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Indie Hackers

Get inspired! Real stories, advice, and revenue numbers from the founders of profitable businesses ⚡ by @csallen and @channingallen at @stripe Get inspired! Real stories, advice, and revenue numbers from the founders of profitable businesses ⚡ by @csallen and @channingallen at @stripe

Transcribed podcasts: 277
Time transcribed: 11d 5h 6m 45s

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What's up, everybody? This is Cortland Allen from IndieHackers.com. And you're listening
to the IndieHackers podcast. On this show, I talked to the founders of profitable internet
companies. I'm trying to get a sense of how they got to where they are today. How do
they make decisions both in their personal lives and at their businesses? And what exactly
makes their businesses tick? Today, I'm talking to Vicky Xu. She's the founder of a company
called Habitika. Vicky, thanks so much for coming on the show. And it's good to have
you here.
Thanks for having me, Cortland. I'm excited to be here.
And I'm excited to have you. I think Habitika is right at the intersection of a lot of topics
that I am personally interested in. It's a business. And I obviously love businesses.
It's a game. And I have a long history of spending countless hours playing games. And
it's also very focused around the topic of human psychology, and how we form habits.
So it's a lot of stuff that I like. But before we jump into all that, let's talk about you.
I love your Twitter bio. It says Vicky Xu, attorney, writer, former trucker, CEO of Habitika.
So why don't you tell listeners a little bit more about who you are?
All right. I am in Vicky Xu, and I will commend you Cortland for pronouncing my name correctly,
even though every person with the last name HSCU seems to pronounce it differently. Yeah,
so definitely an attorney and writer. I had gone, I can go through the bio really quickly
is that I had gone to law school, graduated from law school in the middle of the recession.
So 2008, people were getting their off-the-job offers revoked, because in law school, generally
you interview for a firm and then have that set up and basically coast your last semester.
That did not happen. Firms were going out of business. When I went out for interviews,
it was like me, little brand new minted law school graduate, and the guy from Columbia
law who had been on Wall Street for 10 years and had just been let go and trying to compete
with me for this little one-lawyer firm. So it was a rough time as an attorney. And then
I got connected with a trucking company who was having some legal issues, needed somebody
to monitor the back office operations. And I was looking at that opportunity compared
to some of the offers I was getting, which was people who were like, oh, there's a lot
of competition. We'd like to try you out for free for three months. And then maybe after
that, we'll start you at $10 an hour. And I'm like, this trucking company actually
makes money. It's an interesting opportunity. It's a nice intersection of environmental
and constitutional law and employment issues. And I would get to see the backside of a working
company that made 4 to 5 million a year. Not a bad gig. So that's where the trucking company,
the trucker part of my Twitter bio comes into play. I worked for a little family owned trucking
company out in Long Beach for a couple of years. Really learned the ins and outs of
managing a cashflow positive business and a host of other skillsets as well.
Did you ever get to drive one of the trucks?
I did not. So you actually need a special license for that. And I did consider actually
going out for a commercial license. The timing didn't work out, but I have absolutely climbed
in and out of a cab to check the mileage, lifted up the hood to check out what exactly
had been done to it and walked around and did the safety inspections with the CHP officers.
My coworkers would always joke that the CHP were really happy to work with me whenever
they came in, probably because I was a young woman in a space where there really are not
a lot of young women.
So I have a confession to make. I downloaded Habitica and started using it a few months
back and then I purposely stopped using it and deleted it from my phone because I realized
if I got too into it, then all I would want to do is talk to you about the features and
the details of the game and nobody listening would have any idea what we're talking about.
So I stopped and now I am in the same position as many audience members, although I'm sure
among people listening, there are also many Habitica players. So let me ask you, what
is Habitica exactly and how does it work and why do people use it?
Yeah, so Habitica is a gamify productivity app. And what that means is we basically take
your list of like habits you want to work on, your list of daily commitments and your
to-do list and make it all into a checklist that earns you experience points and gold
coins that you can use to level up an avatar and fight bosses with your friends.
So in a sense, it is an advanced version of a sticker chart that we all probably experienced
as kids in that you're just like checking things off and moving towards a particular
goal. But we really took the time to try and model it on like a World Group of Warcraft
MMORPG mechanics at a really basic level. And Cortland, I'm happy to talk to you at
any time about the features if you want to get into the really nitty gritty.
But basically, the line we were trying to walk is to be as engaging as possible for
somebody with just a really rudimentary understanding of games, and also not to be so engaging that
you would all your time would get sucked down into this rabbit hole of optimizing your little
video game character.
Right. So who's using this? Is it primarily gamers? Or is it business people trying to
get more work done? Are people doing chores at their homes?
You know what, it runs the entire spectrum. Our user base is probably 60% 18 to 44. But
of course, that is actually a really big range. 30% of those are the 18 to 24 range. So college
or just after college, and then young adults 24 to 44 sort of getting into jobs learning
to adult is the phrase I use, right? And just trying to figure themselves out. So definitely
work in school is a large use case because our user numbers drop on the weekends. Really
kind of drastically, it's kind of funny.
We also have everyone from hardcore accountants, lawyers, medical students, people trying to
work on physical habits, people trying to achieve goals like writing their writing novels.
And I think we had one letter from a family that was using it with their grandmother.
They had three generations of people on Habitica, all sort of working together and fighting
monsters.
Oh, wow.
So that was pretty cool.
Yeah.
I don't know what I would have had to do to get my grandmother on Habitica. She was born
in I think 1912.
Oh, wow.
So that would have been a stretch. So just for some context, can you explain a little
bit about what the business model is behind Habitica? How it makes money? And then maybe
something about how many customers you have and what kind of revenue you generate.
Yeah. So Habitica has actually had a really kind of evolving business model. When we started
out, it was very basic microtransactions, in-app purchases. A couple of bucks would
give you some in-game currency that you could spend. And then we realized very quickly that
to make this sustainable and grow it to a business that could support full time employees,
we would have to try moving to a subscription model, basically.
And that was sort of the kicker. That's what pushed us into being able to bring on three
people full time at a very, very low salary. I mean, they call it ramen profitable for
a reason because you really can't afford much more than ramen. Sort of that expanded what
was available to us very quickly.
Currently, we are still on the subscription model that brings in probably a mid to high
six figures annually. It's comfortably sustaining a handful or maybe two handfuls of employees
and contractors. Are cashflow positive, generally? In part because we're very conservative about
how we spend money. We are a remote company. So we definitely take advantage of not having
to pay for things like office space and figuring out other ways to deploy capital in a way
that can really leverage our particular interesting skill sets.
I mentioned a few of my favorite things about Habitica. I like that it's a business, a game,
and sort of a psychology application. What's your favorite part of Habitica? And what do
you like most about being the CEO?
Oh, man.
You got to choose. No cop outs.
I was going to say, the really amazing thing about Habitica and working on Habitica has
been the people involved. Everyone who works on Habitica right now that gets paid to work
on Habitica has come out of the community. So they were volunteering their efforts for
a really long time before we even had the money to sort of dedicate some hours to what
we needed to get done as a business.
That means that the people who work on Habitica, I'm beholden to them. I consider myself a
servant CEO and that my job is to make sure that they can continue doing this work for
as long as possible.
In a way that makes sense for both of them and the larger Habitica community.
And really, one of the joys also of having Habitica be a consumer facing product is that
we get exposed to cool people like yourself. The big surprise of a couple years ago was
that we have a lot of science fiction and fantasy writers like award-winning published
authors on our platform who are using it to make word count and submit their projects
on time.
Oh, wow.
And so we can look at the Nebula Awards or the Hugo Awards and be like, oh, yeah, three
people on this list who won are Habitica users who are known to be Habitica users. So that's
been really impressive and amazing.
Well, we've got a ton of stuff to cover. I want to ask you a lot of questions about Habitica
and about the community behind it.
But first, let's talk about you for a bit so we can learn about what the path is like
to go from Vicky Hsu attorney and training to Vicky Hsu CEO of Habitica. Was the first
time that you ever got interested in entrepreneurship and perhaps being a founder when you worked
at this trucking company or were you interested in it before that?
I think I'd always been aware of that as a path. And so what I mentioned earlier that
I'd never thought I would be heading up a tech startup, I'd always sort of had this
in the back of my head. It's like, oh, I wonder if it's possible to generate an actual business.
I don't know, selling stuff on Etsy or doing a stylist service.
For a while, I had been doing a little bit of work doing production design on independent
films and just sort of feeling out what was out there in terms of what people could make
a living doing. And one of the reasons I went to law school is because I come from a conservative
Asian family, which I'm sure is a good chunk of your listeners. And it was the ultimatum
of, well, you can do medicine or law or engineering. It was really the three options. And I had
decided law was probably the easiest and best match for my skill set.
And I liked the idea that you could potentially build a business, which is a law firm, which
is what a law firm is, essentially. So I thought I would try that out. But it was all sort
of like this general awareness of the business world, the corporate world, intellectual property
with strong interests. And it had gotten, I think, clear enough that something to do
with business was probably going to be the best place for me. And even I think in corporate
law, my professor had flagged that as, you are very money oriented. And he meant that
kindly and not in a bad way. But it was just one of those things where that was driving
me a lot more than, for example, environmental law was driving me.
I think being money oriented makes a lot of sense. And it's one of the big things behind
Indie Hackers itself is I like to talk to people about how much money they're making.
It's become kind of this unspeakable thing. You can't talk about wanting to make money,
but money is essentially fungible. You can exchange money for anything. You could make
a bunch of money and donate it all to charity. So it's not an inherently bad thing to want
to make money. And I'm curious, where did your obsession with business come about? Was
it primarily that you wanted to make a lot of money? Were there certain role models that
you had, certain things that you wanted to do? Or was it just sort of innate in you that
you saw the world and thought that business is for me and I'm going to be a lawyer because
at least I can start my own law firm.
You know what? I don't know that it was necessarily like I want to make a lot of money, but what
I always come back to is the idea that, you know, money will not make you happy, but lack
of money will definitely make you unhappy. Right. And my family particularly grew up
very poor. Like for example, I was surprisingly old before I realized that my mother had probably
grown up without potable water because she has this anxiety reaction. If we pull dishes
out of the dish rack and they aren't completely dry yet, it's like this really overblown reaction.
And I think it was like, it must've been like 27 before I finally figured that out. That
was not a normal thing.
And so I think that was probably a really big influence looking back on it in that you
always have to figure out, you know, how you're going to eat. You have to be able to take
care of yourself before you can even start considering taking care of, you know, your
family and everyone around you. And that is something that's coming up a lot, I think,
now in the love of the self care discussions that are going on online in that you have
to be able to take care of yourself emotionally and physically. But I think money is a critical
part of that. And just understanding even just personal finances is a really big part
of that.
So you mentioned that you thought being a lawyer, in addition to letting you start your
own law firm also matched up with your personal skills. When I was a kid, I actually had a
stent doing mock trial in high school and I thought I would be a great lawyer. I'm curious
what what skills did you have that really made law intriguing to you? What kind of person
makes a good lawyer?
You know, the funny thing is, I was never a particularly great debater. I mean, I could,
if pushed to it, but you really, really have to push me. I am and have always been a more
solid writer as a communicator than a speaker. So there are plenty more charismatic CEOs
out there who can do, you know, podcasts and YouTube videos and really garner following.
And I really do best when behind a screen articulating my thoughts and being able to
sort of clean it up as I go. And one of the things that I think people don't realize about
lawyers if they're watching, you know, law and order or any other kind of legal drama
is that lawyers are by and large introverts. They get an office that they can shut the
door and then just do their work. There are very few people who are sort of courtroom
dramatists and really like the pontificating and the like the exposition, the speechmaking
part of it. Even the litigators were, you know, the people who handle lawsuits when
people are being sued or suing others. Frequently, they are very quiet people. They just really
like being able to organize their arguments because a courtroom is a very controlled environment.
And because the rules are so strict, and the procedures are very defined, it can be a very
comfortable place if you don't like to be ruffled too often.
That's fascinating. I went into law for the exact opposite reason. I was like, I love
debating, I should be a lawyer. But I got out of it pretty quickly before high school
landed. Let me ask about this trucking business. You eventually you stopped being an attorney
and decided that the trucking world was for you. And one of the things you mentioned earlier
was that you learned about kind of the ins and outs of managing a cashflow positive business.
How big was this trucking business? And what are the ins and outs that you learned?
Yeah, so let's see. Trucking business was roughly 4 to 5 million. When I joined it was
a recession. So it had dipped quite a bit during that time. There was probably 12 staff
and another maybe 50 to 70 independent contractors who were the drivers. And that was one of
the big legal challenges facing the industry at the time is basically the Clean Air Act
mandated that a lot of the really old kind of junky trucks had to be taken off the road
because they weren't meeting clean air emission standards. And that forced the industry to
start buying new trucks, which all cost like $200,000, $100,000, $200,000 apiece. So what
used to be a really easy, like almost the equivalent of driving for Uber kind of a business,
like you know, pay spend $10,000, pick up an old truck and then be able to make a living
turned into like, I cannot afford the equipment I need to do my own business. So one of the
challenges for a long time in that space was you were retaining drivers who were technically
independent but needed the business to supply their trucks. And so the business would buy
these trucks, rent them out to the drivers. And the argument there was, you know, are
drivers then employees because they're dependent on somebody else to provide the equipment
they need to do their jobs. So that was one of the things that drew me to the business.
But because the drivers were like, iffy on becoming employees, they were like, well,
we kind of like our lifestyle, we like being able to start and stop. And we're like, well,
you just shell and on the on the business side, you just shelled out a lot of money
to provide these provide equipment that's now just sitting empty because a driver isn't
coming in because he had some other personal reasons. I think a couple of years there was
the Super Bowl or not the Super Bowl, the World Cup was going on. And nobody wanted
to drive during the World Cup until their country's lost the country of origin is lost.
Of course.
It was just like, because everybody was watching the game and we're like, well, you know, these
jobs are coming in, they have to be moved, but nobody's around to move them. And that's,
you know, that's one of those things where like, maybe I should go get a license, like
jump in the car, just jump in the truck and go help out. But it was like dealing with
those personalities. And of course, there was again, the aspect of being female in a
largely male business, communicating with contractors who whose first language was not
English. And then also coming into a legacy business of people who had been there, you
know, 10, 15, 20 years, and had maybe gotten really complacent about stuff. There was a
woman who was sat behind me who would sleep half the day.
And just get away with it?
Yeah. You know, and it was one of the, that was, that was sort of the point where like
when she got a raise and I didn't get a raise, that was the point where we're like, you know,
maybe this isn't my life, right?
Well, you just need to take more naps, Vicki.
Yeah, clearly. And one of the reasons that she was there and had, could get away with
it was apparently when the business had first started out 20 years ago, she was super helpful.
Like she came in pinch hit and the owners were grateful. And so they were willing to
overlook that.
So how did you transition from this trucking business into whatever came next?
Yeah. So funny thing about that is this surprised me, but I think doesn't surprise anybody else
is that I got bored.
When you have a family run kind of lifestyle e-business, there's not a lot of room for
improvement in part because you're fighting a lot of inertia organizationally. It's things
like not being able to fire the person who's sleeping at her desk, right? Or it's fighting
the shareholder who really wants more control, but doesn't have the capital to take control.
Also doesn't have the knowledge to strategize properly in the industry because he doesn't
have the relationships.
There was just a lot of things where I could make changes, but the changes would not be
in my favor in the long-term because it was just going against so much that it was sort
of set.
And as a note for the people who are building lifestyle businesses, there's nothing, absolutely
nothing wrong with that. The trucking company owners have basically built a business across
20 years. And for the last 10 years, all they had to do was come in for three to four hours
every Friday, review the books and take somebody out to lunch. That's all they had to do because
the company ran itself.
It kind of reminds me of the movie. I don't know if you've seen it. I think it's called
The Founder and it's about Ray Kroc and how he kind of stumbled upon the McDonald brothers
who were running their hamburger joint. And his ambition, it was just so much higher than
theirs. His vision was like he was just driven to turn it into this gigantic national phenomenon.
And they just wanted to keep their small store. And the movie is largely about the tensions
between the two parties and kind of the history of McDonald's. I recommend anyone listening
to watch it if you have it. It's fascinating. But it sounds like you were Ray Kroc and you
were tired of the slow, family, unambitious business lifestyle.
I think it wasn't so much that I was tired of the lifestyle as in I knew I could make
a difference and that was not the location to make a difference in.
Let's talk about Habitica because clearly you are making a difference with this company.
How did you first hear about Habitica and how did you initially get involved?
Yeah, so one of the things that happened when I was bored at the trucking company is that
I was starting to rebuild or sort of start feeling out the possibility of just launching
my own firm just as a solo attorney. Of course, I was based in Los Angeles. I had always had
an interest in the entertainment, the film business side. I was starting to network a
lot and participate in the local bar associations.
One of the things that happened is that a friend at the Beverly Hills Bar Association
was speaking at Comic-Con and mentioned that if he had a couple of free passes, if people
want to go and he'd sort of run out of people to give them to because ordinarily he'd set
his speakers up with them. I basically raised my hand and said, yeah, I'll go attend your
session and also just network at Comic-Con.
Went to Comic-Con, wandered around chatting with people. One of the things that the badge
was was a professional badge because he was speaking, of course, as a professional, as
an attorney. I met a couple of people who were interested, talked a little bit about
some of the legal challenges they were facing. Then, of course, the people I was interested
in, I had interesting conversations with, I tried to keep in touch, LinkedIn or Twitter.
I think it was Spike Trotman who runs Iron Circus Comics and a couple of the things who
mentioned on Twitter that she was really into this game called Habit RPG back then. I was
like, well, I enjoy productivity tools. There's always this shiny promise that comes along
when you try out a new tool and I've got nothing to lose. Let's give it a shot and try it out.
Everybody enjoyed it and Habit RPG back then was entirely volunteer driven. It had done
a small Kickstarter campaign but was largely open source, volunteer developers, volunteer
community moderators, volunteer pixel artists and everything.
Just poking around on the website, there was a call for, I need some legal advice, please
get in touch if you are a lawyer. I got in touch and talked to Tyler Ranelli who was
the sole developer and founder at the time. He hit it off pretty well and stayed in touch.
It was really little things like pointing out areas where things didn't quite add up.
For a long time, we had a copyright notice at the bottom of your task page in the browser
version which made no sense because we weren't going to claim copyright on how you worded
your tasks. That didn't need to be there. Flagging really little things like that and
also starting to point out areas where stuff could be improved was, I think, really what
got me on people's radars and really entrenched in the community.
At the same time, I was running around with a couple of my college buddies who had had
an idea to do a video game. We put together a small team of people who had had experience
in other skill sets that were useful and were trying to do a top-down third-person naval
shooter for Xbox. We got as far as naming it Strawberry Armada and got a prototype working
and then it just fizzled out. One of the things I learned from that is that sometimes bridging
the intent and the actual execution is big. There's a big gap there. It's tough to be
like, I want to do a new thing but also go through the actions required to make that
new thing a reality.
What do you think were some of the biggest challenges with actually getting over that
hurdle? Because I think a lot of entrepreneurs are in that situation where they want to do
something but there's not enough time or there's not enough money or they're not sure what
the next steps are or they get bogged down and it takes longer to code than they thought
it would, etc.
Yeah, that is a tough problem that everyone's trying to crack. I know in this particular
case it was a lack of energy availability as well as just a lack of familiarity with
the amount of steps involved in getting a product to market. You can have the idea in
your head that you want to put on a video game but until you draw it out and map out
what the interactions look like, what the screens look like, what the characters look
like, so on and so forth, your developer can't make that up for you and half the time your
developer won't even want to do your job for you because that's a completely fair thing
to decide.
In this particular case it was just once I think one team member stopped pulling their
weight then everyone else sort of started like, okay, well, hold on, I can't move forward
but I also don't want to make any decisions for the rest of the team. Everyone started
to end it up in a holding pattern and eventually it just sort of died a natural death.
So you somehow found yourself in this position where you've gone from trucking to being
sort of a legal counsel for a productivity-based video game and also working with a group of
friends to build a video game. What's up with you and games? Were you just a big gamer or
was it just a complete coincidence?
You know, funny thing is I was not a big gamer but that was not my choice. I was sort of
we had grown up with a very old bootleg Nintendo console back in the day and we're just restricted
from spending too much time on it. And when I say we had to be my sister, my sister is
now a neuroscientist who works in sleep and circadian rhythms. So actually surprisingly
still sort of related to what we do at Habitica. So I was not allowed to play video games as
a child but was always sort of aware that this was a thing that other people did and
I do have that sort of addictive personality in that if you sit me down in front of a game
there is a very good chance that I'll just end up getting sucked into it. In college
I found a really small browser-based MMORPG called Kingdom of Loading. And Kingdom of
Loading is so small that I think Habitica is larger than it is now. Or even it is...
Habitica now is larger than Kingdom of Loading was even at its peak. But it was my first
real MMORPG experience and the reason I had opted to play this game was that they limited
you to 40 turns, like 40 click-through turns. And it was a really amusing way to pass, you
know, probably 20 minutes, half an hour. And the original intent was for Kingdom of Loading
to be a game that you could play on your coffee breaks. And I, you know, clicked through it,
really enjoyed it. It had a bunch of goofy puns and stick figure artwork. But it also
had a community of gamers and I really sort of enjoyed the social aspect. And I still
keep up with a couple of people from that space.
I was smart of you to pick a game that couldn't take over your life because I picked World
of Warcraft. I would not have graduated college if I hadn't found some way to pull myself
away from that game.
And that was the thing is I knew if I had started getting into it, I probably would
not have gotten out. There were absolutely people on my floor who, you know, if they
weren't playing World of Warcraft it was Dota. And then afterwards now I think League of
Legends for a while. So I definitely saw it taking time away from other people. And I
think if esports had been a larger thing back then, it would have been less disturbing to
me. But back then when I was in college, it was like, oh, esports is a thing that for
like crazy counter-strike people in South Korea. So it didn't seem like a viable way
to spend a whole lot of your time.
So let's talk about how you eventually became the CEO of Habitica. How did you go from being
one of the contributing community members to being the person at the top who was kind
of running the company and handling all the business tasks?
Nobody else wanted the job. To be perfectly clear, I think one of the things that people
don't realize as CEO is you are sort of largely responsible for everybody. You're responsible
for making the decisions and taking the fall for decisions that are poorly decided. I mentioned
earlier I sort of approached my job as a servant CEO is what can I do to enable everybody else
to do their jobs well. And I think at some point, my co-frienders had realized that they
did not want to be in that position. They did not have the skill sets to be in that
position or did not have the personality. And I think because I had years at this point
of sort of thinking about business and thinking about strategy and thinking about our community
that I was sort of the natural fit to step into that spot.
Did they reach out to you or did you ask or did it just sort of kind of come together?
It sort of came together. I think there was a time when people realized that they didn't
want to do the job. And that I was still around and spending time and doing starting to take
over a lot of that responsibility anyway. So the shift was more for general optics than
it was for any actual responsibility change. I guess I will say the main responsibility
change is that I became the main responsible person for determining whether or not we were
going to raise funds through like the traditional VC startup round or trying to figure out something
else. And how did that go down?
It went down really interestingly in that because we have such a unique product and
such a strong community, we were very protective of it. So we didn't just want to go straight
up like, hey, we're going to take VC money for whatever, give us money and we'll bring
you on board. Is this person the right fit? Are these people the people to help us develop
Habitika in a way that makes sense for everybody? And definitely we turned down a couple of
offers. Our two investors right now are people who are first and foremost really good people.
I would want to invite these people to a backyard barbecue and hang with them instead of it's
not just because I took their money. And they have operational experience or they have a
skill set that I don't have and PR relationships that I don't have. So we've been very fortunate
in terms of being able to work with market capital and backstage capital as our two main
investors. I'll mention without mentioning any names, we did have a surprising interaction
with a couple of really top tier people who dismissed us because they didn't expect our
company to be making a product that wasn't just for girls. Basically, they were surprised
when it turned out that Habitika's gender breakdown is roughly 50-50. At worst, it's
been 60% male, 40% female. And that was one of the interviews where we came out going like,
we make a video game. Why did they look at this and decide that it was for girls? That didn't
make sense. That's a pretty bad sign of their general competence level around that area anyway.
And this was absolutely a firm that had spent a lot of time trying to talk about their strength
in female founders and getting female founders together and developing a community. And that
was just not the experience that we had going into this interview. And then there was, of course,
another firm also very well regarded who tried to lowball us on evaluation. And not just lowball us
but drastically lowball us, as in I was starting to do research on the side talking to their
existing portfolio companies. And the existing portfolio companies were surprised at what the
valuation they offered was. Not even the same ballpark. So once you start getting experiences
like that, you start thinking that maybe VC money isn't quite the right way to go. And then we also
always knew that there was stuff that we could be doing on our end to make the position stronger.
So the valuable thing for us has been that because we've been cashflow positive,
there has been a lot of freedom not to take VC money in order to survive.
And that's, I think, something that distinguishes us from a lot of other companies.
Yeah, it's funny to hear about this VC firm that talked about being great with female
founders. And then it turned out that they just assumed that anything that you were making had
to only be for girls. It actually reminds me of this thing I read a while ago about marketing and
how a lot of companies will handle their marketing by just picking what they're really bad at and
then saying the exact opposite. So an airline commercial will show people super comfortable
and relaxed and stretching out in their seats when the reality is everybody hates airline seats
and there's no room to stretch. And you know, maybe that's what this VC firm is doing by
telling you that they're good with female founders. Maybe they just knew they were horrible.
Anyway, let's talk a little bit more about sort of the history of
habit RPG as it was called at the time and how that sort of led to the point where you're now
the CEO and you're making decisions about fundraising. How did it get started?
How did habit RPG get its very first users and how did it grow?
Yeah, so habit RPG originally started as I think Tyler's kind of personal project.
It was put on GitHub just because he was a big proponent. And I'm sure he still is
a big proponent of open source software. And what happened was I think Reddit found it.
And between Reddit found it and a lifehacker feature, the costs of maintaining it rapidly
balloon pass what he could support on his own. And the suggestion back then in I think late 2012,
early 2013 was, gosh, put it on Kickstarter, which was a brand new thing.
So he put it on Kickstarter, it raised, I think, 40, more than $40,000. And very quickly with a lot
of fanfare and a lot of early support. So that was really what kicked it off. I found
habit RPG a couple months after that. And then several months after that, we had managed the
conversion from in-app purchases to a subscriber based model, which enabled us to sort of start
working on a full time. Currently, where we're at is we had sort of grown out to subscribe the
subscription basis and switched it a couple years ago to realizing that a lot of people really wanted
a mobile experience of a bit ago. I mean, we had known that going in starting even from the
Kickstarter campaign, that was going to be a thing that we would have to offer eventually. But the
big surprise is once we spent some time working on the experience on mobile side, developing a
native app for it, and developing a cohesive design for it, that that side of the user base really
just grew. Like suddenly, two thirds of our user base is on mobile. And I think that's still the
case today is that at least 20, 30% of our users just moved over to mobile as in that's the way
that they fit Habitika into their lives. We generally get at least 2,000 new users a day on
mobile alone. Oh, wow. That's a ton. Absolutely. And a lot of it is word of mouth. A lot of it is
people searching for being able to turn their lives into a game. We actually do very, very little
marketing. Let's talk about some of the strategic and tactical things that you've done to grow
Habitika and your company. I think one of the most unique things you've got going on is your
community. Because so many people in the community are doing different things. You've got people who
are, or at least early on, we're contributing artwork creations to the game, who are writing
documentation, who are writing guides, you yourself are part of the community, you're helping with
legal aspects of the business. I'm curious how you think about the community part of Habitika and
how does that even work? I mean, most businesses do not have anything that's even remotely resembling
that. And it seems to be such a kind of a superpower for Habitika, because it means that you can get a
lot more done with just the employees that you have. Yeah, well, the thing about community is that
it is very relationship based. So I knew as a non-technical founder, what I did have to offer was
the ability to listen to users and to be able to reach out and say hello and have that kind of
personal contact. And that has really driven, I think, a large part of our relationship with
in that our hardcore users know that there are people and faces behind the app.
We know a lot of our early users by name, we know pretty much all of our trolls by name. And usually
when there's somebody new who's added to the team, there's like this little induction where eventually
they hear about somebody that they haven't heard about before, and we'll be able to explain to them
exactly why this troll is no longer around and the trials and tribulations that were involved in
getting them off of Habitika. And on the flip side, there are users who we get excited about
on the contributor side or even just on the cheerleader side, like we know exactly who our
top supporters are. And even if they're not giant social media followings, they're just the people
who happily will share every little update, every pet they've hatched every time they level up.
We're aware of all those interactions. So I think that's been the strongest piece of our community
is that we interface so much. We don't wall ourselves off behind a corporate face.
I think people kind of assume that businesses and communities are run by robots who don't
who don't actually care what's going on and aren't aware of it because so many seem to be.
Oh, absolutely. And we definitely get that interaction too, is that people come in
basically swinging their arms and swearing. And then once we respond back with a very human
response, they're like, Oh, sorry, like I didn't realize.
And get the same thing on the indie hackers forum.
And to be honest, like, you know, there are people behind the screens at larger companies too,
but we do try to infuse our communications with a little bit more personality to try and prevent
that. How exactly does the community work from a technical perspective? How does a user become part
of the habitica community? Because I'm sure most people who start playing are playing for the game
itself. They're playing to be more productive. They're playing to form useful habits. How do
they go from doing that to being a contributor? Yeah, well, the contributors are really just such
a small slice of the user population, but they are your most dedicated users. There are your
cheerleaders. They will tell you when they think you've screwed up, and sometimes be absolutely
correct. Usually, we actually have a page on the wiki that tells you what we're looking for,
how you can help that we tend to direct people to. Obviously, developers are always appreciated,
but community moderators are a surprisingly difficult skill set to locate. It is super rare
to find somebody who has the ability to de-escalate conflicts or redirect or calm people down or even
just tell somebody that they are out of line without having that person be insulted.
How do you identify these people? I'm curious about the things that you've learned because,
like you said, it's pretty hard to actually find the right people. It's hard to manage all this
stuff. It's hard just to do things like give developers a chunk of code that they can work on
and review it in a way that's friendly to them. What are some of the things that you've learned
in setting up this framework and finding the right people and managing them as a
tribute to your community? You know what? I rely a lot on my team. At this point,
I don't have all that much interaction on the day-to-day interactions with the people
who are wanting to help out. By the time I hear about somebody, it's like, hey, this particular
individual has been doing a lot of high-quality commits. We should keep an eye on them the next
time we're able to bring on an additional contractor. This particular user has been
super helpful in answering newbie questions in the various public spaces. Let's level them up.
I should talk a little bit about our contributor leveling system because one of the things that we
did early on was rank your contribution levels so that people who were helping out would get this
little color tag in the public spaces and that would confer on them an extra level of social
status. That was surprisingly motivating. We paid a very, very small reward to each additional level.
But basically, if you spent that time and did any other job, you would probably
make enough to purchase those rewards off the bat. Instead, it's really people who
want to give back to the community in some way and then they get recognition and then
they become more invested. That also just opens up the pool for us to hire from our community.
I do take the time to try and get to know the top-level contributors and be aware of
everybody else who's coming up through the ranks, in part because that's really a nice pool of
potential candidates for when we need to hire somebody is to reach out and be like,
hey, I know you have the skill set. We're looking for somebody to do exactly this. You want to come
on board. It's a combination of this almost programmatic incentive system and getting to
know people personally because there's really no substitute for doing that if you want people to
help you with your company, even if they are community-based volunteers and not full-time
employees. Absolutely. It's all about balancing both the quantitative and the qualitative,
the left-brain and the right-brain stuff. Yeah, I wonder how much other companies can
build up a community among their users or their audience and get people helping them
actually working on their business. I know one of my friends runs a podcast. His name is Jeff.
He runs Software Engineering Daily. His listeners have chipped in to help him build a mobile app
and some other stuff on GitHub. It's interesting to think about how that comes to pass.
Maybe having a big platform or a big audience really helps you build a community. I'm curious
to hear what your thoughts are and how people can best position themselves to get a community
of people helping them to build their companies. I don't even think that you need a big audience,
is that you have to have a willingness to ask for help. If you are providing value,
people will inevitably want to figure out a way that they can give back, whether it's putting
a couple dollars into a PayPal tip jar or designing something specifically for you.
It's funny that you mentioned Software Engineering Daily because definitely one of our developers,
Keith Holliday, has been helping them out. And I believe that's one of his favorite podcasts as
well. Cool. It's a great podcast. So you mentioned earlier that you guys haven't done very much
marketing. And I think that's fascinating to have a company that sort of grows by word of mouth.
I'm curious, what marketing have you guys done? What things have you tried and what's worked and
what hasn't? Yeah, I mean, the biggest portion of our current marketing strategy is really
the social media side. And when I say we haven't done much marketing, it's we haven't done a lot
of paid advertising and the user acquisition strategies. And that is totally a valid strategy
that I understand if you get the economics right, you can definitely just keep cranking that engine.
But we've just never really had the resources to even try and spend the time to figure out
how that would work for Hubitika. It's definitely on our to-do list. But so far, we have been
redeploying any resources we have into building out the app and trying to stay keep up with our
user base. So one of the things I want to mention about our social media strategy is Beth,
who's Bethy Marrou on Hubitika. She's been manning the Twitter, Facebook, Tumblr accounts,
and recently just launched our Instagram account. So look for that. That'll be coming up.
We're excited to have another avenue to sort of get some interaction time with our user base.
And how do you guys think about this stuff? When you decide to launch on Instagram or hit another
channel, do you have specific goals that you're aiming for, metrics that you want to hit? Or is
it more that you just want to have a presence there because your fans are there?
At the current stage, we should have metrics. It is one of our weaknesses that we are really
working on shifting over this year into a company that does a little bit more data-driven decisions.
Mostly, what we've been trying to do is look at it from a human angle.
What do you expect? What do you enjoy about your favorite Twitter accounts or Facebook accounts?
Definitely respond to any help request that comes through, even if it's just to redirect
them to emailing a particular account. And I think what people don't realize is that even if
we're not interacting with a piece of feedback in any obvious way, we've definitely seen it.
We've looked at it. We've considered it. And maybe we decide not to respond or maybe we just
don't have the capacity to respond at the moment. But we do see everything that comes in and read
everything that comes in. How do you think about growing
Habitika's revenue as opposed to just your user base? And what are your goals in that area?
Yeah, that is actually an excellent question. One of the things that we wanted to try and figure out
is that we get a lot of in-band requests from people who want to use Habitika in groups.
So not just parties and quests that you can battle monsters with your friends, but it's
like people who are managing a small team at work who want to be like, I need you to turn them in
this report on time at least once a week, or submit your proposal by X date. And they want to
be able to gamify these processes because those interactions really aren't a lot of fun. And the
hope there is that by adding a little bit of game flavor, we can at least soften the blow a little
bit. You know, similarly, teachers want to use it with their students. There are plenty of households
running a sort of chore system through our dailies. And what we realized is that there are a lot of
things that we can be doing in that space to really make Habitika useful for that kind of thing.
If your living environment is not being kept up, then that will at its very worst have an impact
on your physical health. So what we are looking at is that groups are going to be the next big area
of focus for us. And hopefully that will open a new revenue stream for our users as they sort of
graduate from school and start moving into jobs and new living situations. The other thing that
we've been sort of taking a lot of time to look at, especially in the last several months, is that
we know we have a large segment of users who are burned out on Habitika because they've gotten
bored with it or they've done everything that there is to be in the game, everything that there
is to do in the game. And the novelty has worn off. So we're working on a couple things that we're
hoping will bring out some of the magic back for those particular people.
Both of the things that you mentioned, actually, number one, the group dynamics and number two,
the novelty are interesting to me because they both play a lot in the human psychology.
I'd love to talk more about some of this psychology behind Habitika and how it works.
What goes into somebody forming Habit and what's the science behind how you guys have designed your
app? So kind of the references that we usually talk about is Charles Duhigg's book,
The Power of Habits. It's definitely something that we've talked about.
BJ Fogg does a habit building kind of mini course out of Stanford that gets mentioned a lot.
That basically you sort of want to trigger a routine and then make sure that you are
rewarded for that kind of behavior change. And one of the things that I think Habitika does
particularly well is that, yes, there are triggers and then that triggers the action and then you
do the action. But most gamification strategies are really rudimentary like leveling system,
or you earn a badge. Whereas what we've done is we've gone back to look at what makes games
interesting and was like, well, it's not just leveling, but it's leveling up so you get access
to a particular skill that you really want. Or you want to crank through your chores today because
then you can get that sweet helmet that just got released. Adding a little bit more juice
and flavor to those interactions is really what sets Habitika apart.
Do you guys find that people are motivated by sort of individual, unique things? Or is it
more or less universal, what motivates people and what motivates your users?
Honestly, our users start to look more like the gamer dynamic in that there are people who are
motivated by the social aspect. Like they're fighting a boss. They don't want their friends
to be injured by the fact that they didn't manage to complete their research paper on time.
There are users who just really want to level up quickly and cycle through and do it fast and
basically do the equivalent of a Habitika speed run. So they're micromanaging everything through
Habitika. One of the surprises when we looked into the analytics is that our think our top 1%
of users spends like four to seven hours a day in the app. They just like keep it open and just
keep poking at it. And our only conclusion is that they're either very active on the social side
or they're just micromanaging every single interaction they have in their lives through
this framework. You know, these are not one-off users. They're people who've been around for
several months. And then, you know, you have your people who are motivated by like dressing up
nicely. There's a little bit of like a paper dolls effect of people want to set up a nice
background and pick the right color pet and put on the right robe that goes with the background
and the pet so that they look cool and then put it out on social media. There was a small population
of those as well. So it's been interesting to see the different styles. And even on the team,
there's a multitude of different play strategies. There's at least one person who's working on a
beast master achievement, which is just you've collected all the pets and released them. And
then there's also people who are just really using Habitika to check to make sure that they're
maintaining progress towards their goals. And they just take a look at their dailies, check them off
and then move on to the next thing. So there's a full range of styles and motivations. And
probably what we're going to do over time is really start digging into how do we determine
the best way to motivate individual users given what we know about them.
Yeah, I was going to say you've got such a huge variety of things that people use Habitika for
and even the ways that they use the app. And I think that's analogous to a lot of people who
have started companies that have created products that are just very generally applicable. They don't
appeal to a very particular niche or single use case. And I think it's difficult when you're in
that situation to find out, okay, well, who's the most valuable user? Who's the most like
to succeed using our app? And how do we zoom in on what they're doing? So I'm glad you mentioned
that toward the end. How do you decide who to focus on and what kinds of people to motivate and
how much of it is just hands off and you let people use the app however they want and go forward
with that strategy? At the very least, we internally are developing it for ourselves.
Because the team has all come out of the community, we all use the app, we're all very familiar with
it. And we all know exactly where the faults are and the areas where we'd like to fix are.
So frequently, there's a lot of discussion about, well, this is no longer worse for me. Why not?
How can we solve that problem? One of the things that we've been trying to do is just tracking
more data, not tracking more data, but looking at the data when we're making decisions. Because
what we realized is that while we're very good at listening to the qualitative data, like the users
who are complaining about problems and things, we were ignoring a whole 80% to 90% of basically
silent majority people who may not be vocal or articulate about what they like or dislike.
But they have very specific ways that they use a product that don't necessarily intersect with
how we as the team use it or how the community that we interface with regularly uses it.
So for example, one of the things that came up last year that we worked on was that we
were not completely unaware of, but we were not accounting for when we were planning our
project strategy is that I think a good 80 to 90% of our users actually never enter the public
spaces. So whereas beforehand, our user flow would be to try and gently push them towards,
like, here are some guilds that might interest you. Oh, I see you're into writing. Check out
these three options. That was actually not a natural flow for a lot of people. What people
really wanted was a space where they could battle monsters with their friends and bring their friends
onto the platform. They really didn't want to interact with strangers in a new social network.
That's fascinating. It's tough to get people to interact with strangers. It's like a big thing
that I'm trying to do on the indie actors form as a bunch of founders. And I'm like, hey, talk to
other founders and tell them what your problems are and see if they have any interest in that.
What your problems are and see if they have any interesting creative insights that you wouldn't
have by yourself. And there's a lot of resistance to doing that because other people are scary and
you don't know what they're going to say and how they're going to interact. And your friends are
in known quantity. So it's a little bit safer to be around them. Yes. And I think there's not a lot
of that kind of interaction in your normal life where you just walk into a room full of strangers.
As entrepreneurs, I think on the tech side, there are a lot of people who are natural introverts.
For example, in my case, it took me several months to get used to the idea of walking into
a networking event, not knowing anybody and being able to have a genuine conversation
and make a genuine connection. We had been thinking that in games, that's actually a fairly
natural interaction in that sometimes you join a game, you don't know anybody, your friends haven't
started playing the game. So you just walk in and go like, I'm looking for a group. Where can I join
a group? And while there is still a large population of users on Habitika who are very familiar with
that lingo and that sort of usage pattern, there's a much larger group of people who maybe don't
want to engage with a stranger if they have any other options. So they're trying to find a pathway
to get their friends on the platform, which can also be a guru for us strategy. And we're hoping
to be able to employ that a little bit more effectively.
So zooming out here a little bit, you've been working on Habitika for how many years now?
I joined them in, I think full time in late 2013.
Okay, so like four and a half years or so?
Yeah.
What are some, I'm sure you've made a ton of decisions in that time about the game,
about how it's laid out. Can you give me one example of this decision that you guys made
that worked out really well? And then perhaps one example of a decision that you guys made that
backfired?
So we actually haven't made too many changes to the core game, but I'll tell you something
interesting about one of the changes that we made that was surprisingly controversial
is currently Habitika allows you to play after a certain time, one of four different classes.
You can be a warrior, a mage, a healer, or a rogue. Each of those classes comes with different
skill sets, which ties nicely into exactly how you motivate yourself. For example, if you are
motivated by acquiring lots of gear for your character, then rogue is going to be your class
of choice, right? If you're motivated by doing damage to the boss and landing these like 100
point, 200 point hits against the monster that your party's engaged in, then a warrior or a
mage is going to be your pick. And then if you're somebody who checks in fairly regularly and likes
to be helpful, or in my case, if you're cleaning up after yourself because you haven't managed to
hit all your dailies, healer is your class of choice. So that is fairly standard classes
and distribution is a regular feature on a lot of different MMORPGs. But when we first introduced
it, it was apparently super controversial, because people didn't want that extra level of complication.
They thought it was too gamified. And of course, now people really can't imagine Habitika without
it unless they're very, very new to the platform. How do you handle people complaining about a
change that you've introduced that you feel confident about that they think is not good at
all? So I think this happens to a lot of apps. This happens to a lot of apps. We have been trying
out for the last few releases that we know are going to be difficult. We know our users are going
to be change averse in a lot of ways. Because we put a lot of work into making sure that Habitika
is a safe space. But you know, when you are prone to anxiety, or you're trying to manage everything,
when stuff moves around on you, it is stressful. But sometimes those changes are really necessary.
So what we've been doing the last few releases is instituting a two week moratorium on any feedback.
And you know, and they're free to go shout on social media or whatever, but we don't really
start taking and logging complaints until the two week period has passed just to let everybody get
used to the change and see if it works for them or if it really doesn't work for them.
That also helps a lot of people simmer down. There are some individuals for whom that two
week period is just two period is really just the time to stew. But there's so it's surprisingly
not a large portion. Usually by the end of two weeks, people have already sort of like gotten
used to it moved on, or they're gonna take the time and send us a nice message about like the
things that we have changed. So that has been super helpful to us. One of the things that we
think might also continue to improve on the process is a little bit more regimented of a
testing process with a lot of our maybe our more dedicated users or users for whom we're trying to
solve a particular problem is getting more systematic about inviting people to test a new
user or a new feature and tracking the data on that before we make any long term decisions about
overall product changes.
It's interesting to hear about your decision to introduce a class system to Habitika. Class
systems are pretty well known as a staple of RPG games and RPG games are themselves pretty well
known to be habit forming. And so if you copy what an RPG is doing, and you're very likely to
bring along some of the habit forming attributes of RPGs as well, how much of what you guys are
doing with Habitika is sort of inadvertently introducing habit forming properties and how
much of what you're doing is very deliberately constructed from the ground up to allow your users
to form and set new habits.
Yeah. I think remembering to reward users somehow is a really big thing that people
sort of instinctively grasp, but they don't look for opportunities to do. For example,
one of the changes that we made that was more impactful than we realized would be at the time
is that we allowed sound effects for when you set up a task or when you checked off a task,
Habitika would give you a little sound. And of course, we had some contributors who worked on
some sounds for checking off a daily versus checking off a positive habit, 8-bit themes,
different style video game themes, and all of that. When we released the new mobile apps,
that was one of the things people missed. And every once in a while it would fall off or stop
working on the mobile app and people would be like, where's my sound? Where's my nice reward
for checking things off? And I feel like that's one of those things where they're so intrinsic
to games that we don't think about them, but that's absolutely something that you can
incorporate into other apps, is rewarding a user's interaction in some way that's not
super expensive of a process, but on the experience side, it's nice.
So we are approaching the end of our time. I've got one question from a user on the
Andy Hackers forum. The question comes from an Andy Hackers user named Alchemist. He asks,
what is the most amazing way that Habitika has improved somebody's life?
Oh man, there are so many. You know what, there's actually a guild in Habitika that we set up for
people to sort of announce their testimonials and occasionally we'll pull a few of those on
to the webpage, the front page to talk about it. There is, actually, let me talk about Mary.
So Mary Robinette Kowal is one of our more well-known users. She is a writer and a puppeteer.
And we reached out to her when she, we found out she was going to be in San Diego for Comic-Con.
And what she told us was basically that Habitika helped her pull herself out of a depressive funk.
And between Habitika and another app called Fabulous, she was able to moderate her depression
where she could drastically reduce the amount of medication she had to take, which was a thing that
was important to her. And she credits, she definitely expressed her gratitude and thanks
and credited our platform with helping her do that. So that's, yeah, that's one of my favorite stories.
We've also had at least one couple get together on Habitika.
Very cool.
So that was fun.
Habitika the dating app.
I don't think it's meant for that kind of interaction. And every once in a while we'll get some
probably school-aged individual who really wants sexy times and doesn't quite know how to get there.
And we have to rapidly tell them to knock it off, which is, I mean, it's just one of those things
where I remind myself and remind the team regularly that sort of our app as it is, is designed for
people who are non-neurotypical in some way, right? We're all playing games. We need that extra oomph
to accomplish particular tasks. So we're going to get a lot of wacky people up in the mix.
Of course. So why don't we wrap things up by taking a look at your entire journey,
which is, I mean, you went from studying law, to working at this trucking business,
to working on your own projects, to working on Habitika sort of part-time and then eventually
moving to full-time CEO where you've been for years. What are some lessons that you've learned
from all of this that you think other entrepreneurs would benefit from hearing as well?
Oh, man. I've got a lot of soft skill type recommendations. Definitely,
definitely take care of yourself. For me, the toughest thing was realizing that I do need to
sleep. I can't just, you know, work hard and have everything fall into place. Because what happens
when you get enough sleep and do things like meditate, which is actually a really critical
part of my routines these days, is you are better able to make high-quality decisions.
The thing in startups is there's a culture of generally making a decision and moving on,
but you can save a whole lot of time and energy if you can make the right decision the first time
around. So, you know, working harder is one thing. And I think the minor superpowers is I am capable
of working like a dog compared to everybody around me. But the flip side of that is sometimes I work
like a dog on exactly the wrong thing. That's not going to be the biggest value as in my business.
So being able to sort of take the time to step back, think about it, rest enough so that you've
got a clear head in order to be able to make that decision is super important. And that was a hard
lesson learned. Also sort of related to that was being able to hear, to parse through a lot of
different advice from a lot of different places and figure out what worked for Hubidika and what
worked for me. I approach things from a very different perspective, I think, as somebody who
is non-technical, as somebody who's not based in the Bay Area. And as also just because Hubidika
grew out of a community and grew out of an open source project, I have different responsibilities
than a lot of the other startups I talk to. And which means that I make decisions sometimes
differently than a company that is maybe not cashflow positive or has had co-founders working
with them temporarily or even long term. Being able to filter out the advice and figure out
what works for you.
Both of those are lessons that I think everybody really needs to hear. To your first point,
a huge part of building a business is making the right decision at any point in time. And there's
an infinite universe of decisions, but only a few of them are the right decision. So getting enough
sleep and being in the right headspace so that you can make the best decisions is really a huge part
of the job. And then to your second point, every business is unique and everyone's different. And
that doesn't mean that you shouldn't learn from other people. But it certainly means that you
should be critical of the advice you receive and see if it really applies to you. So I think it's
awesome that you've really taken both of those lessons to heart and I hope people listening
will do the same. Anyway, thanks so much for coming on the show, Vicky. Can you tell listeners
where they can go to find out more about what you're up to personally and also where they can
go to learn what's going on with Habedica?
All right. Well, thanks for listening to me ramble on. Definitely. I am probably the most
easily available on Twitter. I am at Caffeinated V. So C-A-F-F-E-I-N-A-T-E-D-V-E-E. That's Caffeinated
V at Twitter. And Habedica also is on Twitter, now Facebook and Instagram. We also have a fairly
active Tumblr account. Tumblr is your jam. Or you can just, you know, swing by, say hello to the
tavern and we're always happy to see people there.
All right. Thanks a ton, Vicky.
Thank you, Courtland.
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As always, thanks so much for listening, and I'll see you next time.