The Exchanges

Q an ideas video that did 260,000 views, and so we have, we have a bunch in the six figures, but most of them, you know, they get to five or 10 K, and then they're like, bam, even though we have a 115,000. So, do you, do you agree with that assessment of, like, email and podcasts is more the owned media, or how, how do you think about it?

A I split the, uh, platforms into two buckets. I call them discovery platforms and relationship platforms. Discovery platforms are anything with an algorithm where there's like inherent mechanism for connecting new consumers to content. And in relationship platforms, there is no mechanism. It's decentralized. So on the relationship side, there's only a few, and I agree with you. It's email, podcasting, SMS, and private communities. So to me, the game is Using discovery platforms to reduce your dependency on discovery platforms is basically like, I'm going to go over here. I'm going to perform for the algorithm so that I can get people to my email list or so that I can get people to my podcast or private community. And some people do SMS really successfully, especially in the e-com space. But, um, that is kind of the game today is to say, I don't want to depend on discovery platforms because that can be, it's certainly going to be changed if not completely eliminated from being useful to you. But the longer that you can leverage it to not need it, the stronger your actual leverage becomes.

AI assessment note: “So on the relationship side, there's only a few, and I agree with you.”

Q and you, you threw some bullets into a doc for me to help guide this conversation. And one of the things that you said was something we could talk about was why I shut down a B to B product that went from zero to one and a half million ARR in 12 months. And then I shut it down. Talk us through what, what was that product and why?

A We started licensing our AI co-pilot product, which is basically you could converse with all the financial data, get it to build you graphs, get you to summarize transcripts, slide decks, everything was preloaded into there. We exposed that product while we were trying to build a ton of other product. So it was just like a lot was going on. It was a bit, a bit of a distraction, But the money was flowing in. It went from zero to a million and a half of ARR growing, you know, 20% a month consistent, even when I shut it down. It was probably, it would, it would probably be like two and a half, three today, maybe more. The problem with it was we were signing big customers. One of them was 250,000 dollars a year. Several were in the hundreds of thousands of dollars, some, some on the just tens of thousands of dollars. And a lot of customers were coming offline pretty quick and telling us quickly that they were not going to renew. And the reason for that was we solved a key problem at one point that ChatGPT couldn't handle any of these queries very well. That problem went away and the foundational models started to kick our asses at our own game. And so we started to see the writing on the wall. We're like, okay, this is not actually what we're good at us doing rag for them and solving this quick problem for these customers. It's probably a quick solve because they want AI on their p…

AI assessment note: “We started licensing our AI co-pilot product... foundational models started to kick our asses”

Q the Modern Financial Data Terminal. Go from idea to confidence with clean global financial data trusted by the world's leading public market investors. And your site looks gorgeous, by the way. It's a really nice, nice rebrand. So moving from FinChat to Fiscal, well Fiscal, Fiscal's a great name, especially Fiscal.ai. So part of that was to not be pigeonholed as just like a chat app. Is that the idea?

A Yeah, we're like, okay, we've become finance plus AI and FinChat kind of resembled that, but we would talk to these big bank investors, these public market investors. We had two problems. One, they thought it was just a financial chat. They thought we were maybe like a Bloomberg chat competitor, which was not really true. It was like a full actual data terminal product. So they're, they're like pleasantly surprised when they came to the demo, but still like we're underselling a bit what we were doing. And two, a lot of Big bureaucratic financial buyers. They had almost all AI chat domains blocked on the server because they didn't want anyone putting in customer sensitive information, proprietary trading data, stuff like that. And so we were just always blocked. So those first demos, no one had ever seen the product before, and that was really hurting our go to market.

AI assessment note: “One, they thought it was just a financial chat.”

Q and let's, let's dive right into the first one. The cool part too is several of these are multi-part questions, so I think we're gonna, I think we're gonna get in here pretty good. So, first question. Kevin mentions that he approached Facebook groups to do some of his early marketing. So Kevin, did you have to offer anything in return for that? And if so, what did you offer?

A Initially, we did offer a discount on the software because we just, no one knew who we were, brand new. Got to get someone to join this group. So I believe we offered like a godfather type grandfather deal of like six months free and grandfathered price for life, the cardinal sin, you know. But after we got 10 or 20 or 30, the main pitch was access to the founders. So it's like, hey, if you have ever been with a software where you didn't like change or didn't like how little change was happening, guess what? You could, you can talk to me directly in this group and we'll dialogue back and forth and then follow through on that. So really it was like, you're going to hear directly from the people that make the decisions here.

AI assessment note: “Initially, we did offer a discount on the software because we just, no one knew”

Q line. We started with this conversation. Hearing you refreshing that, uh, that bank balance and, and seeing all the zeros. Huge sense of relief. You're still the CEO of Jimdesk, but what, what are you doing now? Like, as you look ahead Over the next six months, five years, like what, you know, what's on your mind and what are you doing with regards to Gemdesk and with other projects?

A Yeah, so as I mentioned, um, one of the goals, or rather one of the reasons for selling the company was due to burnout. And when I was talking about the terms with the buyer, I mentioned that I would like to step down as CEO after the company sold, and probably over the course of maybe a year or two, eventually walk away from the company, or at least have the ability to do it. That. So currently I'm still the CEO. Uh, we, we closed the deal two and a half months ago. We're in the process of recruiting a professional CEO to come in and take over for me. I literally had a, uh, an interview just before this call. An hour long interview. By the way, it's been a fascinating process, interviewing for the CEO position. I'm talking to really incredible people, and I'm super excited to potentially work with those people, with me taking a small role in the company, mainly focusing on product, That's where I feel I can make the most impact at the company. I've been doing well in the other aspects, but those are definitely not my strong suits. So going back to focusing on product, and over time reducing my involvement in the company, I still hold some minority stake in the company, so I, I wanted to do well, but maybe more on a consultancy basis, eventually. The main thing for me right now, and I already started doing that, is I'm looking to Help mentor other B to B SaaS founders from that…

AI assessment note: “Help mentor other B to B SaaS founders... and also do some angel investing”

Q co-founder of Session Lab. You are a tiny seed EMEA company, and the H-one of Session Lab is an easier way to design workshops, drag, drop, and reuse content, calculate time automatically, collaborate in real time, create a workshop in minutes, not hours with Session Lab. So can you give folks an idea, first of all, of the stage that Session Lab is at, whether it's revenue or employee headcount?

A We are 13 people, uh, growing profitably and about SessionLab itself. Uh, so we help facilitators, consultants, team leaders to design and deliver effective workshops. Um, typical use case you would use our workshop agenda planner tool. If you have a full day strategy workshop or a two day leadership retreat, somebody plans these processes, what people do at what time of the day. And, and that's the facilitator. And these are typically facilitators, agile coaches, org dev professionals. Learning and development people. So we help them design better workshops. And next to that is also, we have the biggest online library of workshop activities. So if you look for icebreakers, energizers, brainstorming techniques, add to session.com library, and you can get inspiration for your next meeting or workshop.

AI assessment note: “We are 13 people, uh, growing profitably”

Q because Leo, the head of the network, wanted people who were there local. And I remember thinking to myself at this time, because I heard about it, what's he gonna do? Because it's, there aren't that many tech Podcast networks in the world, you know, and at that point you made a, you made a shift to basically go into business for yourself. You want to talk us through that?

A Yeah, I did that for, for a number of reasons that some were intentional and some were not. On the one hand, I had a friend who I still do a show called Cord Killers with, Brian Brushwood, who was taking his own things independent and had been for years, who was encouraging me, gave me a lot of great advice. Uh, and sort of helped me along that path. At the same time, I was also planning to start Daily Tech News Show with someone else who was going independent. And so I thought I was not going to be alone. And I did get severance, uh, from Twit. So I was able to have a little bit of runway and I sat down with my wife and I was like, well, you know, I've got this much. Why don't I just try all this stuff on my own and see how it goes? But mostly I just wanted to do things my way, and after having been at Tech TV, CNET, and This Week in Tech, I felt like I had gathered enough intelligence, uh, and the tools online had gotten good enough that I could make, make a go of it solo. Uh, and so I just, I gave it a, I gave it a gamble. I, I decided to, to try it out. My motivation was I want to do my own show and I don't want to have to mess with anything else. I just want to do my show and things like Patreon. And at the time I was using Google Hangouts on air made it easy to do that without having to put a bunch of capital outlay to hire a bunch of producers or have a studio and all of…

AI assessment note: “I did that for, for a number of reasons that some were intentional”

Q recover. Where do you go from here? Because in 2019 then, which was a couple years later, you went two or three years later, you wind up selling the company. So what's the, what's the summary of, of that in between? Was it more of the same, but were you lifestyling? Did you start hiring people? When you sold, were you solo? You know, what, what are the details there?

A Yeah, it's a mix of, I was lifestyling almost to a fault in some ways. I was, I think things had grown stagnant. I gravitated toward what was interesting for me to work on, like product. I loved building. And I would let things like marketing, yeah, I'll get to that eventually. And I would do sales when inbound sales would come in. I would do demos. I would follow up, close the deals, things like that. And I brought on different people at different points. So I brought on a salesperson that was, you know, working on doing demos, cold outreach, things like that. It didn't really work out that well. And then around the tail end, probably about a year before I sold the company, a friend of mine who's a data scientist, he was working on a startup. He said, well, you know, you're a data scientist. I'm sitting on a lot of data right now with Kevi, e-commerce behavioral data. Maybe we can build Something of value for our customers, for the Kevi customers using your, you know, artificial intelligence, machine learning knowledge. And so we started collaborating and we started building new, exciting, what we called smart features for Kevi. Things like being able to tell you what, how effective your email will be based on the subject, subject line. And eventually the plan was we would get, give you the ability to write your entire email without having to Do it yourself based on your, your…

AI assessment note: “I was lifestyling almost to a fault in some ways.”

Q supplement, but a health information site useful to, to SaaS founders? And we're going to get into all that because you've done a huge, a huge amount of stuff, but I am really curious about examine. It's a huge site with a lot of reach. Can you give us an idea of how large it is? Maybe daily visits or monthly or, you know, whatever you, you share publicly. Yeah.

A So the content itself is I think collectively now on the website, we have like eight or nine million words that we've written. Um, so we've been around for 10 and a half years. So obviously we've had a lot of time. Um, I think our research team, which is just basically everyone who actually does the research, analyzes the research and writes about it. I mean, itself is up to 14 people. And I think we have like four or five copy editors and a bunch of reviewers and whatnot. Collectively, I think we're at like two and a half, three million visitors a month. I gotta be honest. I don't look at it too much, especially with like the Perfuffles we've had with Google and whatnot. But one of the relevant things I think, um, that is relevant to the SaaS founders is we have roughly 10,000 paying subscribers for content. So even though we, we don't offer a product or a solution, we actually have a lot of health professionals that rely on us for analysis. So there's a lot of, I think, analogous situations of like, you know, decreasing churn, onboarding, all that kind of stuff that we've learned that would be also relevant to other people in the SaaS industry.

AI assessment note: “Collectively, I think we're at like two and a half, three million visitors a month.”

Q Right. And was it challenging for you to work the day job and have the nights and weekends side project? Cause I know for some people that's really hard. It was like, for me, it was very hard all those years I did it. And for other people, it's just not that big of a deal. How was it for you?

A Oh, it was hard. Honestly, I think back to when I first built Rails Autoscale in 2016 and 2017, and I'm not quite sure how I did it. If I think about 2018, 19 and 20, I don't feel like I was putting much into Rails Autoscale by that point. You know, it was, it was a product that was working. It was growing slowly just through people finding it in the Heroku marketplace. And while I had time, I tended not to have a whole lot of mental energy or creative energy after the day job. So yeah, I found myself just not putting as much into Rails Autoscale and that made me want to go full time on it even more because I just felt like, If I want to accelerate this business at all, I can't have a day job and do it at the same time.

AI assessment note: “Oh, it was hard. Honestly, I think back to when I first built”

Q pretty much anyone anywhere in the world could, you know, live out. I forget what it was. It was maybe 16 K or something, you know, it was a healthy dose, single founder, almost no expenses, but it was still a side project. You had a day job. Why was that? Why did you continue working on Rails Autoscale as a, as a side project, even with that much MRR?

A Yeah, there were several reasons. One is that the growth kind of stoked me by surprise. The growth of the business was slow and steady until twenty-twenty. And then from in twenty-twenty, started the year twenty-twenty at less than five K MRR, ended at over 15 K MRR. So the business more than tripled just in twenty-twenty. And I don't know why. I don't know if that's COVID related in any way with more, you know, things going online and that kind of thing. But yeah, 20, 20 took me by surprise in terms of the business growth and we're a risk averse family. So honestly, yeah, I'm, I'm the only income. My wife is, is back in school and we weren't prepared for the idea of completely relying on this business as our, as our sole income. Now at the end of 20, 20, we'd kind of realized, yeah, this, this is going to happen. It's just a matter of when, when do I make this leap? So that's the point where I decided, well, I could wait until a little later in 2021, or I could apply to TinySeed and see what happens there, because that would definitely be sufficient cushion to make that leap with confidence, even being pretty risk averse.

AI assessment note: “we're a risk averse family. So honestly, yeah, I'm, I'm the only income.”

Q the thing, you know, I often tell early stage founders who may want to split test because they've heard it's the best thing to do. It's real premature optimization when you're that early and things are just flying all over the place. You just kind of have to take your best guess, do your best and see what you can, see what you can change across the board, you know?

A Yeah, I think A-B testing and, and conversion rate testing in general is great when you have between tens of thousands and hundreds of thousands or more Visitors to a page and, and enough of them are converting that you can basically test in 12 to 36 hours. Anything under that and the testing itself will get in the way of you making real improvements. And I saw that, I saw that at Moz all the time. Like we were getting hundreds of thousands of visitors. In fact, we were getting millions of visitors a month. We were Rolling out these changes, the tests would run for 90 or a hundred days, and it would come back and be, eh, pretty even. Was there one clear winner? Not sure. This is how quarter after quarter was wasted. Yeah, I very much regret getting into a testing-focused mindset at that company instead of an innovation-focused mindset. I think, I think we prematurely did that, and Moz was many, many times bigger than SparkToro.

AI assessment note: “Anything under that and the testing itself will get in the way of you making real improvements.”

Q don't think you or I want to be too Sky is falling about it of, oh, anytime an offer comes by, you should sell, blah, blah, blah. But what we see in the movies of, or what we, what we read on TechCrunch of, it sounds like every company gets an offer every few months, and that, that's not the reality that, that I've experienced. Would you agree with that?

A I agree a hundred percent. You know, you, you'll get those phishing letters from brokers who say, hey, I've got a buyer that wants to buy your business. Those are usually not true or disingenuous. You'll also get a lot of phishing letters From private equity groups. And those are sourcing agents. They're just trying to get a proprietary deal. And a prop deal is where the acquirer has proprietary or unique or exclusive access to buying your business. And it's a recipe for making sure you sell your business for much less than it's worth. So there are bad actors out there who are trying to essentially prey on your naivete, your, your ignorance about the process. So you will get those letters. Those are different than a genuine Large, recognizable company that comes to you and says, look, we've seen what you're doing and we want to buy your business. Like in your case, Leadpages, you know, came to you. That's a very different conversation than, you know, a chop shop that's just basically cranking out letters that basically swap out the first name of the person. You can quickly discern those by asking or responding and saying, you know, thanks for your interest. Tell me what specifically about our business did you find most compelling? And most of the time they'll stutter and go, uh, you know, because they, they have no clue what your business does.

AI assessment note: “I agree a hundred percent. You know, you, you'll get those phishing letters”

Q all to my business, even, even a salary that I take out, right? So all of that I can add back in because it kind of is profit in essence that I'm just taking out and maybe using for kind of expenses that are maybe on the edge, you know, or that otherwise I would just pay for personally. Is that an accurate representation? Do you have anything to add?

A Yeah, exactly. I think it's, it's operating profit plus three big categories of expenses. So all of your owner compensation, and that could include your health insurance and anything basically attached to you and compensating yourself, dividends and so forth. And then, yeah, like you said, anything that's kind of personal expenses, travel, meals, accommodation, just random things that people like to add in to reduce their end of year tax bill. And then, um, the third piece is One time sunk expenses. So for example, if you got a trademark that year or did some like intellectual property work or some legal work that sunk, anything that's not going to be recurring or that a new owner taking over the business wouldn't like routinely have to pay for. So you've kind of taken that on, you can add that back. So those three categories of expenses you can add back and then you get to that magic SDE number.

AI assessment note: “Yeah, exactly. I think it's, it's operating profit plus three big categories of expenses.”

Q this out and I want you to counter or, you know, or correct it. But those tend to be the smaller deals that I hear about. You know, if you're doing, like you said, a hundred grand a year in, in SDE, then you get a multiple on that. You're not going to get a multiple on, on top line revenue. Where am I correct and incorrect with that analysis?

A No, you're absolutely right. It sounds very interesting as a valuation landscape, because as you said, it's the only business model that straddles two different valuation approaches, your earnings led multiple or your revenue led multiple. And I guess some of the confusion that comes up about which one to use when is really in thinking about what's the, where's the life cycle of the app. So as a rough guide, I would say that the revenue multiple starts to kick in as an approach or a valuation approach at, like you said, a million dollars in ARR. And that's not like an absolute hard and fast number, but the reason it's chosen there is typically because the business has started to achieve a level of scale at which the buyers that are operating there, like PE and Strategics, feel that it's commensurate to like apply that kind of valuation approach. There are some other caveats to it, which is that the business also needs to, at that point, have been really reducing its churn down to Four percent or lower per month. It really needs to have a proper team in place, proper CTO, proper development, customer support, onboarding, sort of customer enrichment team, all of which would have done the work of, you know, reducing the churn component. And the last piece is it really needs to be starting to grow very, very strongly, like at least 40% year over year in revenue growth. And so what …

AI assessment note: “No, you're absolutely right. It sounds very interesting as a valuation landscape”

Q said that up front. Like, I, I've invested a couple times in a couple rounds in Carthook. So I've been along on the journey with you, but I wasn't involved yet at this point, and I'm wondering, like, did you validate this idea, or did it, I'm imagining this already existed at the time, and why did you decide to build something that already existed if that was the case?

A Well, I, I liked the low risk approach of that. I used to use a product just like this, and it was a terrible product and it made me money. And when I looked at software ideas after selling the e-commerce business, what I did was I looked through our credit card statements and in the e-commerce business, where were we spending our money? And I just identified that app as really high value and really low quality. And so what I said was, okay, what if I build a better version of that, right? At this point in time, I don't really have the intention to build a company. My intention is how do I make 10 grand a month so I can do whatever I want? And I don't, I don't know where the software thing's going to go, but I like the idea of recurring revenue.

AI assessment note: “I liked the low risk approach of that. I used to use a product”

Q price sensitivity and needing a lot of support. Is that correct? Like, was it, was it kind of a tough space to be in, in terms of just needing the volume of customers? Your price points, at least today, are 15 dollars a month. So, by kind of MicroConf's B to B SaaS standards, that it's pretty low price, I would expect high churn and price sensitivity. Is that accurate?

A Price sensitivity, 100%, but high churn, not at all. I mean, the teachers in this niche were already kind of pre-selected, so they were somewhat technical. They knew how to integrate a SaaS into their workflow much more than had we gone to a brick and mortar school, tried to then convince the school board or the principal had to go and train teachers how to use the software. The, the teachers already teaching in this niche were very self-directed, and they were having a lot of trouble solving the, this problem that we ended up solving for them. So the high churn was not even an issue there, but the price point, we actually started lower. We started at five dollars a month, understanding that this, this audience might be price sensitive, and then when They were converting so quickly and seeing the value so quickly, then we doubled the price to 10 dollars a month, got rid of the five dollar a month plan altogether, and then we ran it at that price point.

AI assessment note: “Price sensitivity, 100%, but high churn, not at all.”

Q Well, so take me back to, to 2016. So your family owned a few laundromats, as you've mentioned, and you decided to solve a problem they had yourself, and I'm just curious how that, like, how that came about. Was there literally no other software on the market that could do this?

A So the story actually kind of goes back to 2011 when just shortly after we had opened our second store and going from one location to two, managing multiple locations, realized that there needed to be some systems to help make sure that things were working the way they needed to in the store without me having to be physically present at each location. And back then, really the only software for point of sale systems for laundry services was just dry cleaning software. And dry cleaning and launch mats are two separate things. Kind of similar industry, but they're very different businesses and the processes you need. For dry cleaning, it's a lot of individual garment tracking and racking systems, and when they actually process the, the, the, the dry cleaning items, they put everybody, all people's stuff together on one machine all at one time, which I think is disgusting, but that's, I'm not involved in dry cleaning, so I can have opinion about it. Uh, whereas with laundry services and laundromats, orders are kept separate from each other. Typically, only one person's laundry goes into one machine at a time, and they're washed separately. So, it was pretty common for laundromats at this, in this era, if they were going to computerize anything, because most places just used carbon copy triplicate tickets and cash registers back then, you would use dry cleaning software, if, if any…

AI assessment note: “really the only software for point of sale systems for laundry services was just dry cleaning software”

Q Yeah, I bet it has. What I want to hear, though, is specifically Anar had talked a couple episodes ago about how now having hardware as a component of a SaaS is a, like, is a valuable moat. Do you see it that way as well, as someone who's operating a business like this?

A I do. I really do. You know, the point of sale software was not the whole solution. We, we've really focused on being a point of sale system, and we discovered early on that just trying to sell the software by itself and the customer goes and sources the right hardware, trying to find the right hardware for their store was, was difficult. You know, part of the solution that we sell is that we've sourced commercial grade Equipment, computers and touch screens and printers and all that, that will survive a harsh commercial environment. Laundromats are really, really hard on computers, especially ones that have fans in them. Lots of lint in the air. You literally have to take the computer out and dust it off with some cans of compressed air to get the lint out of the computer. It's bad. It's rough. And there's water and there's humid environments can be sometimes. And the very first few systems that we sold back in 2016, it was a separate Touchscreen monitor and a separate tower, and one of my first customers, she was in New Jersey, and I was talking to her on the phone, trying to walk her through how to set up her system remotely. She did not know how to connect a monitor to the computer. It was an utterly foreign concept to her, and I realized, oh, this is bad. If I'm hoping to help launch my owners across the country, uh, set up point of cell systems entirely remotely and talki…

AI assessment note: “I do. I really do. You know, the point of sale software was not”

Q well, is like, as a mostly kind of bootstrapper at heart, which I, I think we have a quote in this, uh, you announced on Medium in March of 2015. I'm a bootstrapper at heart, but you raised a twelve million dollar Series A from Foundry Group. That is a very large amount of money. What was your thought process there? You know, what, what made you decide to raise?

A I actually want your take on this, too, because we were building horizontal SAS at the exact same time, right? You were building Drip. We were building Help Scout, and I remember having a conversation with you at MicroConf where you were just like, man, it was such a grind trying to reach that next level of growth. I just never felt like I could fully capture the opportunity, and I felt exactly the same way, right? The company was growing like gangbusters. We were profitable. Took us about 18 months before we were profitable, but then we were sort of maintained a sort of ramen profitable business where we were just hiring as fast as we could, deploying all the profits as fast as we could to try to keep growing the business. And about four years in, I had a friend that had taken money from Foundry Group. So Foundry's based here in Boulder. Brad Feld is an absolute legend. Their firm is, is absolutely legendary, uh, in so many ways, and I just felt a sort of alignment with the way that they operated. They were not hands-on. They were pure capital, gave founders a lot of freedom and, and, and respect, and so Foundry Group just felt like, you know, if I, if we were going to go chase a much bigger opportunity, which is effectively what we were signing on to, It was like, hey man, like, is there potential for this to be a hundred million dollar business? If we think there is, then we…

AI assessment note: “if the business's potential is to be a hundred million dollar plus business”

Q bootstrap startup, um, whether a lot of what you say is relevant only to those who are coding for themselves, or whether or not I, I can listen to your audios and, uh, sort of absorb it as if it worked. Directly from me. If not, would you be able to advise me as to exactly what I am and where the best place to start would be? Many thanks.

A Thanks for sending that question in, Helen. My short answer is, I think you are SaaS. I have a pretty short description. It's basically a one sentence explanation of what I think SaaS is, and I'm going to say it here. It's subscription software where software provides The value. So let's break that down. Subscription. That implies it's not a one-time fee, and I would argue that the old model of Microsoft and Oracle, the on-prem software providers, where they would sell SQL Server or the Oracle database, and you would pay 10,000 dollars up front, and then annually you would pay what they call the maintenance fee, and it was usually between 20 and 25%, so another two grand, 2500 dollars a year, For patches, updates, and all that. I would not call that SaaS. Well, we could argue, maybe it's a, maybe it's an edge case, but I, I don't consider that because you are not charging the same every month or every year. You have this big upfront fee, and then this maintenance fee. So it's subscription software, meaning that someone is paying on a monthly or an annual or quarterly basis, generally the same amount, for not only access to software, but where software provides The bulk of the value. Why do I add that last part in? Because every time that I go onto social media and say that there are approximately zero B to C SaaS companies that are successful at scale, I get people chiming in w…

AI assessment note: “My short answer is, I think you are SaaS.”

Q Could you charge that? The question is, could you charge that every year or would you charge 400 upfront and then charge a hundred dollars or 200 dollars a year as a maintenance fee? Something like that. Do you feel like looking back to four or five years, do you wish you'd done that or do you, I guess, what are your thoughts on it?

A Yeah, that's a good question. I honestly don't think so. There's some things that I maybe would have done differently. I think we probably could have done subscriptions for team licenses. From day one, which would have honestly probably been enough to make like a pretty substantial difference. Cause I just don't think businesses are as sensitive to like the one time versus subscription thing, especially if it was just like an annual thing as maybe individuals. And I think there's more justification for it too, because you have different people joining the company and leaving the company and you want to keep maintaining access for those people, whatever. But sort of like the, the strategy for us when we picked the one time pricing model was I was really thinking about how like value is delivered in the shape of the product at the time. It's a bunch of website templates and components and stuff like that. And you could subscribe and download everything and then cancel and have everything and then come back six months later, subscribe for one month again and download anything new and then leave, you know, and that just felt like it's not the same as like a SAS product where you're coming in there and using it every single day. I think like an annual subscription could have, could have maybe worked, but I also still, I still believe that like our conversion rate was a lot higher be…

AI assessment note: “I honestly don't think so. There's some things that I maybe would have done differently.”

Q And you were in the startup world for a while. Did you start your own company or did you work in, in the venture backspace?

A There's a founder in, uh, he's based in Cincinnati, Ohio, and he had started a ticketing company, kind of a StubHub competitor. And he's going through an accelerator and he brought me in and calls me a co-founder generously. Uh, and I, I will take that and say, sure, because I was basically there from day two, and we built that. We, we raised some angel funding, both from the accelerator and then some angels afterwards. Uh, we were acquired about two years after that for a non-life-changing sum of money. And it was an awesome experience, uh, for the most part. And it was also intense, and I looked at that and I said, I am not going to do that again unless I really love whatever problem that company is solving. So then I took a product management role at a company that had gone through a series C at that point in the healthcare space. And they raised from this venture firms called drive capital here in Columbus, Ohio. And they were, I guess, technically the second investment out of their first fund. Those guys came from Sequoia and there were unicorn hunting, you know, like they were trying to build unicorns and show that you could do that from the Midwest. So there was so much pressure on the founder of that company. And I was in a leadership position where I was close enough to kind of see what his life was like. And I thought, man, that was even worse than my first experience…

AI assessment note: “he brought me in and calls me a co-founder generously”

Q Yeah, I like that. And that will automatically force you to Do it, and if you do it enough, then you may start to get better at it, right? That's the idea, is repetition.

A Yeah. You know, and we go through phases. Last year was a challenging mental health year for me, and what I realized at the end of December, after like a very intense December, was I haven't done any strength training for like six months, and so I put together a plan with my friend Claude, and, uh, Claude created some workout plans for me, and since then I haven't missed more than one day of working out, and Now, it's just automatic. I, I start to feel itchy if I haven't worked out that day, and like, the pendulum can probably swing too far in that direction as well, but by and large, if I'm trying to make a positive lifestyle or identity change, building a string of successful days doing that thing has always served me.

AI assessment note: “building a string of successful days doing that thing has always served me.”

Q So, can you give me examples of folks in your community of, like, the niches that they're selling to? You know, your audience is creators who want to educate, my audience is B to B SaaS founders, right? Like, what are, what are three or four others that are some off the wall? I mean, I just have to imagine there's, like, awesome little niches.

A Yeah. Uh, I like going to just our members directory and scrolling. So here's a guy who teaches people how to learn the fiddle. Here's a guy who teaches people how to get the most out of every native Apple application on their, their computer. Here's a woman who's a world champion pole dancer who teaches people movement. Here's a photographer from Iceland. We had another woman who, uh, teaches people how to run marathons or like how to train for marathons if they're on plant-based diets. So it's like super specific. We had, we had a guy who taught high school defensive line coaches how to train their players to be more effective. You know, like it can be extremely specific and narrow, but a lot of the times the pathway is these people were known for being good at something. And so they started working with people one on one. And at some point that became unsustainable because there was just more Demand for that time than supply or interest in, in doing one-on-one consultation. So that kind of became the beginning of content creation.

AI assessment note: “Here's a guy who teaches people how to learn the fiddle.”

Q Excellent Read. We're nowhere near exit, but you mentioned masterminds, and masterminds have been mentioned plenty of times, um, at all stages of the business, and I just wondered what your opinion on when you have co-founders, like, should you be in the same mastermind group as your co-founders, or should you be seeking out separate mastermind groups each? Thanks for all you do. Thanks for the community. It's amazing.

A This is a great question, Andrew, and I wanted to answer it really quickly here on the show. I would not want to be in a mastermind with my co-founder because I think it's a waste of time to have two high functioning co-founders getting the same information and spending that same time in a group. You want a myriad of opinions. You want different inputs, different smart people thinking through the problems that you have. So I have never been in a mastermind with a co-founder. And I think that's a good thing. In addition, what if you start having trouble with your co-founder, you want to talk to your mastermind about it, how you should handle this tricky situation with a co-founder, which has, you know, definitely happens. I don't feel like there's a hundred percent right and wrong answer, but I'm probably 95%. I personally would not want to be in a mastermind with my co-founder, and I think that's probably the general advice that I would give to founders who ask me this exact question. Thanks for that question. Hope it was helpful. And my next question is from Sebastian at sidestack.io. Sebastian asks, do you have any thoughts on SaaS that earns additional revenue through transaction fees based on customer GMV, or gross merchant value? Do you see this type of revenue the same way as usage-based fees, or is it higher or lower quality? This is a really good question. So, if I was …

AI assessment note: “I would not want to be in a mastermind with my co-founder”

Q but you're also an angel investor and an advisor. Were you kind of a founding member of Capital Factory in Austin? Am I remembering that correctly? So you've been exposed to dozens, if not hundreds of startups. Do you feel like, like more of your knowledge and information that you share comes from your first-hand experience or from the experience with, with other companies advising on the internet or otherwise?

A I would say when it comes to specific things like this decision framework or this prioritization or this workshop, that's coming from WP Engine. That's coming because we tried things and this seemed to be something that worked for us or for some teams, and so that seemed worth sharing. When it comes to more strategic or high-level, long-reaching things, some of that's my own experience, but a lot of that is like, oh man, I've seen this like 20 times, which obviously doesn't mean I saw it in my own One to four examples. So the 30th time you hear someone pitch something and you go, oh my God, you know, that that's coming from, from a breadth. So I would say, or personal psychological stuff obviously starts from myself, but a lot of that isn't talking to other founders where there's certain kinds of things where, you know, 80% of the time that I share, oh yeah, I felt like this, or I felt like that. And, you know, almost all the time the other person's like, oh my God, I thought it was just me, or I didn't, I can't believe you're admitting that. And that, that again is some kind of, not universal, but, but, you know, pretty useful good truth there. That's coming from talking to other people, right? That's the only validation that it's not just me.

AI assessment note: “when it comes to specific things... that's coming from WP Engine”

Q social friendly website with scheduling payments, messaging, and more built right in. The proof is in the profits. Coaches like you have earned, collectively earned over forty-seven million dollars using Paperbell. Forty-seven million dollars, that's That's a lot of money, actually, because coaches, I know it's a dicey, I guess I view it maybe as there's a lot of prosumers and hobbyists doing coaching. Is that, you think that's accurate?

A That is accurate. A lot of people do it because it's something you can sort of just do for a few hours on the side. So yeah, a lot of people do it on the side. Um, as you can guess, our best customer is someone who does it full-time as their career. So there's plenty of those out there, but yeah, it's a very prosumery type of business. I liked hearing that headline reflected back and I was like, okay, I think that actually does sum it up pretty well. Um, and yeah, just to clarify on the forty seven million, you know, that's not our revenue. People connect their Stripe account and their PayPal account and then do their payments through Paperbell. So that's just flowing through us. We don't take any kind of, um, cut on that, which is a benefit to our customers. So yeah, we're just a true self-serve SaaS business, 57 dollars a month.

AI assessment note: “That is accurate. A lot of people do it because it's something you can”

Q And, and they like set the stage there. So you launched in 2020, When did they launch, and were they, like, were they funded by the time you heard about them, and how much, you know, did they raise?

A So they also launched in 20, 20 and their founder is actually someone that I did know from years ago when he was more in the course space also. Um, but we hadn't spoken in like 10 plus year, you know, we both apparently just had the same idea at the same time. I don't think that's a huge surprise because like I said, it was a growing market and there wasn't someone who had really completely addressed it really well. So practice launched the same year as us, 20, 20. Um, and they announced that they had raised, uh, ten million when they launched, I think they might have called it a seed round. So the founder in his previous business had raised like a hundred million. So he's someone, you know, who's used to those larger numbers. So this is my assumption. I would assume that he thought he would go on to raise more, which they did not end up doing.

AI assessment note: “they also launched in 20, 20... they announced that they had raised, uh, ten million”

Q lot of folks say, I don't actually need the money. What I want is the guidance, the mentorship, the community. But then they wind up, the money comes in, and they're like, no, this is really nice to have low six figures in my bank account and be able to do it. It's almost this unexpected boon. What did you wind up spending most of the Tiny Seed money on?

A Uh, some growth experiments that were maybe too, too cost prohibitive to, to, to run, but mostly contractors to rebuild our site, so I had designed all the various versions myself, and I'm not a designer, and this time we hired an actual UX designer to think about the product from beginning to end, and redesign the whole thing, and then we bought in a bunch of, like, front end and rails back end people just to rebuild the whole thing, which was massive success. I mean, Still one of the greatest engineering achievements of my life to completely redo this site while it was still live, you know, was big, big deal, and the product is way, way better from a UX perspective than it ever was before, so.

AI assessment note: “mostly contractors to rebuild our site, so I had designed all the various versions myself”