This episode is part two in a two-part conversation. If you haven’t already, listen to Part 1 first.
This week is the second part of a conversation between Rob and Jordan Gal, the founder of CartHook. In the episode, Rob and Jordan dig into the 4th, 5th and 6th stages of SaaS growth and compare their journeys 1:1 between growing Drip and growing CartHook. They come across several parallels between their journeys, as well as some differences. This episode is part two in a two-part conversation.
Jordan started CartHook as cart abandonment software and later pivoted into a checkout replacement solution for Shopify. He has been on the podcast several times answering listener questions and has spoken at a handful of MicroConfs. He is also the co-host of the Bootstrapped Web podcast.
Every time we come up against the hill and then climb it and get to the top, when we look outward, we see so much more. So, the opportunity just keeps getting bigger the further we go. We’re not even close. We’re just barely getting started.
– Jordan Gal
What we discuss with Jordan Gal
- 1:10 Rob’s experience with Stage 4: Escape Velocity
- 4:35 Jordan Gal’s experience with Stage 4: Escape Velocity
- 9:06 Parallels between Drip & CartHook’s journeys
- 9:50 Jordon on hitting limitations and looking beyond money
- 15:27 A fast-growing business isn’t profitable
- 17:26 Rob’s experience with Stage 5: Scale
- 21:54 Jordan’s experience with Stage 5: Scale
- 25:10 Stage 6: Company Building
- 27:39 The range of skills founders need when building a startup
- 30:18 Jordan Gal on the future of CartHook
Links from the show:
- Bootstrapped Web
- Jordan Gal | Twitter
- [Watch] Two Years in the SaaS Trenches – Jordan Gal | MicroConf Starter 2017
- [Listen] “We Went from Hundreds of Free Trials to a Few Dozen…On Purpose” with Jordan Gal | Episode 476
How can I support the podcast?
If you enjoyed this episode with Jordal Gal, let him know by clicking on the link below and sending him a quick shout out on Twitter:
This episode covers the final stages of SaaS growth that we didn’t have time to cover in part one. If you haven’t already listened to part one, I would highly recommend doing that so you have the context as we finish up our conversation with Jordan Gal of CartHook.
Stage four, I’m calling escape philosophy. This is where you have product-market fit and you’ve discovered at least one, maybe two, repeatable channels that are driving leads. You’re converting. You have repeatable sustained growth. Maybe that growth rate is increasing month-to-month. Maybe it just fits $3000–$5000 a month.
If you haven’t raised the Series A, it doesn’t take that much time growing it to $5000 a month to build a hell of a business. For me, I put escape philosophy. It was for about $25,000 MRR up to about $80,000 MRR. It’s probably about $1 million when I think about it. Maybe three of three. During that time, we’ve already done some integrations, but we realized they were working really well. The more integrations we build, not only did we drive traffic, but we were able to retain customers more because they would link them up and there’s just a lot of value created. We did quite a bit of content with some success. It was enough success to keep doing it but it was not the main driver of growth. There was an ROI there. We did some pay-per-click and it worked.
I was doing a ton of podcasting, public speaking, and that was raising it. It was hard to measure but it just continued to have Drip in the conversation. They used to say Infusionsoft and Ontraport as the lower-end marketing automation because I ran thousands a month. Soon, I wanted Drip to be the number three or number two, frankly, just to be the other one that was mentioned in all the blog posts and in all the conversations.
I started hearing it on podcasts and seeing it on blogs with people I’ve never met, never talked to, didn’t reach out to, to say hey, should you mention this? It just started getting on people’s radar because enough people were using it. We also have a ‘Powered by Drip’ link that contributed during that time. I was doing more outreach to influencers and friends who I knew. We were doing cross-promotion and stuff.
It was a bunch of things. There was not one thing that worked amazingly for us. There were about probably two that drove half of our trials in any given month and three to probably grow 75% or 80%. During that time, we grew to a headcount of five people in total. It was me and Derrick, then we had a guy doing support, and another developer. They’re our first customer success.
A person, Ana Jacobs, who many of you know from MicroConf, she’s been in MicroConf circles. She was in Fresno and she was doing essentially marketing work and agency and really wanted to get into products. She was an early game-changer for us because I was doing all the sales demos and trying to do onboarding calls. I’m just not good at that. You’ve got to know your strengths and that’s not my strength at all. She was able to take that off my plate. Not only did I think our conversion rate went up but we’re able to handle bigger customers who wanted someone to hand-hold them.
At a certain point, I started saying I’m just not going to do these anymore. Although Drip’s starting price was $50 a month, we have people approaching us like hey, I remember bringing a list over and we’ll pay you $500-$800 a month. That’s substantial growth for an app that’s doing $40,000–$50,000 a month. The fact that we were able to service them, work with them, and do the extra that they want was a big transition for us during this time.
Still total chaos in terms of the business. I was starting to burn out, in all honesty. I made personal mental health mistakes in terms of just not hiring more out. Everyone was doing their job in terms of building products, onboarding customers, and anything else I took on. I shouldn’t have done that. It seemed like the right decision at that time to keep the business moving forward. I was trying to maximize growth. In fact, I maximize my personal unhappiness because I was doing a bunch of tasks that I didn’t want to do.
That was my escape philosophy phase. Really, your escape philosophy was more with the second product, what CartHook is now. You listed it as a $20,000–$80,000. I think we’re actually in a similar range of thinking about these stages.
Jordan: Yes. We broke every rule. We did not do what I would suggest anyone do. We just built an isolation and we just launched. We fully went the ‘build it and they will come’ route and it just happened to work. This stage for us was, again, a huge success and so much pain.
I’m looking at our ProfitWell graph from all time. It was a theme for us where we have a few months of incredibly fast growth, then sustained period of no growth, and then forcing our way out of it again. The reason it happened to us, it’s the same thing that happened in this phase from $20,000–$80,000, we got the product right. That’s what people wanted. That guest at a customizable check I would upsell that worked with Shopify and allows you to do all this marketing stuff, that’s what the market wanted.
As soon as we released it, the word of mouth was huge and we got overwhelmed with demands. We did one thing that was really, really, important for the whole trajectory of the business as soon as we released it and got too much demand. In the first 30 days, we had, let’s call it 100 or 200 sign-ups. It was $100 a month. We were like this. We found the right thing, but the product wasn’t quite ready yet. After that first month, it was just total chaos. We couldn’t keep up. We couldn’t onboard people. We didn’t even know how to support our own product. What we did, we decided we need to slow it down.
How do you slow down demand? We did it in two ways. We first said you have to do a demo. You got to talk to me. I want to understand who you are or what you’re trying to do and build a relationship. The second thing we did was we tripled the price. We went from $97 a month to $300 a month. We assumed those two things would lead to slower demands. No such thing happened. It just stayed exactly the same, which is where we realized okay, we mispriced the product. Thank God we realized it in 3X the price, and then I just went to work just doing one or two demos every day for forever.
Those demos are really important, obviously, to hear what people wanted but also for the psychology of the team. It was just still the four of us at this point. We eventually hired a few more. We ended up with a team of six or eight towards the end of this phase. In the beginning, it was just the four of us. The motivation we got from my conversations was wild. People were like, I cannot believe you built this. This is exactly what I want. We just heard a variation of that over and over and over. That gave us the motivation to just keep going.
The problem was that the product was just not good enough yet. A checkout product, you can’t be 75% good. If you do anything wrong, you cost people money. We went through this period of growth despite the product not being good enough which just meant a lot of very, very, frustrated customers. That just gets you after a while.
For me, mentally, in this period, I had a really rough time because I’ve basically gone two years of working on this product, took this huge risk, took money from friends and family, then from my point of view, I got it right. I found the right product at the right time for the right market which is rare enough, and then the tech just couldn’t satisfy it.
The tension within the team was tough. The tension with the customers was tough. We just kept growing. We got to around $80,000 in this phase. I’m supposed to be happy, right? I just went $0–$5000 in one year, $5–$20,000 in another year, then $20,000–$80,000 in four months. I’m supposed to be happy. I was anything but happy. It was mentally very difficult. As we brought in new employees, they just entered a world of pain. If you’re trying to support people, trying to help people get onboarded, everything we were doing was just filled with pain, but we knew we were on to the right thing. That just helped us get through it. It was not pretty.
Rob: Yeah. You effectively caught lightning in a bottle. You were early to that space of this replacing the checkout in Shopify. Again, it’s being prepared but getting a little lucky to have been at that place right at the right time and done that because if you have done it a year later, the window is over. You couldn’t do it.
It’s interesting to hear about our journeys. The parallels and then the not parallels. Drip was essentially entering a completely crowded market and trying to build a less expensive, easier to use version of these clunky, expensive tools that were generally not loved. That was a very different approach than what you took with CartHook which was I see an opportunity, I need to shoot this gap and get there right as this opens up. You’re being early.
I had a talk called The Unfair Advantages of Building a SaaS. One of them is being early. In this case, you were early. It was because you were there. Outsiders couldn’t have known that this opportunity was available. That’s the thing. Doing things in public, creating opportunities.
Jordan: Yeah, that’s right. I’m curious to hear from your side. At this stage for me is when I started to hit some real limitations in my experience. When it was a group of four of us, it was pretty straightforward, Guys, let’s make some money together. Let’s do this. Let’s change our lives by building this thing together.
Once we started hiring people, that got tested. I remember, specifically, one conversation that Ben pulled me aside and said look, man. You’re our leader. We need you to go beyond money. Our employees here don’t stand to make millions of dollars if we sell this thing. They need to work for something more than just that. That conversation with Ben I appreciate and think about all the time. That was a real turning point on me needing to look beyond money and create something of a mission, something more important.
I had a challenge because I am very against the ‘change the world, make the world a better place,’ […]. I didn’t want to become a phony and say that that type of thing is our mission when I didn’t believe it. I needed to figure out a way to authentically create a mission for the company that I felt was honest and sincere. Did you encounter something like that as you started to grow the team?
Rob: Not in that way. I think it’s because, from the start, building Drip wasn’t about making money. I never said that. It was more about building a really cool product. There was a lifestyle component to it, but by the time we have three, four, five people, it became, we are truly innovating in this space and building an amazing product for people who don’t like these other alternatives. Isn’t that cool? We are makers and we want to have a very high standard of building an amazingly easy-to-use product that is super powerful for people.
All of our team members, including me, loved the product. We were enamored with this power that we could have. When we looked around our competitors, we were like, that product’s like a toy compared to Drip. That product is super hard to use and expensive. We genuinely believe that we were not making the world a better place but we were email marketing and marketing automation just more accessible. I think at one point I said we’re trying to bring marketing automation to the masses, which is a little bit manifesto-ish and highfalutin. It sounds, in retrospect, whatever, but it really was.
That was something that our team was just onboard with. We talked about that during the interview process. As everyone comes in, it’s like look, this is Drip. You’ve heard about it. You’ve seen it. It’s this product that’s genuinely helping marketers do better things and be more relevant. The codebase is great and the product is easy to use. It’s powerful. It was just all of that. We were proud of it. There was a sense of pride among the Drip employees that I think, partially, I was really proud.
Derrick and I were really proud of what we built but also because it was a damn good product. I think from the start, I didn’t do it intentionally, right? It’s how we think about it. Derrick and I are makers. You know why I wanted to make money? It’s so I can make whatever I want to do, so I have the freedom to do that. Money has never been an end to me. It was the freedom that was the end. I think I accidentally stumbled into, oh, building a great product motivates other people as well or at least the people who should be on that bus.
Jordan: Yeah, I admire that and I think it’s fantastic. That was not my journey. I went into it trying to be clever. How do I basically make $50,000 a month for myself while not doing any work type of thing? It’s not surprising that you went in with that mindset and didn’t have to figure it out in the middle.
For me, it had to get figured out along the way. It’s only recently, over the past two years, that I fell in love with what we do. It took longer to get there. Where we found authenticity is in helping other entrepreneurs. That’s where we get our pride. As opposed to, we’re so proud of this product. We’re very proud of the results. We see these companies come in and just become more successful because of our product. Then, they hire more people. Then, they grow.
What we like to look at is we like to look at the individual level and not the business level. The people running the company, the people working at the company, they have better lives because we help them find more success. It took some time for the clouds to part and to have clarity on that.
Rob: That’s what it became for us was as well, actually. Users would come in from another tool. We call them Infusionsoft refugees where they were coming and try to escape this tool that they didn’t like. They would be so over the moon with it. They would tell us which is so much easier, or this is changing my business. That did become our huge part of motivation, it wasn’t the results. I’m glad you called that out. I think it started with, oh, didn’t we build a great product? Then, it became, oh, aren’t we helping entrepreneurs get more leads or do this easier?
Another memory I have from this escape philosophy phase was up until that $25,000–$80,000 MRR, I kept thinking we’re going to be profitable soon. We would be profitable. We’d break even then we’d grow. Then, I’d hire. Then, we’d grow. Then, I’d hire. We were never very rarely losing much money. Never raised funding. I was pulling some money off the HitTail for a while. At a certain point, Drip was totally sustainable.
I kept thinking much like you, like when is the time when I can start making money at this business? It comes down to this thing that says something that I said at several MicroConf talks of a fast-growing business isn’t really profitable. If you do want to make money out of it, you can. You’re just going to slow the growth.
Jordan: Yes. That is one of the absolute, most critical conversations in the entire experience of building this company. It was the conversation I had with you where I was not trying to be a jerk but it could’ve been viewed as a jerk question. I think we were at $10,000 MRR and you were over $100,000. I was like, you must be profitable. What are you possibly doing at that stage if you’re not pulling profit at $100,000? I could not even fathom it. I couldn’t imagine.
That’s what you said to me. You said look, when you get here, you will have a trade-off decision. If you starve it too early, you’re going to kill the whole trajectory of it. You might also exhaust your team because you won’t be investing in hiring to keep up with the growth. It might sound like an easy decision to be profitable but wait until you get here and then let me know. You were right and then another $100,000.
Rob: Oh, man. We should couch this whole thing of CartHook and Drip are very successful apps in the grand scheme of things. In terms of so few products making it to product-market fit, even fewer make it to a million ARR, fewer make it to multiple millions of ARR. I don’t want to normalize it and say everyone should travel the same journey that you and I did or anything like that.
I do want people to know that if you grow and you do grow fairly quickly in a space, you do have success, I think it’s good to be aware of these stages so that as you enter them, like when you hit product-market fit, it’s like okay, now I should be thinking about repeatable marketing channels. At a certain point, you find one or two and it’s like okay, mental check. I’m in an escape philosophy phase. What did I say about this? It’s going to be chaotic. It’s this and that. That’s really why I wanted to talk through this to get people set. Again, it’s not going to be for every app. It’s $20,000–$80,000. It’s this and that. I think certain apps grow faster and slower, obviously, but I do think that these stages can be helpful as a mental model.
That actually brings us to stage five which I’m calling scale. For Drip, that was $80,000. It was about a million, $83,300 and up. For us, we went into a million, and then into multiple millions. We have 10 people. We were acquired. I stuck around for a year-and-a-half. By the time I left, I believed there were about 60 people working on Drip under the lead pages umbrella. We weren’t independent of the whole scale phase. We were acquired basically mid-scale, I would say.
Part of the early scale was hiring more people, which again, was that decision, that tradeoff of we’re not going to be profitable. We’re still growing. I think this market’s very big. Part of that decision was I was burning out pretty bad but also do we raise money? Or do we sell?
I got five potential acquirers contacting us in a span of about 15 months. As you do when you get on the radar and you built this many brands, two emails a month, three emails a month, from people who said we will fund you. Sometimes, it was junior venture capitalist prospecting and stuff. Other times, it was serious people who I knew had the money and really wanted to invest in a fast-growing SaaS app.
That was a big decision for us as to whether to get acquired and take the chips off the table or whether to basically raise a round, double down, and be like all right, we’re going to do this for two, three, four more years before we think about next steps.
Jordan: We’ve talked about the corporate and the financing side of things a lot through this journey. I think you did things exactly right on the corporate position you are in. Like the amount of equity you had, you hadn’t raised money. You got to this point and then the risk-reward calculations of selling or not, I think you did the right thing. You don’t know what’s going to happen in the future and you built something that’s growing really fast, is very attractive, and you don’t need $100 million acquisition in order for it to be a success.
If you raised a bunch of money, if you’re at the exact same revenue that you were at but you had raised $3 million, you’re in a completely different world. You limit your option set when you take money early. I’ve always thought about that. What we’ve always looked at is how do we raise just enough to get going but to keep those relatively low acquisition offers into play? It’s just much more likely to get acquired for under $50 million than it is to get acquired for over $50 million.
Rob: Yeah. It was a calculated gamble. Derrick and I have talked about it since then over beers. I asked him—this was probably six or eight months after the acquisition, we’re having beers, and we’re still both working at Drip—do you ever wake up and regret it that we sold? He said never once. I said me neither. I have never woken up in a day.
I think part of that is the acquisition took 13 months. We have a hell of a long time to think about it. Derrick and I were very cautious. We think things through. We’re not flipping. It was not an impulse decision. By the time we got to that point, it was like no, we really want this to happen. The harder part would have been if we got there and that hadn’t happened because we were bought into it at that point.
I’ve heard you talking on your podcast about taking some chips off the table about the big raise from the clubhouse app and the founders each took a million off the table, I believe. Some people think oh my gosh, that’s catastrophic. How can you do that? It’s a pre-launch app so I’m like wow. I can’t even believe it.
Aside from that, taking enough chips off the table, I was like look, my whole net worth, I’m worth millions and millions of dollars in completely illiquid private company stock. I have whatever I have, $50,000 in the bank, and I had a couple of $100,000 in a retirement account. That’s my net worth right now and I’m concerned. There was a huge stock market drop and SaaS valuations were cut in half as we’re talking about the acquisitions. Recessions, competitors were just jumping at our heels. There was all this stuff going on that I was thinking, it was exactly that type of press. Let’s not talk it through the podcast before but it really is.
It’s like do I take some chips off the table here or do I double down, keep going, and see what happens?” It would be different for everyone, but I do think having a small win early on and getting to some money that is in your bank account where you can then take bigger risks like, I’m now in a position where I can just take bigger risks. I can grow a TinySeed which is not going to really pay me much for years. I can do that now because of this.
Stage five for Drip, as I’ve said, was scale. It was $80,000 and up to acquisition. For you, you named it out about $80,000–$200,000 of MRR. You want to talk through what your experience was like getting there?
Jordan: Yes. This was the opposite. Book cased by failure first and then really big success towards the end of the stage. When we got to $80,000 with all that pain, we came to the realization of okay, you know what we’re going to have to do? We’re going to have to break another cardinal sin. We’re going to have to rewrite the app. And we did.
Rock, who is now the CTO, is probably the CTO right now because he’s successfully pulled off a rewrite of an app with hundreds of customers and hundreds of thousands of dollars a day in payment processing. We got stuck at $80,000. We got stuck at $80,000 for months and the churn is wild. Churn was like 15% per month. Just growing and losing $20,000 in both directions every month. Just adding $20,000 in MRR and losing $20,000 in MRR. Just over and over and over. That’s why that stage was so exhausting.
We came to the conclusion that we had to rewrite it. It has to be better. We have to take the lessons learned, all the mistakes we made, and just make a better version of it. That’s what we did and then it worked. They pulled it off between Ben, […], and Rock. They pulled it off. As soon as we released version 2, the thing just popped. We went from $80,000–$200,000 again in just a handful of months. That stage was really okay.
Let’s build out the team, let’s build out a support team, a success team, QA, different engineering leads. Let’s get this thing ready so we can actually handle what we have in front of us. Let’s get marketing so I’m not doing it. Let’s get success so I can stop talking to customers. All these different things like building up the company. It was the rewrite and the growth from that is what allowed us to hire about 20 people. That’s when everything just became much more promising. That’s what I look at as that stage for us. Then, at the end of the stage, we got stuck around $200,000. That’s kind of what led us to the next phase.
Rob: I’m calling this the sixth stage of SaaS growth. Obviously, there are many more because we’re going to wrap this up around a few million single-digit ARR. Getting to $20 million, $50 million, $100 million. Of course, there are stages you get to 100 employees, 500, then 1000. We’re not going to cover those because we haven’t done them. After the scale phase, you specifically called out that there’s this transition of all right, we’re scaling but north of about $200,000 at least for you, given the timing, it became company-building where you have to, as a CEO, as a founder, your mindset has to shift. Talk us through what that phase has been, what it feels like.
Jordan: Yes. We built a team in that stage five, the $80,000–$200,000, but we really didn’t build the company infrastructure. We hired the people that we needed but when someone got hired, it was, here’s a laptop. Here’s someone else that does the job similar to yours. I wish you the best of luck. That was effectively our employee onboarding.
The next stage, the company-building stage is when we really have to figure out a lot more around process, a lot more around org structure, reporting structures, where the lines are in the company of who’s responsible for what, and under what circumstance. I needed a lot of help with that. I had never done it before. We hired people, coaches, actually, thanks to an intro from you, who has been hugely helpful (and still is). That’s the phase that we’re in now. We are well over $200,000 in MRR. It feels like we’re just now really starting to set the foundation for being able to grow to 50 and 100 employees. Before we do that, we really need to get our act together in many ways.
It feels like for a very long time, survival was just the only real goal. Now, we’re transitioning into, how do we make this a great place to work? How do we make the mission something that’s clear, that’s everyone’s working towards? How do we attract great talents? How do we keep the employees happy so that they don’t get bored of them wanting to go on to their next challenge? That’s pretty far removed from me convincing a potential customer that they should use our product because of X, Y, and Z. It’s just a new skill set that I’m being forced to learn.
What I will say is, I started off at the other end cynical. How do I make a repeatable revenue? This process of going from that to building a real company, by far the most fulfilling experience has just been the other people involved. Developing other people, watching them succeed, watching their confidence grow once they really settle in.
I talked about this week, we signed our biggest customer ever. I didn’t talk to them. It just makes me really proud and happy about what we’ve done, what we’ve built, and just watching the team kind of start to turn into a higher caliber version of ourselves. That feels like the stage we’re in now. It’s tough to tell what comes next. I’m sure it’ll be crazy because it’s been that way the whole way. This stage right now feels pretty amazing.
When the crisis hits, we just have the ability to take care of people the way we have been able to, it feels amazing. It’s much more fulfilling than starting out and saying let’s make money together. That part of it has been great.
Rob: Building a startup changes you for the better, doesn’t it?
Rob: Yeah. You know what, with Drip as we talked through these stages, just the range of skill sets that you need if you’re going to start a company as a founder to do the customer development, to convince a developer to help you or to pay them or to scrap and cold email, to do a launch, and then to grow to $20,000. Then, to start hiring. Then, hire more. Then, hire managers who hire managers. Then, being at a company-building. What a broad range of skill sets that you have to learn on the fly or makeup as you go along or what have you.
This is a reason back in the day when venture capitalists would fund a company. The founder would grow it to a certain amount. Then, they’d oust the founder. They kind of have a clause. Either the VCs owned enough or they have a clause and it’s like hey, we can boot you. Oftentimes, the founder isn’t the best person to run a $100 million company because a $100 million company with X thousand employees is a very different skill set than what you and I have talked about today.
Personally (I’ll speak for myself), I don’t want to run a team of even 30 people. That doesn’t sound fun to me. Certainly, 50, 100, 1000, people. Maybe I don’t understand what that requires, but it sounds like a burden. It’s partially because my goal was never to build companies. My goal was never to make a bunch of money. It really was to achieve freedom so I can work on interesting problems, interesting projects, and make things. It all comes from making. When I roll that back, it’s like if I want to do that, then I need to make money. If I want to make money, I think I’m going to use my skill set and start a company.
Companies were a means to an end and have been. I, of course, loved talking about it or I wouldn’t have done 500 episodes of this. I’m curious, from your perspective, you’re going to come back on the podcast and you’re going to talk to us about stages seven and eight. Who knows what they’ll be. Do you see yourself running a team? You think you could be happy running a team of 50? 100?
Jordan: Yes. I think I could. I think that’s what I want. I remember when we started out. I remember looking at the Inc. 500 magazine every year as I grew up. The only thing I paid attention to was the ratio of revenue to employees. I didn’t care about the total revenue. I wanted the ratio. I wanted the revenue per employee because looking at a company that made $100 million but had 1000 employees, I looked at that and said that just sounds miserable.
If a company was making $20 million with eight employees, I thought to myself that’s what I want. I want efficiency, I want a small team. I want everyone to be in a small tight community. I still want that efficiency but I think I wanted it to be a lot bigger.
One of the things we’ve said is that every time we come up against the hill, then climb it, and get to the top of that hill, when we look outward, we see so much more. The opportunity just keeps getting bigger the further we go. We’re not even close. We’re just barely getting started. The more we grow, the more it feels that way.
Right now, if an amazing acquisition ever came through, something that I just could not say no to, I am 100% certain that I would regret selling because we’re just starting.
Rob: Just starting, man. I love it. I’m serious about you coming back to talk. We’ve got to figure out what’s after company-building.
Jordan: There’s not too much drama. That’s all I ask.
Rob: I love this conversation. This may be the longest episode of the Startups for the Rest of Us ever. I couldn’t cut it off. I feel like what we’re talking through, I think it’s insanely valuable. It certainly was entertaining for me to listen to your stories and reliving them with you.
Jordan: First, thank you for guiding along. Sorry for making it long. Just 2X the speed. I am proud of us that we stayed away from the darkness.
Jordan: There’s a lot of darkness that we just didn’t touch on and that’s always there. There’s a skill in ignoring that darkness and moving forward that we exemplified in this podcast.
Rob: There are a whole nother hour and 10-minute episode of us just talking about the worst part of each of these stages. That’s something. Maybe that’ll be in your memoir.
Jordan: Thanks for having me on, man. I really appreciate it.
Rob: Absolutely. If folks want to keep up with you, you’re @jordangal on Twitter. Of course, carthook.com, if they want to check out what you’re working on. Bootstrapped Web, that’s the podcast I tune into every week. They can hear you on your journey, man. Thanks again.
Thanks again for joining us. Again, to recap these first six stages of SaaS growth are prelaunch, post-launch/pre-product-market fit, product-market fit, stage four’s escape philosophy, stage five is scale, and stage six is company-building.
I appreciate you joining me twice this week. I look forward to seeing you next Tuesday for episode 500. Talk to you then.
In this episode of Startups For The Rest Of Us, Rob along with guest Ruben Gamez answer a number of listener questions on topics including current marketing tactics, scaling from 5 to 10 employees, SaaS longevity and more.
Items mentioned in this episode:
- MicroConf Connect
- Peldi’ s article about profit sharing
- Quiet Light Brokerage
- FE International
- Empire Flippers
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and growing startups. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Ruben Gomez, we’re here to share our experiences to help you avoid the mistakes we’ve made.
It’s a Q&A episode, one of the listener favorites. We’ve got a bunch of really good questions today, and I’m happy to welcome Ruben Gomez back on the show. You may remember him from an interview we did a couple of months back, but he started BidSketch, which is a proposal software. It’s a SaaS app. He started that back in (I believe it was) 2009. He was one of the early SaaS bootstrappers, and over the past couple of years, he’s been building another product called DocSketch, which is electronic signatures. He’s experiencing quite a bit of success with that as well.
Ruben is a wealth of knowledge. He’s a very thoughtful founder, and he is just meticulous and disciplined. I say that in some of the intros here. He is almost the definition of those things. He’s detail-oriented, he’s very thoughtful about the direction and the moves that he takes with his companies, and he is someone who I would bet on any day because he does things in such a repeatable fashion and has a wealth of experience under his belt. I’m super excited to have him on the show today.
Before we dive into our conversation where we answer a handful of listener questions including several voicemails—I think we had three voicemails today—I want to remind you again about MicroConf Connect. Go to microconfconnect.com. It is MicroConf’s year-round always on Slack channel. We’re currently accepting applicants. It’s for founders, aspiring founders, and folks who want to be in the self-funded and indie-funded community.
In addition, we’ve had several new reviews over the past couple of months. I won’t bore you by reading them on the show right now, but if you have yet to give us a five-star review or to leave a comment, if the show has been helpful for you, if you feel like you’ve gotten value over the past many years we’ve been doing it, we would really appreciate a five-star or a couple of sentences. It helps us stay motivated and keep cracking the show up. With that, let’s dive into listener questions.
Ruben, thanks so much for coming back on the show.
Ruben: Thanks for the invite.
Rob: It’s going to be fun. I think you have some good insight on a lot of these questions today. Our first question is from Will, and it’s actually a question that I don’t think you and I have a lot of insight into, so I’ve called in a remote correspondence to help us out with that. The question is, “Are there any good places that you know of to pick up more stuff on affiliate marketing? One thing that came out of this past year is that I can write a lot faster and more effectively than I thought. I’m not convinced that writing code is even my strong suit even though lots of people tell me it is. I’d like to explore options in this area a bit more but I’d like to borrow your BS filter for a minute. The trouble with people teaching affiliate marketing is that they’re also affiliate marketers, and the signal-to-noise ratio is brutal. Thanks, Will.”
That’s been my experience as well, Ruben. Before we recorded, you mentioned that you haven’t been in the affiliate marketing area for a while.
Ruben: No, but I like that comment that most of the people selling courses are affiliate marketers as well, so it’s really hard to know what’s legit.
Rob: Exactly, I think you’re dead on, Will, so what I did is I tapped a friend and TinySeed mentor, MicroConf speaker, Taylor Hendrickson, who does exist in that space, a lot B2C stuff and affiliate space, and let’s turn it over to Taylor.
Taylor: Hey, thanks for the question, Will. Again, my name’s Taylor, and I’ve been doing affiliate marketing in one form or another since before the Panda update in Google, which for you non-nerds out there, it’s almost 10 years now. You’re completely right and that most people out there who are “teaching” affiliate marketing actually aren’t good at it themselves or just regurgitating the same information they’ve seen or have posted billions of times, that doesn’t actually help anything or anybody.
For that reason, I actually really don’t have any good courses or resources to point to on affiliate marketing, who aren’t just hawking the same stuff everybody else is, but one of us did provide a little bit more perspective or way of thinking about affiliate marketing that I think will help guide you in the right direction you’re looking for.
The main core of affiliate marketing is the same main core as normal business you get into. It’s solving a defined set of problems for a defined audience. When you look at who’s doing that well in affiliate marketing, look at places like Wirecutter, all they’re doing is recommending the best version of whatever the problem people were coming to the website for in exchange for the commission. They know that the only reason they have an audience (were bought for untold millions of dollars by The New York Times) is because they provide amazing value to the people coming there, looking for solutions to their specific problems. I’d recommend the same thing for anybody looking to get into affiliate marketing.
How can you provide value to a very specific audience with very specific problems? By recommending things that you would actually recommend to a friend or a loved one, not just what pays the highest affiliate commission or just random things you’re trying to do to make a quick buck. People see through that really quick.
If anybody is promising those one-click riches, anything that seems a little too good to be true, or actually doesn’t stand the test of, “Will this last for another five years?” completely run the other direction because they are probably a charlatan. I know this doesn’t quite answer the question you are asking, but hopefully gives some perspective as to how to think about this industry better. Now back to you, Rob.
Rob: Thank you so much, Taylor, for being our on-site correspondent for the affiliate marketing question. Our next question is a voicemail around new modes and methods of marketing.
Donald: Hey Rob, waves to Mike. My name’s Donald, a long time listener. You both kept me going through tough times, so I really appreciate that. I’m a recent returnee to my home country of Ireland, but I’ve been in tech networks and security for a long time back at […]. I built my first self-funded SaaS app in 2018. It did live technical screening of engineering skills and engineer skills, but have failed to get traction for a ton of reasons. I somewhat intentionally did things backwards like built it first, as I was new to Rails and web apps, so is learning as I went. I failed at marketing, failed to get paying customers, albeit I did demo for some large and small orgs and experimented with a whole host of cold and warm methods to get leads.
After nearly giving up, I ended up pivoting pansift.com a few months ago to a SaaS GitHub app in the detection tech space. It now automatically honey tokens your deployed branches. Effectively, it’s kind of like a breach detection app for SaaS and infrastructure codes that enables the attacker detection in minutes rather than months. There is some customer education required for both security teams or engineering teams, and I’m trying to figure out positioning in pricing, but my traffic is currently almost nonexistent. As I restart my marketing efforts, I’m struck by the recent vibe I’m hearing on the podcast and elsewhere that an email list and existing audience doesn’t really cut it for SaaS any longer.
Apart from one-to-one, hand-to-hand combat, customer-by-customer, are there any other new or nontraditional avenues I should or could be exploring for marketing rather than content marketing SEO, PPC, giving talks, doing podcasts, or going to conferences, any help or guidance, much appreciated. I love what you’re both doing. Thank you.
Rob: Thanks so much for the question. I think I want to chime in real quick, Ruben, before I throw it over to you, I’ve heard a couple of people quote back to me that on the podcast, I’ve said that having an existing audience doesn’t help. I want to really want to clarify that because if you have an existing audience that is a B2B-focused audience, and they could potentially be a customer of your SaaS app, I think there’s a huge value in that, specialty of 10,000 or 30,000 on an email list.
When I talk about this audience thing not being the end-all-be-all of SaaS is that I’ve seen the kind of B2C marketers have a large audience of kind of wannapreneurs or folks who are just looking for that opportunity to make a million, to make money online crowd. They try to launch a SaaS app for them, and they realize that none of them want to pay. The churn is through the roof and it’s a bunch of mess with it. SaaS is really hard. It’s a lot harder than selling info products.
That’s more what I’m saying or trying to say. If you have an info product audience, you’re making hundreds of thousands a year, and you think that you can switch to SaaS and make hundreds of thousands a year, I’ve never seen anyone do that well. Does that make sense, and do you agree or disagree with that?
Ruben: Yeah, I completely agree. That sort of the Internet marketing space where basically most of it is usually info products where it happens a lot. Selling in that way, selling to people, they’re trying to buy education courses and other info products is different from selling a SaaS. So yeah, I’ve never seen it. I’ve known several people have tried to do it that had big audiences that were successful with info products, and really usually struggle when it comes to selling SaaS just because it’s different.
Rob: Yeah, I agree. I think the one example that I can think of that work was click-on with Leadpages, but it was all annual plans, it was pretty high pressure sales if you went to their webinars. It was really marketed in a very specific way, and frankly, they struggled with that longer term. That’s the day they got big quickly but that had its own drag on the business.
Ruben: Yeah, there are a couple that have done it. It’s not everyone, but most people are not going to be able to do it. The other one that I can think of is ClickFunnels, what’s his name, Brunson something.
Rob: Russell Brunson.
Rob: So, Donald mentioned a bunch of stuff. He was saying content marketing, SEO, pay per click, one-on-one, I think he was meaning like cold email, speaking at conferences, going on podcasts. All that stuff still works, right?
Ruben: It does. Some of it is harder than it used to be, like paid ads are generally more expensive across the board, content marketing back in the day you could do a volume thing, just publish two, three, four, five posts a week. The more you published, the more traffic you got. In some ways, it used to be easier, but things have changed. I’m not sure that I’d say that it’s a lot harder. It’s a little bit harder, but it’s also different. It’s about just getting educated about what’s working nowadays, I think it’s part of it.
I think one of the things that he mentioned was that he was trying to figure out positioning and pricing, and things like that. I don’t know about you, but when I hear something like that, I’d be kind of hesitant to start looking at channels that a lot of people aren’t using, that aren’t proven because in my mind, I would need to figure out that I can sell this product, who the customer is, how does a customer buy, that this is going to work, that I have a funnel that works before I start exploring other channels, channels that are a little unusual or something like that. What do you think about that?
Rob: I think you’re right. It sounds like he’s in customer development almost. Maybe his product is to the point people can use it, but if you don’t have positioning and pricing down, I really wouldn’t start marketing yet. I would be doing a lot of sales. A lot of people equate the two as the same, but they’re very different. I see sales is really a one-on-one act even if you draw in all the leads through marketing techniques, then the sales becomes conversations, and that’s where in his case, I’d be looking to have a lot of conversations and try to pick out their language to figure out positioning.
Ruben: Yeah. You learn so much from those conversations that later help you do marketing in a better way. Otherwise, you’re just guessing. I don’t know this category, so maybe if this category has a lot of competitors, they’re doing really well, it’s pretty established, and you know that this type of product works, I think that’s a different situation where you can have a little bit more confidence. But it still pays to do that up front work, I think.
Rob: Right, and this is where if I were in Donald’s shoes a year ago, I would’ve been building an email list. I would have been trying to build that launch list of people who are interested in this product everywhere I went. I would speak about it when it’s a podcast, speaking in front of an audience or whatever. Whether that list is 200 or 2000 people, that’s your easy farm for customer development where you just have tons of conversations.
If he’s starting from a cold stop, that’s definitely not where I would want to be. But almost everything he listed still works today. Cold email, content marketing, SEO, pay-per-click, podcast tour, speaking, it’s less scalable, but it can get you in front of the right people. The only two others that I would throw in that are in my mental shortlist, and that I see working with MicroConf and TinySeed folks are integrations. Integration marketing where you get both sides to promote, which you were the first person I ever saw do that well way back in the day, probably a decade ago now.
The other one is (and it really depends on your space) is to be higher priced, be the enterprise, but its trade shows. It’s going and being in a booth. I know that a lot of us roll our eyes at that when we want to be self-service SaaS, but I will say there’s more than one company I am deeply involved with that is killing it with trade shows, and they’re absolutely worth every dollar they spend.
Ruben: I’ve always known people that have apps or that serve customers that are a little bit older school (I would say), and they do really well on those. I could hear that those are still doing good.
Rob: I know, and there are obviously many others. I have a long list in a Google Doc, but I also refer people to the book traction by Justin Mares and Gabriel Weinberg for just a list. I think there’s 20 in there. The tactics that are in the book are a few years old now. They may or may not work specifically, but that’s a laundry list that I would start from if I had nothing in the chambers.
Ruben: One thing that I would mention for him, given that his product is technical, maybe looking at what some people are calling engineering as marketing. Free tools is a big one. We’ve had some success with that where we get a lot of traffic doing that. I’ve known other people that have done really well with that. The only thing that I would say about that is that a lot of developers might get excited about those and think that all you have to do is build a calculator or a free tool, put it out there, and you’re just going to get traffic from it.
It’s a product. Building the tools is maybe 20% of it, and then 80% is promoting and marketing. You have to figure out how you’re going to get traffic with it. For us, it was SEO. First figure out the keywords that we’re targeting, this is the traffic that we’re going to get from it, build out the tool, and promote it to start getting that traffic.
Bryan Harris from this company called Growth Tools—it used to be called Videofruit—has a lot of free tools. His approach is very different from mine. His approach is partnerships and paid acquisition to promote the free tools. It’s working really well. He’s written a lot about it. I recommend checking out his stuff.
Rob: That’s a good suggestion. If you are marketing to engineers, then working in public ala […] Derrick Reimer, basically on Twitter posting stuff once a day or twice a week with code snippets—developers love that kind of stuff—recording a short screencast if you’re you actually coding something up. I think that uniquely works in that space and almost nowhere else, maybe with designers or something.
Ruben: I think related to that, something that probably works with almost any product in any space, is basically look at who’s doing a good job attracting that type of customer. It doesn’t have to be just related products. I really like looking at things that are just different. I have a SaaS, but maybe I’ll look at somebody who’s running a podcast, who does a really good job of attracting that type of audience or somebody who’s running a downloadable tool, or a different type of SaaS that’s not competitive in any way, and see what they’re doing. It’s always amazing what you’ll learn from it.
Rob: Thanks for the question. I hope that was helpful. Our next question is a voicemail about the most common employment arrangements in early stage startups.
Sean: Hey, My name’s Sean. I’ve been listening to your stuff for a little while now. I’m not a founder yet, but I love everything you guys do on the podcast and through MicroConf. I’m hoping to find a project to start soon, but for the meantime, I’ll keep listening and thinking. Anyway, my question is, and you may have quoted this before so my apologies. If you haven’t, what are the most common employment arrangements with early stage, no or low funding startups that you typically see?
Rob: Good question, Sean. I believe we have discussed this before, but it is likely hundreds of episodes ago. Ruben, you have thoughts on this?
Ruben: Generally, when you’re starting off, you don’t have a lot of money. Most people that I know (including myself) start off with contractors, part-time then full-time, no equity even when you bring on full-time people, no health insurance early on. It’s being really efficient with the money that you have. Later on, a little bit later, when you start growing a team and stuff but still no equity, I think the thing that I’ve been hearing a little bit more nowadays is that some people are exploring profit sharing a little bit more. At some point, you had health insurance there.
Rob: Right, when you have enough money to think about it. I think for us, it was when we were maybe 3-4 employees. I agree with you, it was part-time contractors for me for years and then you hit a certain point where everyone’s full-time and it kind of makes sense to bring them onboard, they have a bunch of institutional knowledge. Start paying them W-2, it’s more expensive, and you do start offering some benefits. I think the profit sharing is what I’ve seen done most in the bootstrap space just because some bootstrappers are really averse to giving away equity or it just complicates things to have anyone else on the cap table.
Ruben: If I have an LLC, if I wanted to do that for my company, I’d have to change that, wouldn’t I?
Rob: No, you can giveaway units. You can give units. You can do an RS user to restricted stock units. I believe there’s restricted units of LLCs and the vesting just isn’t as straightforward as a thing. That’s the other thing, I really haven’t seen people who haven’t taken any funding. I haven’t seen anyone who’s done stock options versus just an equity grant that vest over a few years. Even though that’s pretty rare and most of it has just been either nothing or it’s been profit sharing, I think it is the general rule in our space versus with Silicon Valley. With a venture-funded startup, there are options everywhere. That’s the currency.
Ruben: Back in the day, and it’s still pretty good, Peldi wrote a good post about profit sharing. If anyone ever wants to explore that, I know a lot of people have used that as a model or the way that they’re doing their profit sharing.
Rob: That’s the one I refer everyone to as well. It’s kind of the best write up I’ve seen. Thanks for that question, Sean. I know you had another one, and we’re going to roll that right here.
Sean: Another question. I’d love to see what the number of hours per week worked is sliced by company maturity or age. I have some assumption about what curve for what that might look like, founders who are in the MicroConf community trying to also double lifestyle and maintainable business? Again, thanks for everything you guys do. I love listening to the podcast. I know you already said you get this a lot, but I love the variety. The variety is great. Thanks a lot. All right. Bye.
Rob: That’s a good question. In fact, I have asked the statistician and data scientist who analyze the data to do that analysis. Hopefully, maybe next week or in the next few weeks, I will have that data, discuss it on the show, and address it then.
Daniel: Hi, this is Daniel. I’m a long-time listener, first time caller. My question is about the transition from being a small team where I run everything to a still small team where I simply can’t do that anymore. I’ve been selling a Word add-in since 2009, took on the first employee in 2015, but this year we’ve completed our transition from being a one-off permanent license to being an annual license. Suddenly, in a space of 6 months, we’re going from a team of 5 to a team of 10, and this just changes everything.
We suddenly have a staff manual and suddenly it’s crazy that people send me leave requests, which they always did before, but now they have line managers now. It seems crazy that I’m still processing expenses and a dozen other small things like that. I’m finding it quite hard to get helpful guidance because everything I see is written for companies that are either smaller than us or larger than us.
My question to you is, knowing that this transition is hard (and you’ve mentioned on the show several times that it is a hard transition), what are the things you see that are mostly likely to break? What systems should I be looking to put in place? And how do I avoid just becoming a glorified admin person? Thanks for your help.
Rob: Thanks for that question, Daniel. Daniel also sent an email where he said, of the ten people on the team, the breakdown is him, six engineers, one customer success, one part-time QA, one part-time growth marketer, and one admin. With that, I’m curious to hear your thoughts.
Ruben: I know a lot of people struggle with the people side. It’s not something that I struggled with a lot. Maybe because before I had my product, I managed a group of people and I went through all the stages from it just being myself to 3 people, 5 people, 10, all the way up to past 30 people. And I studied a lot throughout all of those stages.
Thinking about it more, I think it can be a little bit tricky when you get (let’s say) from 5–10 versus 5–15 or 5–20. When you’re at 15–20 people, it’s a lot more clear that you can’t do everything yourself. You can’t be as involved yourself. You have to depend on others. When you’re in that 8, 9, 10 zone, maybe it’s a little tricky because you can technically do it. You can have most of those people reporting to you directly, but it gets tricky because you’re so busy feeling like an admin doing all the stuff and just managing people.
I would probably say, mindset is one of those things that I would think about your team being bigger than it actually is because it probably will be bigger soon, and the things that you need to do to manage effectively, to have it, you can’t be managing everybody directly. Breaking your people up into small teams, having other people on your team lead and own their positions, are really big. It’s hard to run a team of that size without doing that, and then be having time to do other things. Those are just some of the things that I’d think about.
Also, read. I see a lot of people in our space, it feels like they’re constantly figuring this out for the first time, but there are decades of information about managing teams and a lot of it is useful. It doesn’t have to be specific to startups or a certain size. A couple of books—Traction—I forgot the other author. Not the marketing one. I’ve heard it’s pretty practical and a lot of people seem to like it.
Rob: […] I forgot that author, too, but here it’s the Entrepreneurial OS or EOS. If you search that on Amazon, it’ll get you to the book.
Ruben: Right, and just from talking to people that have read it, a lot of the stuff that they’ve implemented based off that book is stuff that I’ve implemented over the years. It sounds really in line with a lot of the way that people (especially in our space) operate their businesses at these sizes, so check that out. I also like One Minute Manager. That one is one that I really like and I read every once in a while.
Rob: And it’s Traction by Gino Wickman. I agree with everything you said. Actually, I made notes as I was listening to the voicemail, and one of the first ones I said when he said, “What systems should I put in place?” is to have managers that are not just you because you cannot have 12 direct reports. Right now, you have nine or maybe you do have line managers, I don’t know. A mistake that I made with Drip is that everyone reported to me the whole time. There were a bunch of reasons. There were excuses why I didn’t do it, is really the bottom line. It took a toll on me and it’s something that I wouldn’t do again.
I think something else that I noticed is that when I look at your line-up, it’s very product-heavy. You have no sales people and you only have a part-time marketer out of 10 people. To me, that feels off. I would consider, can you grow the business a little faster if that growth marketer was full-time or if you had a salesperson?
The reason leads are still coming to you is because you don’t have anyone else doing sales. I would consider (in a short-term) typically customer success people are often pretty good at sales. Without a quota and all the stuff, they may not be as good as if you went the full process, but customer success people know your product. They know how to talk to people. That is what we did when we only had one customer success person. She did both those roles, and I think that was a good move we made.
Another I would think about, specifically to the phrase of, “How do I avoid becoming a glorified admin,” I would seriously consider at what point here do you need to hire even a part-time Director of Operations or Director of HR? It seems really early to that, but if you’re running your own payroll, you’re thinking about your own books and your accounting, you’re dealing with the state or local governments with the taxes, there’s always unemployment, there’s like three different accounts in every state where you hire someone, and it’s so hard to outsource. It’s like Gusto or any of these payroll providers. They say they do a lot of it, but they don’t do that stuff. You need a PEO (at least in the US) to do that, and that becomes very expensive.
Another mistake I made is that I wished I hired someone to handle a lot more of the day-to-day ops. In the old days, they called them an office manager. They did all of that stuff, kept the personnel files and did a lot of the payroll, the bookkeeping, the accounting, the invoicing, accounts payable, accounts receivable, all of that. Everything was under their purview.
We don’t have all those things necessarily if you’re selling software, but I do think finding someone really competent, who you can hand that off and completely delegate it. Not someone you’re telling what to do day-to-day because you already have an admin, but is that admin competent or experienced enough to really come in and take charge or do you need to go out and find that ops person to get yourself out of that role?
Thanks again for the questions, Daniel. Hope that was helpful.
Our next question is from long-time listener, Mr. James Kennedy. He’s also spoken at a couple of MicroConfs. He says, “It’s clear from the number of people writing into the show with a million-dollar or more SaaS businesses that the community has really come a long way.” I’d like to hear your thoughts on where to go after you’ve replaced the day job. If it’s become a grind, then selling your apps seems obvious, but it’s not a grind, what’s next? There’s always the fear that it all goes south. Most are probably over-invested in a single startup that works. Who have you seen that has handled managing this risk while still running their company and how do they do it? James.”
And he says, “PS, the podcast has never been stronger. It’s still great to hear from Mike, but the extra TinySeed tales and variety of new guests has invigorated the whole thing.” Thanks for that, James. To his question, your thoughts on that, Ruben?
Ruben: Yeah. He said after quitting the day job. I’m assuming it’s way after because right after you quit the day job, it’s still pretty early, and it’s basically at that point, grow the company. But after growing the company maybe for a couple of more years, good revenue, getting people on board (or not, depending on that company). Some people sell, and this has really always been interesting to me. People run their companies, like they’re going to be around forever.
It’s really interesting to me that there’s that mindset in our space where things are changing all of the time and companies are dying. Like in that question, I don’t remember exactly how it was phased, but something about that it can all go away at some point. I have that. I know a lot of people that also have that thought, but I do know other people that it’s not even a thought for them, which I find really interesting.
I think that’s not so good. It’s cool if you want to run the company for a long time but at some point, I think it’s really important for the founder to take some money off the table in some way, shape, or form. If you don’t sell, then sell part of the company or what I’ve done at periods of time is basically use the company almost like a cash machine. If it’s really profitable and you’re efficient with how you’re acquiring customers and all that stuff, I know a couple of people that are currently doing that as well.
I think being in that stage where you’re not that profitable, you have a lot of employees for the amount of revenue that you’re bringing in, running that company in that way for a long time, and expecting it to be around forever and not taking any money off the table, it’s a really risky way of doing things. What do you think?
Rob: I was going to say the same thing. There’s selling. It used to be that it was really hard to sell these small apps. There was no market for them. There was no Quiet Light, FE International, Empire Flippers. It was person-to-person. You’d go on a website and you’d get 1X your annual revenue of something. It was great for buyers, but really bad if you wanted to exit. But there’s so much money coming into the space now. Both through these brokers but also just strategic acquirers where they actually do come in. Strategic or private equity buyers if you’re over a million, where they will pay you revenue in multiples now. You sell a business doing a million dollars for $2 million or $3 million, that’s crazy.
It’s doing a million dollars, and after payroll and all your expenses, you’re making $100,000 or something because you’re growing so fast, and yet, you sell that for $2 million or $3 million, I have seen this happen now. Josh with Baremetrics. We talked an episode or two ago about how he got an offer for 3.75 revenue. It was a $5 million offer. That certainly doesn’t happen every day, but it’s a lot more common than people would believe, I’ll put it that way.
Soon as you go above north $1 million is where that happens. Obviously, I’ve sold a bunch of companies. I’ve either sold or shut down every company I’ve ever had, so I’m not saying you should or shouldn’t sell, but it wasn’t an option. Then it became an option, and now, we know what you just said is selling part of your company, selling 20%. Obviously, look for similar evaluation to a partner who is still a minority partner, doesn’t have control, and it’s not venture capital. It’s for you to literally take the money off the table.
A founder running a million-dollar app that (let’s say) is worth “someone might be willing to pay $2½ million for it.” If you could sell 20% for half a million dollars and put that half a million in the bank, personally, I would’ve slept way better at night when I was running any of my companies, and I wish that that have been more of an option. It is now becoming more of an option. There are folks who have set up funds. Now, there’s only a handful. It’s still an emerging thing. Much like into that VC tiny seed stuff, that’s still this emerging frontier. There’s also this partial cash-out equity that I’m seeing happens. I think it’s an intriguing idea.
Ruben: Yeah. It makes a lot of sense and I’m glad that those types of options are available nowadays. This is still good for people who are in the VC space, getting funding at ridiculous amounts. Mainly because the founder is taking money off the table as well.
Rob: Yup. Typically, it’s like oftentimes, the second round, the Series B founders will take money off the table to be able to sleep better at night. It over-invested in one startup is a good way to think about it.
The last thing that we haven’t discussed is—I’ve seen some folks—find a CEO to run the thing. You couldn’t do that in the stages but if you’re north of a million, is there a budget there? If you decided you did want to step away, can you find someone who is really good enough that you trust to keep the company going while you step away to do something else? I think this is a little bit like the model.
When we look at the folks who have run SaaS apps for really long periods of time, like the Basecamp guys, they’re not still working on that first product. They would be bored out of their mind. We get too bored with stuff. They’re rewritten it multiple times now. They’ve launched Haystack. They launched a bunch of stuff over the years, so that’s how they stay invested. If you think about it, they’re just starting a bunch of companies, but really, they’re not. They’re just starting a bunch of products under the umbrella, the company.
That’s a dream scenario, and I think most of us can’t do that, but if that’s what you need, if you feel like, “Well, I have these companies running really well, and I can find someone good to run it,” there’s obviously huge risk here, right? You find the wrong person and the company tanks. Maybe you sell part of it to take money off the table, you find someone to replace you, and then go on to do your next act. Is that something of interest?
Ruben: Yeah, I’ve known several that have done this. I’ve actually known people that have had success doing it, then basically ended up with the wrong person and had to come back.
Rob: Yeah, and it’s something I have never done. It always seems really scary to me, like I couldn’t find the right person and on, and on, and on. Insert a bunch of excuses here about why I didn’t do it, but it is something I wish I had potentially evaluated earlier with some of the apps that I’ve had. Thanks for that question, James. I hope that was helpful.
Our next question is about starting with no audience and selling at higher price points. The person says, “In two previous podcast episodes, I’ve heard you talk about startups having no audiences and selling their product with significant MRR. I’d love to hear more about this. I started my own SaaS product early this year and I’m doing the cold outreach route with some success. However, apart from what Steli Efti writes, there are very few other resources as to how to get going when you’re first starting out.”
This was another one where I wasn’t saying don’t start with no audience. I was saying taking that B2C audience and trying to transition. Yeah, we already covered this, but the idea is I think having an audience would be great but if you don’t, how do you start selling at higher price points? To me, it’s like cold email is the one that everyone does because it’s worth doing.
I think AdWords is another one that’s really expensive, but if you have any type of cash to pour into it, you don’t need that many leads if you are selling at higher price points. It is going to be so consultative anyway, that you’re going to be getting in demos and conversations with folks. What are your thoughts on this, Ruben?
Ruben: I’m wondering what people mean when they say “no audience.” You covered it a little bit, but are they thinking just any sort of audience at all or more like the personal brand type of thing?
Rob: I think she means no reach, really no audience.
Ruben: Nothing? Starting from the ground?
Rob: Yeah, kind of like no launch email lists, because if you have an email list that was interested in hearing about the product when it launches, then you would just do that, but I think she does mean like, “I’ve made a traditional developer mistake. I built some stuff maybe, I was having conversations, but I did know marketing.” Start marketing the day you start quoting. Start marketing before you start quoting. Just take my advice, please, so that you don’t wind up in this position, but it’s obviously very common for people to wind up in that position.
Ruben: Yeah. Even if you’re not in that position by the time that you launch, everybody starts off that way or most people do. You start with nothing then you build it up. Really, it’s just marketing. It’s just in the earliest stages when you don’t have anything, kind of going back to the first question. It’s about figuring out who your target customer is. How do they buy? Where do they hang out? Then, doing things that will lit up their work that take time to build up. Some things are a little bit faster, like paid acquisition if you can make that work.
Most people that I know don’t make that work very early on. Maybe there are just too many unknowns at that point. Partnerships which work really well at any stage, I’ve seen a lot of people make those work. They’re good because you can get in front of a big audience really quickly. It does take some work but I like those. And I really like SEO, which takes time. I tend to start SEO and content marketing before launching the product because I have experience with it, and I’m confident that I can do the research to get the right keywords and do the work to start ranking for terms.
By the time that the product is released, I think for a lot of people, before investing a lot of time in SEO and content marketing, I probably just get more confidence in the product, in what I’m selling, and that it’s going to work before really investing heavily in that. Investing some time in that is always good but I’d probably start with some of the other things first.
Rob: I think that’s a really good answer. I don’t have much to add to that. Ruben, thanks again for coming on the show.
Ruben: Thanks for the invite. These are fun. I like the Q&A. I once listened to them, and now actually participating in one.
Rob: That’s great. Folks want to find out more about what you’re up to, they can go to docsketch.com, which is an electronic signature app—you’re killing it over there—as well as bidsketch.com, which is proposal software for everyone now. I think back. You did such a good lead and expand. Proposal software made for designers. That was the first year or something, and then the next 9 or 10 years has been proposal software.
Ruben: Yeah, now that’s like 10% of the customer base.
Rob: Yeah, but I got you traction in the early days.
Rob: Thanks again. Talk to you soon.
Ruben: All right, thanks.
Rob: Thanks again to Ruben for coming on the show. If you want to find him on Twitter, his username is @earthlingworks.
We only have a handful of questions for our next Q&A show, so if you have a question for us, you can leave a voicemail at (888) 801-9690 or email firstname.lastname@example.org, and you can attach a voicemail. Voicemails always go to the top of the stack or send a text question and I’ll read it out for you.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. You can subscribe to us in any podcatcher. Visit startupsfortherestofus.com for a full transcript of each episode. Thank you for listening. I’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike give updates on Blutick and Drip. Mike talks about some progress he’s made as well as his current MRR with Bluetick. Rob gives his update on Drip continuing to scale and fill new positions.
Items mentioned in this episode:
Mike: In this episode of Startups for The Rest of Us Rob and I are going to be talking about updates on Bluetick, Drip and other madness. This is Startups for The Rest of Us episode 339. 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 1st product or you’re just thinking about it, I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made, what’s going on this week Rob?
Rob: Well I’m back to feeling really good about Drip because for the last maybe month, prior to last week, which I talked a little bit about it. We just had you know scaling issues right, it’s like stuff comes up, you don’t know if it’s database, you don’t know if you can add more horsepower to it, code implementation, you know what it is. So, different times of day certain ques would back up and it’s like we’re shipping a lot of features, the team is kind of firing on all cylinders right now and I feel like we’re the most productive we’ve been in ages perhaps ever,
Rob: I mean just given that the time size is so much larger, we’re able to just ship stuff faster and yet, like every week was ruined for me because there would be this delay or whatever, this page load is slower, just whatever that like makes me feel like we’re aren’t living up to the promise that we make to our customers, but we turned like a big corner last week with it and I just feel great about everything. So that’s my week.
Mike: Yeah, I know what you’re saying. I think the best analogy, I might have heard this someplace but I kind of feel like I thought of it on my own at 1 point, is like when you’re working on a SaaS app like everything is in motion while you’re working on it, so it’s almost like being a heart surgeon like you have to make sure everything stays up and running while you’re still working on it.
Rob: Totally, that’s right, Reid Hoffman the founder of LinkedIn said building a startup is like jumping out of an airplane and assembling the parachute on the way down right, because you kind of in free fall and you’re burning through cash and the analogy works really well for running a SaaS app and having to do kind of performance improvements, refactors, anything like that that impacts a lot of things and this is where unit testing is such
Rob: a nice scaffold right, unit testing is like having good test coverage, it’s kind of like jumping out with the parachutes already half made or maybe the parachute is, I’ll just stop there because that was a really dumb analogy anyway.
Mike: I was going to point out, I wasn’t sure where you were going to go with that.
Rob: You’re like you’re really taking this too far, let’s ditch the parachute thing.
Mike: That’s almost like my analogy against a heart surgeon.
Rob: How about you, what’s going on this week?
Mike: Well minor champagne moment, I’ve recently crossed the 1,000 dollar a month MMR with Bluetick, so things are going in the right direction. Of course, because it’s the beginning of the month you look at the statistics for growth and stuff like that and they’re just tanked at the bottom which because it’s the beginning of the month instead of the end.
Rob: I know you’ve got preorders up front but this is active customers right, these are people that are actually using it and not people who have paid you and are planning to use it.
Mike: Yes, these are people who have paid me and are currently using it.
Rob: Sounds good.
Mike: Yeah, most of the people I had who had come in as preorders and then converted over into paying customers, a lot of them I had essentially applied credits to their account to give them credit for that preorder to some extent, mostly to kind of boost them over from being a preorder and kind of having an indefinite beta period over to like being a paid customer and those payments are I think going to be starting to kick in this month but even with all of that it’s still over 1,000 dollars a month and my goal for this month is to double it but we’ll see how that goes.
Rob: Wahoo, a 1,000 bucks a month man.
Rob: Are you going to Disneyland, are you going to go out and buy a new car?
Mike: No, I had a beer last night, that was about it.
Rob: Nice, that was your champagne moment, was to drink a beer.
Mike: Yeah, champagne, beer, I’m sure somebody’s going to have a coronary over that analogy.
Rob: Nice, do you feel like the pace is picking up in terms of how quickly you’re adding customers?
Mike: It is and that’s both intentional but also as a byproduct of people talking about it because they are
Mike: using it and they’re having good experiences so they’re turning around and referring other people to it and saying hey I’ve been using this and it’s been working really well for me, that and coupled with some of my outreach efforts, they’re either going on podcasts or talking to people who are on mail lists. It’s a combination of things but I’m definitely pursuing things a lot more in that regard as well and it’s unfortunately a juggling act too because there are things that come in and people say hey, can it do this or can this be modified, can we add a feature or a function over here that does X, Y or Z and it’s prioritizing those against all of the other things that are going on, it’s really pretty hard.
Rob: Yeah, that’s how it always is right, especially in the early days man, it’s tough. That’s why starting on your own and really being the single founder is such a hard road to go if you’re going to build an app like this that’s not in a small niche market where you can move slow and there’s no competition and you can kind of trudge along but building something like this, where there is competition and you’re going to have to be keeping up, you need to get to the place where you’re keeping up enough revenue to basically hire somebody
Rob: soon and essentially, Justin Calcian says hire your cofounders, right that’s what he does now. He doesn’t have cofounders but he hires really early because he races around and he has a little he can back it with and he’s able to give our less equity but he brings people in very early, you don’t see him building something solo or alone because there’s just too much to do when you’re launching something that you want to see grow pretty quickly and it’s in a big market.
Mike: Yeah, I meant there is definitely things that are kind of falling on the floor right now, I mean 1 thing that’s been sitting on my to do list for well over like a couple of months at this point has been working on the sales website and even people who come through the sales funnel when I start talking to them, the biggest chuck of questions that they have is kind of what does this actually do, because the website doesn’t explain it very well and really the website is just 1 page, so there’s not a whole lot of explaining that it can do on that 1 page, it doesn’t provide use cases or examples or screenshots really, I mean there is very little there to go off. Most people are really reliant on what they’ve been told by other people or what they’ve heard about either from me or from other places where I’ve
Mike: done like a podcast interview or something like that.
Rob: You know it’s really cool when you say that some of your new customers are coming from other people using like word of mouth was a big driver in the early days of Drip, not as much with hit tail but there was some but if you have that already, like if you have that when you only have low double digit number of customers, that’s a good sign, right it’s a really good sign because as you grow that’s just a snow ball that allows you to continue kind of leveling up and when you add 100 or a1,000 if you still get that same percentage of people, you’ll always be lower as time goes on right but if you can get folks talking about it, it’s a really nice way to be involved in every conversation right, you always want people to say remember how like infusionsoft and Ontraport, it was always just the 2 of them and just by nature of that fact Ontraport which is nowhere near the product that infusionsoft is, you know had all of this growth and then I remember when Drip started to be part of those conversations when they would say of infusionsoft or Drip and I would like see it, I would say it’s
Rob: not in every conversation about it, but I would see it in these online forms, these threads and then get thrown out and I remember when that started happening and it was gaming changing because you just become another viable option rather than a tool that no one has heard about.
Mike: Yeah, 1 of the things I do, I think it was 1 of the 1st questions that I ask in the survey when you go to Bluetick’s website and ask for an invitation code, 1 of the questions in there is where did you hear about this, so from that I’m finding out exactly who people heard about the product from, so it’s nice to be able to track it back to people who either placed preorders or are current customers, I even have 1 customer who like has a bunch of customers that he works with and he’s going to start recommending it to them because he’s had such a good experience with it and they wanted to use it internally 1st and things have gone well in that respect, so now they’re turning it around and going back to their customer base and say hey let’s get you on boarded with this so that we can help you more. So, what about you, what else is new?
Rob: Well, you know as I talk about most weeks most of my updates involve scaling
Rob: Drip and hiring people, right. That’s kind of a big focus of mine now, there is some other stuff, I might get into it later depending on how much time we have today but I feel you know we have been pretty consistently, just we’ve had an open job, at least 1 job opening since we got acquired and most times we have either 2 or 3, so we’re constantly, we’re hiring other new front end like IUIUX, new rails folks or new people to help with scaling and I feel like I’m kind of in the groove of hiring at this point, like I’ve gotten pretty good. You know it’s kind of this skill that you go in and out of because when you’re not hiring you forget how to skim through a resume really quick, how to do a quick phone interview, how to do a quick phone interview but we’ve just been doing so many recently that I feel like I’m kind of in the groove of it which I don’t know that I necessarily want to be, hiring people is not an aspiration of mine, like I think we’ve always talked about like my book start small stay small, the small was about head count, not about revenue right. I always want to grow revenue but it’s like I want to keep head count down, but
Rob: in this case it’s even just looking ahead as we’re Xing, 2 Xing, 3 Xing every so often it’s pretty frequent that we’re doubling our customer base, we just have to hire a little bit ahead of where we actually are, as well as like I said earlier, being in a competitive space we need to continue delivering features, which as we’ve talked about in the past is harder and harder to do the bigger you get because you spend so much time just maintaining what you already have right, making sure the database is ahead of everybody’s need and the code base and the ques and just all of the stuff that you’re running. So yeah, I guess to summarize we’ve been hiring a lot, I’m hoping we can slow down here pretty soon, we’ve found some really good candidates and I guess it’s getting in the groove of it. I do like doing a bunch of hiring and stopping so that I don’t have to constantly you know being doing it and can kind of focus on other things.
Mike: So, is that going to be the focus of your next book is how to hire people at scale?
Rob: Oh, my gosh seriously. No, it will
Rob: definitely not, and like I say it’s super cool when you get a new person on board and you get them up to speed and they start contributing and like Derek and I looked at each other and we’re like we are shipping a lot of features and it’s because there’s all these people you know doing things that used to be either in our lap or we just pull, hey we have a scaling issue so we’d pull 1 developer off of something and now we don’t have too, like we have dedicated people who that’s all they’re doing and I keep saying we’ve hit our stride. I hate to keep using that analogy but it really does feel like we’re getting the right people in the right roles and it’s kind of a good feeling when you do slot somebody in and you see them start shipping things, you’re like man I’m really proud of what we’re putting out even we’re not doing all of the work anymore because you think back when you’re crafting this software or you’re crafting the UI, with Drip that was really all Derek right, it was he and I deciding what to build and me handling everything else but for so long it was all bottle necked by 1 or 2 people’s bandwidth but now with the growing team it’s neat to see that
Rob: we’re able to maintain the efficiency and still continue that hiring more people actually means we can push out more software rather than in other companies I worked at where hiring more people actually makes things worse, you know it like slows everybody down.
Mike: Yeah, I definitely hear what you’re saying. Do you find that as you are adding more features that like the individual features that you’re adding tend to be more invasive throughout the entire course of the apps, so it’s not like a little surface thing that you can toggle here or add over there, it’s like you’re adding this feature that needs to be added throughout a large part of the pipeline of the applications?
Rob: You know that doesn’t come up too much to be honest. I think in the early days it did because you’re just trying to get to that point where you built something that people want, but I think these days our product is so much more mature that there are things we add now and again that impact everything but our architecture is really solid, so things are broken out into their own subsystems and such. While there certainly are some that come through for
Rob: the most part a lot of these things seem to be more self contained I’ll say, I mean it may impact 5 files or worst case 10 files and you have to go through all of these layers of something and those are the ones that get a little scary right because you’ve got to make sure you have unit test coverage like crazy on that but yeah, I would imagine you’re probably in that boat though right where kind of everything you add it’s like oh gosh I have to go rearchitect this thing in order to do it.
Mike: Yeah, and that’s kind of why I was asking because I find that a lot of the changes that I’m making tend to be stuff that have to be tracked down or tracked all the way through from the front end all the way through the API and then into the service layer and the security layer and then into the database and it gets to be, I don’t want to say frustrating but it takes a lot longer to get some of those things done than I would like especially because of all of the maintenance and ongoing requests or butt fixes and things like that, there are just tweaks and adjustments that kind of invade into that space while I’m trying to get those things done, it’s
Mike: just, it’s honestly like the juggling act right now is really pretty hard, so I was just kind of curious of whether or not you still ran into those things, so maybe there’s light at the end of the tunnel for me.
Rob: Yeah, yeah there is but it takes a while. I remember we refactored Drip, like major database refractor probably twice before we got to launch right, so Derek broke ground on code December of 2012 and we really launched to the world in November of 2013 but we had kind of our 1st group of 10, 20 customers coming on as early as June of 2013, so that was 7 months in and I think within that 1st 6 months before we really had people he had to do a massive rip apart of things we just had made decision to couple and they shouldn’t have been coupled and then there was another 1 when we launched, automation right so that was early 2014 as he was building automation that was just painful, it was like 2 months of standing still and then he built automation, once he had it done the automation stuff was actually not so hard to build but it was like we have to rip
Rob: separate these 2 database tables and you know as you’re falling down making your parachute and it was gnarly but after that like once we hit there, we’ve had limited need to do that because I think the building blocks got in place and the product was solidified. Now us marking automation and we’re not going to add on shipping cart landing page, affiliate marketing management, you know what whatever else, that would all I think impact some of this other stuff where as you’re still figuring out, like where I would guess at your stage, we were still figuring out I should say, so really trying to figure out should I build this feature, what is this product going to become, what is the vision for the product and is my vision still aligning with what the market is asking for and that makes things very fluid, I think is probably a good word for it.
Mike: Yeah, I’m having the same types of general conversations with most people when it comes to either features that they want implemented, like the road map that I have in my head, it’s obviously different than I originally started out with but over the past several months it really hasn’t changed a lot and most of my time is spent trying to
Mike: get those things done, so that’s more of the challenge, it’s not trying to figure out what to do, it’s figuring out what order to do it in and how to get it out as quickly as possible without wrecking things along the way because like you said, there’s that issue where if you go to roll out a new feature or a new piece of the code, if it touches a bunch of different pieces of the application and you don’t have as many unit test around it as you would like than it’s a little scary to hit that deploy button. So most of the time what I do is I deploy it out to my development server and I just try to beat on it a little bit to see like can I break this or is there any obvious things that I might have missed that may not be covered by unit tests because the front of the UI, like there’s very little unit tests are on the front end stuff, like the services and all of the back end stuff, like there is unit tests there but the front end is not tested well but that’s also because I know that the front end is changing a lot, so it’s much harder to put something in place where I’m just going to have to change all of those things anyway.
Rob: Right, and
Rob: you know the front end unit testing, which I guess now becomes what integration or system testing, there’s like a different name for it when you’re going all the way from the top down, that’s stuff runs super slow right and I consider it a more advanced method of testing, not a bad thing to have for some critical paths, I think it’s just my opinion, others may disagree with me but it’s like your sign up flow yeah you should probably have, it would be nice to have a nice UI test for that and maybe sending a broadcast in the sense of marketing, I mean it’s your basically fundamental things but A I would not be testing settings pages or like little corners of the apple out that people don’t use and I’ve heard of folks who separate those front end tests that hit that UI into a completely different test sweep because they can take 30 minutes to run or an hour to run, because they are so slow because they have to speed up browser instances and click on things. So, I don’t know, I would say at this point you will be better off annually QA your stuff and then just having unit tests below the surface, that’s probably what I would have. I don’t think I would spend a bunch of time doing UI tests yet. I actually don’t think the UI
Rob: testing suites are that still, they’re still not that great.
Mike: Oh, they’re terrible.
Rob: I know, I was using Selenium in 2008 maybe, 2007 to 2009 in there to test on an invoice and it was horrendous and I’ve heard there’s like another layer now built on top of Selenium and I heard it’s still not that great.
Mike: Yeah, I poked around it a little bit but realized that there was just too many things changes to really make any sort of difference and it wasn’t worth going down that road. I mean the API and stuff gets tested and some of the different layers but you know once it’s passed that, I mean the front end of the app, it’s all this massive Java script application because it’s all written in angular so there’s not much there other than the smoke tests in that if I make a change on the front end UI I can be reasonably assured that the APIs and stuff underneath are working but that’s no guarantee that if you click on a button it’s still going to do what it’s supposed to do.
Rob: Sure, and that’s where I think about having code that doesn’t have a bunch of side effects on it or places on it so if you’re working in a
Rob: certain part of code you know that you don’t have to go test all of these other things right, that you can test this 1 thing and be fairly confident that you’re not going to break something in the UI and do a cursory test as you deploy it and then just let your customer finds your bugs, no I’m only kidding. That’s like the worst, some of our competitors do that and it has tarnished their reputation.
Mike: Yeah if I can find and fix a bug before the customer ever sees it or knows that it was an issue than that’s the probably ideal scenario but it’s still hard, I mean I’m just constrained on resources and time and speaking of time, things have gotten even worse for me because as of 3 days ago my wife acquired a larger fitness studio here in town, so commence schedule craziness at this point. It’s just her schedule is all over the place and obviously, mine is pretty swamped as it is, so just kind of trying to overlap enough so that we make sure that the kids are taking care of and dinner is ready and all of the other stuff that needs to be taken care of
Mike: is done and out of the way is really been super challenging in the past couple of days.
Rob: 2 people running business in the house, that is tough. I can imagine that is really complicated and having flexible schedules sounds great until you realize that like 2 people with flexible schedules is chaos, like Sherry and I have run into that in the past where it’s like I think I have a flexible scheduled but like you said, you actually have kids and you have like some other responsibilities to get kids picked up and get dinner made and this kind of stuff, so I totally get it.
Mike: Plus our youngest was sick yesterday, so it was either yesterday or the day before, 1 of the days this week he ended up staying home from school and then last night he had a fever and we thought he was going to be home again from school today and it turned out he was fine, but it’s hard to juggle all of that stuff and then plus with her new business, I mean it’s a larger business so she’s got multiple contractors that she didn’t have before and there are scheduling issues, and moving to a new space
Mike: and new software and all of this other stuff that goes with it, it’s a pretty large learning curve is what it comes down too.
Rob: Yeah, I bet man. Well good for her, big congratulations to the both you I guess for her acquiring that studio, sounds kind of cool. I bet that’s a good move for her to kind of up her game, she’s leveling up, stair stepping up if you will, boom.
Rob: how involved are you in her business?
Mike: You know I help look at the business financials and stuff early on but beyond that stuff and just kind of verifying hey is this a good move to make, I really try to kind of stay out of it. Just kind of point out here’s something that you might run into or here’s something else that could be an issue or just don’t worry about this over here, but just kind of try and stay aways from it. I mean that’s kind of her thing so I’m not trying to get in the way, is really what it comes down too, trying to stay out of the way.
Rob: Yeah, that makes a lot of sense. So, speaking of all of the scheduling madness and how to juggle that, Sherry and I made the decision early in the year actually, we were talking to
Rob: someone who said they had an au pair and an au pair is someone who is typically young woman who comes from oversees and wants to come to America and is basically like a live in nanny. So, we were talking to someone who had an au pair and said it was life changing and said it was the best decision ever and so I started noodling on it and we realized that we were both going to MicroConf and I was going to be gone for a week or like 6 days and Sherry was going to be gone for like 4 or 5 and every time we go away for overnights A, it’s expensive, really expensive to hire someone to watch your kids overnight and then there’s always they don’t know your routine and they don’t know your house and there’s just so much to communicate that it’s super stressful. So, we’re just like let’s hire a live in nanny, like let’s see if we can find essentially a local au pair, you know, someone who Sherry was like a young college student would be prefect right, and so we did. So, I interviewed, I don’t even know a dozen people here in Minneapolis and right before MicroConf, like the week before she moved in and she lives in, we have like a basement living suite, it has everything except
Rob: for a kitchen right, so it has a full bath or a 3 quarter bath and then it has laundry and a bedroom and then we share the kitchen but it has been game changing man and for exactly the reason you said, it’s like sometimes Sherry and I just are 30 minutes off of where we’re not going to be there and the kids are going to be there or sometimes we need to be in 2 places at once or Sherry goes out of town, she went out of town for like 4 or 5 days to Austin for a yoga, some training in aero yoga and it’s like during that time I could handle the kids but they get on the bus at 9 15 in the morning and so that would put me to work at 9 40 and now it’s like you don’t need to be around that much to watch the kids because they’re both in school but I can leave at 8 30 or whatever and someone is just kind of hanging out with them for 45 minutes, so it has been game changing for us.
Mike: Yeah, I can imagine. I mean that’s something that we’re kind of struggling with right now is just trying to manage schedules and it’s just really so early on, but you know hopefully that will straighten itself out but I would love to have a nanny.
Rob: I know, it’s something to think about long term
Rob: man, I mean especially 2 people running businesses right, the idea is your schedules are going to be gnarly and in the long run the business should generate a lot of cash, right. I mean it should turn out more money than you would make with a salaried employee and with those 2 things in mind it’s like all right, then we outsource as much as we can and that’s you know, if you’re still mowing your own lawn or snow blowing your own snow I think that honestly, I think that’s not a good use of our time as entrepreneurs. We moved to Minneapolis and 1 of the 1st things that I did, we already had a lawn service but I was thinking like I’m not shoveling walks and it’s not because I’m above it, I used to do it but now the time versus money trade off is insane. So anyway, that’s kind of my soap box about outsourcing stuff and of course I’m not talking about outsourcing someone raising my children of course, I know that’s probably the joke or what folks are thinking, but it is like outsourcing driving them from school to the house, or outsourcing our live in nanny like the kids go to bed at 8 or 8 30 and so she’s hanging out in her room reading and
Rob: Sherry and I are like it’s 8 30, we’re just going to go out for 2 hours and like have a late dinner and have drinks and talk and you don’t have to hire somebody, there’s no clock running where you’re paying somebody 15 bucks an hour while you’re sitting down the street at a restaurant. I think that about wraps us up for the day, if you have a question for us call our voice mail number at 1 888 801 9690. No one ever calls us anymore.
Mike: They don’t love us.
Rob: I know, we get like 1 call every 2 months. I tell you what if you want us to answer like go to the top of the queue of questions, just call it in because we get so few of them and they’re fun because you get to hear the person’s voice, you can remain anonymous, you don’t have to say your name or your URL if you don’t want too but it’s kind of nice to get those every now and then. You can also email us questions at questions at startups for the rest of us dot com. Our theme music is an exert from We’re Out of Control by Moot and it’s used under creative comments. Subscribe to us in iTunes by searching for Startups and visit Startups for The Rest of Us dot com for a full transcript of each and every episode.
Rob: Although you know what Mike, did you hear that our transcription service again, this is like the 5th 1 we’ve used, they just like disappeared. I know, this happens like probably once a year. I seriously think, we’ll we’ve been doing the podcast for 6 years maybe, 5 or 6.
Mike: Something like that.
Rob: And I literally think we’ve gone through more than a half of dozen of these.
Mike: Are we at 7 now, 7 years?
Rob: Are we? Was it 2010?
Mike: I think so, yeah it was.
Rob: Gosh, dude we are old.
Mike: I know, our podcast is older than most businesses who listen to us.
Rob: Yeah, I know our podcast is older than a lot of children. All right, so anyway transcription service I think Josh, our editor is looking for 1 right now, but it’s just funny how these things just come and go. I guess it’s just such a commodity you know, it’s tough to stand out.
Mike: Well I think that’s the issue with all of them and I think that’s why they come and go because you get the transcriptions and they go for a while and they have a really hard time raising the price because most of them tier their pricing
Mike: in terms of how quickly you get it, like oh if you need it in 24 hours this is what it will cost and it’ll be some outrageous number and then it goes down if you don’t need it for like a week or so and that’s the issues is that there’s that race to the bottom in terms of getting it transcribed and I think that most of them just can’t make ends meet and it’s not just because they don’t have enough business but it’s because they’re not able to pay enough for those people and the business just kinds of implodes at some point.
Rob: All right, back to the outro here. Visit Startups for The Rest of Us dot com for a full transcript of each episode. Thank you for listening and we’ll see you next time.