This week is a conversation between Rob and Jordan Gal, the founder of Cart Hook. We dig into the six stages of SaaS growth. We compare our journeys 1:1 between growing Drip and growing CartHook. It’s shocking how well the journeys line up with each other. Some of the differences in the journey are also quite striking. This episode is part one, and part two will go live later this week.
Jordan started CartHook as cart abandonment software and became a checkout replacement solution for Shopify. He has been on the podcast a few times answering questions, and he has spoken at MicroConf a few times. He is also the co-host of the Bootstrapped Web podcast.
The finer points of the episode:
- 6:00 – Stage 1: Prelaunch
- 8:33 – How to create your own luck when your SaaS app is in the prelaunch phase
- 13:37 – Stage 2: Post Launch
- 14:25 – The journey to finding product-market fit
- 22:25 – The most challenging parts of the journey for Rob and Jordan
- 23:29 – Stage 3: Product Market Fit
Items mentioned in this episode:
This week’s episode feels like it’s going to be one of my favorite episodes in a long time. It’s a conversation with myself and Jordan Gal, the founder of CartHook. He and I dig into the six stages of SaaS growth. What we do is we compare our journeys one-to-one between growing Drip and growing CartHook.
What’s interesting is that we took different paths to get there. He raised money, we didn’t, and yet there are so many parallels between the two journeys and the stages line up shockingly well in terms of MRR ranges, of pre-launch, to product-market fit, and to escape velocity. I was struck by (a) some of the parallels, and (b) some of the deviations.
When we started, I figured it would be a normal-length episode. We wound up chatting for almost 1 hour and 15 minutes, so I’ve broken this up into a part one and a part two. Part one is what you’re listening to today, and in part two, we’ll go live on Thursday. I would kick it next week, but of course, episode 500 is next week, and I’ve been planning for that for several weeks. We’re just going to do a twofer this week. I didn’t want to drop a 70-minute episode in your feed today.
We cover the first few stages of SaaS growth in this episode. What’s interesting is I was going to call it the six stages of SaaS growth, but you’ll hear me, towards the end, realizing these aren’t the only six stages. There are stages after this. I have the parenthetical, the first six stages of SaaS growth as defined and discussed in the conversation you’re about to hear.
A little background on Jordan, in case you haven’t heard of him before, he started CartHook, which was cart abandonment software and became a checkout replacement solution for Shopify. It’s doing several million dollars a year in ARR. Jordan has been on Startups for the Rest of Us four or five times answering listener questions, walking through his journey. He’s just a founder in the space. He’s come to several MicroConfs, he’s spoken at multiple MicroConfs, and he’s executing well and doing what a lot of us are trying to achieve. He’s done a really good job executing over the last six-plus years as he’s grown CartHook. The time flies quickly. He’s also the co-host of the Bootstrapped Web podcast, so you may have heard him on there. With that, let’s dive into our conversation.
Jordan Gal, thanks for coming back on the show, man.
Jordan: Absolutely. Great to be here.
Rob: It’s always a pleasure. I’m really stoked to be talking through our journeys, our entrepreneurial journeys, and looking at these six stages of building and growing a SaaS. What’s a trip, what I like about this is I floated this idea to you, like would you be interested in coming on to talk about your journey because you’ve just made it so far so quickly. I know it probably doesn’t feel that way, but I was thinking back to growing Drip, there were some pretty distinct stages. There was the pre-launch, the post-launch, trying to find product-market fit and all these things. I was wondering if ours would at all match up.
When I typed mine out in an email, I shot it over, and how do these match up with what you have, it’s pretty close. The revenue numbers are not exact but the general headspace and what you’re trying to do at these stages, at least at this end of two is shockingly overlapping.
Jordan: Yes. I think because we both started at zero. We were forced into going through these individual stages. It is really different from stage to stage. I’m excited to go back into it. I’m a little worried about all the memories and emotions that it’ll bring up because it’s been a hell of a ride. A lot of it is good and plenty of challenges.
Rob: I’m wondering how much PTSD this is going to bring up for either of us. It’s as you said, of course, there are some great memories. I can reminisce and say oh, man. Remember the good old days? Remember when it was just two of us doing this thing? But you know what, it was super stressful when it was just two of us because we didn’t know if we were building anything people wanted. It was six months of just grinding it out with no market validation and all that. It’s easy to romanticize any of these stages.
Jordan: Yeah. It’s also easy to forget how far you’ve come. Rok and I had a moment the other day. Rob’s my CTO and really my co-founder at this point. We’re really partners. He runs the tech team, I run the rest. We had a moment because we hit 100X from the time he joined. We were like you know what? Let’s take a little time out, get on Zoom, have a drink, and have some laughs because we just keep going through these milestones. There’s so much to worry about and think about, it’s tough to even look back at what we’ve done.
Rob: I’m glad you guys took that time. That was something I was not good at with celebrating the wins and celebrating the transition, and oftentimes, even realizing we were making the transition from one stage to the next. It was Sherry, my wife, who encouraged me to slow down and be like you realize you just built a million-dollar business the day that we crossed $83,333. I was like wow, that really is something that I’d been wanting to do for a while.
Jordan: Yeah, and they change. Recently, this week I had a new milestone. We closed our biggest deal ever, and I never talked to the prospect at all.
Jordan: The team did everything. We’ll get into these stages and the stage that we’re in now. Let’s get there. Let’s start at the beginning.
Rob: Six stages. I’ve named each of these stages because what I’ve noticed is I’ve already (and a lot of folks already) used terminology around this, like pre-launch, post-launch, pre-product market fit, and post-product market fit, but I’m tapping into your and my later experience. Have a couple of stages that I think are cool to define and think about because I think if you do get into the multiple millions of dollars, that you will enter those. We’ll get to those in a bit, but pre-launch, we’re going to start there.
Obviously, I could tell a bunch of stories of pre-launching different stuff, but I’ll stick to Drip for my examples here. Obviously, you’ll stick to CartHook. Pre-launch, for me, was a bunch of customer development, and it was a bunch of validation. That was even pre-building. It was going out. I had 17 email threads going with founders saying if we build this would you pay this much for it? I got about 10 or 11 people said yes, I would at least try it out.
For me, it was a lot of marketing as I had a contract developer who was building into the background first half-time, and then he switched over to full-time. That contractor is a guy that a lot of folks may know. His name is Derrick Reimer. At the time, he was just a 1099. He was a friend of mine who wrote Ruby, and he was a good developer. This was going to be really the first app that I had built that I wasn’t going to write any code on. It was partially an intentional decision to pick a language I didn’t know.
My memory of that was me and this contractor both working remotely. We would chat on the phone once or twice a week, and we had met once to basically spec out what the original version of Drip was going to be. I was thinking about that, I was building the marketing list, I was going on podcasts, and I was running some Facebook Ads to landing pages to test value propositions, I mean all the smoke test stuff. I was also doing some MicroConf stuff, speaking, and the podcast. I was staying busy, but it was very much one of many irons in the fire that I had going on. I’m curious to hear how your experience with pre-launch compares to that.
Jordan: Similar in that your real pre-launch started years prior. What allowed you to really hit the ground running was years of work prior, and yes, the same for me. I ran an ecommerce company with my brothers several years prior to starting CartHook. My customer development was my own experience. My pre-launch was consumed with figuring out how to get a product built if I am not technical myself. Going through all these different options, talking to agencies, looking for freelancers, looking for employees, and looking for co-founders. I just went through all these different options.
I knew the product that I wanted to build. It was a cart abandonment app. It was something similar to what I used as a merchant. I knew it made me money and didn’t cost too much. The ROI was great. I knew I wanted to build something that specifically generated new revenue for merchants so I could price based on a percentage of revenue. I had all that, and my pre-launch challenge was how do I get someone to build this? As often happens, it was preparation plus luck. The luck for me came in the form of bumping into an old family friend of my wife’s.
We were doing our 18-month excursion where we lived in a different city for a month or two to figure out where we wanted to move. While we were in San Francisco, I bumped into the younger brother of one of my wife’s friends from back in Connecticut at the laundromat. I had just known him through the years as the computer whiz kid. It was just a coincidence. We ran into each other, then we started having coffee, and then it turned out that he had been doing a bunch of freelance work. He really wanted to basically learn more on the business side.
We just had this match between I want something to build, he wanted to build something, and that’s what happened. I gave him a piece of the company, basically took three months off from freelancing, built the first version of the product, and then handed the baton over to me to start selling. That was my version of pre-launch.
Rob: Wow. The younger brother of a friend of a sister in a laundromat? Sounds like you’re making it up. It sounds ridiculous.
Jordan: Look, his line item on the cap table will speak the truth. That it’s very real, it’s there, and I hope it really works out for him.
Rob: Quite a trip. A lot of questions for you actually because I haven’t heard you talk much about this stage of your business. As an investor, I guess I should have said that upfront. I’ve invested a couple of times in a couple of rounds in CartHook. I’ve been along on the journey with you, but I wasn’t involved yet at this point. I’m wondering, did you validate this idea? I’m imagining this already existed at the time. Why did you decide to build something that already existed, if that was the case?
Jordan: I liked the low-risk approach of that. I used to use a product just like this, and it was a terrible product. It made me money. When I looked at software ideas after selling the ecommerce business, what I did was I looked through our credit card statements. In the ecommerce business, where were we spending our money? I just identified that app as really high value and really low quality. What I said was okay, what if I build a better version of that?
At this point in time, I don’t really have the intention to build a company. My intention is how do I make $10,000 a month so I can do whatever I want. I don’t know where the software thing is going to go, but I like the idea of recurring revenue.
Rob: Life’s now business.
Jordan. Exactly. I wasn’t full-time on it, I was just exploring. I had worked in a previous business where I was a partner that had this quirk. It generated revenue about a year after doing the work. I had about a year of income without doing any work. That’s when I just said okay, I need to register to replace this income, so I can maintain this freedom to explore. I wanted specifically low risk. I didn’t want to come up with something new and not know if it was going to be wanted by the market.
I had my own validation. What I did, really, as part of being able to convince Charlie, the developer that joined me as the original co-founder, I did the legwork to show him that he wasn’t going to waste three months of his time.
Rob: That’s what I was going to ask you.
Jordan: That was the big thing to convince him. I said look, I’m the business person. I’m not just talking. I used to be a merchant, and I’ve been emailing. I did the cold email thing—30 different people a day—I had an inbox full of people saying, yeah, that’s interesting. I would be interested in looking at that. I would pay for that.
Rob: We get emails in the podcast and I get just emails to me personally about how do I find a developer, a technical co-founder if I’m not technical? I always say you prove your worth as that non-developer side. You prove that you can market, you can make sales, that you will hustle, and you will do work alongside that developer so that they’re not working for three months, like you’re saying, while you’re sitting around doing your thing, and then suddenly you’re going to magically market this thing. Most people aren’t able to do that. I didn’t know that.
My next question was going to be how did you convince him to do it? I love that you basically lived that. You showed him that it was worth it and that you could potentially build it. It’s interesting. You thought that you could build something similar but just better because the UX, the user experience of the other one wasn’t good?
Jordan: Yeah. The design was horrible, the UX was horrible, and the onboarding was terrible. It was a bad piece of software but it made me 3000 or3000or4000 every single month, and I paid them $79 a month. I would never cancel it because it kept making me money. I basically said I want to be that guy. That was where I landed. I had a few other ideas. That’s my pre-lunch.
Rob: What’s cool is the parallel of when I launched Drip. I say ‘I’ because at that time, I viewed it as another one of my apps. As we get later on, it’s we because it was Derrick and I as co-founders, and then it was a team of people. When I launched Drip, I absolutely viewed it as a lifestyle business. Similar to you, I was thinking I had already grown HitTail to about 25,000 or25,000or30,000 a month. That wasn’t super interesting to me anymore, I wanted it to be bigger, but I didn’t expect it to grow as quickly as it did from a start.
Once we got into it a little bit I did, but I was really mostly thinking about it like you were just like hey, I want to freaking build a business that throws off a bunch of cash. It’s funny that we wind up going down similar about different paths.
Let’s talk about post-launch. For us with Drip, as we were working on this, it was from about obviously zero in MRR. We built for about six months and then started a slow launch where I would launch to 300 people on the list. I think the total list was 3400. It’s about 300 people every couple of weeks. Getting them and we were trying to get onboarding set. We were trying to not churn everybody out. By the end of that launch, we were between 7000 and7000and8000 a month in MRR.
Over the next six months, we were flailing trying to find product-market fit because I was driving traffic, I was marketing it, and I was doing all the things that I had done in the past that had worked and they weren’t working. Churn was too high, trial-to-paid was not great, and it just wasn’t working. From about 0 to around0toaround10,000 or $12,000, I view this as a pre-product market fit stage, post-launch/pre-product market fit.
For those you’ve heard product-market fit on the podcast a bunch of times, I have a text expander in my head of product-market fit equals you’ve built something people want and are willing to pay for. That’s how I think about it. And are able to reach them at scale and have a bunch of leads because to me, that’s escape velocity, which is two steps from now. That’s the stage I’m […] to. But at this point, it was me and I believe Derrick at that point I’d say hey, I’m thinking of buying a house, I need a couple of pay stubs, W-2 in order to buy a house. We switched him over from 1099 to W-2, and I think he was making about the same amount of money, but it was more of an accounting thing.
At the time, I believe, Derrick and I were the two W-2 employees, in essence, working on it. It was still super scrappy, we had no office. Derrick would come over to my house. There was a […] on my property and we would sit there, chat, map this stuff out, and talk about what we were building next. It was totally freewheeling. It’s just week-to-week, day-to-day. I was doing the email support for the first few months until we brought someone in. That’s my post-lunch, pre-product market fit story. I will add, this was perhaps the hardest part because it was the mental game of not knowing if we were going to find product-market fit.
It took us from November 2013 until about it started changing in May, but it really peaked in terms of churn just plummeted, trial-to-paid doubled, and just every sign of product-market fit you can imagine happened in a 90-day span from May to August of 2014. Depending on how you measure it, it was somewhere between six and nine months from launch to where, oh my gosh, the unit economics on this business all of a sudden are amazing. The ROI of dumping more leads into the top of this funnel is going to scale this thing. That was the moment that I feel like that was product-market fit. That’s that stage three, so I won’t go into there yet, but I’m curious to hear similarities and differences of your post-launch, pre-product market fit stage.
Jordan: Look, good for you because mine was an extended torture session of 12 months, I guess. It was not pretty. This stage, like really good off the ground, launching, and generating some revenue was really no fun. What happened was Charlie passed the baton over to me. He built the product to a point where it’s good enough and now let’s start to sell it. I started with cold email and it worked. I got it to 500 MRR, then500MRR,then1000, then 1500. And then, Charlie got the offer of a lifetime for just his dream job at1500.Andthen,Charliegottheofferofalifetimeforjusthisdreamjobat1500 a month. I had to just tell him you have to take this job. I’m not going to let you stay with me. I’m not even doing it full-time. It’s making $1500 a month. This is your dream job. You have to do it.
He agreed and he took the job and committed to continuing to help nights and weekends. Then I was alone again. I was doing it half the time, I didn’t really know if it was going to go anywhere, and I was just filled with doubt on it. I just kept going. I figured out a cold email system that allowed me to grow faster. I had information built with, got sent over to a VA, then they qualified, and then they sent those records over to another VA that loaded them up into the cold emailing software. What got spit out of the process was scheduled demos for me. Then I would just do a few demos a day and then we started to grow. That got to about $3000 a month and then a little bit more luck came my way.
For me, this first phase really ended when Adii Pienaar, God bless him. We know Adii from the MicroConf community and just from the startup scene overall. He’s a great guy. He built a company called Conversio that just recently got acquired by Campaign Monitor. He’s obviously from WooThemes and WooCommerce prior to that. When Adii was starting his new company, Conversio, he emailed me and effectively offered an acquisition/partnership. He said look, I think what you’re doing with CartHook is interesting. I have this thing going on. At the time, it was called Receiptful. He said would you think about joining me?
I knew that it was too early to have any financial impact, but the conversation got me thinking. It made me perk up and take the opportunity more seriously with what I was doing. By coincidence, I was in New York at the time and started telling some of my friends about this potential partnership/acquisition interest. That’s when my friends, who all went into finance and made far more money than all of us, said why would you do that? It’s so early. Why don’t you just take a few bucks from a few of us and really give it a go?
That’s what started the next chapter for me because when I entertained really taking money, I knew I needed a full-time technical co-founder. That’s when I found Ben Fisher and that’s when we teamed up and the business changed trajectory. That first phase was just 12 months of doubt, pain, taking every credit card over the phone, and just doing it that way until it got a little bit of interest. Then I used that interest to parlay up into investor interest and then raise money. That’s when the next stage started for me.
Rob: That is crazy. That is also another case of serendipity in essence, right? Just a weird conflux of ATP and are asking you all that stuff and not getting you talking to some friends who decide to convince you guys around. What’s a trip is that’s when, at least the way I have it in my Google spreadsheet that I track my angel investments, I have September 2015 of writing the first check. My memory is you were around $5000 MRR at that time. Did you raise me on this?
I probably told you this in the past, this was a pre-Drip exit for me, so I had some money, but I was not in a place to be crazy with cash. I was still trying to grow Drip, and I was honestly trying to conserve cash. I had done a couple of angel investments prior to that. One of the things that I liked about what you were doing because we knew each other, you’ve definitely done Attendee Talks. I don’t know if you’d spoken at a MicroConf yet or not, but we had definitely hung out at MicroConfs.
The way that you executed, you just hustled. The whole cold email system that you explained to me at the time (and I was super impressed by that), the fact that you had scrapped as a non-developer founder to $5000 MRR in SaaS, which I knew is hard enough to do if you’re the one writing the code and doing everything. The other thing is the Bootstrapped Web podcast. I listen to you talk every week or most weeks, I guess. Three weeks out of the month. I was like this guy’s sharp. He just thinks about things in a way that I think makes sense. It felt to me like you were going to be successful. It was literally a bet on you more than even an abandoned cart.
I was like, an abandoned cart? Cool. I don’t know the abandoned cart space, I don’t know if there are 10 apps, I don’t know ecommerce. But if you’re telling me you think there’s an opportunity there—I’ve seen you execute on this—I want to be involved in this. That was a big piece of it for me.
Jordan: Thank you for saying that, by the way. All of us have these serendipitous moments come through. What I got good at over the years was just identifying how to take one small little thing and just keep parlaying that up into bigger things. That is a theme throughout the company. The way I found Ben Fisher, the co-founder, is he signed up for my product. He just had a cool email address, then I looked him up, and he sounded legit. I got on the phone with him and then impressed him enough to join me as co-founder. It was, again, a tiny little breadcrumb. I think all of us are surrounded by these things.
Building up the radar on knowing I should pursue this little tiny thing because there might be something bigger. I don’t know if it’s talent, skill, luck, or some combination of them.
Rob: I had said that post-launch/pre-product market fit for me was the most painful, agonizing part of the journey, do you share that sentiment, or were there times later that have been worse?
Jordan: Two stages from now was the worst for me. I’ll explain that. For me, stage two—post-launch—just felt like an extended torture session that I had to go through on the way to the next thing. I didn’t like it. It wasn’t for me. I would love to skip it on any other company in the future. It’s just something that I had to just deal with until we got somewhere better.
Rob: If you look at the State of Independent SaaS Report that we did or just look general on the internet and see revenue reports, most people don’t make it to the next stage. Stage one was pre-launch, stage two is post-launch/pre-product market fit, and stage three is product-market fit. Again, build something people want and are willing to pay for. For me, with Drip, keep in mind I also had an advantage that I had an audience at this time. That’s a big part of what got me to 10,000–10,000–12,000 without having to do the hustle and send the cold emails. I was able to lean on that audience for that initial kick-start.
Stage three I have as product-market fit. The numbers that I wrote down—this is starting to be from memories, so you got to give it a little fuzzy around the edges—is from about 12,000 MRR is up to about12,000MRRisuptoabout25,000 MRR. That was me and two W-2 employees. It was me and Derrick. As we were going through this phase, this is when Derrick and I started talking like you’re indispensable here. Derrick was starting about going off and doing his own thing because he’s entrepreneurial. That’s when we had to have that conversation about let’s figure out a way to make this work for everyone and make it worth your while, basically, to stick around so you don’t feel like you’re working a day job.
During that time, we hired a second developer. We were just building the product out. We were playing catch-up. We were first at launch to try to compete. We were just going to be like an email capture thing and autoresponders, then it’s like we’re going to compete with MailChimp and AWeber, and then we realized that the real market with the real money in it was—not that MailChimp’s not a real market with real money—that we could go up-market and compete against the Infusionsoft. At the time, it was Office Autopilot that later rebranded to Ontraport. It’s really not on most people’s radar anymore. Then ActiveCampaign was just coming about. They had been I believe white-labeled software, downloadable software. They were not really SaaS for that long before then.
We realized, wow, there’s so much more money the higher price points there. This product-market fit stage was from 12,000–12,000–25,000. We were building out the product and I was just trying to find repeatable marketing channels that extended beyond my audience because I really had exhausted just the usual my things. I call it a concentric circle marketing where it’s like first I’m going to talk to everyone who listens to me—my email list, Twitter, and podcast list. The next one out is my friends’ audiences, so I go on podcasts, I do that. The further out you get it’s like can I make content and SEO work? Can I drive cold traffic from pay-per-click ads? Can I do webinars?
This was a very scrappy phase of just trying to find repeatable channels that drove repeatable traffic. Again, at about 25,000, that’s when I felt like we had started hitting our stride, which is stage four. I won’t go into that yet, but I’m curious to hear how your product-market fit, essentially25,000,that′swhenIfeltlikewehadstartedhittingourstride,whichisstagefour.Iwon′tgointothatyet,butI′mcurioustohearhowyourproduct−marketfit,essentially5000–$20,000, how that went, and how you think about it in retrospect.
Jordan: I remember when Drip launched. The power of getting off the ground. I remember because I was in the struggle at that time. I don’t know about the timing but I’m pretty sure we were under 10,000 in MRR. Once you get to10,000inMRR.Onceyougetto10,000 MRR in 60 days really shows the power of an audience. We still see that these days. We see my podcast co-host and friend Brian Casel launching something with an audience. We see Adam Wathan and Steve and how much value they give. Whenever they launch a product it’s so much easier. I will remember that for the future.
For us, this stage, that 5000–5000–20,000, was bookended with success at first and then failure toward the end of the stage. Right around 5000 is when we raised some money. We raised friends and family’s money. It was like5000iswhenweraisedsomemoney.Weraisedfriendsandfamily′smoney.Itwaslike275,000, and that allowed us to go full-time, focus on it, and hire two engineers. It was myself, Ben as co-founder, and two engineers. Those two engineers are still with the company, by the way. One of them is Rok who’s the CTO. The other one is Jan who is now on infrastructure.
We built something actually worth paying for. We improved the cart abandonment product and then I went on a search for a flywheel. Just something better than the cold email because as soon as we left the Volusion market, which is where I built my ecommerce business and it was really easy to email the owner of the company, cold email stopped working. Then we had to figure out a better way. What we ended up figuring out were partnerships. What we would do is we would do the integration with a platform, then we would try to do some co-marketing, and we hit onto this perfect situation with a platform called Cratejoy.
Cratjoy was a brand-new ecommerce company run by Amir. He used to work at Zynga, who’s super smart, and they were growing like crazy. Full-on hyper-growth was just crazy. Every one of their merchants kept asking them for cart abandonment email. They didn’t want to build it themselves, and I just stuck my head out at just the right time and said we will build it for you, and then you could just tell her customers that they could use us so you don’t have to worry about it. He was like that’s exactly what we need to do.
We did the integration and then what they did is they took us and just built us directly into their admin. Everybody that created a new account saw CartHook right in front of them and then a lot of people signed up. That ended up being so critical to the whole life of the company because as we started growing in this way, the failure bookend of this phase was really coming to terms with the fact that cart abandonment was just not going to do it for us. The market started to get crowded, everyone started to go cheaper, our differentiator started to get worn away.
Our thing was that we captured the email as soon as it was typed into the field, and only the larger, much more expensive solutions were doing it, and then everyone else started doing it. I just did not like the future of the company in cart abandonment, and that’s when we made the decision to build the second product. But we couldn’t have done it without the flywheel, specifically from Cratejoy because what it allows us to do is spend six months building a new product while the revenue just kept growing anyway.
Rob: You self-funded yourself out of revenues in essence. I remember the conversation where we talked on the phone and you said I see this opportunity that’s not cart abandonment, and I want to build a second product. I was like, shiny object syndrome. I was like you need to convince me. Every founder ever wants to build a new product, why? You convinced me. My memories were like look, this is super risky, it’s another product. You now have to go find product-market fit again, but you’re mired in this every day and you’re thinking about this 100 hours a week. This is where you want to go with it, then you got to trust your gut. This is that founder gut-check moment.
Jordan: Yeah. It was very risky but I pretend to be more risk-loving than I really am. I always want to protect the downside. In many ways, I’m risk-averse, but I want the cake and to eat it too. I want to take additional risk while also protecting the downside. That’s the situation I found myself in when we said at the very worst, this thing’s just going to keep growing but slowly, because of the flywheel we’ve built. Even if we take this risk, at worst, I pare everything down. It ends up as two people doing 20,000, and we can survive. It was definitely a huge risk to take to build a second product with a team of four people and20,000,andwecansurvive.Itwasdefinitelyahugerisktotaketobuildasecondproductwithateamoffourpeopleand100,000 in the bank.
Rob: You had this cart abandonment app that was thrown off, let’s say, $20,000 a month and you used it to build the second product. You want to tell folks what that was and why you saw an opportunity there? Why was it unique? There was timing involved in this.
Jordan: Yes, there was. That’s right. Here’s what was happening. Everyone knows Shopify now and the incredible success story rocket ship like ridiculous performance that they’ve had, especially since going public. When we were in the ecommerce market, this was four years ago, Shopify was becoming successful and being talked about, but it was not the clear, straightforward, obvious winner in the market.
What was happening was as Shopify got better at making it easy to launch a physical product business and the ecosystem around it of fulfillment and importing from China, all these things started coming together in such a way that made selling physical products almost as straightforward and hands-off as selling digital products.
What that did is it started to attract all the marketers that were traditionally in the digital marketing space selling courses and e-books, it started to attract them into the physical product world. It is much easier to sell a physical product than it is a digital one in many ways. You put a picture of it on the site, you write some copy around the benefits, you put a price, and then there’s a buy button. It is much more straightforward than a digital book that explains how to do X, Y, or Z. That started attracting people, and at the same time, ClickFunnels was exploding.
The reason ClickFunnels was exploding was because it was building products in the market of those traditional digital marketers, but it was showing them how to very easily build things that sell physical products. The problem with ClickFunnels was that it didn’t have the infrastructure on the backend like inventory, fulfillment, and shipping. It just had a great system to just put up a landing page and be able to sell, most importantly to sell with post-purchase upsells. What people were doing is they started selling physical products on ClickFunnels. They would find success, but then they would run into the issue of not having enough infrastructure to do fulfillment, shipping, and so on.
They were dealing with CSV exports and losing their minds. Then they went over to Shopify, which had a much better system for selling physical products. But when they did that, they lost a lot of the marketing strategy functionality around the checkout and post-purchase upsells. There was just this huge pool of marketers that wanted to sell on Shopify with the post-purchase upsell functionality. That’s what we saw as the opportunity. If we build post-purchase upsells and a customizable checkout for Shopify, all of these people that are currently on ClickFunnels and want to come over to Shopify will come over along with our ability to provide them what they want. That was the moment right there in the market.
Rob: That was the right bet based on your growth since then. It’s a trip, and you no longer have the cart abandonment functionality at all, right?
Jordan: That’s right. We sunset it from the public eye, maybe 6 or 12 months ago, and we just left some of the merchants that wanted to stay on. It is amazing how long people will keep software around if you keep making them money. We haven’t touched the thing in three years, but we still have people paying us $100 a month because it keeps making them money.
Rob: It’s back to your initial premise of I paid 3000 or3000or4000 a month, or I made 3000 or3000or4000 a month from this software, and I was never going to cancel it as a merchant. That’s the thing.
Sorry to break in here but that is the end of part one. To recap, Jordan and I talked through the pre-launch stage, the post-launch/pre-product market fit stage, and the product-market fit stage. Part two that comes out in about 48 hours, we will cover the remaining stages of SaaS growth. Thanks for listening. I’ll talk to you then.
In this episode of Startups For The Rest Of Us, Rob talks with Derrick Reimer, co-founder of Drip, about his new SaaS application Level. They talk about what inspired the idea as well as ways Derrick went about trying to validate it.
Items mentioned in this episode:
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Derrick: I’m Derrick.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you this week sir?
Derrick: Well, I am deep in the process right now of building out some mockups of my new app called Level, to hopefully get some more concrete things in front of some of my early access list folks.
Rob: That makes sense. If folks are interested just right from the top, level.app is the domain name. You have a really tight landing page. If you’re listening to this and you want to see–this is maybe 400 to 500 words of text–and it is on point. You’ve got the headings, you can skim it, at the bottom is fomo, the reserve your handle today, you can claim a little slice of real estate on level.app. Then you have the social proof, right? 3,542 people who have reserved their handle including me, and so if your name is Rob, I’m sorry but I got level.app/rob. How’s the landing page working for you?
Derrick: It’s working really well. That is actually a live query now showing the current count. It works surprisingly well. I wasn’t sure exactly what to expect when I first built that but I figured that the scarcity play would be effective. I and had a few conversations with folks at MicroConf too, about this. I saw their eyes light up, and they’re like, “Oh yeah, make sure to let me know before you do that.”
Rob: That’s when you know you’re on to something.
Derrick: This is a good sign. They can appreciate it from a from a marketing ploy and then they’re like, this kind of instinct of, “By the way, I really want to know when you do that so I can get mine.”
Rob: For those listening, if you don’t know what Level is, it’s an alternative to real time chat designed for the software development workflow. I just pulled that right from your landing page but it’s ostensibly a competitor to Slack but a much less interruptive experience. More asynchronous, not the blinking red dot, I guess it’s not blinking in Slack but everything’s synchronous by default. In Slack and you’re going for the opposite in essence, and this stems from?
Derrick: From really my experience with Slack. My first time using Slack was with Drip when we were a team of like two or three. It was not painful at all at that stage, but gradually, as our team size grew, it started to get a little bit more cumbersome. I remember actually, the first time I was in a “big Slack,” team was in our building back in Fresno. That was like an early warning that, “Hmm, I think this maybe doesn’t scale so well as your team grows.”
The building chat was full of just folks tossing around various pieces of information, most of them not urgent but often pushed through with an @channel or an @here, “Hey, there’s some cookies in the in the kitchen.” And it’s like, “Do I really need to get pulled out a flow to hear that piece of information?” That was like an early sign that Slack seems kind of broken especially when there’s a lot of people chatting back and forth.
That experience was reinforced after we were acquired by Leadpages and we joined the broader company wide chat. There was about 150 people in there, and a really similar experience where a lot of well-intentioned people who weren’t trying to interrupt each other, but the tool just kind of failed as in essence and made it really hard not to accidentally interrupt people’s flow. Level is really kind of a reaction to that problem. I just observed this over the course of years and I just couldn’t get it out of my head, so now I’m building my take at a solution.
Rob: Yup. You wrote a manifesto a few months back and published it on your blog derrickreimer.com. I see now you’ve you republished it at level.app/manifesto. In essence, you’re describing the pain points you’ve just indicated—of the interruptive stuff in your story.
Derrick: Yeah. The manifesto was kind of step one actually for introducing the idea to the world. I didn’t really waste any time after moving on from Drip. I think I’ve published it on my last day at Drip, is when it kind of soft launched. Then the following Monday, I really did a big push in the manifesto. I was just sort of itching to get this out into the world. That promotion was probably, I think it worked really well because it sort of made a splash, it made a bold statement. I was able to gather quite a few email addresses off of that. I think it was maybe 300 to 400 within the first couple of days, and so that gave me a nice launching pad of folks to start engaging with. Obviously, people sharing it around on social helps too. I think that was a really effective strategy for making the first intro to the world.
Rob: II know you had kind of been noodling on it for awhile just in the background in your head and because we’re faced with the limitations of Slack everyday working on the Drip team, and you left Drip was it February of this year or was it March? I guess it was three or four months ago?
Derrick: Yeah, three or four months ago. Beginning of March, yeah.
Rob: Because that’s the more important thing for someone who’s listening to this two years from now, they don’t care what month it is. You hit the ground running. When you published the manifesto, I remember you wrote it up in a Google doc and then you had a couple of friends come in and edit and make suggestions and all that stuff, and then you published. What is it Twitter that gave you most of your sign ups? Because I remember, it didn’t go up in Hacker News, right? It got a few or something but it didn’t make it to the front page which I was frankly surprised by. How do you think you got those 300 or 400 sign up for someone else who’s thinking about doing it?
Derrick: It was predominantly Twitter. I think that was effective particularly for me because this is a product that’s marketed towards developers, and that’s kind of the premier place where designer, developer types hang out online. I think that was where most of my strategy was focused was trying to get people to retweet it, to like it, to share it. I did assemble a list of folks who are in my inner circle, friends of mine who also have a decent following on Twitter and did manual reach out to those folks just to tell them, “Hey, I’m going to be sharing this thing, if you wouldn’t mind, could you please tweet it out to your followers?”
Most people are really eager to help out. I think it’s where a lot of the lift came from. I did actually try running some Twitter ads that day. I didn’t really tuned the audience too much. I just let Twitter auto choose that by hitting the promote button. That drove probably 30% of the impressions for it but zero activity. I would say majority, I think I put in maybe $100 into that just to see if this is going to help provide any additional lift. I think a majority of it was really organic shares on social. I also emailed my own personal newsletter list which is pretty small just like a couple hundred folks on there at the time. I think I generated some shares off of that as well.
Rob: I could imagine that. I remember there were some comments, I think it was on Twitter but my favorite comments are always the ones that completely missed the point of an article. I would spend eight hours writing something. I know you spent a lot of time writing this, and then you have a one sentence that has something that is debatably, maybe factual, and someone rips into that, and you’re like, “Dude, that has nothing to do with the point.” There was one of these sentences we’re talking about, “Yeah, once we started using Slack, it was great. This is not news now, but five years ago, it was pretty groundbreaking.” There were somebody like, “Well, 12 years ago or 15 years ago, I was using IRC.” That’s not really the point, what are we even talking about right? Did you did you have much of that or was it the minority?
Derrick: It was very much the minority. I think it was on Reddit actually, and maybe I sort of attracted some of that flaming because I did post my own manifesto on there which I know is a little bit against the way you’re supposed to use the service. I was like, “Oh, what the heck. I’ll just post it in the developer subletter or whatever.” Some people took issue with the timing of when Chat was invented. The whole notion of arguing that this whole argument is invalid because I got the year wrong on when it came to the forefront, it was just laughable.
Rob: Yeah, it is what it is. Luckily, that tends to be the minority thing but it does always side track. That’s actually one of the reason that I completely disabled comments on my blog. I got tired of those conversations going on. There were good comments, and then just the ones that were irritating, or ill-informed, or just obviously looking to nitpick stuff. That’s just not helpful. That’s been my own personal journey with that.
You posted the manifesto, you got a few hundred emails, and you’re on the Art of Product Podcast with Ben Orenstein, mutual friend of ours, and you’ve been talking about your process through that, so I’m sure that that has helped get other developers interested in what you’re up to and probably slowly built your list over time. Once you had that list, what were your next steps? Because I know that you and I had talked about this a while back. This is a very ambitious project, and it’s either going to be awesome, or you’re just going to get smoked by Slack. They’re just going to stomp you, or not even notice you, and no one’s going to switch because of the high switching costs. It’s one or the other, and you’re fully aware of that upfront. What were your early steps of trying to validate the idea a bit more than just positing, “Hey, I can build a better Slack.” It’s like, “Okay, step two is…” What are you up to next?
Derrick: I was definitely leery of making the classic mistake of taking a little bit of early indication that we’re on to something, and just running with it and not talking to anybody—which is a mistake that I’ve made before in the past—and so many folks do. I really wanted to air on the side of having too many conversations with people to try to asses out is this, “Am I on the right track with this? Is this actually going to sell well in the market?”
I think it was within a few weeks after launching the manifesto, I sent an email out to the list. I decided to email the entire list which looking back was probably should have started with a smaller slice just to gauge what the response rate would be. But I basically emailed out and said, “Hey, thanks so much for signing up. I want to have a conversation with you and hear more about what your pain points have been with real time chat in the workplace. At this point, I’m not trying to propose any solution to you beyond what I’m kind of alluding to in the manifesto. I really just want to hear what particularly about real time chat isn’t working for you enough that you gave me your email address.”
I sent this out and I sent a Calendly link with that so that people could book a 20-minute slot on my calendar. I kind of reserved it to afternoons only, thankfully, to reserve the mornings for productive time. I think I got around 40 people booking time on my calendar.
Rob: Dope. That’s both really good news and also like, “Oops,” Were they 20 minutes each? What was that? 16 hours?
Derrick: Something like that. It turned out to be basically three and a half to four weeks of afternoons booked pretty solid. At first I was like, “Oh boy, this is a lot.” But I think, at the time, it’s early enough, I’m like, “This is probably where my time is best spent. Talking to people and hearing in their words what problems they’re having.” That did help guide the way I would thought about the product. I would say influenced where I thought the biggest emphasis should be.
I wasn’t sure if the emphasis should be on reducing interruptions, or just organizing content better, or should I be focused around really optimizing for asynchronous, where are the pain points actually. It helps clarify my thinking. One of the things that we’ve talked about a lot that helped in the early days of Drip was just getting feedback from people and looking for patterns. What are the things that we’re hearing over and over again, and those are likely to be things that we should be paying attention to. I did spot some of those themes and patterns. Looking back, it was helpful to have a decent sample size. If I’d only talked to 10 or 15 people, then that may not have been enough to spot patterns. I think it was good overall.
Rob: Yeah, I know it was a lot of time. It seems like you were learning quite a bit as you were going, and at that time, you didn’t have any mockups right? You really were just talking through how would this sound, or how would you use this, or that kind of stuff.
Derrick: Yeah. I tried hard not to actually tip my hand on what I was thinking. I just wanted to hear unbiased people’s take on like, “You know, if there’s one thing I could change about Slack.” or I ask questions like, “Do you use Slack threads and what do you think about them?” Or, “Do you use search heavily in Slack?” Just to get an idea of like how much are people relying on the tool to be their source of the repository of historical information, versus how much is just ephemeral conversations that get transferred into project management tools. There was a lot of things I was just trying to learn and SaaS out from people without tipping my hand too much on my thoughts of a solution.
Rob: Right. In the back your mind, obviously, you know that you need some kind of differentiation, pretty strong differentiation from Slack because everyone’s going to immediately compare you to Slack. One thing you’ve chosen is to niche down to developers, right? You know that interruptions piss developers off. It breaks your flow. You and I have experienced this first hand as our development team grew.
I used to tell people snooze your Slack for two hours, do not disturb it during this time, just try to get focus so that we can continue ship code at high velocity. You have that but there was there was one other thing, that early on, you made a decision to do that is potentially risky but it’s another differentiator. You want to talk a little bit about that?
Derrick: Sure. You and I noodled this little bit when I was just in the idea stage, and I think we were having drinks one day and I was like, “Alright. I think I figured out the one thing that’s going to really make Level stand out. Let’s open source it.” You spit your drink all over my face. There are examples of this happening, there’s Discourse, there’s Ghost, there’s GitLab, so there are companies that are already doing this.
Rob: Not in the chat space, those are in other spaces but it’s a mockup.
Derrick: Yeah. I will say there are other open source chat tools but I don’t think they’re really making any kind of headway as a business. They’re just open source only. The model of open source, the core code base, but then charge people for hosted version of the service is basically the model that I’m going for. The thinking behind it is that one, since this product is marketed towards developers, a lot of developers sort of appreciate when things are open source, when they can look at the source and see what’s happening with their data, and just sort of have that transparency, and also be able to download it, and stand up a cluster of servers, and manage it themselves if they really want to do that.
I’m sort of banking on the fact that most companies that have sufficient budget to pay for a tool aren’t going to want to go through the hassle of managing their own servers, and patching them, and keeping them up to date and all that kind of stuff. They’re just going to want to pay me for the hosted version. But if you don’t have the budget or if you’re bootstrapped, and you’re really scrappy, then by all means, download it, stand it up on your serve, and when you’re ready, you can transfer the data into the hosted service.
Rob: This was, in essence, around that you and I kept talking about, how you can have a free plan because I think you need one. We both thought you need one because that’s kind of part of the course in the space, and how are you going to do that as a bootstrapper, and not get killed by hosting costs, or not get killed by support and all that, and this is a way to do two things. That’s pretty ingenious if it works, and it’s, like you said, developers or more tech-oriented folks, this is in essence the free plan in addition to the benefit of it being open source which most people like, and then they can pay you for whatever the hosting, and the support, and as an almost SaaS app.
Derrick: Yeah, exactly. It’s not only the free plan but it also kind of paves the way for potentially offering on-prem if I’m sort of optimizing for the ability to setup the entire service from the ground up easily as opposed to just running a SaaS app or maybe you kind of cobble together your own hosting situation that’s not easily replicable. I think building it in this way paves the path for companies that don’t want to run a hosted service, or trust another company to run a hosted service for them, they can download it, and run it inside their firewall too.
Rob: Yeah, and that’s really interesting. Can you do that with Slack?
Derrick: No, I don’t think so.
Rob: There’s no on-prem version as far as I know. That could be an interesting enterprise play. I know that wouldn’t necessarily be the market you go after first, but if you get traction, you get name brand, and people are like, “Hey, not only is this open sourced–” which big companies tend to. They either hate it or love it, but if they understand it they’ll love it, and then like you said, you can do the on-prem play, and those are super expensive, that would be a really nice, high-end revenue source for you if you’re willing to put up with the headaches.
Derrick: Right. That probably would be down the line where I have traction, and a team, and I could kind of establish a team to run that end without me having to do all the sales and all that kind of stuff.
Rob: Totally, yeah. After you got all of the information from those Skype calls, I know you and I then met. I know you did a bunch of thinking on your own for a couple of weeks and then you were at a point and you said, “You know what, I have thoughts, it’s not ready to go into mockups yet. It’s not ready to build a UI. I have a bunch of ideas about different message types and how to structure these, let’s do wide port session.” And so you and I met at the local library, actually, in a nice little room, and you wanted to talk about I think, the value of that, or what that felt like and just the point of doing that.
Derrick: A lot of times there are these key points when you’re designing products where it’s like, there’s a lot of information scattered about and kind of coalescing that information into something actually tangible. It’s hard to hold that all in one person’s head, I feel like. I tried doing a little bit of solo whiteboarding, and I jotted down in a notebook, and I probably could have arrived at similar conclusions, but I think it would have taken a lot longer and probably wouldn’t have been quite as crisp and clear.
We whiteboarded for probably an hour and a half or two hours. I think we came away with some really concrete takeaways. It kind of started with like, “Okay, I have all these types of messages that people send in Slack. There’s water cooler type chat. There’s people shelling their work. There’s people announcing things to their team. There’s synchronous discussions maybe around an incident, or something happening in production where we’re needed to go back and forth quickly, and there’s people requesting something from someone else, or maybe things blocking their work.”
I had this long list of things. I was like, “Okay, I need to kind of build up what’s similar about these, what’s different, how will the application know what types of message do I need to ask the user to tell the app what type of message this is, or can we infer it. Then, how does this translate into a priority and notifications?” It was sort of like a really central piece of the application. I felt like I couldn’t just start designing UI because it all kind of hinges on how each of these types of messages is treated. I think this was a really good candidate for whiteboarding, and yeah, I felt kind of like we’ve reignited some of the magic from the Drip days–it was really fun too and motivating. I would say, if you’re solo founder, I think it can be really valuable to find a friend that you have good rapport with, and can kind of brainstorm with, and bounce ideas off of, and just get there kind of two brains thinking about the problem, it can often lead to a really great result in the end.
Rob: Yeah. I was, I don’t know–concerned is probably not the right word–but going into it I was like, “Uh-oh, Derrick’s been thinking about this for months and I’m way out of that whole process. Are we going to be able to rekindle the old magic?” On Drip, we just used to whiteboard all the time, and came up with really good stuff–I thought. I use to say, with the two of us in the room, it’s like 10 times better. We catch all the edge cases and it’s like you said, two people holding the whole thing in the collective heads rather than one person trying to do it. There’s always a back and forth, there’s your sanity checking, there’s just the collaboration, it’s just night and day. If you’re standing in front of a whiteboard on your own, I think you and I really found how different that could be when we started collaborating right on Drip.
Derrick: Yeah, because you’re thinking about stuff, and you reach these points where my train of thought hits a dead end. If you don’t have someone there to kind of either pivot it or just pick up where you left off, then it can be a really frustrating process. You feel like you’re slogging through mud, and just having a pair there to help keep things moving. There were times when we would sit there and just kind of stare off in the space for a minute or two, and that’s okay too. It was a really fun exercise.
Rob: I agree. Being comfortable with silence too. We’ve talked about this when I came on your podcast. If you are going to whiteboard with someone, one or two people, I don’t know if we ever found a third who is as in our own heads as we are, as in the flow. We certainly had some good collaborators at Drip but you and I can sit there for five minutes with complete silence and not feel weird. I think that’s a big thing is you let the other person think and you’re thinking as well.
That’s the other thing I think with whiteboarding is oftentimes, if I try to do it on my own, I’ll get to a point and I just get stuck. I just can’t get past this and that’s when you will step in, and be like, “What if we think about this?” It’s like, “Oh.” Now you got us past it, and we’re still in the flow, and then we could finish the whole rest the hour. But I would have stopped there and just got hung up on it for a day, potentially. I think that’s a good point where you’re like, you could have gotten there eventually but it may have taken you weeks, and it was 90 minutes or whatever for us. That was super fun, by the way. I came out of that feeling great.
You came out of that then with kind of a mental model of message types, and not quite UI. I know we threw you why ideas around. We never sketched anything but it was always kind of hand wavy and talking as we’re like, “This alert to do this in this flow.” Then did you go straight from there into mockups or what was your next step? I know there was a vacation in there as well, right?
Derrick: Yeah, I did take a little vacation. I’ve been having this feeling of like a little bit of guilt as a product person that I should be getting some more concrete ideas in front of users to get feedback—sort of what I alluded to at the top of the show. I did try to take a stab at building some mockups. I’ve been working on them for a little while now. It’s taking a lot longer than I expected. I think part of that is that, we had some concrete ideas formed from the whiteboarding session but like we said, they’re not actual envisioning of where the pixels will sit, and how the product will actually form together. It was still a pretty fuzzy vision of it.
It felt like I had a lot more work out of my head than I actually did when I started to lay out UI elements. I think that’s probably true of any idea where it’s easy to sort of picture this thing that’s not actually real, and once you try to make a concrete, it’s like, “Oh, there’s actually a lot here to still think through and work through.” Perhaps actually, we could whiteboard on this again and maybe burst through another kind of wall, or I just need to keep slogging through it and returning back to it every so often, and incrementally building it out.
Rob: Yeah, that makes sense. It sounds like you hit—not a robot necessarily—but it’s a bit harder, a bit more challenging than you thought it would be. Mockups are often like that. You’re almost trying to invent something new and you have to thread a needle because you can’t be Slack but you can’t be email.
Derrick: Most of the difficulty that I’m having is centering around this inbox in Level. That’s one of the core pieces of the product is–it’s something that’s really missing from Slack–is that I want to have one place where I can come to and quickly see, in priority order, all the things that need my attention. Then I can step away for six hours, go into deep focus mode, come back, and feel confident that everything I need to see with relative urgency is it’s all laid out for me just as I want it.
Once you start kind of exploring, “Well, what happens when there’s 100 messages posted in this group and 50 in this group? How does the inbox mutate over times, that things don’t become overwhelming, and it doesn’t devolve into kind of the email inbox mess that so many people experience? How can I actually make good on the promise that I am threading the needle well between email and chat?” Once I overcome this, it’s going to be, hopefully, something really good and is really going to resonate with people. But until then, I don’t feel like I can just start showing these theoretical mockups where I just kind of hand wavy say, “Oh, it’ll be always manageable for you.” I want to give some proof that I’m actually on to something–some framework or some methodology for categorizing and organizing these messages.
Rob: Right. Because the challenge when you’re building something new is to validate your most risky hypothesis–that the ones that are most likely to fail where the risk is. Typically, it’s not the code itself unless you’re going to build—“I’m going to build an AI engine to predict stocks.” Well, it’s like, “Alright, that’s your first thing. Can you even do that?” But here, you know that you can write the code to make messages go in and out of a queue and come out of the things. There’s two risks left that I see. One is, can you design a UI that is novel enough, and does thread that needle between the two, and is 3X better or 5X better than the other experience for a certain group of people. Then the last risk will be, will people pay for it?
You validated that somewhat through building your email list and having this in-person conversations. I’m guessing once you have mockups or at some point you’re probably asked for whether it’s verbal commitments, or you may take money upfront, and I don’t think you’ve decided on when you’ll do that. That is a big issue—building the mockups and figuring out how is this flow going to work, and is it as novel enough and iterating on it until it is.
Derrick: I think this is arguably one of the most important pieces to work out because without this, the whole promise falls down. It’s one thing to just introduce threads for example. Slack has kind of arguably, poorly implemented threads. If I just implemented something that was just like, “Oh, everything’s a thread. That’s great but that still doesn’t solve the problem of not being a complete catastrophe when you step away from it for a long time.” It’s one of the critical moments, I would say.
Rob: Indeed. I want to switch up a little bit. We’ve talked a lot about the specifics of Level and your process of validating it, and getting the design going. I’m curious, this is in essence, kind of the third app or third startup really that you’re launching. I know that you launched a couple that came and went pretty quickly. But then, you had obviously, Drip with me. You did Codetree, codetree.com which is kind of project management that sits on top and you did that on the side. You sold that while we were, actually, right around the time that we sold Drip, you sold that if I recall.
Derrick: I sold that, we sold Drip, and I sold my house when we moved. I had three big sales.
Rob: That was crazy.
Derrick: Talk about massive liquidation.
Rob: I know. This really is, for all intents, your third act here. I’m curious if you think it’s easier this time around, is it harder, is there more pressure. Talk me through the emotional side or the mental side of where you’re at with it.
Derrick: I think it’s unique in that, with Drip, I started out as a contractor, and so I was gathering a paycheck. Then I went full time on it and then we had HitTail bankrolling our efforts a bit. It was a self-funded endeavor that was throwing off enough money for a least a decent paycheck so that I could live. Codetree was a side thing–that was nights and weekends. I was basically sacrificing my free time, but in exchange, it wasn’t really costing me actual money. Now, this is the first time that I’m really, as an adult, going off and saying like, “I’m not going to earn any salary or revenue for the whole time that I’m building this thing, or at least until I launch it.”
I think that that introduces, in itself, a bit of pressure that I’m trying to just like always mentally overcome that. Obviously, selling Drip and Codetree helped give me a little bit of runway so that I can afford to do this. That’s arguably the whole reason why we do this is so that we can afford to work on the things we want to work on. I’ve had to do some things like, set aside my living expenses for the next year, and figure out loosely what my budget’s going to look like, and then make transfers from this account to my checking account, and just say like, “I’m paying myself for the next year. I’m not allowed to think about money or stress about it.” It’s a work in progress but working on trying to do things like that to keep myself sane and not get too stressed out.
Rob: That makes sense. I find it funny you’re like, “This isn’t the first time as an adult,” because you were an adult all the time but now you’re married. You have real expenses. You live in a city where the cost of living is not super high. But Minneapolis is definitely akin to a California city that’s not L.A. or San Francisco. It was similar to Fresno which is not super cheap. It’s not like you’re going to live on $2,000 a month here. Depending on how you live and where you live, it’s a non-trivial sum.
I’m glad you did that. I know that you were stressed early on about burning some cash. As you said, the two exits you have helped bolster that, but I think your wife also distinctly gave you permission. She’s like, “You need to do this. You earned this.” Is that the phrasing? It was something like that. Like, “That’s what you did these other ones.”
Derrick: Exactly. This is not the time now to say, “Oh, I don’t know. Maybe I should keep a job and do this nights and weekends.” She’s like, “No, no. This is the whole reason why you sell companies.” I think she has a lot of wisdom in that.
Rob: Yeah, I would agree. Cool sir. Thanks for joining me today while Mike is out of town filling in our 399th episode.
Derrick: Oh my gosh. You’re one off from 400.
Rob: Isn’t that crazy? We’re going to figure something out to do that’s like a big bang, not just Mike and I talking about five ways to wrap or something. Can we do something different? We were the worst at that. We’ve looked back and I think 300 we may have just done a normal episode, that’s kind of a shame.
Derrick: Yeah, you got to take these milestones and squeeze some juice out of them.
Rob: Yup, yup, celebrate them a bit. Cool sir. Well, if folks want to keep up with you, they can hit level.app yeah and then derrickreimer.com. That’s where you blog now and again about your experience. You’re building Level for developers out there, you’re building it in Elixir and Phoenix.
Derrick: Elixir Phoenix is the web, framework web, kind of the rails of Elixir.
Rob: Well, I think for most people.
Derrick: Yeah, for most people. It’s a fairly proven technology but still on the newer side. I feel it’s really exciting. It’s predominantly centered around functional programming languages. Elixir and Elm, they’re very functional. It’s a bit different from what I’ve been doing. I’ve been writing Ruby for the past eight years, but yeah, I’m having a lot of fun for it. I’m hoping that the Level codebase can be a good example of like a full-scale SaaS application that’s kind of out there in the world for people to reference.
Rob: Yeah. I obviously don’t know any of the languages you’re using but you have such a good way of organizing our codebases, and your Read Me was super clean. I was like, “Ha, if I had a few extra hours this week, I would just run these commands and try to see if I get this thing right.” It was kind of fun. It was good to see it and then get out there. Cool. Well, thanks again for coming on the show.
Derrick: Yeah, thanks for having me.
Rob: I think that wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690, email us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt, it’s used under Creative Commons. Subscribe to us in iTunes by searching for Startups. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.