In 2003, David Hauser and his co-founder CMX started Grasshopper, and thus began their
journey in bootstrapping a business that would go on to generate $30 million a year in revenue.
I'm Cortland Allen, and I've interviewed a lot of founders for ndhackers.com.
But none have achieved that level of success, especially without raising any money whatsoever
from venture capitalists.
In this conversation with David, I really wanted to pick his brain about the kinds of
things early stage founders and aspiring entrepreneurs could do to raise their chances of building
a hugely successful business like he did.
We talked about everything from coming up with a solid initial business idea and how
to find your customers in places where nobody else is looking, to managing your work-life
balance or, as he calls it, your work-life integration.
David has a ton of insightful knowledge to share, and I know you guys are going to enjoy
this interview and learn a lot.
So I present to you David Hauser, the founder of Grasshopper.
Before we get started, let me tell you about a group of guys that I got to know a couple
of months ago.
They reached out to me as fellow MIT alums, and I ended up interviewing them about one
of their profitable side projects on ndhackers.com.
Dixon & Mo is a boutique digital agency.
They're technical designers with a focus on business and marketing, and they specialize
in helping bootstrapped founders grow their products.
They're based in San Francisco, and they work with founders from all over the world, and
they're big advocates of the indie hacker movement, both as participants, having made
several revenue-generating projects in-house, and as design and development consultants
who work with an array of founders and products.
For example, they help the founder of Wise Pops grow his revenue from $10,000 to $50,000
a month and quit his job at Amazon to go full-time on his side project.
They helped Alex from Groove HQ, who by the way has David Hauser as his loan investor,
to reposition his helpdesk software from a scrappy app for startups to a professional
tool used by companies big and small.
He's now making $500,000 a month.
Dixon & Mo are looking to take on two new projects this year and would love to see where
they can help.
You can chat with them over email or phone about any design, development, or marketing
problem that you're struggling with.
Reach out to Mo, that's M-O-E, at mo at dixonandmo.com.
That's D-I-X-O-N and mo.com.
And make sure to tell them that Cortland from Andy Hacker sent you.
Hi everybody, this is Cortland from Andy Hackers, and I'm sitting down today with Dave Hauser,
the founder of Grasshopper and Chargify.
How you doing, Dave?
Good.
Hey, Cortland.
Thanks for having me.
Yeah, thanks for being on the show.
So you've done a lot of things in your career, including Grasshopper and Chargify, and I'm
personally the most familiar with Grasshopper, so we'll probably spend a little bit more
time talking about that today, but can you tell us a little bit about what Grasshopper
is and how it works?
Sure.
Yeah, so myself and my business partner, C-Mac, started Grasshopper more than 12 years ago
now.
And the simplest way to describe it is we provide a virtual phone system for entrepreneurs.
So what does that mean?
It means, you know, the phone system you'd expect in a big office, press one for sales,
two for support, on-hold music, transferring.
All those features are just totally virtual.
So no hardware, no software to install, all web-based, but you can also still keep using
the cell phone you have or if you do have a VoIP line or anything else.
So it's pretty flexible, and we designed that for that because we knew that entrepreneurs
really have lots of varying degrees of offices and setups and even more so now remote employees
and things like that.
So I mean, that's kind of what we did, and we served over 250,000 customers over that
period of time and learned a lot along the way.
I bet.
That's a huge number of customers.
And you ended up selling Grasshopper in 2015 to Citrix.
Just how big had Grasshopper grown?
Yeah, so we had bootstrapped Grasshopper to $30 million in revenue and just under 40 full-time
employees mostly in our office in Massachusetts just outside of Boston.
So pretty sizable company, a solid management team that was really running a lot of the
business, a lot of those things, and it made a good acquisition for Citrix.
Yeah.
$30 million a year is by far the most money that anybody I've ever interviewed has made.
So that's humongous.
And I also had no idea that you guys were outside of Boston.
What part?
So we were in Needham.
We moved around a little bit, but we started in Needham and finished in Needham.
And that's where we kind of stayed, and that's where the company still is today.
Cool.
You guys should have come out to the MIT Career Fair or something because I was there between
2005 and 2009, so I probably would have seen you.
Yeah, we had done a few things.
We did a bunch of stuff, interns with Northeastern and other things, but that was towards the
later years when we had more kind of junior hiring needs.
When we were first kind of starting, it was hard to hire more junior people.
We just kind of needed more senior people, so it was kind of away from that group.
Makes sense.
So let's go back to 2003 and talk about the founding of Grasshopper.
I think a lot of listeners are at that beginning stage where they're thinking about starting
a business, but they're maybe not quite sure how to come up with a good idea or what it
is they should be working on.
So I'm curious, how did you at Grasshopper decide to build a virtual phone system?
Where did the idea come from and what motivated you to get started?
So myself and my business partner had both worked on previous businesses and we had experienced
this same problem so many times, which is how do you sound professional when you don't
have an office necessarily?
We didn't want people calling our cell phone, we just pick up at random times and we needed
a professional image and we went out there and looked for this and there weren't really
many options.
The options that were available were either very expensive or not flexible and the technology
itself was actually quite easy.
This wasn't a magical technology that we created, it had been around for a long time, but we
knew what the problem was, it wasn't packaged correctly for what we at the time called small
business users and we kind of over time learned that the better term that people identified
was entrepreneurs, but it just wasn't packaged and priced for them.
So we spent the time to create the solution and package and price it for the right market.
Yeah, there's a lot of uncertainty in the beginning for most people and it sounds like
what you're saying is that nobody was doing what you were doing in the way that you wanted
to do it, which was to sell to small business users and entrepreneurs.
But there was really no guarantee at that point that it was going to work out, right?
Because maybe you could have tried doing it and there wouldn't be enough people who wanted
a professional virtual phone system or some other problem.
So what did it take to validate your idea early on?
Was there some aha moment where you realize, hell yeah, this is going to work out or were
you confident from the very beginning?
So I think we were kind of young and stupid in that we were confident from the very beginning.
But I think it came from the fact we were solving a problem we had, right?
It wasn't something that we heard from other people necessarily, or kind of magically created
like this was a problem we had, right directly.
I think some of the best products are really created this way because you know, you can
somewhat skip a little bit of the step of talking to users right away, because you at
least know the base of what you're talking about, right?
And that's not to negate, like it is super important to get real user feedback, but we
knew we were solving a problem.
And I think we ignored a lot of the other things.
And then we got to selling right away, like rather than like, talk about it and see and,
you know, kind of pontificate about why it should work or wouldn't, like, okay, let's
just sell this to people.
And we started selling way earlier than we should have, but I think it's the best thing
we ever did.
Yeah, I remember in your tech space interview, you talk about, speaking of selling to a
customer early, you talk about doing customer support in the early days and customers would
call you and while you're on the phone, you would be writing SQL queries to look at the
customers in your database because you hadn't written any software to actually look them
up.
Yeah, I mean, the priority was very simply like getting people sold and paying us money.
And it was still important to support them.
But like, we didn't think about an interface to do it or a CMS or a support ticketing suits,
like people would call, we'd answer the phone and like we would be literally writing SQL
statements to find the customer in the database, right?
And like, but the important part was they paid us and they were being they were a customer
and they were using the system.
Interesting.
So I talked to a lot of people who are starting businesses, especially developers.
And what you guys did is almost the exact opposite of what most developer founders
do.
The temptation for programmers oftentimes is to just build, build, build before talking
to anybody.
And often they spend weeks or even months just building out their software without talking
to a single person about it.
When you guys are the opposite, your, your whole viewpoint was that the system was crucial,
but you could build it out later and just wing it for now.
And for now, selling is a number one priority.
So why were you guys so focused on selling when it's not the intuitive way to go for
a lot of people?
Well, I mean, I think there's two factors.
One, we didn't have very much capital.
So we had to we had to bootstrap the business, we just had a little bit of money from past
ventures and such.
And it wasn't a tremendous amount.
And this was way before, you know, kind of the true cloud computing, there was no Twilio
for telecom, like, you know, we were having to buy physical equipment and run T1 lines
and do these things.
So the cost of doing so is just very fixed, right?
And we knew that we weren't going to get very far if we spent a lot of time doing that
and not selling.
And then both of us, although I'm technical, right, I can write code and I have written
code, I'm not great at it.
You know, now, today, I can probably review it better than I can write it.
Both of us kind of came from more business backgrounds.
So all we really knew was like, let's market and sell this.
Like, that's what we knew.
We both went to Babson College and, you know, that that's the background we had.
Yeah, it's a background that a lot of programmers don't have, including myself, because I basically
had to spend the last 10 years in the school of hard knocks just trying to figure out how
to do some of this stuff.
But it's really interesting to look back at the time period where you were creating Grasshopper
and to look at the differences because there was no cloud computing, there was no Twilio
or AWS.
And so in a way, a lot of the things that you could do were very limited, just didn't
have that many tools to build on top of, which seems like a disadvantage at first glance.
But it's also advantageous in a way because it forced you guys to get a mindset of selling
immediately.
Yeah.
And of course, the disadvantage is that things are super expensive and hard to do.
So how did you afford your infrastructure, because even just just getting servers for
hosting back in those times was a pretty tough ordeal.
Oh, yeah, I mean, we were buying servers from Dell and racking them and stacking them in
a data center and like what people wouldn't even imagine you would do today, right?
And you know, I think, you know, two things we did, right?
We use the capital that we had as efficiently as possible.
So we negotiated terms with every vendor we worked with.
Some vendors, you know, extending us terms that they probably shouldn't have, right?
Because they believed in what we were doing, right?
We sold them on the vision of like, we're building something for entrepreneurs.
And that's who we are.
We believe this is going to work and here's why.
And they probably gave us terms that they hadn't given others and they shouldn't have
given us, right?
So we took probably about $200, $250,000 and ended up, you know, putting together an infrastructure
that should have cost us probably about a million dollars from servers, you know, Oracle
database, like, you know, like those are things that are quite expensive.
And then, you know, also bring in physical T1 and then as we got bigger, DS3 lines and
stuff to these data centers, like those are hard costs that, you know, today people don't
even think about.
So not only were you selling to customers from day one, but you're also selling to
vendors, selling them on your idea and selling them on your vision.
And I can't imagine that was easy to do because it was 2003, I mean, not that long beforehand,
pretty much every tech company had just been wiped out of existence.
So how did you negotiate with these people?
Yeah, it was a hard time.
You know, we sold them on our vision, we told them on who we were.
And I think it really came down to people believing that what we were telling them actually
was a need.
So that was some validation, you know, even before we were able to sell that other people
saw this as a need, especially as we talked to people in telecom, right?
Because we had to negotiate contracts to buy phone numbers and minutes and, you know, things
like that, right?
And we got feedback like, oh, you know, we're gonna start referring people to you right
away because we get customers that are too small that always want this, right?
So I think that was good.
And you know, we stuck with those same vendors for a long time.
And probably longer than we should have from a cost perspective, like we were loyal to
them because they helped us start.
And you know, over time, obviously, you know, we did start to migrate to larger tier one
vendors compared to tier two vendors and things like that.
But look, I think they made a good investment and it paid off for them.
Yeah, it sounds like it was a win for everybody involved.
And it also sounds like you're dealing with a little bit smaller companies in the beginning.
Did that make it easier for you to negotiate these deals?
Oh, yeah, we were talking to, you know, they're their founders or presidents, right?
So like, these were, you know, in telecom, very small companies, but way bigger than
we were at the time, which was nothing until you eventually grew to huge numbers, like
you're saying 250,000 customers served and making $30 million a year.
One constant that I've seen and talking to different founders and entrepreneurs is that
there's always a difference between what founders believe and what the actual reality of the
world is.
For example, you as a founder might have ideas about who your customers are or what they
want, or the best place to reach them, or what messages they'll respond to you and you
might not be accurate in all those assumptions.
I assume that you guys weren't perfect in the beginning, but you grew so much in the
end that you had to have eventually successfully aligned your beliefs and hypotheses with the
reality of the world.
So what are some of the things that you learned?
And also, what methods did you find the best for learning what product to build and how
to reach customers?
Yeah, I think that's a great question.
And quite honestly, I think we got all of it wrong at the beginning, and maybe towards
the end, we got a little bit right.
But you know, I think it's a it's an ongoing battle in both directions, right?
In that, you know, when you're starting, you have this vision that like, no matter
what, you know, you're going to persevere through everything, right?
And you know, it's like all green in front of you, right?
In kind of the middle, you worry a little bit more, and you're like, okay, now there's
some reality setting in, like, it's a little bit harder to sell than I thought there's,
you know, cost more to market, right?
And you know, I think that kind of continues.
And if you lose that, that's when you start losing, and you know, competition comes in
and kills you, right?
And I think, you know, one of the things we learned, you know, towards the middle as well,
which was, we thought we had kind of capped out on the market, we're like, you know, others
around us are like, look, you know, the market's only so big, you know, we're worried that
we're starting to kind of plateau in growth.
And we had many plateaus in growth, and then we had growth spurts, right?
And we kind of started to believe this ourselves.
So we spent time focusing on other products, and we built other things, and that's when
we built Chargify, and a bunch of other stuff that failed, Chargify actually did well.
And we lost focus on the business.
And looking back on it, what we really realized is we were wrong.
We got bored, and we should have stayed focused.
And we, you know, there was plenty of growth in front of us, we just weren't looking in
the right places.
Yeah, it's a really tough line to straddle this balance between when to quit, or at least
when to change it up, and when to persevere kind of seemingly against all odds.
And you hear stories on both sides of people pivoting into a really great idea that was
way better than what they were working on at first.
Or people like for example, the Airbnb founders who keep working on the same thing over and
over even though it's failing for years, and it ends up working out.
Yeah, I mean, I think that's what it is to be a founder, right?
We as founders kind of persevere through that, and probably in most cases are too positive
and wait too long, right?
But that's what creates success where I think those that fail didn't have that same drive,
or if you just hire a manager to run a business, right?
They're much more pragmatic about it, right?
Customers have that vision like, you know, I don't really care what else is happening,
but I believe this.
Right.
And on the flip side, there are times where the thing that you're working on as a founder
truly is not worth working on, or maybe you're just going in a different direction than you
should be.
So are there any examples, and I'm especially interested in the early days, are there any
examples where there's something that you learned from talking to customers and trying
to sell that shifted your direction?
Yeah, I mean, unfortunately, in the beginning days, we didn't really talk to customers very
much, it was probably the biggest problem.
This was well before, you know, it was kind of a popular thing to even, you know, in the
tech community, say you talk to customers, right?
So we just, we didn't understand that at all.
So we built, you know, and packaged the product in a very complex way that we understood, right?
And this came out in user churn, right, which was, we were onboarding customers that were
not as technology savvy as we were, right?
And you know, either would call up and it would cost us a lot of money in support time
and cost, because we always provided 24 seven US based support, not outsourced to another
country, right?
And true 24 seven, not like open a ticket and wait, like call us and we answer the phone,
right?
So we saw it in churn and cost.
And that's when we realized, oh, like, we have a problem here that, yes, we've built
something that people want, because we can, we've shown that we can get people to sign
up effectively at good CPAs, but you know, now we're having people churn out and we're
having onboarding problems, right?
And that's when we started to say, okay, like let's talk to our target market more than
ourselves.
Cool.
And what kind of tools did you use to start talking to your target market?
Was it email surveys or?
You know, initially it was really talking to people because we were doing the customer
support ourselves.
So that meant like I was on the phone, actively talking to someone who was struggling with
a problem.
And you know, quite honestly, that was the best thing we could possibly do, compared
to some like random user group or whatever, like this was someone who paid us money, signed
up and said, Yes, I want this.
And they're telling me they have a problem.
There's just no better source of feedback than someone who's actually a paying customer.
Right.
And we tried to encourage this in later years too, where, you know, I think as you grow
and you have, you know, 10 people and then 20 and then 30 and 50 or whatever, right,
you lose touch with the customer.
And especially, you know, developers because they kind of get insulated from support, right?
Because it's quote unquote, a distraction.
So you know, we had a program where everyone had to make seven phone calls to new customers,
everyone, no matter what position you were, right.
And it was just a welcome.
But like, very quickly, a welcome turned into, Hey, I love this, I hate this.
Why is the problem with this, right?
Like, it was instant feedback.
And just seven phone calls, it only took a little bit of time.
But it kind of brought back that touch.
We did that for a long period of time.
That's really smart.
And honestly, I think it's funny that you mentioned that you weren't talking to customers
in the beginning and that it wasn't as well known of a mantra back then in the startup
community that you needed to actually talk to customers.
Because in my experience, even today, people don't understand this people drastically underestimate
how wrong their guesses and hypotheses can be about what people need.
And they underestimate how effective it is to actually talk to a customer.
It's one of the reasons I hate the kind of movement to all online ticket based support.
You know, I think there's just this inherent value in talking to someone on the phone,
you get much more instant and direct feedback.
You can ask questions right away.
And you can make a real connection with a customer.
And what we found was it cost us a lot of money, like no question, right?
However, for sure, this contributed to our extremely high word of mouth referrals, which
we maintained at between, you know, kind of 22 and 30% until we sold the company, right?
Which is, as you're scaling marketing, very hard to do.
Yeah, that's huge.
But like, when someone calls up with a problem, we consistently turned them into raving fans,
because we solved it on the phone in real time when they needed it, right?
So to some extent, we wanted people to have problems so we could have that touchpoint,
because we saw what happened and we listened to the calls.
And I think it's just so critical.
And so many people bypass that today.
Right.
And what about in the early days before you guys had really started talking to customers,
and you just had the sense of, okay, we know that we have this problem, we need a virtual
phone system for ourselves, other people have to have this problem, too.
How did you find these other people?
Yeah, so we were very lucky when we started that this was before AdWords, but it was
at the beginning of Omniture, who was selling, you know, kind of click traffic.
And we were buying traffic really cheap, like cents per click, right?
Or even some case, you know, a cent per click.
Were these banner ads?
Yeah, we use banner ads, but most of the paid traffic came from, you know, search paid traffic
with Omniture, which is the precursor to AdWords.
So we did that.
We did some print stuff, which sounds crazy.
But you know, there's a clear target for SMBs.
At the time, there was Entrepreneur Magazine, Fortune, you know, a few that were very targeted.
So we played with print.
And those were the initial channels.
The other one we spent a lot of time on was organic SEO.
Like it was very clear that there was a need for people searching for these terms.
And those people were converting at much higher rates because it was intent purchases, right?
So all of our initial targeting, like, you know, from day one to the first 12 months
was like, someone is looking for small business phone system, virtual PBX, you know, professional
phone, like those types of terms.
And we just converted them, you know, as best we could.
Yeah.
So it sounds like you were paying for a lot of your traffic and SEO worked out great too,
which is interesting because those are just two advantages that I mean, like super cheap
paid traffic paying for ads for cents.
And also getting to the top of Google was probably just way easier in 2003 than it is
now.
Oh, it's way easier.
But I mean, but I think the advantages are different today and it's just a different
platform, right?
So like, if I'm starting today, I'm looking at like, how am I buying traffic on Instagram
and Pinterest and places like that where there is still intent, it's not as direct as search,
right?
But there's still intent.
And I can buy traffic very cheap, because there are newer platforms, they're still trying
to prove themselves.
Right.
Right.
And, you know, like the companies that I talk to now and I work with, you know, those are
the areas that they're seeing advantage in, right?
Where big companies are ignoring that.
So it sounds like you guys did very well with paid advertising.
And you also got a lot of word of mouth referrals, which to be honest, are kind of the holy grail
of, of growth and marketing.
Were there any other marketing strategies that worked well for you guys later on?
Because I'm sure in the 12 years that you ran Grasshopper, you probably tried all sorts
of strategies and channels.
Was there ever a magic bullet of sorts that worked better than anything else?
Yeah, I think, unfortunately, we were always searching for the magic bullet.
And, you know, in our kind of naive young selves, we're like, look, we're gonna find
this channel where we're gonna go from, you know, you know, 25,000 customers to a million
customers, guys, like, don't worry, we're gonna find it, right?
And I think just, it doesn't exist, right?
And people always hear about these stories where, you know, the companies we know, quote
unquote, or that are success stories, you know, yes, they have millions.
They have millions of customers, but there was no magic channel that got them there.
But that's what the story usually is, right?
So we tested everything, right?
And we failed at most of it.
But in along the way, we found things that worked for us, right?
So we along the way, we found that satellite radio worked for us.
We were the first advertiser with XM, well, at the time series, right?
When Howard Stern moved over, right?
So we signed up very early, and we scaled that channel to, you know, well over 50 or
$100,000 a month, you know, and, you know, then we had lots of failures, right?
We tried trade table ads on planes, we tried, you know, anything you can imagine where our
target market might be.
Yeah.
And then, you know, as we continue to grow, I think what happened was, you know, these
little tests became bigger and bigger, right?
So when we were small, a test might have been $100 or $1,000, right?
When we were growing, a test might have been $1,000 or $10,000.
As we kind of matured a little bit, and we got bigger, and we were starting to get closer
to $30 million in revenue, tests became, you know, a few hundred thousand dollars.
Or in our, you know, the year before we sold, we had a million dollar test in radio, right?
So we decided that terrestrial radio was the right approach, we had all the right metrics,
but the cheapest you can really test terrestrial radio in three demographics and do it the
right way is about a million dollars.
So that was a test, right?
We were pretty confident in it to put that type of money up, but it was still a test.
It worked, and we scaled that channel to $12 million, you know, very quickly.
Yeah, that's a lot of money, and those are economies of scale at work, because obviously
a smaller business can't afford that, even though it might be helpful.
So they just can't even compete on that front.
But it's cool that you guys are able to consistently test and figure out what appealed to your
customers over time, because it sounds like, you know, right up until the end, you guys
were still experimenting and finding out new ways to grow.
I think one of the things that happened, you know, quite a number of years ago now is,
you know, we really learned that testing was critical.
And this was early on in A-B testing tools.
And we had a few people come in and really help us and build a culture of testing.
And this culture of testing started to really go throughout the organization, not just in
marketing, not just in conversion, but, you know, A-B testing, you know, onboarding tools.
Like literally, the question was, have you tested this right internally?
And yeah, I think it helped us tremendously.
And you know, the we tested, you know, pricing plans, pricing increases, we did different
tests on how we increased plans on our user base or not on the like, everything was tested.
Yeah, testing is a smart way to do it, because obviously, then you know what's working instead
of just blindly assuming that all the things that you're doing are working.
And speaking of blindly assuming, I want to talk about how people will look at an established
business like Grasshopper, and maybe it's 10th or 11th year.
And they see what it looks like, and they see the things that it's doing.
And then they assume that it's always been this way.
And so they try to copy it.
And they don't realize that the assumption that they're making is that the things that
are important to a huge $30 million business aren't necessarily important for getting a
fledgling business off the ground.
So what are some of the ways that Grasshopper today or when you sold it in 2015, differed
from when it started?
Yeah.
So I think a lot of things changed, right?
But when you're small, I think the things that don't matter as much are, you know, kind
of structure and process.
When you get bigger, those are critically important, because you can't be looking and
touching everything at the time, right?
We made a lot of mistakes.
But I think one thing that is ignored early on, and I think is critical, is culture and
core values and core purpose and really having a true culture that really exists.
I wish we had done that earlier.
And just for some context, when did you guys make your first hire?
Probably in month three from when we kind of started.
Okay, so you guys started growing almost immediately.
And that hire was something to help with customer support.
Right.
So from the beginning, you were saying that you guys didn't focus on culture as much as
you probably should have?
No, we didn't.
We just we just hired, we just we had no idea what we were doing, right?
And we got to a point where we had about 50 people.
The culture clearly wasn't right, just didn't feel right.
And we spent a solid year figuring out what our core values were, talking about them,
getting making sure the right people were on the bus, you know, that that took us more
than a year.
And that was in the middle of trying to scale a business, which is messy, is hard.
We made lots of mistakes doing it.
But we could have saved that by really doing that much earlier.
And we did that at Chargify much earlier, right?
And we didn't have those problems later on.
I think just the concept of having a company culture with values that you want people to
operate on is fascinating, because when you're only one or two people, then culture just
sort of evolves naturally out of whatever your personality is, because you represent
such a high percentage of the people there.
But if you grow and you don't set a culture deliberately, then one kind of forms on its
own and it might be unhealthy, or something you don't want.
So what goes into setting a culture like intentionally deliberately creating a culture at a company
with more people?
Because I know it's easy to have a list of values or write some words down on a page.
But how do you actually instill those values in people and make them a reality rather than
just a cheesy collection of words?
Yeah, it takes a lot of time and a lot of effort.
And I think actually getting real core values is actually very hard, right?
Lots of people can write honesty and respect and things like that.
But having real core values that are meaningful and actually represent not just what you want,
but what you are, and you're right, it comes from the founders.
So our core values were go above and beyond, always entrepreneurial, radically passionate,
and your team.
It spelled out Gary, we had fun with it.
But we pounded people over the head with this.
In the hiring process, this was the very first question.
How do you apply yourself to these core values and give stories around them?
In the rewards and recognition process, we had quarterly and then we moved to yearly
reviews.
Long story why we did that, it's not really relevant until you're kind of 30 plus people.
But every period where we reviewed each other, we talked about core values.
Our monthly meetings, we presented gifts and rewards around the core values.
Who showed this the most?
We had an I-Caught program where people could catch other people showing these core values.
So it was just everywhere all the time.
Yeah, we publicly talked about them, customers knew them.
So when we gave a credit or we did something, we matched it to a core value.
No matter what it was, it always went back to that.
And there's a related topic that I want to talk about that's kind of similar, but perhaps
more individualistic.
But it's the psychology behind being a founder, which is questions like how do you manage
your mental state and make sure that you're the best that you can be?
And I think a lot of people underestimate how much of a role this plays.
Maybe just because it's hard to measure.
And that's why I love talking about it because it's so rarely discussed.
But there are all sorts of things for developing this kind of personal culture, like what's
your philosophy on work-life balance, for example, and how do you deal with scheduling
your work?
How do you maintain motivation and get yourself up in the morning or on the flip side, how
do you deal with burnout or depression?
So what are your thoughts?
Did you have any guiding personal philosophies for how to manage your own psychology as a
founder?
Sure.
Yeah.
So I mean, I think there's a lot in that question.
And so, yeah, so first, I don't believe that there is such thing as work-life balance.
I think there's work-life integration, which means I work at times that it doesn't make
sense.
Maybe I'll interrupt dinner or I'll work at home or whatever it is, or on vacation.
Because I think as you integrate things, you have more flexibility and freedom compared
with regimenting things and saying, I can't work after 7 p.m. or I'm going on vacation
and I'm not going to look at emails.
I think those extreme things really don't help.
And there's this culture of, you know, I only look at my inbox once a day or bullshit like
that.
No, like, you know, real people that have to get real things done do look at it more
and should look at it more.
Sorry.
Right.
So I think that it's about integration.
I think personal health is very important.
If you can't treat your personal health and eating right, which initially I was all wrong
with.
I was eating all the wrong foods.
I wasn't exercising.
I was gaining weight, right?
Because I'm in the office, I'm working, I'm stressed.
So I made major changes there.
That had a clear impact.
I think waking up early is the biggest advantage any entrepreneur could ever have, right?
If I wake up at 5am and everyone else wakes up at 8am, I gained 3 hours on everyone, right?
And like, that's a magic 3 hours where a, there's much less distraction, right?
There's less emails, there's less phone calls, there's less people asking for things.
But most other people are not getting up at 5am and working, right?
And that's how you win.
Plain and simple, right?
Like, that's how you win.
It's not, there's no magic, there's nothing else.
So I think that's very important.
I think the last piece to your question, I'm kind of trying to remember each piece.
So if I forget something, definitely ask me.
It was a heavy question.
Yeah, I think the other piece is, as entrepreneurs, we have two selves, right?
One which is our public self, which we have to present to our employees, our partners,
our vendors, which is overly optimistic, right?
No matter what, we're going to persevere through anything, right?
Even when the real reality might not match that, but we have to, and we need to face
the real reality, but we need to present an image of, we're going to get past this and
here's why and here's my plan, right?
There may be times where you go through this roller coaster and you're at the bottom of
that kind of slide and things are very negative or you really don't believe that the next
step is possible and I think the only way to deal with that is to have peers around
you that you can discuss those things with and there are other entrepreneurs, right?
Because it's hard to discuss it with your family because there may be real financial
impact to sharing something like, oh my God, I can't believe we might not be able to meet
payroll next week, right?
So it's hard to share it with family.
It's very hard to share with employees sometimes, right, until there's more maturity in the
business but in the early days, like I couldn't imagine sharing those problems, right?
But finding a peer group of other entrepreneurs facing the same problems and be able to comfortably
share them, I think that's how you get through the non-public image of entrepreneurship.
Everything you said is awesome and I just love talking about the stuff.
The first thing that you said, it sounds like you're really focused, it was when you were
talking about work-life integration rather than work-life balance, which got me thinking
about the fact, and not everybody is like this, maybe it's just me, but for me, one
of the things that I prioritize the most in my life is flexibility.
Because what your business needs, for example, is not always going to fit on this perfect
nine-to-five schedule and it's similar with your mental state.
What you feel motivated to do at any given time is not going to always fit into this
perfectly organized box.
So for me, it comes down to doing what feels right at the right time.
And then the hackers, for example, there are going to be times I really feel like editing
the text interviews and there's going to be times where I really don't want to do it and
the thought of it makes me sick.
And I want to be a lot happier as a person and a lot more productive as a founder if
I don't try to force myself to do everything on a rigid schedule every day no matter what.
A small little bit of flexibility gives you true flexibility to do what you want when
you want.
Exactly.
You know, there is actually such a thing as being a workaholic or being addicted.
And I understand why people want to have these strict separations.
But I think sometimes it's kind of an overreaction.
You're trying to live your entire life on a rigid schedule with strict delineations
and time blocks with your work between 10 and 6 and your leisure time.
On Saturdays at 2pm, it just, for me at least, it doesn't work that well.
It just doesn't naturally fit into how I feel and what my business needs.
But another thing that you talked about that I thought was interesting was waking up early.
And on most of my previous projects, pretty much for the last 10 years of my life actually,
I've had this night owl programmer schedule where I'll stay up late coding and wake up
late.
But with ND Hackers, I wake up super early and it's a different business to be honest
because I spend so much of my time talking to people, answering emails, tweeting, sales
calls with sponsors, et cetera.
And I think part of me waking up early is that I moved in with my girlfriend who likes
going to bed early and will wake me up early, et cetera.
But also part of it is that I'm on the west coast and if I wake up at 10am, then half
the day is already gone on the east coast effectively.
So it's kind of a natural thing.
If I'm actually doing my job right and talking to people, then I'm going to feel pressured
to wake up early anyway.
Yeah.
I think it's a great point about time zones, right?
I experienced this when I moved from the east coast to the west coast, but all of my staff
and the company was on the east coast, right?
So a 10am meeting was a 7am meeting for me, right?
And so even more so waking up early was important because now everything had shifted by three
hours naturally.
So now if I wanted time that was more quiet or focused, I had to wake up even earlier.
And I think there's no better advice, I think, for an entrepreneur than doing that.
There's no other solution and even with all these crazy things people talk about, looking
at your inbox once a day, doing this, doing that, nothing will gain three hours a day
compared to just waking up earlier.
Another thing that you talked about was having peers around you who are entrepreneurs themselves
because you can share with them a lot more easily what's going on and they can understand
you better than other people who haven't really been in the trenches.
And I think a lot of people listening, including myself, are solo founders.
We don't have co-founders.
That's not really even an option and a lot of us don't even have employees.
So I think that having some sort of other source for a community is crucial.
And what's helped me personally is this trend towards transparency.
So for example, I can hop on Twitter and you certainly could not have done this in 2003-2004,
but I can tweet out a decision like, hey, I'm recording a podcast.
Which of these topics sounds the most interesting to you guys?
Or last week I tweeted, hey, I'm having trouble with my affiliate marketing program.
What am I doing wrong?
And the amount of amazing support and feedback that I got from people was staggering.
Everyone jumped in and had different opinions for what I could do.
And I think from a practical standpoint, obviously getting this kind of advice is good, but even
from a psychological or an emotional standpoint, just having other people who've been through
what you're going through makes it way easier when something goes wrong because it doesn't
feel like you're completely alone.
And I think a lot of founders who haven't found a community, who aren't on the anti-hackers
forum or aren't on Twitter and don't have people to talk to, end up getting sad or quitting
or getting depressed because they just don't have anyone to share with.
On a different note, I'm really curious about how you sold Grasshopper, because when it
comes to selling, there's always two questions that I have.
And you ended up selling to Citrix in 2015.
And one question is why Citrix?
And the other question I think is a little bit more interesting, but it's why sell at
all?
Because at this point, you've been running Grasshopper for 12 years, your business was
incredibly successful, and I'm sure it felt a little bit like it was your baby.
I've only been running anti-hackers for five months, and I already feel like it's part
of my identity, so I can't even imagine 12 years.
What kind of framework did you have in your mind for determining when to sell?
Yeah, great question.
So first, from day one, we never had an exit plan.
People kind of asked us this question, they kind of thought we were crazy.
We're like, what do you mean exit plan?
We're building a business because we want a great place to work and we think we're solving
a real problem.
Like, why do we need an exit plan, right?
Part of this was we were also bootstrapped, so we were never pressured by VCs or others
to have a quote unquote exit plan.
So we never expected to sell the business, quite honestly.
Citrix approached us.
The process took over a year from when they first approached us to when we sold it.
There were a lot of reasons that it was a good fit.
I think the timing made sense.
As founders, we had been in the business for 11 years.
All of our personal wealth we had generated was in the business, right?
We had no reason we needed to sell.
We drove the cars we wanted, or car, I should say.
We lived in the house we wanted to live in.
We didn't have extreme lifestyles, but we had the stuff we wanted.
I think that's, as being an entrepreneur, that's part of the goal, right?
Is to have the flexibility and to have what you want, not to have crazy things, but just
to have what you want, right?
So there was no reason to sell.
But as we went through the process, we found more and more of a fit with Citrix.
More culturally, they believed in keeping the name Grasshopper and that brand, which
we cared about.
They cared about the employees and keeping them.
End of the day, the monetary and structure of the deal made enough sense that it was
impossible to say no to it, right?
I think that's the best outcome is when you're not looking for that.
It worked out very well for us, and the company still thrives today within Citrix.
What's your role been like since then?
Have you been helping out with the company at all, or is it kind of a clean break?
It was actually 100% clean break, so we closed in the middle of May in 2015.
The next day, I'm like, holy shit, I need a new email address because they're like,
your email is going to forward for a few months, but you've got to figure something out.
Every username I had, every account, everything, right?
I think it worked out well.
We had a management team of five other people that were running the business, and that's
part of the reason Citrix didn't need us to stay.
It worked out very well for us, and it worked out well for them where they didn't need to
find a place for two founders and give them a salary for no reason.
It was pretty instant.
It was like, okay, that's it, done.
I think it's pretty impressive that you guys built a business that could completely run
without the two of you.
I think partially it intentionally done it, and partially it by mistake.
We hired people to fill in the gaps for the things we didn't like doing.
Over time, those people got better and better at doing those things, so there was no reason
to have us around as much.
I then moved out of the office, so being remote kind of forced more of that.
Honestly, the team we had was just an amazing team, and I love all of those people that
have been involved and really set us up for success and did the things that as founders
we could never have done.
Brought structure to the business, brought process, brought years of experience in other
organizations and what we really needed to be able to scale to that point.
What are you up to now?
Obviously, you're in a financial situation that is, I'm assuming, pretty good.
In some ways, it limits what you can do.
It limits what's even worth working on, but obviously it also gives you the ability to
work on things that you never could have earlier.
I spent a year thinking about that and doing a lot of different stuff.
I spent some time with 500 startups and helping out with their Mountain View accelerator program,
so working with some companies there.
I made a ton of individual investments, both prior and now.
Now really it comes to the realization, about a year and a half after the sale, what we're
going to do is we want to buy a SaaS business, preferably in the SMB space, but we'll look
at any SaaS business that's doing between half a million to a million or more in annual
revenue.
We're going to buy it and scale it like we have.
That's going to be our next step and we'll still do investments and other stuff, but
honestly, I've slowed down my angel investing and really targeted very specifically companies
like Groove that I made an investment in, who is both profitable and didn't need the
investment, but was looking for both advice and structure in certain areas and different
very specific things, and in doing so, those are the types of investments that I'll be
making more.
Sounds really fun.
I think.
Yeah.
Hopefully it is.
Ask me in a few years and see maybe it's totally changed and I decided to do something different,
but after a year of thought and testing different things out, this seems like what is most interesting.
I want to wrap things up by hearing your general advice for people who are indie hackers or
aspiring entrepreneurs.
What resources did you find helpful and what stories are inspiring to you and what do you
think somebody who's just starting out should know about?
Yeah.
I get this question a lot and I've thought about it so many times and one part of me
felt like my advice should change over time maybe, because things change, industry changes,
but I keep coming back to the same thing, which is I think the best piece of advice
is just go out and do something, anything, rather than talk about it, rather than wait
and see what users think and just do something, because I would prefer to see an entrepreneur
fail at something than fail at doing nothing, and I think that today we spend so much time
reading, and there's so many resources, I could say go here, go there, there are so
many great resources, blogs and podcasts and everything else.
We can consume so much information that we get into this paralysis of like okay, I need
to know my next seven steps, like no, just do one step and do something, right?
If it's build the product, if it's talk to a customer, if it sells something, collect
a credit card, like just each little step, just keep doing them, right?
Yeah, I meet a lot of people who are even contemplating starting a business forever,
and they're just consuming things and they never get around to actually starting.
And so I think in terms of bang for your buck advice, that's probably the most valuable
just because of the sheer number of people who are on the fence.
Yeah, I wish I had like better things like, you know, go do these three hacks or go do
this, right?
But, but I mean, in reality, I think if you if you do if you're doing something, you're
getting up early in the day, and you're working hard, you'll find something that you both
love and is successful.
It may take a few failures, it may take time, there's no magic to it.
But if you combine those things, you're at least on the right path.
If you're not if you're not doing anything, and you know, you have a schedule and you're
not eating well, like, you know, like nothing's gonna work.
It doesn't matter if you're an entrepreneur or not.
Agreed.
Well, cool.
It was great having you on the podcast, David, and I know we didn't get to talk about a lot
of different stuff.
Chargeify, for example, and I've got about 20 other questions here that I did not get
to ask, but maybe one day in the future, you can come back on.
Yeah, absolutely.
And you know, if anyone has any specific questions, you know, feel free to reach out.
I'm on Twitter.
My email address is readily available online.
You know, I'm happy to talk to entrepreneurs that take the time to, you know, proactively
reach out and have a real question or something that can help them.
All right.
Thanks, David.
Appreciate it, Kweli.
If you enjoyed this conversation, you should join David, me, and other ND hackers
and aspiring entrepreneurs in discussing this episode on The ND Hackers Forum.
Just visit www.ndhackers.com slash forum.
Also, make sure to subscribe so you know exactly when I release new episodes in the future.