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Apr 13, 2019 · 19m · top-founders

1358 He's Put in $450k Before Turning on Paywall, Smart or Not?

Drew Sheehan · 11m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs, host Nathan Latka interviews Birdseed.io founder Drew Sheehan on investing $450,000 of personal exit capital into a pre-revenue conversational marketing SaaS, evaluating his freemium acquisition funnels, and debating the timing of paywall activation.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 33% of the talking time here. How this is scored →

Nathan as informed peer 5.0 Guest teaching 1.3 Guest disagreement 1.2 Nathan pushing back 4.3
05100:0010:000:01–2:12 · Nathan as informed peer 0/10 Promotion for Nathan Latka's Book "How to Be a Capitalist Without Any Capital" Introductory monologue and promotional ad read for Nathan Latka's book with teaser clips from past guests.2:13–6:01 · Nathan as informed peer 5/10 Drew Sheehan's Background and the Origin of Birdseed.io Drew explains the origins of Birdseed and the struggle of small businesses managing live chat. Nathan redirects Drew to clarify the competitive positioning relative to Drift and Intercom.6:01–9:43 · Nathan as informed peer 6/10 Personal Capital Investment and Engineering Team Structure Nathan drills into Drew's $450k personal capital expenditure and pushes him on Birdseed's value proposition, arguing that having too many features muddles the marketing pitch.9:43–12:35 · Nathan as informed peer 7/10 Monetization Timeline and Bootstrapping Psychology Nathan argues that freemium models require strong category branding like Drift's conversational marketing and questions if Drew's past wealth makes him complacent about monetizing.12:35–15:26 · Nathan as informed peer 7/10 Paid Acquisition Case Study: The Hustle Newsletter Sponsorship Nathan calculates Drew's acquisition cost from The Hustle sponsorship ($63 per free user) and strongly urges Drew to turn on the monetization paywall immediately.15:26–18:52 · Nathan as informed peer 5/10 Monthly Burn Rate and Overcoming Hesitations to Charge Users Nathan pushes Drew on what he is scared of regarding charging customers before moving into the standard Famous Five closing questions.0:01–2:12 · Guest teaching 0/10 Promotion for Nathan Latka's Book "How to Be a Capitalist Without Any Capital" Introductory monologue and promotional ad read for Nathan Latka's book with teaser clips from past guests.2:13–6:01 · Guest teaching 2/10 Drew Sheehan's Background and the Origin of Birdseed.io Drew explains the origins of Birdseed and the struggle of small businesses managing live chat. Nathan redirects Drew to clarify the competitive positioning relative to Drift and Intercom.6:01–9:43 · Guest teaching 1/10 Personal Capital Investment and Engineering Team Structure Nathan drills into Drew's $450k personal capital expenditure and pushes him on Birdseed's value proposition, arguing that having too many features muddles the marketing pitch.9:43–12:35 · Guest teaching 2/10 Monetization Timeline and Bootstrapping Psychology Nathan argues that freemium models require strong category branding like Drift's conversational marketing and questions if Drew's past wealth makes him complacent about monetizing.12:35–15:26 · Guest teaching 2/10 Paid Acquisition Case Study: The Hustle Newsletter Sponsorship Nathan calculates Drew's acquisition cost from The Hustle sponsorship ($63 per free user) and strongly urges Drew to turn on the monetization paywall immediately.15:26–18:52 · Guest teaching 1/10 Monthly Burn Rate and Overcoming Hesitations to Charge Users Nathan pushes Drew on what he is scared of regarding charging customers before moving into the standard Famous Five closing questions.0:01–2:12 · Guest disagreement 0/10 Promotion for Nathan Latka's Book "How to Be a Capitalist Without Any Capital" Introductory monologue and promotional ad read for Nathan Latka's book with teaser clips from past guests.2:13–6:01 · Guest disagreement 1/10 Drew Sheehan's Background and the Origin of Birdseed.io Drew explains the origins of Birdseed and the struggle of small businesses managing live chat. Nathan redirects Drew to clarify the competitive positioning relative to Drift and Intercom.6:01–9:43 · Guest disagreement 1/10 Personal Capital Investment and Engineering Team Structure Nathan drills into Drew's $450k personal capital expenditure and pushes him on Birdseed's value proposition, arguing that having too many features muddles the marketing pitch.9:43–12:35 · Guest disagreement 2/10 Monetization Timeline and Bootstrapping Psychology Nathan argues that freemium models require strong category branding like Drift's conversational marketing and questions if Drew's past wealth makes him complacent about monetizing.12:35–15:26 · Guest disagreement 2/10 Paid Acquisition Case Study: The Hustle Newsletter Sponsorship Nathan calculates Drew's acquisition cost from The Hustle sponsorship ($63 per free user) and strongly urges Drew to turn on the monetization paywall immediately.15:26–18:52 · Guest disagreement 1/10 Monthly Burn Rate and Overcoming Hesitations to Charge Users Nathan pushes Drew on what he is scared of regarding charging customers before moving into the standard Famous Five closing questions.0:01–2:12 · Nathan pushing back 0/10 Promotion for Nathan Latka's Book "How to Be a Capitalist Without Any Capital" Introductory monologue and promotional ad read for Nathan Latka's book with teaser clips from past guests.2:13–6:01 · Nathan pushing back 3/10 Drew Sheehan's Background and the Origin of Birdseed.io Drew explains the origins of Birdseed and the struggle of small businesses managing live chat. Nathan redirects Drew to clarify the competitive positioning relative to Drift and Intercom.6:01–9:43 · Nathan pushing back 5/10 Personal Capital Investment and Engineering Team Structure Nathan drills into Drew's $450k personal capital expenditure and pushes him on Birdseed's value proposition, arguing that having too many features muddles the marketing pitch.9:43–12:35 · Nathan pushing back 7/10 Monetization Timeline and Bootstrapping Psychology Nathan argues that freemium models require strong category branding like Drift's conversational marketing and questions if Drew's past wealth makes him complacent about monetizing.12:35–15:26 · Nathan pushing back 6/10 Paid Acquisition Case Study: The Hustle Newsletter Sponsorship Nathan calculates Drew's acquisition cost from The Hustle sponsorship ($63 per free user) and strongly urges Drew to turn on the monetization paywall immediately.15:26–18:52 · Nathan pushing back 5/10 Monthly Burn Rate and Overcoming Hesitations to Charge Users Nathan pushes Drew on what he is scared of regarding charging customers before moving into the standard Famous Five closing questions.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 83.2% · guest 16.8%0:00 · Nathan 83.2% · guest 16.8%3:00 · Nathan 9.9% · guest 90.1%3:00 · Nathan 9.9% · guest 90.1%6:00 · Nathan 25% · guest 75%6:00 · Nathan 25% · guest 75%9:00 · Nathan 28.5% · guest 71.5%9:00 · Nathan 28.5% · guest 71.5%12:00 · Nathan 19.5% · guest 80.5%12:00 · Nathan 19.5% · guest 80.5%15:00 · Nathan 27.3% · guest 72.7%15:00 · Nathan 27.3% · guest 72.7%18:00 · Nathan 43.7% · guest 56.3%18:00 · Nathan 43.7% · guest 56.3%
Sharpest disagreement ▶ 11:43 Drew defends bootstrapping pace without rush to monetize

Drew rejects the host's premise that having millions from a previous exit is a disadvantage, arguing it enables long-term decision-making over short-term revenue hacks.

 Hardest push from Nathan ▶ 10:38 Nathan challenges lack of monetization pressure

Nathan bluntly asks Drew whether having deep personal capital removes the urgency needed to figure out how to make money.

 Biggest teaching moment ▶ 4:35 Drew explains SMB constraints with live chat platforms

Drew educates Nathan on why small businesses fail with Intercom and Drift due to inability to staff live chat 24/7 or manage complex bots.

 Nathan holds their own ▶ 13:36 Nathan breaks down customer acquisition cost on the fly

Nathan immediately runs the math on Drew's $10k Hustle sponsorship and 160 free signups, pressing him on recovering a $63 cost per free user.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Promotion for Nathan Latka's Book "How to Be a Capitalist Without Any Capital" 0000 Introductory monologue and promotional ad read for Nathan Latka's book with teaser clips from past guests.
Drew Sheehan's Background and the Origin of Birdseed.io 5213 Drew explains the origins of Birdseed and the struggle of small businesses managing live chat. Nathan redirects Drew to clarify the competitive positioning relative to Drift and Intercom.
Personal Capital Investment and Engineering Team Structure 6115 Nathan drills into Drew's $450k personal capital expenditure and pushes him on Birdseed's value proposition, arguing that having too many features muddles the marketing pitch.
Monetization Timeline and Bootstrapping Psychology 7227 Nathan argues that freemium models require strong category branding like Drift's conversational marketing and questions if Drew's past wealth makes him complacent about monetizing.
Paid Acquisition Case Study: The Hustle Newsletter Sponsorship 7226 Nathan calculates Drew's acquisition cost from The Hustle sponsorship ($63 per free user) and strongly urges Drew to turn on the monetization paywall immediately.
Monthly Burn Rate and Overcoming Hesitations to Charge Users 5115 Nathan pushes Drew on what he is scared of regarding charging customers before moving into the standard Famous Five closing questions.

Statements from this episode (9)

Insight
Sheehan: Live chat is too difficult for most small businesses to support
“Frankly, if you're open 40 hours a week, the majority of the time you're not available. And even when you are available during those business hours, it's very tough for a small business to support live chat.”
Drew Sheehan Apr 13, 2019 ▶ 4:41
Disclosure
Sheehan invested $450K of personal capital into pre-revenue Birdseed
“So I would say somewhere around four, 450,000. but the product is fully built and That is my own money.”
Drew Sheehan Apr 13, 2019 ▶ 6:09
Disclosure
Birdseed offers its full product free for two users to drive acquisition
“So it's appreciably less. We operate on a freemium model. You know, our whole product, we give away for free. We limit it to two account users, but for the majority of our Who we believe will be our business, which is small to medium sized businesses to accoun…”
Drew Sheehan Apr 13, 2019 ▶ 9:15
Insight
Latka: Freemium models only work when your brand is top-of-mind
“I think the only way to make freemium work though is people have, you have to be at the tip of their tongue when they talk about a space.”
Nathan Latka Apr 13, 2019 ▶ 10:39
Assertion Not checkable as stated
The Hustle newsletter sponsorship drove 160 signups and 2,500 clicks
“Yeah, we got about 2500 clicks to the website. And our conversion rate was about seven percent. So we had seven percent. We had about a 160 signups. Within a 24 hour period.”
Drew Sheehan Apr 13, 2019 ▶ 13:03
Insight
SMB SaaS churn is largely uncontrollable because small businesses often close
“You know, I think in a small business, you know, space, one of the problems you deal with is churn that really is not controllable. You know, a lot of those businesses, frankly, you know, they just close up shop.”
Drew Sheehan Apr 13, 2019 ▶ 14:03
Disclosure
Birdseed burns roughly $10,000 to $12,000 per month on development
“Probably, I mean, again, it depends on the month, but probably about 10 grand a month, maybe 12.”
Drew Sheehan Apr 13, 2019 ▶ 15:43
Assertion Not checkable as stated
About 700 companies have signed up for Birdseed
“I mean, we have about 700 companies that have signed up overall.”
Drew Sheehan Apr 13, 2019 ▶ 15:54
What-if
Sheehan estimates 10% of Birdseed users would immediately pay $40 monthly
“I think if we were to literally flip the switch tomorrow to say, hey, you can sign up for this, you know kind of like Loom, I think about 10% of those businesses would automatically just say, hey, I'd love to spend 40 dollars a month to be able to remove brand…”
Drew Sheehan Apr 13, 2019 ▶ 15:58
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