The Exchanges

Q all early founders. So some type of validation in quotes, right? It's not, it doesn't have to be this prescriptive, oh, I follow exactly what Rob Walling says in SAS Launchpad, right? The steps, or I follow exactly what Eric Rhee said in, um, in Lean Startup. But there is, there's some, some research, some conversations that should probably be had before you go sit in a basement and code.

A Yeah, absolutely. I think the most valuable ones were things that we had with real customers or even real prospective customers. Even to this day, you know, we all pitch in on support tickets here and there, and then when I reply to a ticket for sure, I always say, I handled that for you. By the way, how's StatusGator working out for you? And you would be shocked at how many people open up then with just that simple question of like, oh, it's great. We love it. Here's a nice tidbit for your website and a nice little quote, but also here's the thing I think could be improved. You get a lot more valuable feedback from interactions like that than you do, like, asking someone in a bar whether you think this is a good idea to build, because they're gonna say yes. It's just, it's just way more natural, and so we just literally, at every chance we can in every email, just ask people, literally beg them for their feedback. I would love to hear feedback. It's really important to me. We're a small company. Please let me know what you think, and yeah, it's a hard, it's very hard to filter through all that, but through those things you get the pieces that are useful.

AI assessment note: “I think the most valuable ones were things that we had with real customers”

Q Got it. And it's only been a few months since then, right? Three months, maybe, since you were at twenty-k, so you've grown 75%. I mean, it's, that's fifteen-k of MRR, almost doubled MRR. Like, what is working? Like, what moved the needle for you?

A Two big things. Adding integrations for other platforms. We added, instantly has been a really big one for us, and then, and then continuing to make Salesforce better. There's been, like, certain features that as soon as we ship it, we've unlocked revenue, where people say, we have to have the lead object. If you don't have a lead object, we can't use your integration, and then as soon as we ship it, they get, they get started. Um, so that's been one part of it, one part of this, like, motion, and then the other one has been focusing more on partners. I actually brought on a sales coach and I actually cut my pay to cover it. Because I was like, I just gotta get to profitability. So focusing on the, on the growth part of the business that's working, and I can talk about, like, bringing on the coach, why I did that, and the insights that we had there, and how, like, every 24 hours I'm wanting to cut that expense, but I think probably because it's a good thing, um, just like I don't feel like stretching before I run. But so those are the two things, I think. Integrations and partners.

AI assessment note: “Two big things. Adding integrations for other platforms.”

Q the product to fit the market, but the market basically shifted to you, which I think is a succinct and, you know, very clever way of saying it. These days Vidhug is located at memento.com. Memories are made with memento. And it started off as something that, uh, you built to fix a pain point that you experienced with your mom's 70th birthday. You want to tell us that story?

A Yeah, that's, uh, that's right. So this was back in late 2016. Uh, my mom was turning 70 years old. Milestone birthday. You want to do something special. And, you know, I come from an immigrant family. My mom's family and friends mostly don't live close by. They live in other continents. And so we thought, well, what if we got everybody to record a video message to mom and put that all together into one video? And My mom was turning 70. She's the youngest of her many siblings. Uh, and so you can imagine the crowd, the audience that I was trying to get recorded videos sent to me digitally from. And so I experienced the challenge with that. I did actually put together a little webpage where they could visit it, use their webcam, record a video, and that would automatically get sent to me. And that, even that, as clunky as it was, was easier than like record something and put the file in Dropbox and, or Try to email it to me, but Gmail attachments won't, you know, allow that, that kind of thing. Then I put them together in iMovie. It took me a long time, even though I consider myself a technical person. It's just, you want it to be good and perfect. And so by the end of it, when I was going to show her the video, I was honestly sick of the project. I was like, I spent way too much time on this, but let's see, let's show it to her. And it was, you know, As I would find out again an…

AI assessment note: “So this was back in late 2016. Uh, my mom was turning 70 years old.”

Q the thing, you went out, we talk about hard work, luck, and skill, like you put in hard work because you reached out and got a crucial backlink from like a blogger, right, who had a listicle about long distance gift ideas where they said video, and you're like, hey, can you just add a link to Vidhug? And that kind of start, that was a flywheel for you, right?

A Yes, yeah, I love that story. Um, so I was still listening to the pod at the time, and I knew, I knew, I needed content, right? And so I did start like a blog for Vidhug, and I was writing my own, but I knew, You know, again, that was, that was a long term thing, that that wasn't gonna happen right away. So I knew the terms I was interested in were related at that time to long distance relationships. And so one of the top terms for that was a listicle about long distance birthday gift ideas. And it was from somebody who had an e-commerce business where they sold birthdays in a jar, basically. Um, and so, or like a, like a gift box, but it included like birthday cake in a jar, I believe. Um, really like A lovely idea. And they had this article of like, here's the ideas. And obviously like their product was in that list. But number four was like, make a video. And almost all, I remember all the 10 links or all the 10 items in the list had a link, but the fourth one didn't, the video one didn't. And so I thought about it and I, I didn't want to just cold approach them. So I actually did a little bit of research on this founder. She was on an interview somewhere. I listened to it. And so when I reached out to her, I I had done my research, and so it was an approach where I was, you know, like, I'd spent some time, like, learning about you, and, uh, I think that made her receptive t…

AI assessment note: “Yes, yeah, I love that story. Um, so I was still listening”

Q certainly speak to experiencing that with, with Drip, which again, didn't grow nearly like, you know, exponentially like this. But I remember thinking, shouldn't I be happier? Is this what I've wanted for a day, you know, for 1015 years? And now I'm here and it's like, this is not very fun. And that's a really, really interesting place to be. Why do you think you didn't pull the plug?

A I definitely want to give some credit to my wife that she was very supportive. Um, and she wasn't the kind to say like, you know, no, don't pull the plug. You should keep going like that strongly. But she was just, you know, she was there for me and, and, you know, kind of in a way like this will pass. These things always do pass. And it did. And you know, what I found, even though I was answering so many support questions during that time, Almost everyone was so understanding. They were like, oh my gosh, I'm speaking to the actual creator of this product. Cause I had in my signature, you know, Zamir Khan, founder and CEO of Vidhug. Little did they know I was the only person working for that company. Uh, but they felt special and they said, oh, like you're, you're looking at this right now. You're responding to my email in the middle of the night. Thank you. And so that made it a bit easier. Uh, but I have to give credit to my wife, Heather. Just like when I was out on that beach holding the phone out for Signal, she wasn't saying like, you know, why are you wasting time on Vidhug? It's not paying the bills. She never said that. And so I think for a lot of founders who have been through this journey, they know that it takes more than just one person. There's, there's other people behind the scenes that, uh, make that happen.

AI assessment note: “I definitely want to give some credit to my wife that she was very supportive.”

Q is really fragile. Your sales process is fragile. You're thinking of like, who is this revenue going to stick around? Is it going to continue to grow? All of that's fragile still. And that does solidify as the company matures. Harris has talked before about expanding to other CRMs outside of HubSpot. One of his newest missions was to integrate Salesforce, and I wanted to see how that was going.

A Well, so, okay, I didn't cheat, but I did maybe bend the rules of what, like, maybe you were thinking a Salesforce integration is, because there's two ways to integrate with Salesforce. And we did a connected app, which is essentially like a private unlisted app. And so that allowed us, and this is what we did with HubSpot, too. It allows us to sell to Salesforce customers. They just basically create their own, like, authorization for our, our Web server and like hit their Salesforce account. So that was how we moved so fast. And then the other thing we did is we started with a tiny, tiny, tiny footprint of what we're, of what it does. And so we just solved like a very basic problem of like, we log emails as activities. Do you want that? And enough people were saying, yeah, that they've like started paying. So we have multiple paying customers. We've got like a mid market company that we're in procurement process with now who wants that. And then another one who has said like, Hey, I'll, I'm going to sign up for this probably in the next week. So I think that we'll go from zero dollars in Salesforce revenue to probably like two K MRR, probably by the time we hit January, all of that closing basically over the course of a month. And then if we do that, you know, if, if all of our other numbers stay the same, um, I'm just doing quick calculator math here, you know, that'll end up…

AI assessment note: “we have multiple paying customers. We've got like a mid market company”

Q And you have been a founder. You've been a COO. You've been, I believe, a VP of engineering. You have been a coach, advisor, and investor of a lot of startups. So you have quite a, quite the gamut of experience. Did I miss anything?

A Yeah, well, the first 10 years of my career, I was a software engineer at Google. So I started off at Big Tech, and I think over the course of my career, I've been going smaller and smaller, earlier and earlier stage, to the point now where I'm now the co-founder and chief technology officer of a very early stage company called Violet. So I think one thing that has helped me to do, Rob, which maybe we'll, we'll touch on this episode, is because I've come from later stages to earlier and earlier stages, I kind of know what comes next. Right. So when I'm an early stage founder, I know what it looks like to start to scale, ah, and then reach that really large, large stage as well.

AI assessment note: “Yeah, well, the first 10 years of my career, I was a software engineer at Google.”

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 have three co-founders, so there's four of you total, and I'm curious, we talked about this last time we recorded, so I won't go too far into it, but I, I'm curious now that you're here where you are with, you know, a 40 person team, and you've raised, raised all this money, what's maybe the biggest positive to having that many co-founders, and the biggest negative that you've seen?

A The biggest positive is that there are four of us across the different parts of our business that have an amazing leader on day one. That's the biggest positive. So me as a CEO, my chief product officer, one of my co-founders, my CTO, uh, one of my co-founders. So they run tech and product and they are outstanding at what they do. And then my CEO, Adrian runs all of our data operations and just operations in general. And he is, he's the dream hire, right? So I had kind of the dream hire on day one, from day one, building the business. And to me, that is super, super valuable, without a doubt. Plus, I love these guys. So it's nice to, it's great hanging out with them every day. So it's just a good team. We get along great. The biggest downside, I guess, would be I could see the potential for clashing when it comes to decision-making, hiring, product decisions, long-term vision, but I think if you were to ask my co-founders, they would say that I've earned their trust to unequivocally make almost all of those decisions, and ask them if it's okay, and they give me the green light, but we don't Pose strategic questions and say, what do we think? I pose the strategic question, say, this is what I'm doing. This is what, where we're going to go. Does anyone have any major issues with this? If so, then speak up, then we'll reroute. But if not, and you, you know, I've given, I've gained…

AI assessment note: “The biggest positive is that there are four of us... The biggest downside”

Q groups, because that's what we've talked about for the first, you know, 10:15 minutes of, of this show, let's bounce to SEO, because Tom had a question about that. And he said, I did some quick SEMrush research on home inspection software, and it seems like the search volume is pretty low. So what keywords did you concentrate on to do your SEO, and how did you find those keywords?

A It's a great question. Uh, good job, Tom, doing your homework on SEMrush. We've all used it and loved it. Yeah. Small volume. So it's a small industry. Just like imagine garage app, you know, your wrap and sign addressable market is. And so I said, we have to rank first for home inspection software. That's the only game in town. We only had one or two keywords. And so it was, it was a big hill getting in the industry saying, oh my gosh, home gauge and home inspector pro rank first and second. Everyone loves them. Everyone goes there. How are we ever going to supplant them? Turns out just content every day for years can bust through that when your competitors aren't doing it. So YouTube is owned by Google, second biggest search engine on the planet. So keep in mind, good YouTube presence, I just believe has something to do with the main algorithm. I don't have any proof of that, but I, I have to believe clicks and signals into YouTube help. So I made YouTube webinars, videos, any blog article turned into a YouTube video. Rob, you're no stranger to creating content, so you know this. Um, but then I looked at adjacent keywords, so I think SEMrush is great. If you use the magic keyword tool, it'll give you adjacent keywords and kind of the next bubble out from the main keyword. And for me, it was, if someone's looking for what association do I belong to if I want to be a home inspe…

AI assessment note: “SEMrush is great. If you use the magic keyword tool, it'll give you adjacent keywords”

Q And you've, you've written a lot and given out so much practical advice about money. What motivated you to write the wealth ladder specifically? As in, was there a gap in the advice you were seeing, uh, that brought you to write the book?

A Yeah. And some of the gap I was creating in a way. And so I think a lot of the personal finance advice out there is very one size fits all solution. Like, Hey, just do this. And I even did that with just keep buying. And the point when I wrote that first book, it was like, Hey, if I know nothing about you, like what, what piece of advice would I give you? And that advice is, you know, the continual purchase of a diverse set of income producing assets, et cetera. Right. And so that's like, I know nothing about you. No priors, you know, just keep buying. But then I said, you know what, what if I could control for something? What if I knew something about you? Like I knew you're starting wealth level. And more importantly, if I knew where you wanted to go, like, oh, I want to get to that wealth level, then I could tailor the advice better. I can kind of, it's more of like a choose your own adventure story instead of like a one size fits all thing. And so it's not that my one size fits all solution was bad, but there are people that are deeply in debt, like just keep buying is not their answer, at least not yet. Right. And then people that are like, Hey, I want to get to a major exit. I want to go to ten million plus, et cetera. Just Keep Buying is not going to get them there either. They're going to have to become an entrepreneur, etc. And so I kind of zoomed out a little bit from…

AI assessment note: “a lot of the personal finance advice out there is very one size fits all”

Q a big company, or they've just saved over time, or maybe they got a little bit of an inheritance from relatives, so they're two and three million bucks. But to get up to 10, 15, 20, 30, like you don't, I don't think you save your way to that, right? So is there a common, what are the ways that you've seen or have heard of to make that jump?

A So excluding celebrities, athletes, entertainers who have these very huge contracts that will get them into that Level five or above. For the most part, it's going to be entrepreneurship, and you're taught what you already brought up, exits. And I can just do the math for you that makes it very simple, right? Let's say today you, you just got to a million dollars. Let's just say you have a portfolio. Let's ignore, like, home equity and all. Let's just say you have a million dollars in a portfolio, right? You got there today. Remember, already, that's already an accomplishment. It's not easy to get to a million. You got there today. It's earning five percent a year, and you're adding a hundred K to it every year. So you're saving a 100,000 dollars after tax, a considerable amount of money. Do you know how long it would take you to get to ten million? The answer is 28 years. It's a long time. That's 28 years of grinding, saving a hundred K after tax, like probably having to cut back in areas, right? Like, think about it. Even if you're like, you know what, Nick? I can save even more. I have even higher income. I'm gonna save 300 K a year. You do the math there, guess how long it takes? Start with a 1,000,005 percent a year, 300,000 dollars a year. It still takes 17 years. It still takes almost two decades saving. You have to be making almost a million dollars after tax and costs …

AI assessment note: “For the most part, it's going to be entrepreneurship, and you're taught what you already brought up, exits.”

Q lot of sense. Something I was, I was really intrigued by is you emphasize spending based on wealth, not income, right? And like income can be lumpy for entrepreneurs, right? Or unpredictable. So I guess, how do you think about spending based on wealth versus income? And, you know, I guess that, that relates pretty well to, to the feast or famine cycles, you know, that some entrepreneurs might experience.

A Yeah, I think this is especially true for entrepreneurs who don't have that, you know, every two weeks they're getting that same paycheck of the same amount. And when I say this, of course you have to spend based on your income. Like if you have zero income, like, you know, your wealth's not going to throw off enough to live on unless you just have a lot of wealth already. And then why are we even having the conversation? But let's say, okay, you have your rent, you have whatever your mortgage, you have your, your fixed costs. My question is on that marginal spend, can I buy that extra thing? Can I go and Get that nicer meal at the restaurant. Can I stay at that nicer hotel? I came up with a rule for this, which is based on the wealth ladder, and it's called the .1% rule. And so all you do is you take your net worth and you multiply by .1%. So that's .1 or more simply divide by 10,000. That's probably easier for people. So take your net worth, divide by 10,000. And that is how much your wealth is conservatively generating each day. .1%. You do that over 365 days. That's about 3.7% a year. I think it's a very conservative return. If we assume that's happening every day, that's like kind of like your, it's trivial. It's a trivial amount of money. So when you're at the grocery store and you're like, Hey, do I want to get the normal eggs or the cage free eggs for two dollars more? …

AI assessment note: “I came up with a rule for this... called the .1% rule.”

Q As we move towards wrapping up, I want to ask you the age-old question. You have an entire chapter with this title. Does money buy happiness? What's your sentiment on that? I have my own, I have my own thoughts and I want to weigh in after you do, but I'd love to hear.

A So, most people know the research, the first paper, which, I mean, they may not know the name of the paper, but it's, you know, the Angus Deaton, Daniel Kahneman paper, which is like, hey, after 75,000 dollars in income, we don't see any more happiness. Well, There's a guy named Matthew Killingsworth came back, came out with another study that said, hey, actually, after 75 K a year, I'm still seeing happiness. They said, hey, what's going on? Like, someone has to be wrong. Let's, so they dug into the data. Kahneman got with Killingsworth. They went through all the data, and they basically found that the original paper was, the measure wasn't as precise, and so they were actually measuring unhappiness, and so above 75,000 dollars a year, you can't prevent unhappiness. So you can be miserable at any income level is basically what they're finding, right? So it's a weird double negative. You can't prevent unhappiness, but that's what they found. And so Killingsworth paper was like, hey, no, if you're already happy, more money's probably going to make you happier. But if you're not happy, and you're not poor, by the way, because if you're poor, more money's probably going to make you happier too. But if you're not happy, and you're not poor, more money's not going to do a thing. So all the people that are looking up like, will more money make me happier? If you're not poor already, …

AI assessment note: “if you're already happy, more money's probably going to make you happier”

Q lot of sense. Now I want to ask you the big question, the end of the hero's journey. The day the cash hit the bank account, you refresh the bank balance. I bet you and Kevin were in touch and you're just waiting for millions of dollars to go and more money than you've ever seen or probably ever imagined you would have. What would describe that feeling to me?

A So it was very funny. It was A bit anticlimactic in a sense that, so the whole closing day was done remotely, so we had lawyers in the U.S., investors in the U.S., so TinySeed, we had the buyer in Lithuania, and us in South of France, so you do all those docusign, you have proof of this as a buyer, send a proof of wire transfer, and then you just wait, So it was for three to four hours, and when I actually received the notification, refreshing the bank account, I was just f***ing relieved. Like it, I didn't want to jump, and actually I took a nap. I took a, I think a two hour, a 40 minute nap, because I had slept only four hours the night before, and it was very, very stressful those last few hours, because you have all those lawyers talking about the last A few details of the SPA, so the, the final agreement , so it was a lot of relief, actually. Then you have to start announcing stuff to the team, although they, they knew we were getting acquired, but you know, you're making it official, you're introduced to the acquirer Slack channel, so, so it was, yeah, a pretty hectic day, a very good one. Yeah, just, A lot of relief. I remember afterwards, I, after my day was over, I just took a one hour walk. I called my parents and my grandfather to tell them that it's over. It's been sold and, uh, this time it worked. Yeah, that was anticlimactic, but a beautiful day for me.

AI assessment note: “when I actually received the notification, refreshing the bank account, I was just f***ing relieved.”

Q about, you were at about 1.5 million ARR at the time, so if they want to hear about How you found the idea of Scraping B, they can go do that. But having done B to C, B to B, had failures, and then had this outsized success. Is there any, like, what are the, what are the differences? Like, why did Scraping B work when these previous ideas didn't?

A So I think first main reason was, I would say, founder product fit or founder audience fit in a way that our first serious SaaS was Price monitoring tool for e-commerce owners. We were, you know, it was at a time where drop shipping was very hot. We build a tool allowing to monitor prices and all, but we didn't know e-commerce and we didn't know to talk to e-commerce people. We didn't know where those people hanged out on the web, what their problem were. So we basically build a product, uh, waiting for a solution, you know, waiting for a problem. What changed with Scraping B is, like, with Kevin, we were a developer, and we did a lot of web scraping, so it was a mix of dog fooding, because we used a product like Scraping B when building pricing bots, and yeah, product audience fit, like Kevin had a book and a blog about web scraping in Java, which was quite popular in that niche. You know, afterwards, it sounds very obvious, like, why haven't we started with that, but, um, I think the What changed the most, the audience, and knowing the people you, you want to sell it to.

AI assessment note: “first main reason was, I would say, founder product fit or founder audience fit”

Q So let's talk about the sale process, the exit. You and Kevin got together and decided it was time to sell. Was there, I want to ask you, like, how did you decide it was time to sell? I guess is the first thing, and then talk a little bit about, you know, how that, how it actually went down.

A So actually, if we're talking about the early start of the process, it was 18 months ago when we, so we sat down with Kevin, we saw revenue, growth, churn, margin, business was in good state, we were a bit exhausted, so we started a full process. Uh, with, uh, Discretion Capital, our M&A advisor. We went through the process of building a pitch, you know, selling a story to potential acquirer, and, um, doing some interviews, and then getting some offer. And then we just received, we received a big, frightening cease and desist from one of the five biggest tech companies in the world. Of course, everyone got frightened about it. We had to abort the sales process. We were like, okay, it's not going to happen this year. We want to try again in a year. What can we do to make the process smoother next year? So actually it was a year long process. So two big things we did was to hire more, to standardize operation, document a bit everything, and to have All the accounting stuff ready, you know, in gap format. We're a French company, so it was a bit of work for us, but very helpful. And so fast forward a year, we're in August with Kevin, and he's like, okay, I want to, to start again to sell the business. Number, we're still good. We talked with Ainar, was like, okay, let's do it again. And so obviously that time it was a bit faster because the whole pitch was ready. The accounting stu…

AI assessment note: “business was in good state, we were a bit exhausted, so we started a full process”

Q volume, but let's get something in. Let's look at number three. Quote, what if we made our affiliate terms X percent for recurring revenue for the lifetime of a customer? So if I have an affiliate program and I'm a SaaS founder, the, the kind of myth or pitfall here is We've given away 10, 20, 30%, whatever it is, for the lifetime of our customer. What's the problem there?

A Well, I'm going to say I was pretty new to affiliate marketing. It's not something I've ever really thought about before, but I have now worked on a number of affiliate programs, uh, for, for SaaS companies in this stage. And when you take, you download that CSV out of the affiliate platform and you look at the number of, uh, the number of new sales that happen over time, what you tend to see, and this isn't always true, obviously, but what you tend to see is that the, The number of new sales actually drops over time, but the amount that you're paying out does not. In some cases, it even grows the amount that you're paying out, because if you've got expansion revenue working, you're still paying for the same percentage. For somebody who wrote a terrible little blog post in 2018, got you one customer, and now they have been taking 30% Of the lifetime of that customer, even after you worked hard to expand them or grow the whole account. Now, firstly, that feels almost criminal to me, uh, but secondly, stop doing it. It is crushing your profitability. Every month that you continue to pay out on that, like, frankly, pipe dream of a promise to continue paying them forever is a month where you are, like, making your business less profitable. I, again, recently I worked on one of these, and I found on, like, day one of looking at the affiliate program, like, really, like, 20,000 dolla…

AI assessment note: “new sales actually drops over time, but the amount that you're paying out does not”

Q and he was an electrician his whole life and then a project manager, worked construction. When he retired, he didn't have side gig freelance, like probably most of the listeners here being developers or entrepreneurs can figure something out, right? It's a different day and age now, right? So you can do stuff on the side. And so unretirement is a thing. I hadn't even heard of that, that concept.

A Yeah, it is a big thing, man. And look, I think part of it, it just feels natural. When retirement was first established, it was in 1889 by a German chancellor named Otto von Bismarck, and he picked the age of 70 when they were putting together the first government-run social plan. He picked the age of 60 because that was the age that most Germans were dying. It wasn't lowered until 65, until about 30 years later. FDR, when he was setting up Social Security in 1935, Thought that sounded like a good number. Um, at that time, life expectancy was about 71, 72. So it was never meant to be this thing where we just sat around and did nothing for 30 plus years. And I have a little bit I cover in the book about the difference between pursuing happiness and pursuing meaning. And essentially, when somebody is only focused on their own happiness, they're only focused on, you know, being comfortable, sitting on a beach somewhere, having, you know, a fruity drink. It's producing a reaction in their body that is the same reaction that's produced when someone's dealing with chronic adversity, when someone's dealing with the loss of a loved one, when someone's dealing with the loss of a job, versus the people that were in a separate group during this research initiative who were pursuing meaning, something bigger than themselves, contribution to the world at large. Those people were not produc…

AI assessment note: “Yeah, it is a big thing, man. And look, I think part of it”

Q lot of, you know, you doubled several times as I was saying when I read it out, but getting to 18 K MRR almost 20 by the end of the first year is like, that's crazy. The one that I think that surprises me the most is one year later you're over a 100,000 MRR, like you five X'd in a year. Was it just, was it the same story?

A There were two big occurrences that happened. So we, we also went and found all the Facebook groups where home inspectors hung out and mingled. Like there was these small Facebook groups and we were like, Okay. How do we get in there to be helpful? So we would just try to add ourselves to them. We would ask an inspector that we knew to add us and let us in there just to listen. And we wouldn't even post because they hate vendors in these Facebook groups. And we tried to find the influential inspectors in there and really like poke on that. And so one very influential inspector that everyone kind of looked up to killed myself to get a demo with him. And he was like, I'll meet with you, but it's six AM on Sunday. That's the only time I got because my kids are busy. My kids keep me busy. I got inspections all week. And I was like, this is a test, man. I was like, let's do it. Six a.m. Sunday. So I set my alarm, got up at four a.m., prepared. He ended up loving the software. He went and told his Facebook group of 200 inspectors that the next biggest thing is out there. You guys should check out Spectora. So that was one big kind of push when we were like, wow, these guys listen to each other. Then the second we did a stupid grandfather pricing for life sale.

AI assessment note: “There were two big occurrences that happened.”

Q And you said you wanted to shout out a compliment to a private equity firm, um, because there's a lot of private equity that's shifty, and there's some that are good, and there's some that are great, right? But in particular, I think it was, uh, Main Sale.

A Main sale partners. They, they just came across as so authentic and down to earth and not like private equity in the sense of like the sharp elbows talking a different language. We started talking to them in 2019. I started doing calls like well before we were ready to even think we were a viable business to buy because I wanted to learn from them and ask and I that that would be my advice to any entrepreneurs is like when you're talking to private equity like Don't be shy to ask them like, Hey, what would make this business worth six X, seven X? Like, what are you looking for? What's appealing to you? And like, make them tell you. But anyway, main cell was very high integrity, very transparent. It never felt like they were trying to like get a deal or get one over on us. I wanted them to be the highest bidder at the end of the process. They weren't, but gladly worked with them and may work with them in the future. We'll see.

AI assessment note: “Main sale partners. They, they just came across as so authentic and down to earth”

Q it sounds like it worked out, like you have no, like you, Radian's doing a good job running the company, because you, you hired a CEO that's, that we've smashed cut to twenty-twenty-four, and you and your brother have since stepped away from the business. Well, well earned, by the way. And Radian, the company's still growing, and everything's, I mean, because you still own a chunk of it, right?

A Yeah, still own collectively is still on about 29, 30% between Mike and I, but they have been a great partner. Um, learning about board meetings and how they are run at different sizes and stages has been very enlightening. And then you start to see what deep expertise in like go to market product payments looks like when you meet some of these, because a lot of these funds have operators, they have an operating team that actually will get into the business with you and help. So we've had radiant folks fly out Work with our team in person to solve certain issues that you're dealing with. And then you get access and insight into a couple dozen other companies. Probably similar to TinyC, it's like the collective wisdom of a group of companies. Pretty powerful. We feel like we're out in the wild alone all these years, right? And then you're like, there's other businesses like mine.

AI assessment note: “Yeah, still own collectively is still on about 29, 30% between Mike and I”

Q good. So you probably have a bunch of bugs, probably hard to add features cause there's a bunch of cruft and legacy, this and that. What were you, did you get, I guess to, to kind of piggyback on that, it's like, did you get customers early when you were in a shop and app store? And then how did you deal with this basic technical debt from the start?

A So we did get customers. I think the one thing that was my strong suit and still is, is just marketing and growth. And so at first we just partnered with a bunch of influencers that post YouTube videos and Instagram and whatever about e-commerce. And we actually got to 10 K MRR in the first three months. So we had like decent growth and With that 10 K a month, I was like, okay, I can find some developers to work with. That being said, I still didn't know how to find a good developer because as someone who looks at code and just sees gibberish, like you can't tell a good developer from a bad developer. So I went back to Upwork, which is, you know, another mistake again, and I hired more freelancers and it just, I mean, I'm kind of fast forwarding like a year at this point because it really was a year of just hiring and firing, hiring and firing these Upwork developers, everything breaking nonstop, customers getting pissed. Hiring again, firing again, just like, it was a treadmill of that until I found someone who was pretty good, and he told me he wanted to be my CTO. And to me, this was like exactly what I needed because I didn't have anyone that I really trusted as a leader in the engineering side. This guy proved to be probably the best engineer I've worked with so far, and he wants to be my CTO. He said he'd take a huge pay cut in exchange for some equity. And I was like, ok…

AI assessment note: “So we did get customers... got to 10 K MRR in the first three months.”

Q But I remember your churn being Like really high and we were trying to, there's an influencer thing where it's like, ooh, is influencer space gonna keep going? Is it, is it really a thing? Again, this is five, four, five years ago, but also I think the churn was a big, was a big blocker. Do you have a, do you have memories of, of all that going down?

A For sure. I remember, I remember talking to you and I was like super starstruck and then you told me to calculate my churn and I was like, oh no, you asked me what my churn is. And I said, I have no idea like where would I even look to find that? Especially because, like, we don't build through Stripe, we build through Shopify's billing API, which at the time, nothing integrated with. Now there's a platform called Mantle, which is great, but at the time, there was literally nothing. So I remember I spent, like, I think it was, I'm not even exaggerating, like, two or three hours going through every single transaction, and, like, all we had was this, like, raw transaction history of everything that's ever happened, and I was, like, using a pen and paper and adding things up. I don't even remember how I did it, but I, like, figured out how to calculate churn Literally by manually adding and subtracting, or whatever, every single transaction, and then I got a number, and it was something super high back then, like, 10% or something. So it makes sense that you rejected me, honestly. Like, that is really high.

AI assessment note: “For sure. I remember, I remember talking to you and I was like super starstruck”

Q these are your people, man. I love the, the, you just Kind of made it not even an analogy, but a categorization of who's on LinkedIn, like which SaaS is on LinkedIn and which SaaS is on Twitter right before we hit, uh, record. And I'm not sure that I had thought of it this way, but you want to, you want to tell folks what, what you told me?

A Yeah. I mean, I think that a lot of the companies that will work with us will be venture backed. And so that's one criteria that puts you in LinkedIn land because you want to do that post and you want to show everyone else in your professional network. Look, we just raised thirty million dollars and, and, you know, Twitter, People are doing fundraising announcements on Twitter too, right? But that's one aspect. And then a lot of times it's people selling to marketing teams or sales teams, making technology, martech, sales tech, and they tend, it seems like to gravitate to LinkedIn because that's where most of their buyers are. So we get the companies that have a lot of thought leadership cache and are talking about what they're doing for that specific group. So I would say most of the companies you work with are in those two buckets. We rarely get design related companies. Like developer tools related companies will get some, but it feels like that group of people, they don't really sell to people who are living on LinkedIn all day. So for them, it, a lot of them have grown their audiences or have, you know, sales pipeline coming from people on Twitter. And so I, it does feel like we work with kind of. Potentially the less creative and kind of more boring side of the house over with LinkedIn. So I'm like, should we start? You know, an X account and start getting followers there…

AI assessment note: “that's one criteria that puts you in LinkedIn land because you want to do that post”

Q whichever one you want to call yourself. And then that last question is what makes you better? And really it's what makes you better than the competitive alternative? Why are you an improvement On them. And so that's where you start to talk about your differentiation, what you bring to the table. How do you accomplish that workflow better than the way that they've been doing it in the past?

A All right, so my last SaaS app that I sold in 2016 was called Drip. You can still see it at drip.com. And it's, it started as email marketing, then it became marketing automation. The headline now is totally different than what we had back then, but the headline, the H-one at the time, which I would, you know, venture to say was, it was kind of our positioning, was lightweight marketing automation that doesn't suck. That was, that was the H-one. I, I, a couple friends in my mastermind said you should consider something like that. It was, Not contentious, but it was thought-provoking. The word suck kind of drove some people away, but it brought people to us. And, and we had a few different ICPs, you know, it was like SaaS marketers slash founders, if they were, you know, in, in my audience. And it was info product and course sellers, like what today we call the creator economy. That phrase didn't exist in 2012 when we started building this. And agencies. There were like agencies and consultants that wanted to manage their email lists and they wanted some workflows and they wanted to identify. We had lead, lead scoring and other things like that. In your opinion, is that an okay headline and position? Or do you feel like applying your methodology would have been an upgrade? Or I guess just to get your thoughts on that, like it worked for us at the time, but then again, I didn't t…

AI assessment note: “our positioning, was lightweight marketing automation that doesn't suck”

Q Let's dive into the first one. So our first question is, it sounds like from the podcast that your ideal customer should be your highest paying customer. Does your ideal customer need to be the one that pays me the most? What if it's someone that is easiest to work with, most responsive, gives me the best feedback, but isn't necessarily the highest paying customer? What do you think?

A Yeah, this is such a great question. The ideal customer does not need to be your highest paying one, but if your ideal customer is not in your, let's say, top 20% of paying customers, it'll be very important to understand why. The SaaS business model really depends on two things, retention and expansion. And if you can get both right, you unlock this magic of compound growth, and that's really what makes SaaS so special. Just as an example, so Customer.io, where I work, only a couple percent of customers churn each month, which means there's about 98%, 99% customer retention each month. And of those, uh, greater than 60% expand their profile count each month. And in Customer.io, we charge based on profile count. So when they add profiles to the system, uh, they pay Customer.io a bit more each month. So the combination of keeping these customers month over month and them growing Is what unlocks this compound growth. So when you're thinking about your ideal customer, one of the things to do rather than just jumping to the highest paying, although I think that's a good shortcut, is you could look for your oldest customer, that's retention, so someone who's really stuck around and gotten value out of your platform for a while, and you want to combine that with the oldest customer that has also grown their usage of your system the most. So whatever the key actions are, key behaviors…

AI assessment note: “The ideal customer does not need to be your highest paying one”

Q extensive, and it was often getting developers and, right, right, right? So you've seen both sides of it. I see both sides of it with tiny C companies. You are in an incredibly luxurious position right now. I mean, I'm blown away. Like, three minute onboarding? That's amazing if you can do it. Do you wake up every day and pinch yourself and think, this is it? This is great.

A So this is one of the few things that I can actually say was completely deliberate, and it was a reaction to pain. Cardhook was pain, Rally, in terms of onboarding, pain, and one of the requirements in this product was self-serve. And I think that has served us well because voice and AI is really, really powerful, and when something's really powerful, you're tempted to bring all that power to the user, and that's what creates onboarding friction. So a lot of our competitors are like, sign up for a demo, Or build this visual workflow and choose your AI model, and we were like, absolutely not. Under five minutes to value and to onboarding. So that was very deliberate, and it does feel incredible. Part of the product market fit sense came after we launched SelfServe, and we watched completely non-technical people sign up, get their phone number, make a phone call, And then put their credit card in. So we, we put the credit card on the other side of testing your agent. One of the more important experiences we had was around pricing. So maybe it's worth kind of like taking a little detour into that because that kind of surprised us in general. When we first started, we had a seven-day trial with a credit, with a credit card required. And for the first few weeks, we looked like geniuses because everyone was converting. Seven days goes by, your credit card's on file, you convert, and …

AI assessment note: “So that was very deliberate, and it does feel incredible.”

Q are not increasing, you know, they're getting more value and they're not paying you. This is, this is a, you're going to cap at five K MRR or 10 K MRR. Like you're never going to make it to seven or eight figures because it's too in favor of the customer. Your pricing is too generous, right? So threading that needle, as they say, is, is harder than it sounds.

A Yeah, it is. And that's also when like, kind of thinking about different businesses to start, this is an interesting exercise to play, play around with. There's a, like session recording is an interesting one, like full story or log rocket. And I think there are a couple, um, startups starting there. Like one of the best things about that model is it's usage based, based on sessions. And that makes a lot of sense to customers for the most part, they're willing to do it. So you're going to be able to get some of that expansion revenue. Another interesting one, and I, I share it only in case it sparks something. Intercom has, uh, their AI-powered chatbot, and they've got an interesting pricing model for that, which is they charge based on successfully resolved chats as marked by the user. Okay, did we solve your problem? Yes. Which is interesting, because you could, that system feels like it could be kind of gamed, but it is something that can be measured, and it's something that the, the company itself isn't selecting, although perhaps it could influence. That's like, um, On the spectrum of, like, not fair at all to super fair, that's on the super fair front. I actually am curious to see if they're, how their expansion revenue is working. Yeah, it's a fun story, but.

AI assessment note: “There's a, like session recording is an interesting one, like full story or log rocket.”

Q on, well, okay, but what if I, I don't know, if I got these projections, or what if I have this specific problem that I want to offload to someone else, like project management, or something, like, is that okay? So you can go more detailed, but product managers, the way that I have experienced it across my career, you don't need them until you're doing, you're doing pretty well.

A My rule of thumb across, kind of, tiny seed companies, they, they'll ask me, or even just, I'll get a question on this show, right, and it's a rule of thumb, can't be broken, is that you don't need a product person before a million ARR, and usually I see it between one and two million, somewhere in there, and it depends a lot on the product. Look, there's some very simple products out there that are kind of like a feature or a collection of a handful of features, and like, do you need a product manager? No. And then there's Customer.io and Drip, and HubSpot and Salesforce, and you know, these very complicated, it's like, yeah, you probably need one earlier, earlier than not. Similarly, my rule of thumb for when do you need kind of a head of marketing or someone to run marketing that's not the founder? Usually it's between one and two million. That's also my thing. And part of that is what you're saying, which is, well, then you have, you should have the budget to do that, to hire someone good, because they are going to be a hundred, 120, 150 K or more. And usually you just are at a point where you can bring someone in from the outside because the product's mature enough. It's not that mature, but it's way more mature than when you were at 240 K a year doing 20 K a month, like products. So you need some founder level decisions at that point. You know, it's really, really hard. T…

AI assessment note: “you don't need a product person before a million ARR”