The Exchanges

Q And with Ryan, you got to go, wait a second. Is this a headline he's pitching? Cause you know, he's genius. Mark, or is this a rate? Like, are you actually, Actually, is there actually a ghost town or by?

A Yes, exactly. Um, and I had known, uh, Brent Underwood from, cause he has an agency with Ryan and, uh, and they run the website daily stoic together, which is a ConvertKit customer. And so I'd known him somewhat, you know, um, but Ryan was the one that kind of pulled me in and it was just this thing where, Because it was a unique property and this is a Cerro Gordo, which is a 300 acre ghost town in the Sierra Nevada mountains. Um, so when you stand on the peak, uh, behind it, if you look to one side, you see Mount Whitney. So the highest point in the continental U S and if you turn around and look behind you, you see Death Valley, which is the lowest point. Um, and it's just this crazy place. And so then I thought, okay, one, uh, Brent and Ryan and their other partner, John, Just have this great idea for what they're going to do with it. And I was like, can you imagine the mastermind groups and the like mini conferences and the writers retreats and whatever else that you can have, like the stories and memories that you can make, uh, at a place like this. And so, yeah, I had to, had to get involved.

AI assessment note: “Yes, exactly... Cerro Gordo, which is a 300 acre ghost town”

Q new product like that? Do you really go deep on a persona and maybe actually use that persona? You call Pat Flynn, say, Pat, I know you do more than a million a year in revenue. We'd love to process all your commerce. What's it have to look like for you to switch over? Or do you try and build something more broad and appeal to a hundred beta users?

A I think you try to do both because, um, You can fall into traps in both ways. Uh, and like we use, uh, object, we use OKRs, objectives and key results, um, to manage and track our business. And you, what you usually end up doing is having a main objective that you're going after. And in our case, like let's say GMB, right? We're trying to, to, we want the most dollars sold. But if you optimize only for that metric, then you might do things that is for short-term gain, but not the long-term. Like we could say like, okay, we're trying to get to ten million in, in GMV in X amount of time. Then if I just go out and get a single client that sells a million dollars a month, like done, did it like, you know, we're set, but that isn't success for the platform. And so then, um, you can go to the other extreme and say like, oh, I'm going to help X number of creators earn their first dollar. And that's all well and good, but everybody follows the big names. So if you don't have any of the big names, like it's way harder to get those. And so what I look for is the key metric, which is GMV and then the counterbalancing metric. And so in this case, we're looking to drive the most GMB. Um, that's the main thing. Small creators, big creators all contribute to that, but obviously the big creators drive far more. And then I have a counterbalancing metric of, I want X number of creators to have e…

AI assessment note: “I think you try to do both because, um, You can fall into traps”

Q Okay, so, wow, 120 bucks woodworking, four of six siblings, 2005, you're 13 years old. You eventually, obviously, end up, I believe, going to college. Let's fast forward here a bit. What did you do in college? What did you study?

A Yeah, I studied graphic design and then marketing. So I wanted to, I wanted to do graphic design, you know, Photoshop, interface design, all of that. Um, and I, uh, I went to college super early because all my friends were older than me. Um, I was homeschooled and I wanted to keep up with them. And so I basically asked my parents, um, Hey, is high school four years or is high school a set amount of work? And to their credit, they said like, oh, it's, it's a set amount of work. And I was like, great. Can I have that in to-do list form? Cause basically all my friends were going to graduate two years before I was and go off to college. And I didn't want to be left behind. Um, and so when my parents listed all out and I had older siblings, you know, who had Finished high school already, and so they had already figured out, like, this will be all the homeschooling curriculum. Um, then I just sat down and, and knocked it out. I remember thinking, like, I'm bored when we go on these family road trips from Boise to Seattle every summer. I'm also bored when I do algebra. So why don't I combine these things? I'm on like an eight hour drive. I do a month's worth of algebra lessons or something. Um, and so then I graduated college or graduated high school when I was 15 and started going to college.

AI assessment note: “I studied graphic design and then marketing.”

Q really valuable number. Thanks for sharing that. So, so are these other, before we move on to how you've structured profit sharing, are there any other flywheels that like, You just found it. You love it. You haven't run a blog post on it yet. You haven't put on a podcast. You probably don't want to share it, but I'm going to pressure you. Anything you guys should ask about?

A Uh, I think, I think our free plans, you know, community, um, everyone's very adverse to free. They're like, no, I, I charge for a product. I, I sell things and we get paid for the value that we provide. We're not those Silicon Valley startups that like don't have a business model or like are losing money on every customer. And There's truth to both sides of it, but I, I just read, well, so two things, uh, in 2018, I sat down with Ben Chestnut, the CEO of MailChimp, uh, at the Inc. 5000 conference. He was super generous with his time. We just got to chat for 30 minutes in a hotel lobby. And he was just like, look, free was huge for us. That is the inflection point. And it still is huge. And it's not a bunch of low value customers. It is those, but it's all of these high value customers. They just show up and you're like, where did this 100,000 subscriber account come from? You're like trying to attribute it. And you're like, you know, you're not, you can't figure out like, it's not from paid. It's not from search. You know, it just doesn't make sense. And so you do customer interviews and your product managers sit down with this account. You find out that this marketer Use the free version of MailChimp, spun up a free account, did some stuff, learned how to use the product, grew it to, I don't know, 50 subscribers, 500 subscribers, something that's not material for MailChimp, a…

AI assessment note: “I think, I think our free plans... basically freemium Drove all of this”

Q And with Ryan, you got to go, wait a second. Is this a headline he's pitching? Cause you know, he's genius. Mark, or is this a rate? Like, are you actually, Actually, is there actually a ghost town or by?

A Yes, exactly. Um, and I had known, uh, Brent Underwood from, cause he has an agency with Ryan and, uh, and they run the website daily stoic together, which is a ConvertKit customer. And so I'd known him somewhat, you know, um, but Ryan was the one that kind of pulled me in and it was just this thing where, Because it was a unique property and this is a Cerro Gordo, which is a 300 acre ghost town in the Sierra Nevada mountains. Um, so when you stand on the peak, uh, behind it, if you look to one side, you see Mount Whitney. So the highest point in the continental U S and if you turn around and look behind you, you see Death Valley, which is the lowest point. Um, and it's just this crazy place. And so then I thought, okay, one, uh, Brent and Ryan and their other partner, John, Just have this great idea for what they're going to do with it. And I was like, can you imagine the mastermind groups and the like mini conferences and the writers retreats and whatever else that you can have, like the stories and memories that you can make, uh, at a place like this. And so, yeah, I had to, had to get involved.

AI assessment note: “Yes, exactly. Um, and I had known, uh, Brent Underwood”

Q Okay, so, wow, 120 bucks woodworking, four of six siblings, 2005, you're 13 years old. You eventually, obviously, end up, I believe, going to college. Let's fast forward here a bit. What did you do in college? What did you study?

A Yeah, I studied graphic design and then marketing. So I wanted to, I wanted to do graphic design, you know, Photoshop, interface design, all of that. Um, and I, uh, I went to college super early because all my friends were older than me. Um, I was homeschooled and I wanted to keep up with them. And so I basically asked my parents, um, Hey, is high school four years or is high school a set amount of work? And to their credit, they said like, oh, it's, it's a set amount of work. And I was like, great. Can I have that in to-do list form? Cause basically all my friends were going to graduate two years before I was and go off to college. And I didn't want to be left behind. Um, and so when my parents listed all out and I had older siblings, you know, who had Finished high school already, and so they had already figured out, like, this will be all the homeschooling curriculum. Um, then I just sat down and, and knocked it out. I remember thinking, like, I'm bored when we go on these family road trips from Boise to Seattle every summer. I'm also bored when I do algebra. So why don't I combine these things? I'm on like an eight hour drive. I do a month's worth of algebra lessons or something. Um, and so then I graduated college or graduated high school when I was 15 and started going to college.

AI assessment note: “I studied graphic design and then marketing.”

Q really valuable number. Thanks for sharing that. So, so are these other, before we move on to how you've structured profit sharing, are there any other flywheels that like, You just found it. You love it. You haven't run a blog post on it yet. You haven't put on a podcast. You probably don't want to share it, but I'm going to pressure you. Anything you guys should ask about?

A Uh, I think, I think our free plans, you know, community, um, everyone's very adverse to free. They're like, no, I, I charge for a product. I, I sell things and we get paid for the value that we provide. We're not those Silicon Valley startups that like don't have a business model or like are losing money on every customer. And There's truth to both sides of it, but I, I just read, well, so two things, uh, in 2018, I sat down with Ben Chestnut, the CEO of MailChimp, uh, at the Inc. 5000 conference. He was super generous with his time. We just got to chat for 30 minutes in a hotel lobby. And he was just like, look, free was huge for us. That is the inflection point. And it still is huge. And it's not a bunch of low value customers. It is those, but it's all of these high value customers. They just show up and you're like, where did this 100,000 subscriber account come from? You're like trying to attribute it. And you're like, you know, you're not, you can't figure out like, it's not from paid. It's not from search. You know, it just doesn't make sense. And so you do customer interviews and your product managers sit down with this account. You find out that this marketer Use the free version of MailChimp, spun up a free account, did some stuff, learned how to use the product, grew it to, I don't know, 50 subscribers, 500 subscribers, something that's not material for MailChimp, a…

AI assessment note: “I think our free plans, you know, community, um, everyone's very adverse to free.”

Q Ok, so, wow, 120 bucks woodworking, four of six siblings, 2005, you're 13 years old. You eventually, obviously, end up, I believe, going, going to college. Let's fast forward here a bit. What did you do in college? What did you study?

A Yeah, I studied graphic design and then marketing. So I wanted to, I wanted to do graphic design, you know, Photoshop, interface design, all of that. Um, and I, uh, I went to college super early, because all my friends were older than me. Um, I was homeschooled, and I wanted to keep up with them, and so I basically asked my parents, um, hey, is high school four years, or is high school a set amount of work? And to their credit, they said, like, oh, it's, it's a set amount of work. I was like, great. Can I have that in to-do list form? Because basically, all my friends were going to graduate two years before I was, and go off to college, and I didn't want to be left behind. Um, and so, when my parents listed it all out, and I had older siblings, you know, who had finished high school already, and so they had already figured out, like, this will be all the homeschooling curriculum, um, then I just sat down and, and knocked it out. I remember thinking, like, I'm bored when we go on these family road trips from Boise to Seattle every summer. I'm also bored when I do algebra. So why don't I combine these things? And on like an eight hour drive, I do a month's worth of algebra lessons or something. Um, and so then I graduated college or graduated high school when I was 15 and started going to college.

AI assessment note: “Yeah, I studied graphic design and then marketing.”

Q And with Ryan, you got to go, wait a second. Is this a headline he's pitching? Cause you know, he's genius. Mark, or is this a rate? Like, are you actually, Actually, is there actually a ghost town whereby?

A Yes, exactly. Um, and I had known, uh, Brent Underwood from, cause he has an agency with Ryan and, uh, and they run the website daily stoic together, which is a ConvertKit customer. And so I'd known him somewhat, you know, um, but Ryan was the one that kind of pulled me in and it was just this thing where, um, Because it was a unique property and this is, uh, Cerro Gordo, which is a, a 300 acre ghost town in the Sierra Nevada mountains. Um, so when you stand on the peak, uh, behind it, if you look to one side, you see Mount Whitney. So the highest point in the continental U S and if you turn around and look behind you, you see Death Valley, which is the lowest point. Um, and it's just this crazy place. And so then I thought, okay, one, uh, Brent and Ryan and their other partner, John, Just have this great idea for what they're going to do with it. And I was like, can you imagine the mastermind groups and the like mini conferences and the writers retreats and whatever else that you can have, like the stories and memories that you can make, uh, at a place like this. And so, yeah, I had to, had to get involved.

AI assessment note: “Yes, exactly... Cerro Gordo, which is a, a 300 acre ghost town”

Q new product like that? Do you really go deep on a persona and maybe actually use that persona? You call Pat Flynn, say, Pat, I know you do more than a million a year in revenue. We'd love to process all your commerce. What's it have to look like for you to switch over? Or do you try and build something more broad and appeal to a hundred beta users?

A I think you try to do both because, um, You can fall into traps in both ways. Uh, and like we use, uh, object, we use OKRs, objectives and key results, um, to manage and track our business. And What you usually end up doing is having a main objective that you're going after. And in our case, like, let's say GMV, right? We're trying to, to, we want the most dollars sold. But if you optimize only for that metric, then you might do things that is for short-term gain, but not the long-term. Like we could say like, okay, we're trying to get to ten million in, in GMV in X amount of time. Then if I just go out and get a single client that sells a million dollars a month, like done. Did it? Like, you know, we're set, but that isn't success for the platform. And so then, um, you can go to the other extreme and say like, oh, I'm going to help X number of creators earn their first dollar. And that's all well and good, but everybody follows the big names. So if you don't have any of the big names, like it's way harder to get those. And so what I look for is the key metric, which is GMV and then the counterbalancing metric. And so in this case, we're looking to drive the most GMV. Um, that's the main thing. Small creators, big creators all contribute to that, but obviously the big creators drive far more. And then I have a counterbalancing metric of, I want X number of creators to have earn…

AI assessment note: “I think you try to do both because, um, You can fall into traps in both ways.”

Q Ok, so, wow, 120 bucks woodworking, four of six siblings, 2005, you're 13 years old. You eventually, obviously, end up, I believe, going, going to college. Let's fast forward here a bit. What did you do in college? What did you study?

A Yeah, I studied graphic design and then marketing. So I wanted to, I wanted to do graphic design, you know, Photoshop, interface design, all of that. Um, and I, uh, I went to college super early, because all my friends were older than me. Um, I was homeschooled, and I wanted to keep up with them, and so I basically asked my parents, um, hey, is high school four years, or is high school a set amount of work? And to their credit, they said, like, oh, it's, it's a set amount of work. I was like, great. Can I have that in to-do list form? Because basically, all my friends were going to graduate two years before I was, and go off to college, and I didn't want to be left behind. Um, and so, when my parents listed it all out, and I had older siblings, you know, who had finished high school already, and so they had already figured out, like, this will be all the homeschooling curriculum, um, then I just sat down and, and knocked it out. I remember thinking, like, I'm bored when we go on these family road trips from Boise to Seattle every summer. I'm also bored when I do algebra. So why don't I combine these things? And on like an eight hour drive, I do a month's worth of algebra lessons or something. Um, and so then I graduated college or graduated high school when I was 15 and started going to college.

AI assessment note: “I studied graphic design and then marketing.”

Q And with Ryan, you got to go, wait a second. Is this a headline he's pitching? Cause you know, he's genius. Mark, or is this a rate? Like, are you actually, Actually, is there actually a ghost town whereby?

A Yes, exactly. Um, and I had known, uh, Brent Underwood from, cause he has an agency with Ryan and, uh, and they run the website daily stoic together, which is a ConvertKit customer. And so I'd known him somewhat, you know, um, but Ryan was the one that kind of pulled me in and it was just this thing where, um, Because it was a unique property and this is, uh, Cerro Gordo, which is a, a 300 acre ghost town in the Sierra Nevada mountains. Um, so when you stand on the peak, uh, behind it, if you look to one side, you see Mount Whitney. So the highest point in the continental U S and if you turn around and look behind you, you see Death Valley, which is the lowest point. Um, and it's just this crazy place. And so then I thought, okay, one, uh, Brent and Ryan and their other partner, John, Just have this great idea for what they're going to do with it. And I was like, can you imagine the mastermind groups and the like mini conferences and the writers retreats and whatever else that you can have, like the stories and memories that you can make, uh, at a place like this. And so, yeah, I had to, had to get involved.

AI assessment note: “Cerro Gordo, which is a, a 300 acre ghost town in the Sierra Nevada”

Q 50. Okay. Sorry. 50 to 60. Okay. So why change, Nate? People listening are going, wait, this sounds great. I would kill for these numbers. Why is he changing?

A Yeah. Um, I, I asked myself that as well. Um, so we wanted to see, you know, you, you always want to test and experiment and really work on your funnel. We, we thought that a lot of people were signing up and we were getting conversions purely because people forgot to cancel. And so then the churn down the road was higher. And so we wanted to see, can we build a better funnel here? You look at, uh, Squarespace, um, a bunch of other great brands and they all do it credit card at the end of the trial, right? And that's, so it's a, it's a tried and true method, uh, different brands. We wanted to try it for ourselves and we knew that we needed to make our onboarding a lot better for that to work. So we spent the last four or five months really diving in, trying to improve all of that, finding problems, Getting a lot better metrics in place.

AI assessment note: “we thought that a lot of people were signing up... because people forgot to cancel”

Q you're, you're on the same track. So the next big question is like, what should I, what are the activation metrics that most directly correlate to them putting in the card and signing up for pricing? And I imagine for you, do you know what those are yet? Is it actually embedding the form on the, on the site, like getting their first 10 subscribers? What, what are those things?

A Yeah, it's exactly those two things. So really them getting visits to a form. So it's one thing to like, I made a form. Great. But if you didn't get anyone to visit it or, and then subscribe to it, that tells us you didn't, you didn't promote it anywhere or put it on your site. And so, um, that's the first thing where we always look, you know, let's get them to get a form on their website and then let's get them to get a handful of subscribers or, um, If they said they like, this is great that we have this data now. If in signup, they said they have 2000 subscribers. Now we know that our, our single goal is to get them to import those subscribers. And so it can totally change the activation metrics based on who they are.

AI assessment note: “Yeah, it's exactly those two things. So really them getting visits to a form.”

Q you're, you're on the same track. So the next big question is like, what should I, what are the activation metrics that most directly correlate to them putting in the card and signing up for pricing? And I imagine for you, do you know what those are yet? Is it actually embedding the form on the, on the site, like getting their first 10 subscribers? What, what are those things?

A Yeah, it's exactly those two things. So really them getting visits to a form. So it's one thing to like, I made a form. Great. But if you didn't get anyone to visit it or, and then subscribe to it, that tells us you didn't, you didn't promote it anywhere or put it on your site. And so, um, that's the first thing where we always look, you know, let's get them to get a form on their website and then let's get them to get a handful of subscribers or, um, If they said they like, this is great that we have this data now. If in signup, they said they have 2000 subscribers. Now we know that our, our single goal is to get them to import those subscribers. And so it can totally change the activation metrics based on who they are.

AI assessment note: “Yeah, it's exactly those two things. So really them getting visits to a form.”

Q I mean, you know, people use webinars all the time. Some people I think are more focused on teaching or on doing webinars, teaching how to make money on a webinar versus actually building a real business using webinars like you are. What's your process look like? Do you have a full-time person that specifically goes and hunts for new webinar partners? And if so, how do they find them?

A Yeah, so our, you know, we have a growth team, and there's two people on that team who are involved with the webinar process. Um, and so they, uh, hunt down the partners. You know, we talk to all of our customers. It helps that so many of our customers have, you know, 10,000 subscribers, 50,000, or a quarter million email subscribers, or something like that. So that's a great place to start. And then we just, you know, network at conferences, who's who in the blogging world, get intros, that kind of thing. Um, and so we're, we're trying to do two things. You know, we're trying to get, uh, someone to switch their email list from MailChimp or Aweber or whatever to ConvertKit. And then later on we're saying, Hey, if this has been a great experience for you, uh, we'd love it if you'd promote it as well. And so we kind of have a lot of effort put into that, like two step direct sales process.

AI assessment note: “we have a growth team, and there's two people on that team who are involved”

Q I mean, you know, people use webinars all the time. Some people I think are more focused on teaching or on doing webinars, teaching how to make money on a webinar versus actually building a real business using webinars like you are. What's your process look like? Do you have a full-time person that specifically goes and hunts for new webinar partners? And if so, how do they find them?

A Yeah, so our, you know, we have a growth team, and there's two people on that team who are involved with the webinar process. Um, and so they, uh, hunt down the partners. You know, we talk to all of our customers. It helps that so many of our customers have, you know, 10,000 subscribers, 50,000, or a quarter million email subscribers, or something like that. So that's a great place to start. And then we just, you know, network at conferences, who's who in the blogging world, get intros, that kind of thing. Um, and so we're, we're trying to do two things. You know, we're trying to get, uh, someone to switch their email list from MailChimp or Aweber or whatever to ConvertKit. And then later on we're saying, Hey, if this has been a great experience for you, uh, we'd love it if you'd promote it as well. And so we kind of have a lot of effort put into that, like two step direct sales process.

AI assessment note: “there's two people on that team who are involved with the webinar process”

Q new product like that? Do you really go deep on a persona and maybe actually use that persona? You call Pat Flynn, say, Pat, I know you do more than a million a year in revenue. We'd love to process all your commerce. What's it have to look like for you to switch over? Or do you try and build something more broad and appeal to a hundred beta users?

A I think you try to do both because, um, You can fall into traps in both ways. Uh, and like we use, uh, object, we use OKRs, objectives and key results, um, to manage and track our business. And you, what you usually end up doing is having a main objective that you're going after. And in our case, like let's say GMB, right? We're trying to, to, we want the most dollars sold. But if you optimize only for that metric, then you might do things that is for short-term gain, but not the long-term. Like we could say like, okay, we're trying to get to ten million in, in GMV in X amount of time. Then if I just go out and get a single client that sells a million dollars a month, like done, did it like, you know, we're set, but that isn't success for the platform. And so then, um, you can go to the other extreme and say like, oh, I'm going to help X number of creators earn their first dollar. And that's all well and good, but everybody follows the big names. So if you don't have any of the big names, like it's way harder to get those. And so what I look for is the key metric, which is GMV and then the counterbalancing metric. And so in this case, we're looking to drive the most GMB. Um, that's the main thing. Small creators, big creators all contribute to that, but obviously the big creators drive far more. And then I have a counterbalancing metric of, I want X number of creators to have e…

AI assessment note: “I think you try to do both because, um, You can fall into traps”

Q that are known for promoting products they really believe in. Um, and then lastly, your SEO content seems to be super strong. You put some of the key anchor articles. In your footer as well. So I'd love to spend five minutes just touching on those. Could we maybe start with like the powered by convert kit? Can you quantify the success you've had using that as a growth channel?

A Yeah. So it's still relatively early. Um, just for some more context, we've always been a paid product, um, you know, like free trial, but you got to pay to use it until January of this year when we launch premium. Um, and so you can see like prior to this year, um, so last year, maybe we were driving two to 3000 visitors a week, um, through powered by links. And then after launching freemium, scaling that up, we're now driving, uh, So you're just seeing, and it's actually a couple of step functions in there as we made our free plan more valuable, got the adoption up, stuff like that. Now, powered by traffic converts a lot lower than other traffic. I don't have the exact numbers in front of me, but if a visitor to conversion, visitor to free account conversion rate is seven or eight percent, like in other channels, Powered by traffic might convert at one to two percent. So it's much more of this, like, broad awareness play than, like, a direct, um, conversion, but just, like, not many traffic channels just keep climbing like that, so it's really fun to see. Um, the next one, search is really, like, just that anchor that we've, I don't know, gradually invested in over time, and now, um, it pays off in a big way.

AI assessment note: “prior to this year... we were driving two to 3000 visitors a week”

Q So, so Nathan has put together the sort of ladders of wealth that, that explains how he thinks about wealth creation. And so one of the things you talk about is sort of moving from trading your time to eventually, you know, bundling your hours into projects sort of things. Would you call this 10 K sale your, your first sort of bundled agency product where you weren't selling hours?

A Yeah, and I think that when I was still, that was probably this transition, right, between selling hours and, like, selling an outcome. Um, and, and so, yeah, that was an, an early example of a product, but, but still largely, you know, hourly project-based work. Um, but it was definitely on a continuum. It was not the hourly web design work that I'd been doing before. It was like, okay, now I'm getting paid for an outcome, and there's starting to be this disconnect Between the effort that I put in and the money that I make, which is what we're looking for in entrepreneurship, right? If, as these things are tightly coupled, there's no leverage, but the more those can be disconnected, then there's at least an opportunity for leverage. It can go terribly wrong. And you can have a project that like, like you're a hundred hours in to deliver this outcome that you're not getting paid enough for. Then the leverage goes poorly, but you know, we try to create those situations where the leverage goes well, where we can deliver You know, a ton of value with less inputs and, and get paid for it.

AI assessment note: “Yeah, and I think that when I was still, that was probably this transition”

Q new product like that? Do you really go deep on a persona and maybe actually use that persona? You call Pat Flynn, say, Pat, I know you do more than a million a year in revenue. We'd love to process all your commerce. What's it have to look like for you to switch over? Or do you try and build something more broad and appeal to a hundred beta users?

A I think you try to do both because, um, You can fall into traps in both ways. Uh, and like we use, uh, object, we use OKRs, objectives and key results, um, to manage and track our business. And What you usually end up doing is having a main objective that you're going after. And in our case, like, let's say GMV, right? We're trying to, to, we want the most dollars sold. But if you optimize only for that metric, then you might do things that is for short-term gain, but not the long-term. Like we could say like, okay, we're trying to get to ten million in, in GMV in X amount of time. Then if I just go out and get a single client that sells a million dollars a month, like done. Did it? Like, you know, we're set, but that isn't success for the platform. And so then, um, you can go to the other extreme and say like, oh, I'm going to help X number of creators earn their first dollar. And that's all well and good, but everybody follows the big names. So if you don't have any of the big names, like it's way harder to get those. And so what I look for is the key metric, which is GMV and then the counterbalancing metric. And so in this case, we're looking to drive the most GMV. Um, that's the main thing. Small creators, big creators all contribute to that, but obviously the big creators drive far more. And then I have a counterbalancing metric of, I want X number of creators to have earn…

AI assessment note: “I think you try to do both because, um, You can fall into traps in both ways.”

Q So, so Nathan has put together the sort of ladders of wealth that, that explains how he thinks about wealth creation. And so one of the things you talk about is sort of moving from trading your time to eventually, you know, bundling your hours into projects sort of things. Would you call this 10 K sale your, your first sort of bundled agency product where you weren't selling hours?

A Yeah, and I think that when I was still, that was probably this transition, right, between selling hours and, like, selling an outcome. Um, and, and so, yeah, that was an, an early example of a product, but, but still largely, you know, hourly project-based work. Um, but it was definitely on a continuum. It was not the hourly web design work that I'd been doing before. It was like, okay, now I'm getting paid for an outcome, and there's starting to be this disconnect Between the effort that I put in and the money that I make, which is what we're looking for in entrepreneurship, right? If, as these things are tightly coupled, there's no leverage, but the more those can be disconnected, then there's at least an opportunity for leverage. It can go terribly wrong. And you can have a project that like, like you're a hundred hours in to deliver this outcome that you're not getting paid enough for. Then the leverage goes poorly, but you know, we try to create those situations where the leverage goes well, where we can deliver You know, a ton of value with less inputs and, and get paid for it.

AI assessment note: “Yeah, and I think that when I was still, that was probably this transition”

Q 50. Okay. Sorry. 50 to 60. Okay. So why change, Nate? People listening are going, wait, this sounds great. I would kill for these numbers. Why is he changing?

A Yeah. Um, I, I asked myself that as well. Um, so we wanted to see, you know, you, you always want to test and experiment and really work on your funnel. We, we thought that a lot of people were signing up and we were getting conversions purely because people forgot to cancel. And so then the churn down the road was higher. And so we wanted to see, can we build a better funnel here? You look at, uh, Squarespace, um, a bunch of other great brands and they all do it credit card at the end of the trial, right? And that's, so it's a, it's a tried and true method, uh, different brands. We wanted to try it for ourselves and we knew that we needed to make our onboarding a lot better for that to work. So we spent the last four or five months really diving in, trying to improve all of that, finding problems, Getting a lot better metrics in place.

AI assessment note: “we were getting conversions purely because people forgot to cancel. And so then the churn”

Q But do you hear any pushback from teammates when they sort of have already calculated what they think their checks And then you guys decide you want to spend more aggressively. So there's less profit to share. And how do you balance that?

A Yeah. So one, we like the same, all the transparency that you see on the outside, we have even more transparency on the inside. So for example, um, you know, we have a full open book so everyone can see all the expenses, see what we're, what we're spending and everything. Um, and we just are really upfront about all of the trade-offs in the business. So we talk about this like short-term versus long-term and what the effects are with compounded growth and everything else. Um, So I think of, uh, compensation in two different ways that kind of makes a quadrant. So I think of short-term versus long-term compensation, and I think of guaranteed versus performance-based. So short-term guaranteed is salary. Uh, long-term guaranteed is like for one K match, you know, retirement, um, short-term performance-based is profit sharing and long-term performance-based is equity. And what I think that does is it makes this whole, like this matrix where it's all covered and you're taken care of in each way. And the individual team member can get a feel for the, the trade-offs that the business is making. So for example, I, as a founder, I'm like, let's spend right now because let's get on the growth trajectory that we want on our path to fifty million ARR, a hundred billion ARR. You don't want a team member be like, no, no, no. I want money in my pocket.

AI assessment note: “we just are really upfront about all of the trade-offs in the business.”

Q write your, about your investments on your website. Like, you know what? I enjoy working with these people. They're my friends. I'm going to give them capital and see what happens. Can you talk to me about that? Cause I don't see that on the ladders of operations or a chart you've built. How are you thinking about literal, you know, you know, capital leverage moving forward for Nathan Berry?

A Yeah, I think it's not on the chart because it's relatively new for me of, you know, if you look at my, my earnings, they trail, like, for kids growth, like, my earnings trail that by a few years, right, of, um, that's something interesting that my wife and I talked about of, like, it was only three years ago that we, like, didn't really have, you know, like, the things were really tight, you know, um, And so I think that's something that I'm learning a lot right now and is just what that investing looked like and, um, Someone that I follow a lot in that space is Andrew Wilkinson from tiny. Um, it's just fascinating to see him deploy capital. Um, and it's just been, been fun to read books like, uh, the outsiders or, you know, snowball about Warren Buffett or some of these other books of like, okay, wow. You know, it's not just all angel investing and stuff like that. I have a, you know, a decent number of angel investments. Not a lot. I think maybe nine. Um, Um, but, um, what I'm trying to do more of now would be inspired by like what Andrew is doing or Warren Buffett style of like, great, can I buy 10% of a company? Um, and so like, uh, there's an e-commerce brand that I was able to do that with, um.

AI assessment note: “what I'm trying to do more of now would be inspired by like what Andrew is doing”

Q write your, about your investments on your website. Like, you know what? I enjoy working with these people. They're my friends. I'm going to give them capital and see what happens. Can you talk to me about that? Cause I don't see that on the ladders of operations or a chart you've built. How are you thinking about literal, you know, you know, capital leverage moving forward for Nathan Berry?

A Yeah, I think it's not on the chart because it's relatively new for me of, you know, if you look at my, my earnings, they trail, like, for kids growth, like, my earnings trail that by a few years, right, of, um, that's something interesting that my wife and I talked about of, like, it was only three years ago that we, like, didn't really have, you know, like, the things were really tight, you know, um, And so I think that's something that I'm learning a lot right now and is just what that investing looked like and, um, Someone that I follow a lot in that space is Andrew Wilkinson from tiny. Um, it's just fascinating to see him deploy capital. Um, and it's just been, been fun to read books like, uh, the outsiders or, you know, snowball about Warren Buffett or some of these other books of like, okay, wow. You know, it's not just all angel investing and stuff like that. I have a, you know, a decent number of angel investments. Not a lot. I think maybe nine. Um, Um, but, um, what I'm trying to do more of now would be inspired by like what Andrew is doing or Warren Buffett style of like, great, can I buy 10% of a company? Um, and so like, uh, there's an e-commerce brand that I was able to do that with, um.

AI assessment note: “what I'm trying to do more of now would be inspired by like what Andrew is doing”

Q SAS plus place, a SAS business plus something else, professional services, percent of GMV model, a marketplace. Maybe when you look at the commerce business, one of the goals you talk about is, man, I'd love to the point to the point where we pay a billion dollars or help creators make a billion dollars. You launched here last year in 2019. How much went through your system in 2020?

A We have two different numbers that we track. Um, the first one is like the total amount earned by creators using ConvertKit. As email products. Um, and in 2009, beginning of 2019 or, um, or 2018, I'm trying to remember exactly when we launched new APIs so that when people are selling through ConvertKit and using Shopify or Teachable or Stripe or any of these others, it report, like it includes the reporting of Where the revenue came from and how much you're earning and it aggregates it across all these different platforms. So you have one creator dashboard. Um, and that's been really cool. And actually, uh, January of this year, we passed a billion dollars earned by creators, uh, on ConvertKit or

AI assessment note: “January of this year, we passed a billion dollars earned by creators”

Q that are known for promoting products they really believe in. Um, and then lastly, your SEO content seems to be super strong. You put some of the key anchor articles. In your footer as well. So I'd love to spend five minutes just touching on those. Could we maybe start with like the powered by convert kit? Can you quantify the success you've had using that as a growth channel?

A Yeah. So it's still relatively early. Um, just for some more context, we've always been a paid product, um, you know, like free trial, but you got to pay to use it until January of this year when we launch premium. Um, and so you can see like prior to this year, um, so last year, maybe we were driving two to 3000 visitors a week, um, through powered by links. And then after launching freemium, scaling that up, we're now driving, uh, So you're just seeing, and it's actually a couple of step functions in there as we made our free plan more valuable, got the adoption up, stuff like that. Now, powered by traffic converts a lot lower than other traffic. I don't have the exact numbers in front of me, but if a visitor to conversion, visitor to free account conversion rate is seven or eight percent, like in other channels, Powered by traffic might convert at one to two percent. So it's much more of this, like, broad awareness play than, like, a direct, um, conversion, but just, like, not many traffic channels just keep climbing like that, so it's really fun to see. Um, the next one, search is really, like, just that anchor that we've, I don't know, gradually invested in over time, and now, um, it pays off in a big way.

AI assessment note: “prior to this year... last year, maybe we were driving two to 3000 visitors a week”

Q But do you hear any pushback from teammates when they sort of have already calculated what they think their checks And then you guys decide you want to spend more aggressively. So there's less profit to share. And how do you balance that?

A Yeah. So one, we like the same, all the transparency that you see on the outside, we have even more transparency on the inside. So for example, um, you know, we have a full open book so everyone can see all the expenses, see what we're, what we're spending and everything. Um, and we just are really upfront about all of the trade-offs in the business. So we talk about this like short-term versus long-term and what the effects are with compounded growth and everything else. Um, So I think of, uh, compensation in two different ways that kind of makes a quadrant. So I think of short-term versus long-term compensation, and I think of guaranteed versus performance-based. So short-term guaranteed is salary. Uh, long-term guaranteed is like for one K match, you know, retirement, um, short-term performance-based is profit sharing and long-term performance-based is equity. And what I think that does is it makes this whole, like this matrix where it's all covered and you're taken care of in each way. And the individual team member can get a feel for the, the trade-offs that the business is making. So for example, I, as a founder, I'm like, let's spend right now because let's get on the growth trajectory that we want on our path to fifty million ARR, a hundred billion ARR. You don't want a team member be like, no, no, no. I want money in my pocket.

AI assessment note: “we just are really upfront about all of the trade-offs in the business.”

Q SAS plus place, a SAS business plus something else, professional services, percent of GMV model, a marketplace. Maybe when you look at the commerce business, one of the goals you talk about is, man, I'd love to the point to the point where we pay a billion dollars or help creators make a billion dollars. You launched here last year in 2019. How much went through your system in 2020?

A We have two different numbers that we track. Um, the first one is like the total amount earned by creators using ConvertKit. As email products. Um, and in 2009, beginning of 2019 or, um, or 2018, I'm trying to remember exactly when we launched new APIs so that when people are selling through ConvertKit and using Shopify or Teachable or Stripe or any of these others, it report, like it includes the reporting of Where the revenue came from and how much you're earning and it aggregates it across all these different platforms. So you have one creator dashboard. Um, and that's been really cool. And actually, uh, January of this year, we passed a billion dollars earned by creators, uh, on ConvertKit or

AI assessment note: “January of this year, we passed a billion dollars earned by creators”