What's up, everybody? This is Court Lund from IndieHackers.com, and you're listening
to the IndieHackers podcast. On this show, I talk to the founders of profitable internet
businesses, and I try to get a sense of what it's like to be in their shoes. How did they
get to where they are today? How did they make decisions, both with their companies
and in their personal lives, and what exactly makes their businesses tick?
The goal here, as always, is so that the rest of us can learn from their examples and go
on to build our own profitable internet businesses.
Today, I'm talking to Brian Balfour, the founder and CEO of Reforge. Brian is a prolific blogger
on the topics of growth and user acquisition. He's had a successful career along the same
topic, culminating in his role as the VP of Growth at HubSpot. He has grown products
to millions of daily active users. He's also a serial founder himself. I believe you started
four companies, Brian, is that right?
Yeah, it depends on how you count. You've raised money from venture capitalists, you've
bootstrapped, you've sold companies. You've done it all, really. Today, you're joining
me on the IndieHackers podcast, so welcome to the show.
Thanks for having me.
Thanks for coming on. I first found you online, I think a couple years ago. I was reading
your blog, and you had a post called, Why Product Market Fit is Not Enough. I've never
read anyone who said anything like this before. Product market fit is hailed as the pinnacle
of startup success. It's what every company needs if it wants to hit a home run and basically
become everything its founders dreamed it could become. You were saying, that's not
quite enough. Can you share with us your opinions there? Why is product market fit not enough
for founders to succeed?
Yeah, I think just in general, in tech, basically what ends up happening is somebody creates
a framework or concept to help explain a really important topic. It's very helpful at first,
but then we like to do in tech, we just take things to the extreme and start applying it
in just way too many ways and ways it's not.
I think it's a super useful concept, don't get me wrong, but I think there's two big
things that I tend to talk about and think about and that I've especially felt as a founder
in both a positive and negative way is that one is that product market fit isn't a moment
in time. I see a lot of founders that I advise and invest in. I even had a conversation on
Twitter today about this, somebody asking of like, have I reached product market fit
or not yet? Almost like they're searching for this bell to go off. I wish we had a product
market fit bell that just rungs. We all knew that when we had it, but it just doesn't work
that way. To be honest, in the founder's seat, I think it very rarely ever feels that way.
The closest thing I've ever gotten to a description of that feeling is from the CEO of Segment
Peter, who described this sense of the market is pulling the product out of you rather than
you pushing the product on the market. I thought that was the best description I've ever heard
of just the qualitative feeling of when you have it, but I often find it almost feels
like this search for the pot of gold at the end of the rainbow or this lucky leprechaun
and we're actually going to never find that confidence or that feeling that we ever got
it because it's this thing that's always moving. All these components, our product, our market,
our distribution channels, or how we monetize our users, these things just are constantly
changing and evolving. Even when you find product market fit on a single feature or
product, these things move and things get out of whack. You got to move with it. You're
always on this constant search for continually evolving and making sure you not only maintain
product market fit, but you're searching for new product market fit of new features and
new products. Even at HubSpot, a big part of my job as I came in is like, they had this
marketing product growing to $100 million in revenue, but they knew to continue to maintain
growth of that business that they had to find new products, new verticals.
We restarted the whole product market fit search all over again inside of an organization,
which is really hard to do at small and large organizations, but for different reasons.
I think people just get caught up in the concept as like, I just got to find this thing and
then I'm done with that and I get to move on to some other things. No, it's like you're
constantly working at this and evolving and molding and shaping along the way. I think
that's the first thing.
The second thing is just because you have, I like to call it market product fit because
I tend to think about things first from like, who am I building this thing for first? What
are their problems? Then I can think about the product, which is the solution to those
two things. I often find when we flip it and we say product market first, we think about
the solution first and then the audience and the problem. This is semantics, but I actually
think language is pretty important. It shapes how we think about things.
When I think about like market product fit, that's one thing, but there's these other
fits that I commonly talk about. The main ones are product channel fit. Even if we get
market product fit, meaning like we have clear signals that our product is solving the problems
for the audience that we intend to solve them for. Those signals can come from NPS data,
word of mouth signals, retention data, all that kind of stuff. We still need to find
a way to actually grow this thing. Just because we have those things does not mean it's going
to grow. We're working on things that we can control, like the product and we get to choose
the market.
The one thing we don't get to control is what are the scalable channels available to us
where our audience is living? That's actually determined by somebody else. Not only that,
but the rules of those channels are also not within our control. A lot of people can be
very frustrated by that. We do not control what Google does. We do not control what Facebook
does. We do not control what the email providers do to their spam algorithms and promotions
folders and all of this stuff. We do not control a damn thing of it.
At the end of the day, we have to focus on the things that we can control. What we have
to do instead is mold our products to fit with one of these channels. Different channels
are better for different types of products. We have to kind of mold to that. The other
one that I often talk about is channel model fit, which is that one of the levers we can
control is how much we price our product for, how do we structure the monetization model
around it, what features go in, what package, all that kind of stuff. All of these levers
of our monetization model actually create friction for the user deciding whether or
not they're going to use and purchase our product.
We can either create a model that's super low friction, so low price point, freemium
models, all that kind of stuff. As a result, we're able to use channels like Virality,
like paid marketing, or some of these lower friction channels, or we can create really
high friction, high price point, got to pay up front, all that kind of stuff.
As a result, we need to use channels that have more influence to help people get over
that friction. Those are more things like inbound marketing and sales and all that kind
of stuff. The last one is model market fit. Based on the monetization mechanisms I've
set and I look at my market and how many people are in that market, if I just do simple math,
average revenue per customer times the number of people in my target market times the percentage
I think I can capture, how big of a business does that build? Am I building something as
big as I want it to be?
A lot of times founders that are kind of on the VC path need to create $100 million plus
revenue businesses. We walk through that math and the math just doesn't work out. You have
all of these fits and the thing is you're constantly searching for them over time. A
lot of times one or two come really easy to that business and then the other ones are
the ones that you've got to really work on and really innovate and put your muscle and
your grease behind.
These are all components that you need to think about. These things are not easy. Building
companies are not easy. These things are systems that where if you move one lever, all of the
other levers move and so it's this constant game of putting all the puzzle pieces together.
That's such a perfect way to describe it. It's not like you can just change one part
of your business and not worry about the other parts. They're all connected. If you choose
a particular market, that's going to affect the prices that you're able to charge and
the prices that you charge are going to affect the distribution channels that you can afford
to go after.
Like you said, it's like a puzzle where all the pieces have to fit together. I also love
that you mentioned that as founders we tend to want to work on the things where we have
the most confidence, the most control, where we're the most comfortable with it. If you're
a developer or designer or something, that's probably going to be the product. You're going
to obsess over all the features and the bells and whistles you're going to add. You're going
to be imagining people using this cool product that you built and it's going to seem so real
to you while at the same time you're neglecting all the other parts of your business that
you actually need to care about in order to make this thing work.
I think a lot of people like to talk about a lot of reasons companies fail because they
got the product wrong. I actually don't think that's true. I think they probably got one
of the other components wrong. They either built a product for the wrong market or for
a market that didn't exist, which actually doesn't mean they got the product wrong. They
just got the market wrong. They chose the market wrong. They didn't define the problem
in the customer. Or they built a product that didn't fit with any of the distribution channels.
Or they didn't choose the right monetization model and the right pricing and all these
things and so it doesn't create compelling unit economics and all those components. Maybe
that's a counterintuitive statement. I don't know, but I actually think most of the time
I look at these things and I'm like, you built a really interesting product, but one or more
of these other things is off. You didn't fail at building something. You built something
that you just didn't figure out these other components.
I think it is counterintuitive. If you look at the population, the demographics really
of people who are building these tech-based businesses, these online companies, they're
pretty smart people. They're pretty ambitious and driven and talented and motivated and
all the good stuff and yet most companies still fail. I think that should tell you if
you're a first-time founder thinking about getting into this that, hey, your intuition
is probably not good enough. Otherwise, it would have been good enough for all of these
other people. There's probably some stuff that you need to learn and try to understand
so you don't make the same mistakes that everybody else makes.
I think one thing that I've become more of a believer in is I don't know, this rule probably
applies in a bunch of places. Look at what everybody else is doing and try to do the
exact opposite and that tends to work out. I mean, just like look at reforge as an example.
I think when we started the online professional education space, what everybody was focused
on was like the entry-level market, helping people get jobs or pricing things low like
on Udemy at like 10 bucks a pop or letting anybody buy the course and just like all of
these components, we did the exact opposite. We were like, you know what? You got to apply
for it and we're only going to accept X percent and we're going to slap a super high price
on this thing. Actually, we're not going to target helping people get jobs, which is a
good initiative, but we're only going to target people who have jobs already and build a difference.
We literally did the exact opposite of what everybody else was doing in the space and
it's worked out super well for us so far. I think the reason it just works is like if
everybody is like doing one thing or saying something or focused on something, I guarantee
you that there is an audience on the other side of that equation that is not being served.
Some other things that we did is like a lot of online courses were like, you're going
to get amazing results in like X period of time and we said the exact opposite. We said
we were like, you know what? This shit's going to be super hard. It's going to be super intense.
You're probably going to hate us by the end of it and we're not guaranteeing you like
some crazy outcome like tripling your outcome in two weeks, but we're going to teach you
some really meaningful stuff and if you put the time into it, you're going to meet some
really amazing people and we guarantee you that you'll be able to use these things to
create value for you and your company. It's just like say the opposites and I guarantee
you you'll find an audience that's just like tired of the rest and will immediately attach
themselves to what you're doing. So I like looking for the opposites.
I think that's a great approach. I've talked to a few people on the podcast who've done
something similar. To Be His Fan Snyder comes to mind. His episode was called Definitely
Not Trying to Fit In with To Be His Fan Snyder because he always does the opposite of what
everybody else is doing and it's worked out for him. It's obviously worked out with you
for Reforge. I want to talk about how you got to where you are at Reforge actually.
Your story starts a little bit earlier. You said that you were hired to become the VP
of Growth at HubSpot and they already had a product that was doing $100 million in revenue
when they hired you. How do you get hired for that kind of position?
Oh man, I still kind of question why they ever hired me, but the history of it is that
okay, so I spent my early career. I started this company called Vixamo. Some VCs wrote
me some massive checks that they should have never written. I was like 22 at a time. This
was like pre-Facebook platform and we just kind of saw what was going over on in Korea
with virtual goods and we were like, that's really interesting. That seems like a new
business model. We don't know how it's going to develop, but let's start exploring there.
Facebook platform launch, social games became a thing. We ended up building this alternative
social gaming platform. Ended up selling it to a company called Tapjoy, but that was where
I really started to learn growth, what people now refer to as growth. It was like product
driven growth, a lot of things around virality, a big mix of quantitative views with qualitative
views of user psych and all these other components. That's where I started this whole growth thing
and many years later basically HubSpot initially started off. They built this amazing marketing
and sales machine, but one of the things that they felt they wanted to do going forward
was start to enable more product driven growth mechanisms. That wasn't really a muscle that
they had internally. They had a really interesting opportunity to explore that because they were
starting these new products. Rather than experimenting on an existing product and having the initiatives
be constrained, it was like, hey, here's this blue ocean, this Greenfield territory, do
what you want.
I had known Dharmesh and Mike Volpe and a bunch of the other early team from HubSpot
for some time. Marco Berge, who was the early salesperson and built the whole sales machine
there was one of the leaders of this new product division. He and I just got to talking. He
made me an offer twice. I said no twice and finally on the third time he convinced me.
I went and it was one of the best decisions I made. It was like myself and maybe like
six others when we started this new products group. The only things that we had as our
goals were we knew we wanted to develop new products in the sales software vertical and
that we wanted to create a new $100 million line of business and that we wanted the primary
growth motion to be a product growth motion rather than a sales first growth motion. That's
how I entered HubSpot and then over the next couple years we ended up developing the free
HubSpot CRM and what's now known as HubSpot Sales Pro, which I don't know if they publicly
announced but pretty confident is over $100 million as a line of business now. I think
they did announce that so you can keep that in there. But yeah, it was just crazy growth.
It was just crazy growth in like a couple of years, but it didn't come without it. It
was really hard and I've written a lot about this about like some of the failures that
we had to like navigate through to get through success. So even with that giant machine that
we had behind us, it was finding these successes and these fits that we're talking about was
still a difficult road for sure.
I think for most of us, the way that the growth machine works inside a big company like HubSpot
is a total black box. So could you give us a story or an example of how things works
behind the scenes?
Well, it depends what you mean by the growth machine. There's growing the company itself
and like the operating system of the company is growing the products. There's multiple
so go a little bit deeper. What do you mean by the growth machine?
Let's talk about growing the products because it seems like you came in and it was basically
like you're starting almost a miniature startup inside of HubSpot working on brand new products
and trying to grow those. What was that like and how does a mature company like HubSpot
approach the problem of trying to grow a product and reach more people?
So I think HubSpot did really, I did not make these decisions. By the way, there were smarter
people like JD Sherman and Brian Halligan, the CEO and CEO that helped set this up. But
basically the way that the big death of most new products inside companies is that there's
a couple of different failure points. At the beginning failure points, they don't give
the products enough room to like truly explore from first principles. So they basically assume
too many things of like, oh, like, well, we know this, we know this, we know this, because
we have this other success over here. But a lot of times those successes don't translate
to new audiences or new verticals. As a result, they lead you down a road of failure. And
so you really have to like wipe the whiteboard clean and start from scratch and rebuild from
there.
And so what they did was they actually treated it as like venture rounds inside the company.
So essentially we took multiple product bets. There's multiple products, got bets, got like
quote unquote seed funding. So a year of funding at like a typical seed level, I think the
budget was in the hundreds of thousands of dollars. And so it funded a team of X. And
at the beginning of the year, we're like looking for these validation points by the end of
the year. And then at the end of the year, we would go quote unquote picture series A,
right? So we would go talk about like what we learned in the validation points. And then
we would get like the next level of funding. And then the series B, right? Like, and they
actually funded it that way. And then finally, by the time you get to the series B and you
know, this is like a really real thing now hits the second big problem, which is how
do you kind of mold this thing back into the giant machine of right? And that's a whole
transition point as well. And that was actually led by somebody different than I did. Cause
this was about six months into this transition. I ended up leaving to start reforge. Um, but
a guy named Michael Peachy was responsible for this and did like an amazing job and started
to figure out how to transition it back into the machine. And then the third failure point
is you got to do it all over again and make sure you don't screw up those first two things.
That's how it essentially worked in terms of like how we planted these bets. Now how
the product, the mechanisms behind the products actually grew. It was a different story. So
one thing that I commonly talk about is if you're trying to build a like super high growth
type of product, which I know not everybody is, which is totally fine, but these types
of products that, you know, we read about on TechCrunch and all these other places behind
them. Um, if you look at how they grow, it's basically a system of what we call compounding
growth loops at reforge. So rather than looking at these things as funnels, these things are
actually self-reinforced. So there's some self-reinforcing loop behind the thing that
creates this kind of compound interest effect that gives you those exponential curves. The
compounding machine behind the marketing product at HubSpot was originally basically what we
at reforge would refer to as a company-generated, company-distributed content loop. So we would
get these leads combined with a sales loop. So we'd get these leads. We generate revenue
off of them. That revenue would fund the company-generating content. We then distributed that content
to the search engines like SEO and stuff, as well as our users would distribute that
content, which would close the loop and create more like leads and followers, which would
give us more revenue. And so through every cycle of the loop, we were able to invest
more and more into more content, distribute more content, and it just like continued to
compound on itself over time. Now, over time, that loop got even more efficient because
rather than the company-generating content, we had built such an audience up that we just
got what we like, what I refer to as suppliers to generate that content. So it was like guest
writers who wanted access to our audience. So we were able to generate a higher volume
of content every cycle of loop, which distributed more content, which attracted more leads, right?
And like continued to like repeat itself. So that was really the thing behind the HubSpot.
Now the new products, they wanted to take a totally different approach. So a product
led machine. And so there, you know, we're thinking about like user-generated content
loops and the different forms of viral loops and everything like that. And so the early
HubSpot sales pro product, we took a bet on one main thing, which I refer to as like a
financial viral loop. So it was a freemium product. And as a result, it was designed
for an individual, not a group or a company. And it started off super simple. It was like
what we called an email tracking product. It sent you notifications when people opened
your emails. Super interesting to salespeople sending contracts all day long. Now this is
standard in a lot of tools, but it wasn't back then. Basically you got, I think it was
like a hundred notifications for free. And once you had a hundred notifications, you
could invite others to get more notifications or you could pay, I think it was like at that
time like 10 bucks a month. And so the key here was like people who hit this notification
limit like 13 days into the product, which was kind of a magical time. They had built
the habit around the product. They had gotten addicted to these notifications. And so they
were super incentivized to invite others. We got to hundreds of thousands of users just
off of that single loop. Now we evolved that over time into other growth loops. But that's
how I think about like growing products is like how do you build these compounding loops
and then just how do you improve them over time?
It's great that you have so many internal frameworks for how growth works. I mean, growth
is arguably the most important part of any company. How do you go from zero customers
to one customer? How do you go from one customer to the point where your company can pay your
salary and beyond? That's all growth. And yet most of the people that I talk to, they
don't have this level of knowledge that you have obviously, or even a small fraction of
it. They have no idea how to organize these different concepts. They hear about something
like viral growth or product driven growth, or marketing or SEO. And they don't know how
to really structure these things in their mind as how they're related and when to apply
one and when to apply the other.
You've been both a founder and a VP of growth of the company. What do you think, you know,
your average founder needs to know and educate themselves about with growth before they start
a company?
Yeah, that's a good question. I mean, look, I think it's actually it is very important
to understand these things. And even more so, as the company grows, you kind of need
a common language of how to talk about these things inside the company. Because growth
means so many different things to so many different people. And so if you don't actually
establish this common language, you just end up talking apples to oranges with each other
and you don't need and you don't even know it. And this is often really kind of the source
of most internal like disagreements or misfires is that people think they're aligned and talking
about the same thing, but in reality, they actually aren't. And if you just asked them
to like draw a picture of what you mean on a whiteboard, you would very quickly realize,
oh, you are thinking about this way different than I am. That's why I tend to talk in frameworks
because I essentially just think about his frameworks as like, if I'm in a meeting trying
to explain something to somebody, can I get up on the whiteboard and draw a picture of
this so that we all like understand it and are talking about the same thing. So it is
important. However, the reason I'm having a conflict internally is like, I keep going
back and forth. I'm like, should you really be working on like filling in your weaknesses
or just like doubling down on your strengths? And so the reason I talk about it like this
is because this is like, obviously my strength. This is what I've spent, you know, years and
years on. I used to like code, but if you asked me to code today, like, you know, you're
really like you're about to put yourself through a world of pain if you ask me to do that. So
it's hard. So I would say like, I do some investing on the on the side and advising.
And so whenever I do that, the bar I take people through is kind of what we just went
through. I'm like, Hey, like I think about growth like this, it's a system of compounding
loops, there's these common set of loops. I think this is how I would view your product
growing. And we like draw a picture up on the whiteboard of like how one step leads
to another step. Do you think about it in the same way? And oftentimes no. And we kind
of like collaborate on this. And so the minimum bar that we essentially try to get to is a
common picture of how we think the product grows, not how like money comes in, in the
system and money comes out of the system. But it's like, how does one user lead to another
user? And then once we have that common picture, then we can kind of zoom into that map and
say, well, like, how do we like make this thing happen? How do we improve this thing?
Right? So if there's like content involved, then we think search engines and then we can
talk about all the levers and tactics of that little like arrow in the picture. Or if it's
like, Hey, like I, you know, I'm calm.com the app and I'm a subscription product. It's
a free trial and I'm driving it through paid ads. Well, okay, that's fine. Like we can
now talk about, well, what are the key steps in these loops that are going to be really
important to making that work? And so actually that's an example where I wasn't involved
in the company, but they looked at that and they were like, actually, you know what, to
make this work is we needed to do annual subscriptions versus monthly subscriptions so that we collect
the money sooner so that we can reinvest it back into ads in order to grow faster. Like
these are the types of conversations you can have. And so I think for founders, it's just
like they need a picture of like how they think about the product grows and be able
to draw that picture. Because if they're able to do that, and they're then able to do a
couple of things, they're able to like zoom in on what might be the most important part
of the picture at any given time, or two, they're able to engage with people like me
or the many other awesome like growth people out there to have like a very productive conversation
about like what the weak spots are and like how to improve. But a lot of times I just
get founders that come to me and they literally ask me, well, how do I grow? I'm like, well,
shit. Well, that's like, I don't know, like every forge we have about, you know, 200 hours
of recorded material on that single question. Like, like, yeah, it's just impossible for
me to answer that type of question at that at that broad. And so in questions like that,
it takes like an hour just to peel back the onion of like, well, who's your target audience?
What's the problem that you're solving for? Like how big of a pain point is this an individual?
Is this a group? What are the alternatives? Like what are their motivations? Okay, then
we can start to think about like the loops and like how all those things start to play
into account. So I would say like if founders, if you're listening and you just want to get
to that basic bar of knowledge, I would say like we have a couple blog posts on reforge
one about growth loops and one about a growth system. If you supplement that with some reading
from like Casey winners, who the chief product officer at eventbrite, a couple things from
Andrew Chen, he's got like what investors look for and growth deck out there on his
blog. To be honest, those four, you start with those four things and you really internalize
those things, you'll be gold.
Okay, I'll put some links to those and the show notes because I think it's super helpful
to get that background knowledge and be able to draw that diagram, you know, on the whiteboard
of your mind for how growth works for your company. So like you said, you can talk to
other people intelligently about it and also so that you can understand and talk to yourself
intelligently about how these things work. At some point, you left HubSpot. You started
the company you're working on now reforge. You're doing seven figures in revenue. You
mentioned earlier that you're doing the opposite of what everybody else who's doing sort of
professional education is doing. And that's worked out for you. I'm curious the story
is there. How did you decide to start this type of company? Why did you decide to start
this type of company? You've always worked on product companies. Why get into the education
business? And also, you know, to make this question even longer, what did the growth
loops look like in your mind before you got started?
So professional education was something that I had been interested in for a while. Prior
to HubSpot, I co-founded a company called Boundless Learning, another VC-backed company. We developed
a way that took what would take a college textbook publisher like two years and a couple
million dollars to produce. And we got that down to like 30 days and 15 grand a capital
and equal to higher quality results. So orders of magnitude. And as a result, we could offer
a free alternative to students college textbooks, which here in the US, you know, cost people,
you know, two to three grand a year, right? So huge pain point for college students. You
know, that was a case where, you know, we took a bet on that company with three huge
hypotheses. One that we could develop a system that created 10x or more efficiencies, which
we proved out to that we can market this directly to end students, because like, that wasn't
like a proven thing at the time, we proved that out. Actually, we got to like millions
of users. And then three, we could build a product that they would engage with on a recurring
basis and pay for. We fell short there, a number three, part of it was the textbook
publishers got pretty freaked out by us. And the three biggest ones here in the US banded
together and sued us, which is like a podcast for another time. But that was like a wild
ride. But during that, I started thinking about professional education, because it was something
that that I was doing that was like really close to me, it was like a different audience
than what we were targeting at boundless learning. I didn't pull the trigger on it at the time.
And so it was just kind of like ruminating in my head for a while. And I went to HubSpot,
our team grew really fast. And I would just eventually sit in these one on ones. Every
week, somebody would ask me about professional development, I'd spend hours researching what
to recommend them nine times out of 10, I would come up empty handed. And that made
me feel like a terrible manager was a terrible experience for them. And so I decided I was
going to create this like course on the side. Andrew Chen, who was an entering growth at
Uber at the time was going to do something similar. So we're like, Hey, like, why don't
we do this together twice the distribution half the work, you know, this was like the
MVP of MVP is like when people talk about you should be embarrassed of your your first
version of the product. I am incredibly embarrassed of that first version, I still see and meet
people who were part of that first course, and I just profusely apologize, like how but
the thing was, we had like 1000s of applications, we slapped a high price point on it, we generated
some good revenue. And NPS and the feedback after that was pretty good for what it was,
it was like NPS was like 30. And for the for the crappiness of this thing, like that to
me was like 90 NPS, like I was like, holy crap. So you know, that combined with some
other things that were going on, I'm at HubSpot at the time, it just made it the right time.
If I was going to leave and do something, it was either that or stay at HubSpot for
another couple of years. And I just it was a really hard decision because I was I learned
so much at so much at HubSpot during my time there. But I ultimately just decided to pull
the trigger and leave and take a bet.
Why do you think 1000s of people were applying to this course that you're teaching? What
got everybody so excited? Because that's a pretty unusual response to, as you said, you
know, the smallest of the small MVPs.
Yeah, it was just part of just, um, it was kind of going back to what we were talking
about earlier, which was, so I had experienced the problem as a manager. And so it was kind
of like, well, why can't I find anything out there that I feel that I can recommend to
my employees and have it be a good use of their time, we just started creating a list
of those things, and started creating a list of like, what was out there. And then we just
did the exact opposite, rather than it being like a short course, we did a long course,
rather than it being about tactics, we actually did it about like strategy and frameworks,
rather than it coming from like an author of a book, it was like Andrew and I who were
operators at the time, and rather than being low price, it was high price rather than accepting
everybody, we made everybody apply like we did all of these things. And as a result,
right, there was an untapped audience out there that was tired of what everybody else
was chasing. And it just stuck out to them, it was like differentiated, and they were
in they responded to it. But I think the more that I've gotten into reforge, you know, I
took the leap on reforge, I had no idea whether or not it was going to be a big company, like
that wasn't a thing that I was confident in. At the beginning, I now believe in that after
working on it for a few years, improving out a bunch of hypotheses, but it's not like the
need for professional education has decreased, it's only increased. But it's just that, along
with that, like how people want it has totally changed. Like they don't really want it from
tenured professors, they want it from operators, and they don't want to take two years off
and go do it, they want to do it alongside their careers. They don't want it to be general
and surface level, they want it to be something that they can apply like right away. There's
just like all of these different factors about it. And so this isn't new news. But like,
MBAs and master's degrees in general are in massive trouble. A bunch of them have been
shutting down because they've been basically, you know, in the red for many years for schools.
There's very few schools that are even coming close to like keeping up with the times not
only on topics, but who's teaching them and the formats that they're offering in them
is just that's a slow moving world. And so, you know, the speed is our benefit at the
moment.
Earlier when you were talking about why product-market fit is not enough, you brought up a bunch
of different fits. And having read your material on this, you've got like four different quadrants.
You've got market, product, your distribution channels, and your monetization models that
all sort of go into how your business grows. And I kind of want to analyze reforge on the
basis of this four fits framework. So I'll do my best, you tell me where I go wrong.
The market here is this milieu of all these people who don't want to get their education
from master's degrees. They want it from operators. They feel that they can grow in their careers,
make more money, become more successful. That's sort of the problem you're solving that this
market has.
And the business model, as you pointed out, is that people pay directly for the courses
and they're willing to pay quite a lot of money for it. The product is one of these
areas where you've taken a look at your market and what their needs are and just sort of
matched it to fit directly what they want, which in many cases involve doing the opposite
of what other products are doing. And that's why you've got all sorts of different courses
that people can take while they're at their careers, whether they're having to take several
years off, et cetera. Those aren't decisions you made in a black box. Those are decisions
that you made because they float backwards from you knowing who your market was and what
their needs are.
And then I think the big question mark for me is the channels, the distribution channels.
How do people find out about reforge? How did you get it in their hands in the beginning?
And how has that changed over time?
Yeah. Let me restate these real quick. So the way that I think about the market is that
we target mid-career professionals. So these are people that are at least a few years into
their career, but not tenured execs yet. The problem that we solve for that market is that
I need to get up to speed from the best on this topic really quickly. So oftentimes you're
like a PM at Facebook and you get thrown onto a new project. You've never worked on that
thing before and you need to start by standing on the shoulders of giants.
The product is, we actually describe the product as we pursue three principles and we can bring
that to life in any way. But we talk a lot about credibility so that it's coming from
actual practitioners and people that our audience identifies. We talk about relevance, meaning
that it's relevant enough to you that you can take action on what you learn almost immediately.
And we talk about depth so that we go deeper than anybody else out there on the topics
that we choose.
So those are the three principles. The model is a transactional model. We charge $3,500
or $3,000 per person for teams of three plus. And the channel, I'm glad you mentioned that
because as I mentioned earlier with these four fits, you never nail these four things
out of the gate. They are always things that evolve and you work on over time. You typically
start strong in one or two areas and then out of the others.
And I would say this is definitely our weakest area. Andrew and I, we've been blogging for
like 12 years now or something like that. So we had these email lists that had built
up over time. Those lists have just like kind of continued to grow on their own. And to
be honest, like those email lists and a very basic content presence has gotten us to where
we are today, which is fine because like, once again, you have limited time, you have
limited resources, so you have to prioritize. So for us, we looked at this and we're like,
okay, well, with our limited time and availability, which ones should we focus on? Well, why would
we focus on channel when we have enough there to get us to a certain point? Let's figure
out these other pieces first.
But we are actually getting to a point where our growth is kind of hitting the ceiling
of like what we have and what is available to us. And so you will likely see some new
things from us in the coming year that fundamentally change the channel and the structure of our
model actually. So both those things. So like I said, always moving.
Yeah, it's really cool to see how you've been so successful, despite the fact that you say
your channels are your weakest point. And I think a lot of that comes down to the other
parts of your model. They all fit together. And the fact that, for example, with monetization,
you're able to charge customers 3,000, 3,500 bucks a head. Well, if you can charge that
much for what you're selling, you don't need 10 million users to make a profit. You can
have a few hundred people and you're already making enough to support a small team.
I think this is something that a lot of fledgling founders don't understand. They start right
out of the gate saying, what can I build? What can I create that I can sell for $5 a
month or $10 a month or something extremely low, not realizing that that automatically
means that they have to hit out of the park with their distribution channel. They have
to have some sort of massive distribution. If they ever want to turn a profit with that,
what made you so confident that you could charge that much coming out of the gate?
I wasn't confident at all. Andrew was the one that pushed this actually initially. I'm
glad he did because exactly what you're talking about is even if you know this principle,
you will still likely underprice your product. It's just like a natural human bias. We have
lack of confidence, almost like in our own thing. We didn't know at first.
I would say we actually have never revisited pricing, so we haven't changed pricing in
four years, which is actually a huge problem, which I actually just wrote a blog post on.
We know we're way underpriced just based on the volume of applications. Our NPS is typically
above 70 in the mid-70s, but that's okay for us right now because we're optimizing for other
things with the limited resources that we have.
I would be lying to you if I said that I personally had the confidence in that. That actually
came from Andrew pushing a little bit. We even thought about prices that were double
that at some point. We just wanted to validate other things. By default, I would go down
the line that what you're saying is either start by charging way more than you're initially
thinking or you just need to pursue a problem that justifies a higher price point and you
can create a compelling business off of that.
Once again, these things are all systems. It really depends on all of the other components.
If you think about our market, mid-career professionals, in-tech companies, of companies
post-product market fit that are interested in the product growth vertical, you're talking
about in the grand scheme of things, a pretty niche audience. In order to create a profitable
compelling growing business like that small audience equals that you need to charge some
higher dollars for to do that.
It's hard to give general advice on one of these components without talking about all
of the other components at the same time.
You have a niche audience, but they're very well positioned in terms of being a lucrative
audience. They're people who make a lot of money and who see even more money in their
future if they can leverage an educational platform to help them learn and become better
at their careers. Like you said, these are people in the middle of their careers working
at tech companies. They're pretty well paid.
I think that supports you being able to charge a high price point. You also said something
that I would really love to deep dive on, which is half of the equation for raising
your prices as a founder is having that confidence or just taking a leap of faith.
But the other half is maybe just solving a problem that people already have proven is
valuable enough for them to pay a lot for. Maybe if you're building a task management
application, people are paying five bucks a month for it, it's going to be pretty hard
for you to raise prices.
But if you're building something in, for example, the education space, you already know people
pay 40, $50,000 a year to go to college. People value education to an extreme degree. Just
by making the decision to be in that market, you're sort of giving yourself a huge boost
in terms of how much you can charge.
This is one of the reasons why I tell a lot of indie hackers that one of the best businesses
you can start is an education business. I've had a ton of founders on the podcast in the
past who've had some sort of business where they're teaching people. I've had Wes Boss,
who teaches developers to learn how to code. He just makes his own websites and puts up
courses and people pay hundreds of dollars a pop to learn how to code because it's valuable
for them. They understand how it's going to make them more money in their career.
Let me push back on that a little bit. I'll play devil's advocate for a second. Our true
competition or true alternative is the huge wide web of generally free content that in
a lot of cases is pretty good, like this podcast. That alternative is pretty compelling. We
do something that no other education company does, which is we do not sell certificates.
I'm morally opposed to certification. I think it's bullshit. It's a false destination. That
is not the end. I would rather have you take one thing, apply it, and create value, then
memorize all of the frameworks in our course and pass some quiz for a certificate.
Most other education companies justify their price points by some signaling factor. We
do not do that. There are alternatives out there. They are free, but it pushes us to
create something for a specific audience that wants a different environment, a different
audience, a different outcome than that. That's why it's so important to get as detailed as
possible as you can with the market and the problem that you're actually solving. I know
it's super common generic advice that probably everybody on this podcast gives, but I don't
actually think most people know what it looks like to really know the audience and really
know the problem and have it written down in a structured way and evangelized within
your company to a point that everybody can repeat it on prompt.
Pricing is a tricky thing. There are some good mechanisms and stuff out there as well
if you want to gather some information and data around. I would just search, there's
this great company, ProfitWell, that talks about how to measure value metrics and do
max differentiation surveys and stuff like that. They have some excellent content on
this.
That's been a guest on the podcast.
Yeah, there you go.
A lot of good information from him about monetization and not only how it can help you make more
revenue, but how it can also help you grow faster and reach more customers, which is
fascinating because most people don't associate how you charge with how fast your company
is growing.
Yeah, that's right.
So you said on the topic of acquisition that the times are actually changing and that user
acquisition is actually harder today than it was in the past. It's getting more expensive.
Why don't you educate us a bit on why that is and what founders can do about it?
We initially went through a wave where new big scalable channels were emerging at a pretty
consistent pace. I'm talking about the days where Facebook emerged and Instagram and Snapchat.
Sorry, I forgot about Google and all these different channels.
But that's done, at least for the time being. The reason that's an issue is because if you
flip it, every time a new one emerges, it creates a new opportunity, a new wave of people who
are willing to try these things out early, they really get a lot of benefit from it.
But getting to that type of scale on a consumer basis is so hard now just due to the network
effects of all of these companies and their extreme willingness to squash it, others at
any moment through acquisitions or other mechanisms.
And so that just means everybody's competing in the same territory. On top of that, you've
just got the macro trends of most US people are online at this point, so you don't have
the tide is rising. So these channels aren't growing their pool of people naturally that
way either.
On top of that, I think in the past three to five years, even though we haven't had
a ton of new channels emerge, there's been a lot of innovation in the use of data for
different types of targeting algorithms, lookalikes, all that kind of fun stuff.
Obviously the big privacy push, new regulation feels like, I don't think we've really felt
it yet, but it's going to feel like those what I call data tailwinds, which helps make
acquisition more efficient and more effective, start to feel like they might be turning into
headwinds.
So I think just like all of these dynamics at once make the whole game tougher. What
to do about it is like a really hard question, because it depends on your company. But I
think the good thing for this audience is that the people that I see winning are the
ones who are leveraging technology and data a lot more.
So there's this awesome guy, if you haven't had him on the podcast yet, you should have
him. His name is G Cobain, or Guillaume Cobain. He was VP of Growth at Segment and then Drift.
He's like one of the most creative, technical marketers I have ever met in my entire life
and the types of things that campaigns and things that he puts together is just absolutely
brilliant and amazing.
But he does all of these things where he finds unique sources of data, pulls it in, is able
to personalize, automate things off of these unique sets of data in ways that I haven't
seen others.
You also see the people who are doing the best at paid acquisition right now are not
actually performance marketers. They're typically a team of two to three engineers with a PM
that has a little bit of background.
So companies wish that I've spent, I think, tens of millions on Facebook ads, even people
like Pinterest at this point, and Airbnb is actually another good one. These teams are
technical teams and that's because the way to win in these channels is not through anything
like manual. It's all through the use of data, mass personalization, finding technical holes
in algorithms, all of that kind of stuff.
So where it goes from here, I don't know, the obvious thing is like in the B2B space,
you see all those companies move from like sales and marketing channels to more product
driven like viral products spreading.
But that even feels kind of like saturated at this point. It's like so many invites for
so many different products, right? So it's hard to predict where these things are going
and that's not really what I spend my personal time on. I spend my personal time on understanding
the underlying principles and frameworks so that others that are kind of working on these
problems can use them to uncover new solutions.
And so that's kind of like what we teach every forage. And yeah, so it's not something, I'm
not a fortune teller, unfortunately. But get people like G on this podcast and he's a wealth
of knowledge.
Well, you've been a wealth of knowledge yourself, Brian. Thank you so much for coming on the
show. I regret not being able to ask you like these other 35 questions I had.
No, can I just say one more thing?
Totally. Yeah.
Because I know a lot of people on this are starting companies. This shit is hard, super
hard. I don't think we talk enough about how hard it is. We can sit up here and we can
talk about like how like all the successes and all that kind of stuff. So if you're sitting
there and you're like, feel if you feel the struggle, I'm just like just embrace the struggle
because it's hard for everybody, everybody, believe me, I like wake up half my mornings
and I question why the hell I'm doing what I'm doing because there are so many other
easy ways. So look, I just don't want people to feel alone out there and feel like everybody
else has it easy. It's hard for everybody. And so embrace the hard stuff and that's what
gets you returns.
I'll throw my hat into that ring as well. I'm right there with you. It's not easy. But
you're also not alone. You've got tens of thousands of other people doing this as well.
That's the entire point of this podcast. The entire point of Andy Hackers is to show that
you're not alone and there's other people you can talk to. Brian Balfour, thank you
so much for coming on the show. Thanks for sharing your story and your advice with us.
Can you tell listeners where they can go to learn more about what you're up to online,
your writings about how to grow and your company, Reforge?
Yeah, main places are I have a blog, BrianBalfour.com. And then just go to Reforge.com, sign up
for the blog there as well. So that this is the best places. We don't send a lot of emails.
So we focus more on quality over quantity. So don't be afraid. Like we're going to spam
you or anything.
Those are the main places. I'm kind of on like a social media diet. But I'm also occasionally
on Twitter at Balfour. Any of those places work.
All right. Thanks so much, Brian.
Thanks for having me.
Listeners, if you enjoyed this episode, you should subscribe to the Andy Hackers podcast
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Thanks so much for listening and I will see you next time.