friend, and when I bring long-term friends, people I’ve known for 10, 15 years on the show, I ambush them with ridiculous trivia questions. I  

Jordan Gal:
Was going to say, maybe they know the drill. I did not know the drill. You don’t listen  

Rob Walling:
To my podcast anymore. I think I  

Jordan Gal:
Turn it off after this.  

Rob Walling:
I do this to Derek Reimer all the time, dude. And I just pick a topic that sometimes hopefully they know something about and sometimes they don’t. So the topic that I picked is the B movie.  

Jordan Gal:
Oh, okay. Have I seen it? If I went downstairs and brought my wife up into this room and I’d say, “What’s the funny joke that the whole family knows when it comes time to choosing a movie, what’s dad going to say 100% of the time?” And she would say, “Be movie.”  

Rob Walling:
Be movie. B  

Jordan Gal:
Movie. Perfect. Jerry Steinfeld, perfect movie.  

Rob Walling:
ChatGPT steered me right. It pulled a quote from you from an interview on a podcast because I said, “What are Jordan Gall’s? Hobbies.” And I was like skiing, family, driving to random places in Illinois. You know what I mean? Yeah. And I mean, I could ask you questions about Portland, Oregon. There’s a bunch of other stuff, but I ask ChatGPT for B-Movie trivia questions. We’re going to start easy. We’re going to go hard. We got five of them.  

Jordan Gal:
Oh,  

Rob Walling:
Geez. We’re going five for five today. I want you five for five. All right.  

Jordan Gal:
Wish me luck. Wish me luck because I love the movie. I don’t know about the details, but we’ll see.  

Rob Walling:
Totally. So difficulty two out of 10. What is Barry’s job immediately after graduating from college?  

Jordan Gal:
I can’t believe you’re doing this to me. Hold on. Let me pull up the browser.  

Rob Walling:
I love every minute of this.  

Jordan Gal:
His job right when he graduates is he doesn’t like the job. He wants to be a fighter pile. His job is like, I don’t know, like clearing out old wax or something. I don’t remember what it is.  

Rob Walling:
Is he a worker at Honex Industries specifically assigned to Stir Honey? Does that sound familiar? That’s your job to be detailed. Yes. I’m going to take that as- Seriously,  

Jordan Gal:
A Honeystir. Honey skirt.  

Rob Walling:
That’s what it is. All right. Here’s a difficulty one. Who voices Barry B. Benson?  

Jordan Gal:
Seinfeld? Yeah. Seinfeld.  

Rob Walling:
The main  

Jordan Gal:
Character. The main character.  

Rob Walling:
Yep. All right. So you got one out of two. What is the name of the human woman, Barry Befriends?  

Jordan Gal:
Oh my God, his girlfriend. The  

Rob Walling:
Greenhouse.  

Jordan Gal:
He’s never coming  

Rob Walling:
Back on  

Jordan Gal:
This. I mean, this is crazy. This  

Rob Walling:
New low.  

Jordan Gal:
I’m thinking in Jerry Seinfeld’s voice right now is what I’m doing.  

Rob Walling:
Starts with a V. Hint starts with a V.  

Jordan Gal:
Vera? Vanessa.  

Rob Walling:
There it is.  

Jordan Gal:
Vanessa. Vanessa. Yeah. Yes. All  

Rob Walling:
Right. I’m going to give you that. So two out of three. What is Vanessa’s profession?  

Jordan Gal:
Sweating.  

Rob Walling:
Sweating is not  

Jordan Gal:
A profession. Well, that’s what I’m currently … That’s my current profession.  

Rob Walling:
I love that you could run a startup and do all the crazy ups and downs and I asked you questions about a movie you’ve seen 58 times.  

Jordan Gal:
So many times. Love that movie. Okay. She goes on her laptop. Her husband … Okay. Is she a lawyer?  

Rob Walling:
She’s a florist. Oh,  

Jordan Gal:
Hence the B attraction. Okay.  

Rob Walling:
Hence the B  

Jordan Gal:
Attractive. Totally off zero out of … You’re  

Rob Walling:
At two out of four. Two out of four. 50%.  

Jordan Gal:
Generous scoring system.  

Rob Walling:
All right. Last one. I was going to go up to difficulty 10. I think you might implode. Yes. I’m going to do a difficulty five as your artist. What product does Barry see in a grocery store that shocks him and sets off the main conflict?  

Jordan Gal:
I mean, he sees the bear, the little bear honey. And he’s like, oh my God.  

Rob Walling:
Jar slash bottles of honey  

Jordan Gal:
Being  

Rob Walling:
Sold  

Jordan Gal:
By humans.  

Rob Walling:
Yes. And  

Jordan Gal:
Then he realized it’s big honey. It’s not what he thought it was.  

Rob Walling:
Three of five, sir. 60%, D minus. You just passed. I appreciate that. Crutch. One pointless independent half. Thanks for coming on. I hope that this doesn’t dissuade you from coming onto a future episode.  

Jordan Gal:
Oh, absolutely not. I’m looking forward to it. It’s good to get the juices going. And I’m still not relenting. I will still suggest B movie every time my family wants.  

Rob Walling:
You’re like me with The Thing, 1982 and Blade Runner. Those are my two movies every time. I’m just like, “Oh yeah, I watched that yesterday and I could watch it again today.” See, my kids are older, so we can watch horror movies.  

Jordan Gal:
Oh, good for you. Yeah, I have a house full of girls, so three girls. So it’s a challenge for me to get a movie in. So B movie’s kind of pitch perfect.