What's up, everybody?
This is Cortland from IndieHackers.com, and you're listening to the IndieHackers podcast.
On this show, I talked to the founders of profitable internet businesses, and I tried
to get a sense of what it's like to be in their shoes.
How do they get to where they are today?
How do they make decisions, whether they're companies and in their personal lives?
And what exactly makes their businesses tick?
And 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 Patrick Campbell.
Patrick, welcome to the show.
Yeah, happy to be here.
Pumped to chat.
I know, like I said before, we had to reschedule this couple of times.
I'm so excited to hopefully share something that's useful to folks.
Excited to have you on here.
You are the founder of ProfitWell, which is a pretty amazing business.
And you started it back in 2012, and it has grown super rapidly since then.
I want to walk through just a couple of numbers to give listeners sort of an idea of what
you're working on.
What's your revenue like today at ProfitWell?
Yeah, so we are past the 10 million mark, essentially.
It's a little bit tough just because we're going so quickly.
So it's one of those things where giving you the pinpoint as of today, we typically don't
try to do that.
But we're past that 10 million mark and heading to the next 20 or 25 as we're trying to go.
You are past 10 million in revenue.
You are a first-time founder, correct?
Yep.
First-time founder.
Unless you count selling animal crackers when I was a kid in school, but that was a long
time ago.
Okay.
Yeah.
We won't count that.
You are a first-time founder.
You're also bootstrapped, I believe.
So you haven't raised any money from friends and family, angel investors, venture capitalists,
or anything like that.
No.
Well, I started the company by my mid-20s.
I cashed in my 401k, which wasn't very large because I was pretty young.
And yeah, completely bootstrapped and haven't raised any outside capital.
But there's been a lot of other costs besides not raising money.
So yeah, we'll get into those.
But overall, it's a pretty rosy picture.
I mean, you are a first-time bootstrapped founder who's built an eight-figure business.
I'm pretty excited to ask you a ton of questions about how you did this because I just so happen
to know a lot of first-time founders with no investor connections who would love to build
a $10 million a year business.
Why don't you explain for us what ProfitWell is and why people use it?
Yeah, definitely.
We basically focus on what we like to call the hard parts of subscription growth.
So we have a suite of software products that basically help subscription companies with
a few different things in their business.
One is a free subscription financial metrics product.
So it plugs right into Stripe or whatever billing system you're using and gives you
access to your cohorts, your segmentation, benchmarks, a bunch of other things.
So you can do all of your reporting and hopefully find different problems or root out different
problems in your business.
And we give that away for free.
And so the way that we make money is we essentially use that to kind of show you different problems
and opportunities.
And then some of those opportunities or problems we solve or we have products that help.
So we have a retained product that takes care of involuntary churn.
We're heading into a world where we're going to start going after voluntary churn as well.
And then we also have a product called Price Intelligently, which was our first product
that essentially did or works its software that basically helps figure out how you should
be optimizing your subscription pricing.
So you help founders with the hard part of growing their subscription revenue.
Are there any easy parts to growing subscription revenue?
I think there's paths of least resistance, right?
I mean, you have like just read 10 growth articles and there's a bunch of paths there.
Hey, do this, add this, add, do this type of blog post, these types of things.
And so yeah, long story short, it's one of those things where there are easier parts
than others.
I think when we say hard parts, it's more of just looking at the things that no one's
spending enough time on that they should be spending time on and trying to attack those
problems versus being one of a thousand products that are trying to solve the problems that
everyone's thinking about every single day.
I kind of want to talk about how founders can prevent some of these problems.
You've got a ton of data on this.
You've also spent a lot of time educating your customers and educating yourself about
how to sort of solve these problems.
How much do you think getting around these problems of churn and getting around these
problems of knowing how much to charge, et cetera, how much of that do you think comes
in the early days of just picking the right market, picking the right business to work
on?
And how much is the result of sort of the subsequent decisions you make, the tactical
and strategic decisions you make after you've already decided what your business will be?
Yeah, that's a really good question.
When you think of something like churn and especially churn, and I would argue, well,
no, I think definitely with churn here, there's a core part of your retention that no amount
of tactics, tools, software, et cetera, are going to solve.
And same thing with monetization.
There's no amount of tactics ending your prices in nines, these types of things that is going
to solve.
You do not have the right market.
You're not selling the right type of product or you're not selling to the right type of
person.
And so I think in the early days, the things that you do for retention and monetization
and even into the long term, there are still these things that you need to do that are
kind of the fundamentals or fundamentally at the core of solving those problems, picking
the right market, picking the right product, building the right features, positioning the
right value proposition.
And a lot of that, that's what we help with on the price intelligently side both in the
early days and the extended days.
But as you continue to scale and you start scaling a business, there's a bunch of tactical
things that you can do to take care of the mechanical parts of churn as well as the mechanical
parts of pricing.
And I think what ends up happening is we just assume for both retention and monetization
that we know that they're important, but things are just scaling and things are just going.
And therefore, we don't have to focus on any of the tactics or things aren't working out.
And so we can just focus on what we think is the path of least resistance, which is
acquiring customers, acquiring users.
And so it's just breaking down each of these things and the sum of their parts and working
in a way to understand what you can control and what you probably can't control or need
to dive more strategically in on.
Yeah, I think if you talk to any founder off the street, mostly what people are talking
about, mostly what they're worried about is acquiring new users, growing, getting their
name out there.
I don't hear very many people having conversations about some of these deeper topics like churn.
How much do you have to educate founders and let them know, hey, this is something you
should be paying attention to, there's actually a lot of revenue you can unlock by fixing
churn and how much of it is people sort of coming to you once they've already experienced
these problems, they know how important they are.
Yeah, it's pretty fascinating.
And this is a particular problem in our business because if you go ask 10 people, how would
you solve pricing or monetization inside their business?
Or you go ask 10 people and how would you solve delinquent churn, which is kind of where
we started with our retained product, or even certain aspects of voluntary or active churn.
And most of the time, they just don't know, because they never really have thought about
these things.
Or they know that they're important, but they're such big, scary problems like pricing, that
the smart, capable people, they don't just realize, oh, you should just apply the same
type of thinking that you do to building your product, building your company, managing your
team, etc. in order to kind of solve those problems.
So the short answer is we have to do a lot of education, I kind of attribute or I kind
of compare it, excuse me, to something like pet insurance, right?
So pet insurance wasn't really a market 10, 15 years ago.
But all of a sudden, you would get educated on, well, you should get pet insurance because
if you don't, and something goes wrong, Fido, who's now a pure member of the family where
maybe 20, 30 years ago, it was the dog outside could get hurt.
And so similarly, our products, it's like, if you realize the actual impact that'll happen,
it makes sense to kind of take care of things, and that's why the people who are really hot
to trot or really come in and are like, oh, we need this product, those are typically
the ones that are in a little bit of a precarious position where they're investors or their
boards or their advisors are like, hey, you really, really need to fix this.
Or they're in a situation where they finally kind of came to the light and other things
aren't working.
And so they want to kind of solve their problems through these kind of growth levers and channels.
So a lot of people listening are super early stage founders, they might have no idea what
the hell we're talking about.
They might not know why this is important, no, no, it's my fault.
So why don't you give us kind of the pitch, you know, I'm an aspiring founder, I think
I'm gonna start a company.
Why would I care about any of this stuff?
Why does it matter?
Yeah, so here's the thing, when you're when you're in the early stages, you, in any part
of your business, you only have so much time, right?
And when you're in the early stages, you need to be on the quickest path to learning.
And so what ends up happening is you eventually will figure something out through either brute
force, clever thinking, some good research, these types of things.
But as you then start to build your business, after you figured out kind of the product,
you get some really early customers, maybe their friends and family, you're going to
start to want to grow your business, right?
And you hopefully have figured out, you know, some traction, or, you know, hopefully figured
out some, you know, ways to acquire more customers.
But what ends up happening is you have to realize that after you get, you know, a little
bit over like that freshness, or that, oh my god, we got our first customer stage, you
have three growth levers, you have acquisition, you have monetization, and you have retention.
And in a subscription business in particular, and even if it's not a subscription business,
you know, what ends up happening is those retention growth levers and those monetization
growth levers, those are the ones that essentially are driving a vast majority of your growth,
because the whole point of a business is to have repeat customers or have that subscription
kind of going forward.
And so ultimately, what ends up happening is, is that you need to focus some time on
those parts of your business, not just on, hey, let's write another blog post, let's
get another couple of ads written, let's do XYZ.
Instead, making sure that you're kind of building a sustainable business, not one where you're
putting a dollar in and getting a customer, and then all of a sudden, that customer leaves
you almost immediately, because they didn't feel like they should have that product, or
they're not necessarily seeing the value that you're charging them for.
And ultimately, you want to make sure you're aligned to that customer, and it takes more
than just kind of making that customer come through the door.
Yeah, it's such a great way to put it.
There's these multiple levers that you can use to sort of progress in your business.
And the worst thing you can do is be completely blind to like two out of these three levers
to be kind of stuck and be like, ah, my business isn't growing.
And I keep pushing on this one particular lever, and it's not going, I guess, I've got
to start something new.
And it's like, well, no, you never really looked at your pricing, you never really looked
at these other different channels that you can use to grow.
One of the things that's really interesting to me about your story is that what you're
working on is you're helping companies solve these really difficult problems.
These are problems that are hard for people to solve on their own, when they're extremely
incentivized to solve these problems, because they'll make a lot of money, they'll be successful
founders, et cetera.
I can only imagine how hard it is for you to come in and try to solve this as a third
party.
So I want to walk through your story and how you grew ProfitWell and how you've sort of
iterated to the point where you are today, because it's kind of a windy path that you
took.
Yeah, that's maybe a nice way to put it or charitable way to put it, I suppose.
Let's go back to before your ProfitWell days.
You were at a startup, I believe, before ProfitWell.
You also had a stint at Google.
Before that, you worked for the NSA, which means you're probably the closest I will ever
come to having a spy on the podcast.
What was it like working for the NSA?
Is there anything useful you learned there that you could share with us?
No, no, no.
I'm going to have to kill you after this podcast.
So it was super fascinating.
So I'm a farm boy from Wisconsin originally, and I fell in love with numbers and kind of
solving problems and finding solutions.
And so I studied economics, and I thought I wanted to be a lawyer.
But as I was studying economics, I was like, oh, there's like other things I can do.
And maybe I can go try and save the world by being in Washington, DC, and just love
that city.
And ended up kind of finding through an internship this other program in the intelligence community.
And it's like everyone with the intelligence community.
If you've ever watched a movie about the military or spies or read a Tom Clancy novel or something,
there's always a little bit of romance to it.
And so I was like, oh, this will be interesting.
I hear applying is a terrible process, and it's really hard to get into.
So let me try it.
And so went through a bunch of different tests, including a full-scale polygraph where you
– I don't think I'm actually even allowed to tell you the whole process there.
But basically, I got everything checked.
They interviewed my neighbors from my childhood, most of my close and personal contacts, and
all that kind of fun stuff.
There's a lot of things you have to do to get a top secret clearance, essentially.
And so it was probably one of the most fulfilling jobs I will ever have in my life.
And I would argue – and this is a really hard thing to argue – that it's almost
more fulfilling than my job here building a company.
And the reason is because even if you're essentially an entry-level intel analyst like
I was, basically you're doing things that have an impact on helping the world and helping
specifically the United States.
And so there's this level of mission and this level of patriotism that I'm sure it's
very different and more intense if you're in the military or you're a public servant
or something like that.
But it was really, really fulfilling.
And in terms of things I learned, I think that we don't learn enough about critical
thinking when we're taught in school.
And unless we're in debate or something like that as an extracurricular activity,
it's really rare for you to learn about critical thinking or someone to teach you just how
to think.
And I think that what was beautiful about having that as kind of like a first job was
that at the NSA and in the intelligence community, your whole job is to figure out how to think
in order to get some sort of solution to a problem.
So whether you're trying to find a bad guy or a bad gal or find a connection to a bad
guy or a bad gal or you're trying to solve this giant puzzle of how do I figure out how
these things are connected or I have just to find out some mission or something like
that.
And I'm being intentionally vague just because I can't get too far into what I did.
And I know that sounds so mysterious, but it's just the nature of that job.
But that was one of those things where the courses and the mentorship and the advisement
that I got, I would not be here today without having that stint there because I learned
how to think.
One of the things you mentioned is that we don't really learn how to think in schools.
It's something you have to sort of learn or stumble across afterwards.
And you learn that a lot at the NSA.
I find that people I talk to can always sort of remember back to their early 20s or some
point where they first stumbled onto something or someone who taught them how to think.
For me, that was reading Poor Charlie's Almanac.
That book just changed my life.
I was like, Oh my God, there's so many different things.
There's just so many ways to be, I don't know, a meta thinker, to be more psychologically
aware of how my own brain works, how my own thought processes work that have served me
super well throughout the rest of my life so far.
You gave a talk at MicroConf earlier this year.
And one of the things you talked about that I liked a lot was the way that you break down
your decision making.
It's a whole framework for how you want to analyze the cause of a problem rather than
just the symptoms.
It's just pretty solid to have because as a founder, you obviously went into tons of
problems.
If you can't analyze them correctly, your business is not going to last very long.
Can you break this model down for us if you remember even when I'm referencing?
Yeah, 100%.
I talk about it.
I literally whiteboarded it today to a new hire.
So I talk about this all the time.
And I think that just to give a little bit of background, when you're starting a company
and especially if you're in the early stages and especially if you're bootstrapped, not
all of us have the security and the confidence to change our LinkedIn profile to CEO or founder
and then deal with people who just don't understand that life.
I remember when I was early on, I was basically embarrassed to call myself a CEO because the
joke was, oh, this means you're unemployed.
Being an entrepreneur, and I know Patrick McKenzie talks about this all the time, patio
11, for those of you who don't know his actual name, because I know he goes more by patio
11 than anything, especially his, I believe it was his wife's family just didn't understand
being an entrepreneur.
But I bring that up because your emotional levels when you're starting a company and
I would argue at most stages is constantly being tested because you not only are trying
to create something from nothing, but you're also taking that something and trying to scale
it.
You have, even if you're just trying to create a lifestyle business or an indie business,
you have just increased the surface area with every move you make.
Any person you hire, any contractor you manage, any additional feature you add, all of a sudden
you have more surface area in your business and you need not only frameworks in your business
in general to handle that surface area properly, even if it's super simple, but you also need
frameworks to understand and handle the emotional aspects of that business.
That just doesn't mean not crying yourself to sleep or not blowing up at your significant
other because you're aggravated and pissed off about something that happened in the business,
but it also means in how you handle problems.
Because the number one problem I found that I had a problem with is that I thrive on crisis
and I thrive on reacting.
If something bad is happening or all of a sudden, even if something was good happening
and a lot of founders have this, all of a sudden, I would either create the crisis or
I would enjoy the crisis and I would basically react and I'm like, all right, I got to solve
this problem.
I got to solve this problem.
The issue there is oftentimes when you react, you just try to guess and check your way to
a solution, meaning, oh my God, this person's upset with me.
Oh my God, my competitor just tweeted this passive aggressive thing to me.
Oh my God, this thing happened and all of a sudden you sit there and if you just react,
meaning if you just enjoy the crisis and you instantly react without stopping and thinking,
AKA guessing and checking, it has a lot of really bad externalities because you haven't
thought through the chess game, even if it's a very small chess game of, hey, what is this
customer trying to get at?
What is this person trying to do?
You tend to freak out if you don't do that.
The framework that I recommend is always when you have that crisis, get to a point where
you take what's called the most charitable interpretation of that situation, meaning,
okay, my competitor just tweeted this passive aggressive thing, I have to go figure that
out.
I have to give him the most charitable interpretation or her the most charitable interpretation
and I have to go, okay, there's something, this person thinks there's something wrong
or this person is doing XYZ and this handles even a support request that comes in.
All right, this person's upset for some reason.
Maybe they're valid.
Maybe they're completely right.
That's the most charitable interpretation.
Then what I do is that gives me that extra second to then think through what is the framework
through which I can evaluate what to do in this situation.
The one that I described it to you was problem cost solution.
What this means is that when you have a problem and maybe it's a support request where someone's
aggravated, it could be we're not growing, it could be my loved one is mad at me, it
could be a whole host of things.
A lot of times what we want to do is we want to do that guess and check with that problem.
We basically want to respond and we got to fix it, we got to fix it, we got to fix it.
The issue there is you can't solve a problem.
You can only solve causes of a problem.
If we take world hunger, which I think we all can agree is not great, even the most
amount of money, you can't just throw money at this problem and fix it.
You have to think through, well, world hunger is caused by a whole host of things, bad irrigation
in certain areas, fraud when aid is sent to certain areas, poor circulation in crops,
it's caused by the money going to the wrong people.
They found that with women's funds, if you give women in developing countries the money,
it actually goes to actually developing the economy, then that's a really funny article
if anyone hasn't read that to look that up.
But anyways, I have a bunch of causes to world hunger and now what I can do is I can evaluate
what is the biggest cause here and then based on that, I can solve for those causes.
So if irrigation is the number one problem, well, then maybe I should be building irrigation
systems in these areas that have hunger issues or if fraud is a problem, maybe I should go
a political route and go through the State Department or something like that to try and
fix the fraud in some particular way.
With really big problems like world hunger, there's cascading causes and it takes a long
time to get through those, but with that support ticket where someone's aggravated, it might
be, well, this person, yes, we have an answer to their question, but the cause of this might
be they weren't able to get the right numbers and therefore they looked bad in front of
their board or they weren't able to access this because there was some hiccup or a bug
in the system.
So when I understand those causes, I can then more appropriately give a solution and sometimes
the solution is not to do anything, but with a negative support ticket, I can then do something
that's super empathetic.
I can say, hey, I know that's really frustrating and now I've thought through it and then I
can give them the actual solution and then even make up for it.
And so bottom line is problems need causes and then you can solve for the causes because
those are the things that will affect that actual problem.
Can't solve a problem.
You can only solve the causes to a problem.
You at some point decided that you wanted to start a company.
Do you feel like you were solving a problem by making that decision?
And if so, what were the causes of that problem and how did starting a company solve them?
Yeah, I think honestly, I started a company out of pure hubris, like being a punk mid-20s
kid.
I think that that's really where it came from.
So I had worked at the Intel community.
I was aggravated with the bureaucracy.
One of my mentors, they were joking and they said, oh, that's so-and-so.
They've been here 30 years and they haven't worked in the past 15 and I thought it was
just a funny joke, like we're ribbing each other.
And then they're like, no, this person just can't be fired because of government bureaucracy
and things like that.
And so it just wasn't moving fast enough.
I'm a little bit of a momentum junkie in terms of growth and building things.
And so I thought going to Google would solve bureaucracy and in fact, Google is a really,
really nice bureaucracy.
But I was there when it was like 30,000 people.
So it was a big company at that point.
And I had worked on some cool stuff that was similar to what we're doing now with value
modeling and stuff like that on the pricing side.
But I was ironically basically using models to find more money for Google.
Interesting enough, very similar models that I was using to find bad guys or gals essentially.
And what was cool is I worked on this project.
It was essentially a glorified lead scoring algorithm for the mid-market sales team that
I was on.
And I kind of did it on the side.
This is when I was learning to code and learning to do data visualization and kind of taking
a lot of my econ understanding and making it useful.
And essentially what ended up happening is I made Google a ton of money, which was great
for them.
And I got this cool award and everything.
But they wanted to shut my project down because there was this other project that was going
to make them more money.
And I needed to go back to doing this other job because this was all like a side project
for me at the time.
And that didn't sit well with me.
And I was like, oh, I don't like this lack of control.
And so that's why I say it's like hubris because I was like, oh, I can go start a company.
I can work for myself.
It's going to be amazing.
And so thankfully, the smartest decision that I feel like I had no intention of doing is
I went and worked for another company called Jimvara, which was a customizable jewelry
company like Blue Nile.
And basically, you could customize the gemstones, the metals, these types of things.
And what I ended up doing is they threw to me this somewhat entry level, not actually
entry level, but a younger person, the pricing problem to fix.
And they had 1.6 million different skews there, and I was working on it, and we would make
these little changes to pricing here and there, and we'd see these really outsized increases
or decreases in revenue based on the changes that we made.
And so I was there for about nine months, and I wasn't really enamored with the culture.
You're probably sensing a theme there.
And then basically, it was like, all right, well, I'm in my mid-20s.
I don't have any major financial obligations.
I very, very much thankfully had a merit scholarship to the college I went to, so I didn't have
any big student loans.
And then basically jumped out and was like, I'm going to start a company, and I think
I'm going to do it on this pricing thing because it's a big problem.
And I discovered that no one took it seriously because it was something that's relatively
hard.
And then ultimately, it was one of those things where I knew it had an impact.
And so if I could evangelize that to folks, that could be a company.
And so I think we started off with basically that concept of this is something that works
and this is something that people don't understand.
And that was kind of like the framework of thought.
And then it quickly moved into like, OK, how do we solve the pricing problem?
Because the pricing problem really, the root cause of the pricing problem is people aren't
doing anything.
And then it's like, well, what's the cause of that?
Well, people aren't doing anything because they don't know what they should be doing.
And we're like, OK, what's the cause of that?
It's like, well, pricing is this weird thing that they just don't know what to do, not
because they're not smart, but because they've never done it before.
Or they really just don't have enough confidence in trying to figure out the problem so that
they can implement things to make their pricing better.
And that was like the biggest root cause we found is this confidence gap.
And we were like, oh, OK, well, let's build a product that can basically close that confidence
gap.
And the initial product we built was a survey tool that basically we had some algorithms
we built into it.
And essentially, you'd go out and you'd collect some data, it would go through these algorithms
and they would spit out some price elasticity information and some relative preference information,
which would hopefully give you confidence in order to make a decision.
Well, what we found is that that solution for that cause wasn't enough because we would
have people who would go, yeah, I see how this data tells me to do this with my pricing.
But I don't know.
Can you just come talk to my team?
Can you just come talk to my team?
Can you just help me implement?
And we were like, wow, that's service, maybe we should do that because VCs don't like that.
And this is when we didn't know if we were going to raise money, not raise money.
And so we were like, well, if you pay us, sure, we'll do it.
And they were like, oh, OK, yeah, we'll pay you this much.
And this much was, I think our first deal was $1,600.
And keep in mind, we were selling $50 a month software here.
And I keep saying we, but I'm essentially a solo founder.
I have some advisors early on, but it was just me doing this.
And I was like, well, let's take the $1,600.
And then the next person was like, we'll pay you $10,000.
And I was like, oh, interesting.
And so that started to solve that root cause.
And then there were a bunch of other problems and causes that popped up over time.
But that's what led us.
And that was within those first six months of figuring that out and digging deep on it.
And then we went to the races with this bigger vision that we've headed down.
But that was the thought process that really occurred.
And that's why I encourage a lot of first-time founders,
if you're starting a new product, you've got to really get to that root cause.
And that root cause of why they have that problem, that itch they need scratched,
that's really where your product should be.
And I think oftentimes, we start with, hey, this is a problem.
People need to connect.
People need their sales data and their marketing data.
And then we end up building things that are more like a spreadsheet organizer
rather than building just an API integration.
And so if you did a little bit more thought,
it allows you to kind of figure out more of an elegant solution,
or at least the more impactful solution if you do that analysis.
How do you do that analysis?
It sounds like you were super good at honing in on the cause of the problem
and the cause of that cause and the cause of that cause.
Do you remember the process you were going through to learn all this information?
Yeah, exactly.
So that's a great question because I say it hopefully somewhat elegantly right now
in like a pithy one minute to 90 second sound bite.
But it's a struggle.
And I think that what really helped us and in me at the time was, one,
knowing that this is a journey, a longer journey, meaning, yes,
let's do a bunch of things that don't scale as they say.
But let's also make sure that we don't go all in on something
until we realize where we're headed.
And I think that's the biggest thing because what ended up happening is we first,
we had this little tool, we had some people using it.
Then we had some people like through our content and things like that contact us.
And basically, we let that customer basically guide us forward.
And the biggest thing that we did to kind of remain thoughtful,
and I don't think I did this intentionally.
I think it just kind of naturally happened with the cycles of the business
because I was doing everything is I would have these little kind of lulls
where get a customer, do a bunch of stuff for that customer,
or get a customer, talk to that customer, prospect, etc.
And then there would be these little lulls where I needed to go out
and get more customers.
And those lulls allowed me to really think deeply about like what in the world
is going on here and just be strategic.
And my biggest kind of tactical recommendation here is to take whatever
you're trying to do and whatever you're trying to solve
and probably start with something that's a little bit more finite,
not like world hunger, which has so many different layers.
But hey, this ad campaign isn't working.
And if it's just like a search ad, for instance, you have the copy,
you have the keyword, you have the landing page,
all of a sudden there could be multiple causes on those different levers.
And that allows you to then really compartmentalize and get your strength
in terms of this type of analysis.
And for us on a tactical basis, I would just write this stuff out.
I would have problem, I would have cause, and I would have solution.
And you just have to iterate on it and actually get it out of your head
and get it onto a page.
And eventually, we got our CPO a couple years into the business,
Facundo, who's a principal engineer and then became like a really
stereotypical product guy.
And I mean that in the most loving way in the sense of wanting to say no,
only wanting to build the right thing, not just throwing engineers at things.
And then he became a really good tandem partner to talk through these things.
And then we essentially argue, sometimes it actually sounds like fighting,
but oftentimes it's just really good discussions on like,
well, why should we do that?
Well, this is why we should do it.
And I'm a little bit more pragmatic and he's a little bit more idealist.
And finding that tandem partner I think really, really helps.
I don't think they need to be in the business necessarily if you're just
doing a solopreneur type venture.
But they should absolutely be like someone that you talk to about,
hey, trying to figure out what you should be building or trying to figure out
and challenge your ideas on what you're actually building and where you're going.
One of the cool things about doing this analysis and sort of teaching yourself
the causes of all these problems and writing it down and making sure to do the
research is that you're actually becoming kind of an expert yourself.
You actually really begin to learn a ton about this problem that you're trying
to sell people the solution for.
I'm curious how those sales conversations went for you in the early days and how
you were even finding these customers after you would come back from one of
these brainstorming lols.
What did that process look like?
Yeah, I think we thankfully we also had a mindset.
And so I'm mixing a couple things here, but thankfully we also really had a
mindset of the thing that we rationalize.
I think human beings, we are amazing at rationalization, especially post-talk
rationalization where, you know, why did you do that?
Well, at the time, you probably really did it for another reason than the one
you're rationalizing as to why it turned out the way it did.
And so I think that for us, we, you know, in hindsight, it's like, yeah, yeah,
we knew service was going to be the thing that took our software to the next level
and got us on this, like, growth trajectory.
Really at the time we were like, I don't know, but the way we rationalized it was,
well, we're going to get paid to do our customer development, right?
We're going to get paid to do our customer research.
So at the very least, we're going to go into these firms and we're going to, you
know, help them with this data and kind of talk them through it.
And then that's going to allow us to like learn a ton.
And I think that although we were kind of rationalizing and there was a lot of
truth in that because it was one of those things where each of those customers kind
of taught us a new thing.
And really what we learned is that, you know, pricing is traditionally a
consulting type engagement because there's so much lack of confidence that
you need someone who has gray hair and, you know, has basically done this for 30 years
in order to help you.
And we were like, okay, well, I'm 25.
Like I would, I still like grow a beard because I don't want people to like know
how young I am actually.
And that was actually caused by some insane insecurity where we got this really
small, like, you know, engagement with a pretty large software company.
And I was so excited.
And I just remember going to like the, you know, the first meeting after we got
the data and the results and this new CMO turns to me and she was, she was a
bigwig.
She was a CMO at a couple of like very famous public companies.
And she like, I got like maybe four sentences out of my mouth and it was a
day that I had cleaned shaven.
And she just goes, how old are you?
Like just interrupts me.
And I was like, oh, uh, I was like, well, I'm, you know, 25.
She's like, well, how long have you been doing this?
And I was like, well, company's been around for this long, but, and you get in
those insecure where you're like, but I, but I've been an economist and a data
analyst for, you know, the last, you know, five plus years, right?
And so it's, it's one of those things where I don't know why I went on this
tangent, but basically it was one of those things where like, it just taught
us like, Oh, this is how this person sees the world.
I go hire McKinsey or Simon Kutcher and this is how I solve this problem.
Well, does that particular solution work?
No, because we chased that down and we found out, Oh, like they just buy this
like six week engagement for $500,000.
And then all of a sudden they don't do anything.
Like they don't implement anything.
It's the same PowerPoint deck that they probably sold to three other companies.
And it's just one of those things where we're like, Oh, interesting.
So how do we actually solve this problem then, but also mix it in a way that it
becomes palatable to the customer, right?
And that allowed us to basically kind of figure out, okay, we have a service
element and as we get those additional customers, like the service element's
important and then over time it became, well, we're still having the service
element and we're giving them like this really good data, but they're not
implementing it.
Well, we need to be on a subscription model for this product.
And that's when it became what's called a tech enabled service, essentially.
And then eventually it's going to be like our retained product where we're
building, you know, some of these mechanical pieces that, you know, we can
basically have you set it up, connect it right to your Stripe account, and then
it'll just automatically optimize your pricing and kind of go, go from there.
And so long story short, it was, it was, it was a good way to basically get this
information to then have those little brainstorming sessions and the way that
we got our customers, frankly, like just started blogging.
We had a free HubSpot account, thankfully, cause we're in Boston and, you
know, HubSpot accounts were just running around back then, but, uh, no, we just,
we knew someone, um, person on our board is, is actually the, the head of product
at HubSpot.
And so he was like, Hey, use this, this inbound marketing things like good.
And we're like, Oh, okay.
And so we, we basically started blogging and what really helped there is we found
this out in hindsight pricing is one of those things, again, no one really knows
what they're doing or what it's about, but they know it's important.
So we would write a blog post that was pretty basic and all of a sudden people
would be like, Oh my God, this is so helpful because my boss asked me about
this thing and that just kind of started the nice little flywheel going.
We would have people come through content and then, you know, they, they
wanted a solution for this problem when they knew it was a problem.
And, and that kind of goes back to what I was saying before, which is, you know,
it's one of those pieces that, you know, you, you really just need to know that
this is a growth lever in order to, to want to like fix it.
It's so interesting.
Cause I meet so many people who have trouble coming up with ideas and just
in like one speaking term that you're talking, uh, you just gives me tons of
ideas cause you're, you're mentioning these different problems.
I think at one point you mentioned, you know, how do you get ads working?
Well, I hear people constantly complain, Hey, I'm trying to run Facebook ads,
but it seems like they work worse and worse over time.
How do I fix that?
Like that's an opportunity for someone to do what you did, really dive into the
problem, talk to people, figure out what they're trying, why it's working, why
it's not working, learn a lot, start blogging about it, et cetera, blogging.
A lot of people don't get their content marketing and blogging to work the
way that you guys were able to get it to work early on and find your first
customers.
Why is that?
Well, you can talk to lots of different people who are working on content
marketing and who are blogging at their companies and see what's working
for them and what they're trying.
And you can just learn a lot about any of this, no matter what level you're
at and end up becoming sort of an expert and teach other people what you
know, and then get your first sales through doing what you did.
I talked to Jason Cohen.
He's the founder of WP Engine.
Yeah.
He said something very interesting, which is that for any advice you hear someone
give, there's someone equally as smart, equally as experienced, who'll probably
give you the exact opposite advice somewhere.
I've heard so many people say, you know, the worst thing you can do as a founder
is start selling to big companies right off the bat because then you're going
to be locked in and you're not going to be able to escape.
You're going to be sort of a slave to whatever these companies want.
And that's going to shape your product, et cetera.
You guys did the exact opposite and worked out really well for you.
You learned so much in these conversations.
You sort of got your flywheel spinning.
You figured out where you want it to go.
I know someone might give the opposite advice, but why would you suggest
founders to go the same path that you did?
Yeah, I think first, I think that, and this may be speaking to Jason's point,
like, I think what you just said about big companies is insane.
Like you're never a, you're never like a slave to any customer.
Like you can fire customers, right?
And it sucks, but I think that it's one of those things that you absolutely can.
I think if I maybe go on another tangent, which I've done a couple of times here,
I think the big thing you have to be doing is pursuing truth.
Like truth is the number one thing that guides us.
We're starting to make it part of our marketing because we just talk
about it so much internally, because if you think about your business,
it doesn't matter what your business is.
If you're trying to solve a particular problem and you start getting down a
path and you discover that that problem, the highest leverage you have for that
problem is selling to a big company, you absolutely should do it.
Or you should figure out another product, right, or another problem.
And I think that we get too caught up in trying to bend the world to our truth
rather than discovering the actual truth that is out there.
I talk to so many, you know, I love microconf.
I love, you know, this crowd, I want to be a part of it.
I feel like an imposter sometimes because, you know, it's one of those things
where, you know, there's just so much cool stuff going on.
But it's one of those things where I meet so many people who are like, hey,
I'm going to build this for this community.
And you're like, why?
And they're like, well, I just think that, you know, it's not as blunt as this,
but it's like, I just think that, you know, they should have it.
And it's like, why don't you go build to this person where I know I have some data
or I know I have some information that will help you.
Oh, no, I don't want to like support those types of people because, you know,
they're big companies and they have big company problems.
And it's like, okay, well, it doesn't sound like you're pursuing truth, right?
And for us, it was the truth came down to, oh, small companies,
no matter how many times we tell them, you should think about your pricing
and you shouldn't do all the things that a big company would do.
But small companies, they have too much stuff going on to think about the pricing.
And it's not just like, hey, they're focusing too much on acquisition
and they're not thinking about the pricing enough,
but they got to figure out payroll.
They got to figure out, you know, they're getting yelled at
because they got to, you know, go pick up their kid or something like that.
There's just so much going on early stage that no matter what we tell you,
no matter how much we talk about a pricing to wear blue in the face,
you're not going to focus on it as much as you should.
And we're just like, okay, well, who starts to focus on it?
Well, we started to notice that unless a board member or an advisor,
someone basically says, hey, you need to focus on this,
or unless there's a huge problem and it's very clear their pricing is screwed up,
normally right around $10 million at that level a year,
that's when companies start to like kind of care about this
because they have enough bandwidth, they have enough like, you know,
people power to kind of consider this as a particular, you know, growth lever.
And then as you kind of increase the complexity changes,
and trust me, we have definitely some companies
that we probably shouldn't have worked with that were very, very large,
that, you know, it just wasn't good for our product.
But it was one of those things where that's kind of where we picked the market.
And, you know, it's a little ironic that we have this free product
because it's zero dollars.
But really, we tend to try to target people who are a bit bigger,
you know, this mid market or enterprise to sell our actual paid products to
because those are the ones that we know have the pain.
And so long story short, I think it's you have to pursue that truth
because that truth is going to be a little bit different depending on the problem.
And if you bend like the world to your truth,
you're probably not doing it properly.
You have to be more intellectually honest with what's going on in your life
or what's going on with your customer base that you're trying to seek
or the product you're trying to build.
Because ultimately, like, you can't control what people want.
You have to kind of guide them to solving the problem that they actually have.
You know, I think one of the one of the stumbling blocks that people have here
is that all this data collection, all this research, all this learning
just takes so much time.
It's months and months, years and years of work.
I don't even want to know how many companies you had to talk to
for you to recognize that $10 million was sort of a special revenue threshold
where above that it was easier for you to sell them to these companies.
How did you have the patience?
How did you stick through this years of learning
and updating your products and updating your sales pitch?
Yeah, I think, I mean, you say it like that, but I look back and I'm like,
again, these are really good 90 second sale bites.
But it's all episodic, right?
It's all like, you know, and that's what's beautiful about, you know, growth
is like sometimes you're down.
Sometimes you're too far up for where you're at, you know, those types of things.
But as long as that line, and this maybe is a line of learning
or a line of, you know, information is going up and to the right
and you're able to kind of consolidate it and think through things, that's great.
And so for me, I think that really got me going was just having the addiction
to finding the truth.
And so that was a big thing.
I started the company more so, you know, I mentioned before, like out of hubris
because I was like, well, if I'm going to do all this work
and make someone else this money, like maybe I should be my own boss
and make the money, right?
So it was kind of, it wasn't quite all about the money,
but it kind of had too much of that, that tint to things.
And then, you know, as I got into this, I was like, oh, this is hard.
You know, there's easier ways to make money, you know,
but besides building a company, right?
And I got into this just this love for the momentum
and this love for, you know, searching for the truth
and wanting to know the truth
and just getting addicted to solving the puzzle, right?
And the beauty of founding a company is that if you're trying to, you know,
you're trying to build a product or a builder, there's infinite puzzles
when you're solving, you know, you're trying to solve things and there's puzzles,
you know, they don't have to be big puzzles.
You don't have to have a big company to solve these puzzles.
But, oh, like, how should I set up this?
Let's figure out this puzzle.
Oh, I have this problem with HR type stuff,
but I don't want to hire an HR person because I want to keep the company small.
Let's figure out that puzzle, right?
And so for us, it was, or for me in particular,
it was more about getting to the emotion of what really drove me
and then ultimately making sure that that truth that I was seeking
was what drove me and then that I had good support systems around me,
which I didn't always have for, you know, pretty much my whole life
until, you know, starting the company, having the right team,
which, you know, we still have issues with,
but, you know, we're building a company.
So that's that ups and downs, having the right partners,
which I also had issues with, but, you know, figuring out those ups and downs.
Then finally, like surrounding that with like good family
and good support system in terms of like the time for research.
I think that you really have to understand that you're going to make mistakes
and you should optimize for speed,
but you also have to realize that at the same time,
you need to optimize for being smart about the resources and time that you're using,
which means that some of the time that you should spend is on that research.
And that's a really, really hard thing to grapple with
and you're going to make a lot of mistakes.
We still make mistakes with this,
but we rarely spend enough time thinking through what makes the most sense.
Even when we're like, hey, let's plan our OKRs.
Well, we don't want to plan our OKRs or things like that
because, you know, we don't want to take that much time
because we want to take the time to do the thing.
And it's like a little bit of like, you know, what is it?
A little bit of prevention or an ounce of prevention
is worth a pound of cure, whatever it is.
A little bit of prevention, a little bit of research,
a little bit of understanding, you know, what's going on.
Even if it's like a month, you know, when you're trying to figure stuff out,
that's worth going through, even though there's not revenue,
even though there's not like momentum being felt,
even though it doesn't feel like something's happening.
It's worth getting addicted to that truth
because then all of a sudden when you're like, cool, I figured something out.
I think for the next two months, we should build this thing and distribute it
and see what happens.
Then all of a sudden, you get this nice flywheel going of like
the quickest path to learning, learning as much as possible,
implementing that learning.
Okay, we have another problem.
We need to learn more. Let's go learn.
Oh, we've learned it. Now let's build it in.
And just kind of like getting these cycles going within your business
rather than just reacting to everything.
You know, this strikes me as a good argument
for why you might want to start a service business upfront
because you immediately start bringing in revenue
because you're able to charge customers.
Versus oftentimes, I would get addicted to this sort of momentum
of learning and pushing forward.
But it would be in the pre-revenue days of some of my older businesses.
And I was really just addicted to solving the problem of product development.
And so I would just be coding over and over.
And there's like lots of fun problems to solve there.
But is that the same thing as really driving your business forward?
Not really.
Whereas if you actually have revenues, you actually have customers,
you have employees who you need to take care of,
you're sort of biased towards solving problems that matter.
You can't really spend all your time with your head in the ditch
working on your code, working on your product without talking to people
because you know your revenue is not going up.
Well, and it's, but what's interesting about it is,
you know, to Jason's point, the other side of that coin
is I think that people get addicted to the money in service businesses
and not like addicted to a lot of money, right?
But it's a little quicker money, right?
It's not quicker, it can be quicker learning,
but it also can be quicker money.
And what we found is it took a, like, it wasn't hard for me
because I had this, you know, going after this like vision
and this mission of, you know, these hard parts of subscription growth.
And, you know, I didn't characterize it in that particular language
or anything like that then, but it was, you know,
I have this mission, I want to build something great,
I want to build something big, I want to solve this problem,
I want to build, build, build, build, build.
But, you know, for some people, it's really hard to look at,
you know, I think our first calendar year,
we ended up closing $450,000 in revenue.
And it was really, really hard to look at that and go,
okay, like, I'm still only going to make $50,000 next year,
you know, because I need to hire these people
and I need to find, you know, someone who's a full-stack engineer
or a lead engineer or a head of product or something like that.
And then it's really hard to look at that revenue growing and go,
oh, you know what, this like new thing,
we've been kind of building this metrics product,
like everything indicates that this should be free
because, you know, all the data indicates
that that's the right move.
Okay, now we have to hire an engineering team
that literally isn't going to build on the thing
that's making us money right now,
but it's going to build this free product.
And that means like all this profit, you know,
or all this revenue is going to go in
investing back into the business, right?
And that's like, people thought we were nuts, you know,
and maybe we still are, I don't know, like,
but it's one of those things where we're like,
okay, well, this is the long-term vision,
this is a long-term mission and I think that,
you know, maybe it's not necessarily a pursuit of truth,
maybe it's something different from you,
but you got to stay connected to the mission.
And on the other side of that,
you might be fine with a service business
where you're pulling down 100K a year net
and you are working 20 hours a week, right?
Like that's the, you know, the four-hour work week dream, right?
You know, that type of thing.
And I don't think you should apologize
or think you're lesser because that's your view,
but I think you should be honest with yourself
that that's your view.
I know that I wanted to build, you know,
a business that could make a dent
in some part of the universe, right?
To use kind of the cliche that a lot of people talk about.
And if I wanted to do that,
there's probably better ways that I can do it,
but that also meant that I was okay
not making that much money
because I was like focused on the long-term
and I probably need to be coached a little bit
to not like shoot myself in the foot,
but I don't think that that's better or worse
than someone who goes,
I just want to build a business
that brings in $3,000 a month
to supplement my income and pay for my mortgage.
Or I want to just, you know,
build a services business that pulls in 200 grand a year
or whatever it is.
And I think we get a little too caught up in,
you know, looking at, you know,
what other people's truths are
or other people's lives are and thinking,
oh, that's what I need.
When you just be honest with yourself,
which, you know, is easier said than done.
What do you wish you had known
about transitioning from a services business
into more of a product business, a SaaS business?
I think that that's a really good question.
I think that we handle the transition pretty well
because we've never considered ourselves a service
or a consulting business.
And we always grimace
when everyone calls us a consulting business
because we're like, no, they're software.
We just don't, you just don't log in.
Like, you know, and it's actually really sophisticated.
Like these algorithms are actually really complex
and they've been developed and things like that.
And so, yeah, I think it was one of those things
where in hindsight, I think I would have loved to know
that, and this is more broad,
it has nothing to do with service to software,
but I'll answer that question in a second.
I wish I would have known that wisdom needs to be learned.
It can't be taught
because there are certain things in your business.
Like I probably said one or two things on here
that like everyone nods their head and is like,
oh yeah, that makes sense for me and my business.
But until you actually feel and learn it,
like no amount of like podcasts,
no amount of like books or anything like that
are gonna help with that.
So like a good example of that is
you have to probably make a bad hire
or four or five bad hires
before you realize why you're making the bad hires.
You know, because even though that person told you
that it's really important to find someone
who can do X when you're hiring an engineer,
maybe you rationalize and think,
oh, well, they can learn it on the job
or they can figure it out.
And then all of a sudden you find out,
oh no, they really did need to know that particular thing
or they really needed to have that particular trait
or attribute.
And that's a really, really big thing
because I would get really down on myself
because I would be like, oh man,
that person told me that thing.
And I made that mistake
and I didn't realize things are gonna take longer
than they are.
Oh man, I'm failing, I'm failing, right?
When in reality, it's just kind of part of the journey.
Now from services to a software company,
I think that one of the really, really big things
is the communication with your team.
So we as a bootstrap company,
we ended up basically saying,
okay, well, we don't wanna sacrifice this revenue right now
because that's eight, 10 people's jobs at the time.
And so we wanna make sure
this is kind of like a separate thing,
but we don't really know how it's gonna merge, right?
And I think what would have been better
and I've been talking to some folks
who have been doing some services stuff
and now they're coming out with software
is it's probably better to just launch it under one brand
and then almost position it as,
hey, we have this software, even if it's very different,
but assuming it's at least somewhat connected
to your service business.
Now, if it's, hey, we're gonna build,
I know Nick Francis over at Help Scout,
they had a service agency
and then all of a sudden they built the help desk.
Maybe didn't make sense to launch that under the same brand,
but if we're helping the same type of customer,
probably would have helped to launch under the same brand
rather than kind of causing confusion
because then people didn't really know.
They're like, well, you do this pricing thing,
but then you have this other product.
Is that just lead gen?
And yeah, it's just one of those things
where getting that product marketing
even directionally correct early on,
I think can really, really help your business
because you've already spent so much time
getting these leads for your service side
or your tech enabled service side.
And it's one of those things
you wanna use those leads naturally
to also be good for your other products
rather than trying to build from scratch over again.
So today you have quite a few products
and I know because I had to make a mental note to myself
while I was preparing for this interview
to not call you price intelligently over and over.
It's just like what naturally comes out
the second I say the P in profit well,
I'm like price intelligently.
But you've got more than just price intelligently.
You've got a product called Retain
which helps customers reduce their churn.
You've got a product called Recognized.
You just released a whole bunch
of different products earlier this week.
You've got another product called Metrics.
How different is it to launch a brand new product
versus launching a new business from scratch?
What are some of the similarities
and what are some of the differences?
Oh, that's a really great question.
I think, yeah, what's really funny about it
is just like a side note here
is that it's really figuring out that core,
like what you're driving towards
because if you notice
and maybe you have to squint a little bit to see it,
like all of our products are kind of converging
on a similar theme, right?
Where we help subscription companies
with these different things, right?
And there's like a sub thesis there
as to why profit well metrics is free
and then we launch different features
and things like that.
And so I think that in terms of
what's the differentiation of launching new products?
I don't have a really good advice on
if you're launching a brand new product,
like multiple products at different customer bases
because then I think you're just kind of
reinventing the same thing that you did.
Hopefully iterating on it
for just like a different customer base.
I think for us, where we struggle is,
and you kind of alluded to this as well
with like the price intelligent now it's profit well
is just our product marketing in general.
And so when you're launching new features
or new products underneath your umbrella,
I think it's a really good opportunity
to start to re-educate the market.
So what we did recently this week is we did,
and I'm embarrassed to say it this way,
but it's the quickest way to kind of explain it,
is Apple had some event and we're like,
why doesn't a SaaS company do that?
Why don't we launch stuff like Apple does,
and obviously it's not gonna have all the press
and all that kind of fun stuff,
or maybe one day it will,
but why don't we do it like that?
Why is it always like product hunt
and just like a blog post and stuff like that?
It just doesn't feel like it makes enough sense.
And so we basically did an Apple-style event.
It was on Zoom, but we did a bunch of work
where we actually were able to like retell that story.
And I think that's where,
whether it's a feature or product,
I think that launching that particular aspect
is another opportunity to kind of educate that story.
And I think Stripe, I think does that really well
because every time it's like, well, this is our mission,
to don't necessarily say it all the time,
like increase the GDP of the internet,
but you can kind of see that all of those different pieces
are contributing towards that.
And for us, I don't think we've really figured out
what that tagline is or that pithy like mission is quite yet,
but it's one of those things where we're like, all right,
we need to re-educate folks on,
this is what profitable is,
this is what we're trying to do
because a couple of months ago
or maybe it was a couple of weeks at this point,
I can't remember, you know, I tweeted out like,
how would you describe profitable to someone?
And, you know, everyone was like,
oh, this pricing consultancy, this pricing consultancy,
this pricing consultancy.
And we're like, oh my God, oh no.
I was like, if you ever wanna like scare the life out of you,
just tweet out, you know, how would you describe X,
the company, and just get excited for, you know,
oh, everyone who's known us for the past six, seven years,
thinks we're this,
and then everyone who's known us the past two years
thinks we're this, all right,
we gotta get better at product marketing,
we gotta get better at educating.
And so, yeah, I think long story short,
I think there's, you know,
you gotta treat each feature as a product launch.
And I think that there's some differences
just in terms of the depth you go to.
So, you know, we have a segment integration
that we haven't officially announced to our base
or anything like that.
We're not gonna do a launch video
and a bunch of other stuff for that,
but we're gonna think in that framework
so that we can use it as to, how do we tell the story?
Even if it's as simple as, hey, you know,
our biggest mission is to do X, you know,
hard parts of subscription growth,
part of that is making it easy for you
to do the hard parts of subscription growth.
And part of that is making sure we, you know,
integrate and use the right tools that you already do.
So that's why we're so excited to announce
the segment integration because now
with all the other things you can do,
you can automatically install the snippet,
profitable snippet in order to get your engagement metrics
or install retain or install, you know,
some of the other products that rely on that snippet.
And so there, even though the bulk of that article
or bulk of whatever that's going to be
is gonna be about like the actual feature
in segment integration,
I'm basically retelling the story of the why,
which I think has a really, really good externalities
on your base and ultimately helping them refer people
and helping them, you know, be a part of that community.
So one of the common themes I'm hearing here
is just education.
It's been a big part of what you're doing
since the beginning of your business.
And even now you're educating people
as to how you work and how the things you're doing
can help them.
A lot of businesses don't have this focus on education.
How do you think you can differentiate
between whether or not, you know,
the business you're starting is something
you're really gonna have to get good
at teaching people about
or something you can just start executing on?
Is there any sort of markers that delineate?
I think that it's how transactional
the product or business is, right?
So on one end of the spectrum,
if you have an e-commerce company,
not all e-commerce companies,
but a lot of e-commerce companies,
it's purely transactional.
If you think about like commodity transaction,
like an auto part
or I can't think of another commoditized thing,
like, you know, if there was a bean company
that sold beans online, like, right?
Like that's such a commodity, right?
Yeah, paper, something like that,
like you got commoditized, it's like purely transactional.
You probably like, there's a very minor education
you need to do.
And the education you're probably gonna do
is trying to convince them to buy a premium version
versus that regular version, right?
It's not gonna be about,
hey, this is why you need paper clips
and this is why paper clips are so important
and these types of things, right?
Now, if you go one step up the stack there,
there's probably e-commerce companies,
especially subscription e-commerce companies,
where why do I need to buy my protein powder
on a subscription basis, right?
Like that's a product, you know, muscle box, right?
And it's like, okay, I don't know.
Like someone needs to educate me, right?
Is it because it's cheaper?
Is it because it's better?
Is it like, you know, what is it for, right?
Or, you know, maybe it's, you know,
there's box of the month companies in the hot sauce space.
Like that's a pure delight thing.
So you need to educate me on why it's delightful
and you're gonna be able to give me different hot sauces
that are curated and are well thought out, right?
And then you might go up another level of abstraction
and it's like, oh, these are, you know,
software products that I need to use every day, right?
And okay, well, I need to probably educate
that person on some level, either through the user onboarding
or through telling stories or, you know, blogging
or something like that, why this product's important
and why the way that we do this is important, right?
And then, you know, even higher than that is like very
similar because you still need to do all those things
with these products, but these products,
then you need to tell them why they need it, right?
And why it's so important that they, you know,
focus on their pricing.
And to be really frank with you, if I was trying
to build a product that, you know, was like an indie
product or something, right?
I wasn't trying to grow to a 10 million beyond business,
but I was trying to, you know, basically put something
together that was, I don't know, like, you know,
just for, you know, 5K month, 10K month.
And yeah, if it grew really big, cool, but you know,
I'm just trying to get to a minimum.
I think I would focus on, you know, more like
transactional products, not quite paperclips of course,
but more things that, you know, already had a requirement,
you know, already had like, I need a CRM.
I need, you know, something that connects X to Y.
I have this problem, I have this pain,
and it's easy to understand, and I don't need a lot
of education, the sales cycles are relatively small,
and the retention is good.
And the reason for that is because one of the biggest
problems that we face is, you know,
people don't realize it's a problem.
And if people don't realize a problem,
they're not necessarily seeking it out.
And if they're not seeking it out, it's really, really hard
for, you know, us to basically help them, right?
We have to get in front of them, which is, you know,
a much, much harder battle, right?
And we're kind of, you know,
we're trying to solve this ourselves.
So we're moving, you know, our retained products,
we're going to start calling it, you know,
a customer success solution, because that's an actual space
that people search for things,
and they already have a requirement or sub-requirements
for a customer success solution, right?
And so it's just one of those things where, you know,
that space in that market, which is one of the original
things we talked about, is so important to kind of realize
depending on what you're trying to do as a business.
And if you're more transactional,
it's going to be a lot easier
because people are going to seek things out.
You don't have to educate.
If you're less transactional or it's just something
that doesn't really have a requirement right now,
then you're probably going to have to, you know,
have a little bit more of an uphill battle,
and therefore the uphill battle should hopefully
have some sort of outcome that is very advantageous
or else you shouldn't just go up that uphill battle.
Yeah, that makes perfect sense.
If you're moving into a crowded or competitive space
where there's lots of players and it's established
and customers already know what's going on,
then you don't have to do as much education
because there's sort of a history there
and your competitors have educated people as well.
Whereas if you're going into sort of a new space
and you're blazing a new trail,
you're going to have to do a lot of education.
And I think one of the hidden advantages to that also
is that you might have a little bit more pricing power.
If there's no competitors who come before you,
you can kind of set the price where you want it to
because there's not that much competitive pressure
bringing down the price.
So let's talk about pricing for a little bit.
How should founders think about pricing
when they're starting their companies?
And also, is this important to get right up front?
Or is it something that's more important to just tweak
and modify later on?
Yeah, that's a great question.
I think, so, you know, as Patti O'Levins says, charge more.
I think that's a big thing.
But I think what's behind that is,
I think you have to think about what you're trying to do
and where you're going to get the most leverage.
And so what I mean by that is when you think about what you're
trying to do in early stage, the actual number probably
doesn't matter as much as you might think.
Like, is it $10 versus $11?
That probably is very inconsequential to your growth
because that's not the biggest problem
or the biggest cause of the problems you're facing.
And so it's one of those things where we recommend
in the early days, don't worry about the number necessarily.
Figure out what level of product you are.
Are you like a $10 product?
Are you a $100 product?
Are you a $300 product?
Are you a $1,000 product, right?
And really evaluate that and maybe collect some information
or talk to a few prospects or talk to, you know,
some folks on how they see your product
or the problem that you're facing
or the problem that you're trying to solve
or kind of remedy what that looks like in terms of like value.
Because I think often what happens in the early stage,
I have at least found it easier not to start
in the enterprise necessarily,
but start not in the $10 a month, $50 a month range.
So if I'm selling a product that, you know,
may cost 50 bucks a month,
I might actually want to put that in the early days
at 200 bucks a month or $150 per month
because I want to find the people who really care enough
that they're almost willing to buy it even at a higher price.
It's kind of like a price skimming kind of concept.
And so that's if I was like a $50, $100 product.
Now, if I'm a $1,000 product,
maybe I'm going to put that price at $5,000 upfront
because I want to find those people who care enough
and are going to be that invested.
And you have to be careful with this.
You can't go so out of control
because then you're just not going to get any traction,
especially in the early days.
But don't worry too much about the price point.
Worry about like where you are
in terms of, you know, kind of a price level.
I think the other thing,
and this is the most important thing,
is in the early days,
the one thing that you should obsess over
is what your value metric looks like.
And your value metric is, you know, what you charge for.
Is it per user, per hundred visits,
per, you know, a thousand widgets or whatsits
or whatever it actually ends up being?
And the reason that this is so, so, so, so crucial
is that all the data indicates
that you can get everything else wrong
or get everything else not to be optimized.
But if you get your value metric right,
not even the level of value metric you give away,
but just picking the right thing to charge along,
that will actually save you most of the time.
And so what I encourage early stage founders to do
is not to think about like the price point
and should they do a discount?
Should they enter prices in nines or fives?
Should they put the, you know, most expensive plan
on the left side of the page
versus the right side of the page is,
really spend that time thinking about how you should charge
and what's going to be the best lever
for ratcheting those customers up.
Because ultimately what ends up happening is,
is that your customers expand their revenue
or end up being a high price customer
versus a low price customer
based on their actual value usage.
Are they adding more seats?
Well, they're going to start paying you more.
Are they basically, you know, using more email addresses?
They're going to pay you more.
Are they going to use more visits?
They're going to pay you more.
And they're typically more than happy to,
because if you got your value metric right,
they totally realize, well,
I'm getting more videos in my account,
presumably in my marketing, you know, video product,
more videos in my account means I'm making more money.
Yeah, totally.
I'm more than happy to pay, you know,
Wistia more cash.
And if they start using less,
they don't necessarily churn out,
but they might actually, you know, contract in revenue,
which is, you know,
absolutely better than losing that particular customer.
And so that's where you see, you know,
I don't like talking about like public companies
that did really well before their IPOs,
but I think Slack is still a good example
where the value metric really drove that business
where their free plan basically only being available,
you know, up to the 10,000 messages, essentially,
and then adding those additional users,
because as soon as those users converted,
those accounts were $100, $200 per month,
they weren't just 10 bucks a month with one seat
or something like that.
And then all of a sudden as people added users,
they obviously started paying more
because Slack basically became so central
to their businesses.
And so value metrics,
and then just kind of figuring out
where you are in the world in terms of price level.
And then I would recommend starting high
and then coming down if you feel you need to,
because it's so much easier to lower prices
or even experiment with lowering prices
than it is to raise prices over time,
because you might just not have the guts to do it
because we all get squirrely
when we want to ask people for more money.
Oh, yeah.
I want to talk about that
because it's so counterintuitive
for a lot of early stage founders
who think that they basically can't get away
with charging more when they're so small.
But first I want to talk a little bit more
about value metrics.
What's an example of a company doing a bad job
at choosing a value metric?
Oh, that's a really good question.
You're going to put me on the spot
to talk crap about someone.
Yeah, I think, I don't have a specific company
and I might think of one as I'm saying this,
but most of the time per user pricing
is not the right value metric.
Per user pricing is this relic
of the perpetual license days
when we would basically just sell licenses
to people for software.
And then we were like,
oh, we have this cloud and this SaaS thing.
Oh, let's just use the license thing, right?
And the issue there is for most companies
and most products,
the value isn't actually in per user.
And the best test of this is if you can log in
to someone else's login
and get the exact same experience
as if you logged in with your own login,
that value metric shouldn't be per user.
And instead you should probably give away unlimited users
to boost your retention
and then price on some other axis.
Whereas like CRMs, help desks, chats, these types of things,
if I log in, I get my own leads or my own chats
and those types of things.
But those are typically some bad value metrics.
I haven't really thought of a good one.
I think another not so great one is,
you see this in the analytics space a lot
where companies will charge,
the analytics space is really, really hard to charge along
because unless you're in the mid market or enterprise
and that's why most of these companies
end up going up market,
there's just not as much of a requirement,
there's not as much willingness to pay,
but some companies will charge,
not only in analytics, but also in other businesses,
charge based on how big the dataset is
or how big the company is.
And normally what ends up happening is
if your product doesn't scale naturally
in terms of value with the size of your customer,
you end up running into a situation where people are like,
why are you taxing me for being bigger or growing
or something like that?
Then you should find a new one.
And sometimes it's really hard because sometimes
there just isn't a better value metric
and you kind of have to go in understanding that.
Yeah, I can actually name a couple examples
that align perfectly with both of those principles.
You just lined up Ahrefs,
which I use for basically SEO friendly hackers.
I think they charge more per seat,
but every month I'm kind of like,
well, it'd be nice if like my brother could log in
to Ahrefs easily, but I don't really want to pay double
for him to get the same exact features that I have.
So I'll just give him the password to my account
and I've just never upgraded and added another seat to Ahrefs.
And then another one is Amplitude,
which I use for metrics and analytics.
It's like super free right now.
I pay nothing for Amplitude
and I get a ton of value from Amplitude.
And every now and then they call me
and try to get me an upgrade,
but the upgrade is like, I don't know,
like 30, 40, $50,000 a year.
It's like a huge jump up from free.
I can't afford that.
And it's not worth that much to me.
And so I'm kind of in this awkward no man's land.
So it's pretty interesting to think about.
Oh, I just thought of another good one.
That's a really good one too.
DocuSign is like this.
I don't know if you deal with DocuSign,
but we use one DocuSign for the entire company.
And that includes our, or I think we use technically two.
We use one for HR, PeopleOps types things,
and then we use one for the sales team.
And the sales team all just uses the same login basically.
And it's just kind of funny
because they'll occasionally contact us
and they'll be like, oh, it appears
you're over the fair use limit.
And we're like, and that's normally when we just had,
because we have some episodic sales periods.
And we'll be like, our usage will go down.
But it's also like, I can't think of a better value metric
because the market's become so commoditized, right?
There's so many different types
of DocuSign type products out there
that if we put out some sort of other products
like that charge based on the number of contracts,
then we'd run into the problem where people are like,
well, why are you taxing me for being awesome, right?
So I think it's one of those things where,
this is where bands come into play really well.
So if you do a histogram analysis of,
and they're really straightforward,
just Google histogram analysis
and there's great YouTube videos.
But if you do a histogram analysis
on your usage of the value metric
that you might be wanting to charge along,
you'll start to see these really interesting bands of users.
And that'll help you figure out like,
oh, well, maybe we should have tier one be zero
to 10 DocuSigns a month.
Because of the people in that group,
they never really go over eight.
But if they go over eight and if they go over 10,
they definitely should upgrade
to our 11 to 25 DocuSigns per month, right?
And if you do those bandings right,
what ends up happening is you don't have a lot
of aggravation between those precipices,
but you don't have a lot of problems there
because the people who truly are going over that amount,
they're more than happy to you
because they've kind of reached that next level
of being a customer.
They've kind of changed over
from being one of those customers.
But you also leave the power on your side
to enforce that overage.
So one of my favorite things with Wistia,
what they would do is when you would go over,
the first time you went over, they would go,
hey, just so you know, you went over,
we're not gonna automatically charge you
or charge you an overage or anything like that.
But if it just happens next month,
we'll bump you up to this plan,
which makes sure that you have enough videos.
And they would get people who would basically go
to that particular email and they would just auto upgrade.
They would just click a button to upgrade already.
And it was just kind of amazing because they were,
and then for the people who accidentally
or had a really good month,
they were just so thankful that the company
didn't auto upgrade them essentially.
And so it just gives you a lot more opportunities
if you just understand what's going on
with those bands and things like that.
Yeah, I think Postmark does something like that,
where I went over my limit.
I used them to send transactional emails
and they sent me some sort of friendly nudge
that I was over my limit, but it was okay.
And then I was kind of embarrassed.
I'm like, oh, I'm gonna go upgrade
to an even higher plan than I actually need
because I don't want them to have to send me
some sort of embarrassing reminder email like this
and a feature that I'm not paying for what I'm using.
And I wonder how many other people also upgrade
and pay more than they really need to
because of that great email.
That's awesome.
Let's talk about that other topic
that I sort of put on hold for a second,
which is this concept that as a founder,
thinking about how to price your startup,
you shouldn't be thinking about like these micro changes,
like should I charge $10 or $11,
but you should be thinking on more
of an order of magnitude level.
Like should I be charging $10 or $100
or $1,000 for my product?
And not only that, but that you should generally favor
charging more, especially in the early stages,
which is super counterintuitive.
Usually if you're an early stage founder,
you're thinking, I can't charge that much
because I'm just one person, maybe two people
building this really simple product.
All of my competitors are so established.
The only way I can get a break is if I charge
less than everybody else.
But you should probably be doing
the exact opposite of that.
Can you elaborate on why that is?
I think, I mean, I feel like Patrick McKenzie
has the best like articles on this.
It's like, I think it's just one of those things
that I've met, you know, I've met many types of founders,
but I think there's commonly two buckets.
There's one bucket where, you know,
and we've had to have these conversations
when they're customers where they think
that their product is worth so much more than it actually is.
And basically what ends up happening is you have to be like,
hey, you know this thing that you really, really value
and you think is really, really valuable?
Well, all data, no matter how we slice it,
no matter who we asked, no matter what we did,
and we cleaned it seven different ways,
it indicates the value just isn't there
because the market's like this or something like that.
And then the other group are the people
who basically are like, hey,
I don't think this is valuable enough
because it only took me two weeks to build
or, you know, I don't know.
Like it's just, they're not gonna wanna buy it.
Like this insecurity, right?
And like this group, this latter group
is about 85 to 90% of founders.
And so I think it's one of those things where,
especially in Europe, by the way, like Europe,
there's just like this weird complex of like,
oh, we're just not gonna be as good as the US products.
And, you know, it's just one of those things
where it's like, no, like it's software.
Like it doesn't have a boundary or a border.
I mean, yes, there's some laws
that you have to be careful of
depending on where you're based.
But like, it's just one of those things
that I think that insecurity is driving everything you do.
So what I would encourage those folks to do
is kind of stick your step back and go,
like, what do you got to lose?
Like, what do you gotta lose to trying it for a month?
Like you're already making no money
or you're already making very little money.
Like, what do you have to lose by putting, you know,
that price point?
And I think he'd be okay if I shared this,
but I had this conversation with Colin from Float.
You know, he's a good friend just from, you know,
the world of SaaS.
We met through, you know, online
and all that kind of fun stuff.
And I just remember being like,
what are you gonna lose doing it for a month?
You know, you have no pressure right now.
They were funded and everything,
but it wasn't, you know, it wasn't that big of a deal.
But all the data was kind of hedging the decision
to like raise the price.
And I was like, what's the worst thing
that's gonna happen?
Like, you're gonna miss out on your number?
Well, you're already kind of, you know,
not hitting the number you want.
So that's okay, right?
And then, you know, they do it.
And all of a sudden they're like,
oh, our conversion rates stay the same,
but our ARPU doubled.
It's like, great, like, let's do it again
or let's do something else.
And so I think it's really thinking about
what you have to lose and just, you know,
getting over the confidence of starting small
and being like, all right,
I'm just gonna do it for a month.
I'm gonna just look at the data after the month
and I'm gonna start with something small.
I'm gonna start with just like raising the price,
you know, by 50%, right?
Which feels really high, 50%,
but if you're raising it from 50 to $75, it's not crazy.
Or if you're raising for 25 to, you know, $50,
100% increases, that's not absolutely
that big of an increase.
And normally what you find is you get your confidence up
because you're like, well, my conversion rate
went down a little bit, but not that much.
And we netted out our biggest month ever, right?
And you're like, okay, well, let's try something else, right?
And I think it's just starting small and getting those reps
and just realizing that, you know,
your insecurity is driving a lot of your decisions
because you're doing something from nothing
and that's really, really hard.
And, you know, your mind doesn't like to fail
and your mind doesn't want to do things
that is going to cause you to fail.
And so getting over that psyche
and basically getting into a world
where you can get those little reps
and then as you become bigger and stuff like that,
you can do bigger reps
because you can afford to pick bigger mistakes.
And so I think that's kind of how I think about it.
But like I said, I think Patrick McKenzie,
Patio Levin has written a lot on this
and it's been really good for a lot of folks
to kind of get the confidence up.
Let's talk about this 10 to 15% of founders
who are just weirdos who think customers
are going to pay way more for what they're building
than they're actually going to pay.
There's kind of a parallel here
where I talked to a lot of founders
who think that people will use what they're going to build
when the reality and the evidence is suggesting
that people aren't going to use it because it's not valuable.
Yeah, I wonder if there's sort of a parallel
if it's the same thing going on.
In your experience, why do people believe
that people are going to pay more
for what they're building than is true?
So I think the people who, the 15% that I mentioned,
I think they're very, they're just,
it's probably their personalities, right?
It's like they think that they are God's gift
to whatever their space is.
They think it's really, really good or something like that.
And it's never like black and white in that direction,
but I think that's what happens a lot.
I think the folks who think that someone's going to use
the product and you're just like, probably not.
Those folks, it's suffering from a similar delusion,
but that delusion is more sometimes driven
by a hope, right?
Just put all this time into this thing.
So of course they must like it.
And what I find with a lot of indie founders
is that most, not all, but a lot of us
are developer mindset, we're engineers first
rather than someone like me who's more like data scientist,
but really more on the business side than anything.
And so what ends up happening is our idea is like,
let's just build stuff.
Oh, we got weird pushback
that this person wasn't going to use this
because they didn't have this feature.
Well, let's just go build that feature, right?
And so what ends up happening is they build
this Frankenstein monster, which isn't pretty.
And it's one of those things where just like,
no one's going to use it,
but they did put a lot of time into it.
So they have to have that optimism.
They have to have that hope.
So I think it's a little bit different
than the pricing aspect,
but it's definitely like in the same family, if you will.
One of the coolest things about your business
is that you're sitting on a ton of data.
You are working with so many companies
helping them to reduce their churn, optimize their pricing.
What are some of your favorite tactics?
What are some of your favorite insights
that you've seen from all the data and insights
that you've gathered over the years
that other founders might not know about?
Yeah, I think that's a really good question.
It's a broad question.
We've done a lot of fun studies.
And yeah, like I think you alluded to before,
we actually just launched a benchmarks product.
So you can go into your profitable account
and basically compare yourself,
not only in a snapshot,
but also over time with similar companies.
I think that was the biggest thing
missing from a lot of benchmarks product
is it was like,
oh, here's like a data set of 300 in this report.
And all of those businesses are nothing like yours.
We actually look at like,
hey, these companies have similar ARPU, similar churn,
or in the same vertical or different vertical.
This is what they look like.
This is what you look like kind of a thing.
And so I think what was cool about that
is it allows us to kind of automate
some of this understanding of what's going on in the market,
what works and what doesn't.
But to kind of get back to like your actual question,
I think the value metric point that I brought up before,
like having a value metric,
companies that are using value metric based pricing
are growing at,
it's like double the rate as those companies
who are using feature based pricing,
meaning they're just pricing based on,
hey, you get these features and it's like a flat rate.
So essentially it's like unlimited usage
or unlimited value that you get from it.
And maybe you to get this other feature
have to upgrade for 50 bucks a month,
but those companies are doing as well.
And it's rare you see a double phenomenon, right?
Like that's really, really rare in data.
I think some of the other things is
what's happening in the world of like subscriptions
in particular is that these aspects of growth
are starting to get more dramatic.
And what I mean by that is,
we talked about these growth levers,
acquisition, monetization, retention.
Over time, acquisition was basically the best thing
you could ever do 15, 20 years ago
because there wasn't as much competition.
The average number of competitors you had
was like close to two or three
when you launched your product.
Now the average number of competitors,
the first day you launch is closer to about 13 to 15.
Just because software and products
are easier and easier to build,
they're not easy to get right,
but they're easy in terms of spinning up a server,
spinning up a website, driving traffic, et cetera.
And so when you have these low competition moments
in history, what was really kind of fascinating
is that you also had this other relationship
where you're getting a brand new marketing channel
almost every single quarter,
and in some cases every single month.
So I don't know if anyone's old enough
listening to the podcast to remember,
and I wasn't old enough to remember this either,
but there are worlds where you had 90% email open rates,
you had penny per click Google ads,
you were the first person on Facebook advertising,
these types of things,
where you just had these massive opportunities
where these channels would just explode.
And I think what's happened,
or it's not, I think the data indicates what's happened
is that all of a sudden more and more companies,
less and less marketing channels that are brand new,
and so you don't have this
interesting arbitrage opportunity anymore,
and so what was happening back in the day is
you didn't have to have a great product
because there just weren't a lot of great products out there
because you were just kind of building
the bread and water of SaaS,
you were building the bread and water of products,
and what ended up happening is
you had these major growth channels,
you had these products that we would look at now
and be like, wow, that was a billion dollar company,
that was a hundred million dollar company,
that was a 10 million dollar company,
and they just weren't great,
and they were able to grow really, really quickly
because they were the only products
actually solving that problem.
And so to get to the point here,
what's happened is the impact of acquisition
has actually started to go down,
and to say it's gone down is a little bit disingenuous
because really it's just gone down to not God-like levels
because we haven't had a new marketing channel
or a major marketing channel
in the past three, four years.
I think the last one that really was major was Snapchat,
and that's not really applicable to everyone.
And even then, you have a world where
basically what's happened is you can't just get
unfair arbitrage opportunities out of acquisition,
and this is why we're reinventing all these channels.
Account-based marketing, it's basically email reinvented
to be good email, not just spamming people, right?
And so what's happened is acquisition
isn't as powerful of a lever,
so these other levers, monetization retention,
they actually are giving about four to eight X the impact
assuming a similar optimization.
So if you improve your leads by about 1% right now
on the acquisition side,
and this is across a lot of different businesses,
so it's gonna be different for different verticals,
you can expect about a 3% boost in your revenue,
but if you improve your ARPU, your monetization by 1%,
or you improve your retention by about 1%,
you're gonna see about four to eight X that,
so right around 15% in the world of pricing,
and then also basically close to 10%
in the world of retention in terms
of your bottom line revenue.
And so long story short,
that's a huge trend that we're seeing,
and that's one of the central trends
that we have been writing,
and it's been really guiding us
in terms of the products that we build,
because there's more and more of a reckoning
every single year because of the density
that's happened in this market.
But to be a little bit more tactical in some trends,
because those are always useful for some things,
some of the most underutilized aspects
of growing a subscription business in particular,
making sure that you're optimizing
for more and more people to buy annual,
if not longer term deals.
Annuals have about, I think it's 30% better retention
than monthly accounts,
just because it's one time a year,
you're getting people to basically sign up
for that year versus 12 times per year.
Another really underutilized aspect is add-ons.
So again, you're building this product,
and you're building this customer base
who presumably likes you
because they're being retained,
like sell them an add-on,
sell them priority support,
sell them a new feature, a new product
that maybe shouldn't be baked directly into the product,
and maybe should be something separate.
But that's a really, really big thing.
It's a really, really underutilized piece.
Then a final piece I think is
there are a number of different mechanical pieces of churn
that I think you can kind of go after.
We talk a lot about delinquent and credit card failures.
They make up about 30 to 40%,
depending on your type of business of your overall churn,
meaning 10 people churn out,
three to four of them was because of credit card failures.
And you're only recovering really three out of 10
of those folks that churn because of credit card failures.
And so that's a pretty good area of optimization
from a mechanical perspective.
And then the annuals I already mentioned for mechanics,
and then even like good engagement emails,
that's another mechanical piece
that's super, super important
for basically taking care of business
in terms of your churn.
So there's at least one missive in there,
I think, for everybody.
And so, sorry, I started to ramble there.
There's just some really cool stuff.
And I get fired up about this
just because I love studying in the market.
I don't know if spewing out insights rapid fire
can be called rambling.
Yeah, you got to put a quarter in me, man.
I just go for days on this.
And it's also because I'm running our content team still.
And so it's one of those things
where I'm just right in the thick of it,
doing the analysis, getting the posts out,
that type of stuff.
And so, yeah, I mean,
I'm not writing the posts anymore, thankfully,
but definitely cranking on things.
To close out,
I want to reference a couple of facts
that you also spoke about
in your talk at MicroConf earlier this year.
You said that from your surveys and from your data,
remote companies have considerably less growth.
Oh, this one's going to get me in trouble
with this crowd, I feel.
The co-located companies, yeah.
You also said that founders who have hobbies
but who score high on work-life balance
tended to report slower growth
than founders who had fewer hobbies
and who had worse work-life balance.
You know a lot of these,
let's just say unpopular statistics
that founders don't want to be true.
As we sort of close out here,
what's your recommendation for people listening in?
What's some advice,
some common things I might believe
that you think that they should reconsider?
Yeah, and so I think just to be super clarifying
so I don't get run out of town here,
I think the funny thing is that we build conceptions
and this goes back to truth.
We build conceptions of what the truth is
because we don't want to be wrong.
We don't want to fail.
We don't want to let people down, these types of things.
We rationalize and that's amazing, right?
That's a good human evolutionary characteristic
that keeps us alive, at least mentally, right?
And I think that what's happened is
we then feed off of each other
and we feed off people who are very similar to us.
So there's the remote work posse,
there's the indie hacker posse
and what's funny is we all start to get these beliefs
that we can sometimes take to an extreme, right?
Remote work is the greatest innovation
to work in the past 10 years, right?
I've read that, I've read similar things to that.
I've read part of that verbatim actually
and so it's one of those things
where whenever I see something like that,
I want to get some data on it
because I'm like, well, hold on a second.
It can't be like that black and white, right?
Like it can't be that black and white as to,
this is great because there's definitely downsides
to everything, right?
There's downsides to every direction
and so that's when I start to research things
and with the remote work aspect, it was, oh, interesting.
Everyone kind of goes remote eventually as you grow
but to say that you're not making trade-offs
by being remote and it's just great
because you can hire people from anywhere
and all the obviously positive aspects of it,
is just wrong because there's more nuance there
and so I think that's why I wanted to get that research
and for those of you who haven't seen that research,
basically, what it indicates is that
before $10 million in ARR and annual revenue,
it's slower growth for remote companies.
Now, there's positives to having that slower growth
but it doesn't mean that there isn't a trade-off
and on the hobby side, there is definitely a trade-off
to having a hobby that takes up a considerable amount
of your time, I think it was like 10 hours or more per week
that you are doing and trying to build a big company
so you're gonna have slower growth
and so I think it's really, really important
and the advice I would have is know thyself
as much as you possibly can
because and if you feel like you don't
and you feel like if you're having dissonance
with yourself or with others,
maybe look internally a little bit
and try to know thyself and as I say that,
I realize I just sound so soft from where I once was
but it's so true because once you start to realize
who you are and be unabashedly unapologetic
about what's important to you,
then you can be like, yeah, I know it's gonna grow slower
but my mental health, my happiness, my relationships,
all these things are probably going to be much better
therefore, I'm okay growing slower
or I'm not trying to build a $100 million company,
I'm trying to build a $1 million company
and I'm fine if we're all remote
and if we become a $10 million company or more,
that's totally fine too
and so I think that's the really, really big thing
is the biggest piece of advice is know thyself
and then don't look at things
and this was the larger point of I think
when I brought that data up,
don't look at things in like this,
oh, I'm being attacked if something disagrees
with my conception of the world.
Look at it more as maybe there's something I don't understand
or maybe my view is too aggressive
and you can still keep your view after that exercise,
like that's totally fine
but if you don't understand the trade-offs
and you don't understand the other side of the argument,
you can't truly believe your argument
because you haven't assessed
why you should believe what you believe
and honestly, that goes for politics,
it goes for building a company,
it goes for workplace balance,
it goes for interpersonal relationships
and those types of things
but there's trade-offs in everything you do
and I think that's a really, really big thing
you have to grapple as a founder
because once you figure that out,
it becomes a lot easier
because then you can be honest with yourself
and be like, all right,
well, we're gonna come out with this free product.
Well, why don't we sell it?
Well, we could make money on it
but we're trying to go for this vision
and if we're gonna go for this vision,
we're willing to give up that money
or hey, I'm gonna dedicate my life to this
and I'm gonna love going to work every day
and I don't wanna apologize for working a ton of hours.
Yes, I'm gonna need some good people around me
who are gonna tell me if I'm getting a little too stressed
or hey, maybe you need to go on a break
and I need to figure out what those triggers are for me
when I know I need to go on a break
but why should I apologize for wanting to work
those 60 hours in a week
or why should I apologize for wanting to only work 20
and dealing with the trade-offs of
maybe I'm not gonna be a billionaire?
This is such a good point
because almost everything has a trade-off
and if you're not honest with yourself
about the trade-offs that you're making,
then you're gonna be making those trade-offs
without your knowledge and that's not better.
It's definitely way worse.
So I appreciate you bringing that point up.
Patrick, thanks so much for coming on the show.
It's been my pleasure having you on.
Can you tell listeners where they can go to learn more
about what you're up to at ProfitWell?
Yeah, absolutely, man, and thanks for having me.
Like I said, I love, I'm more of a lurker
in the indie hackers community.
I sometimes participate but I just love this world
and I love what you guys have done
and just the rest of the indie hackers' resources
and stuff like that because it's like,
we're all in this together.
We're all trying to do stuff.
Sometimes we compete with one another
but at the end of the day,
we're trying to get those good outcomes for ourselves
and so thanks for everything you do.
In terms of where you can find me,
my email address is just patrick at ProfitWell.com.
I'm more than willing to help basically anyone.
Things get crazy, schedules get hectic
but I get back to people eventually
and I try to pride myself on that.
It might take me a few months
but it's one of those things I can help.
In terms of online, ProfitWell.com,
we finally have a website that I'm not super proud of
but I'm proud-ish of so I think that it kinda
explains everything that we do
and I publish a ton of content.
We publish a ton of content
and so one good place to see it for me personally
is just Patrick Campbell on LinkedIn.
We do a lot or just follow us on Twitter at ProfitWell
or sign up for a newsletter or something like that.
So yeah, it should be pretty easy to find us
but if you have any trouble,
just email me at patrick at ProfitWell.com.
All right, Patrick, thanks so much.
Awesome, man.
We'll have a good rest of the week
and yeah, it was good chatting.
Listeners, it would really help out the show
if you took a minute to reach out to Patrick on Twitter
and let him know that you enjoyed hearing from him.
He is at patrickus on Twitter, that's P-A-T-T-I-C-U-S.
I would really appreciate it
if you reached out and showed him some love.
I also appreciate hearing from you myself on Twitter.
I'm at CS Allen, C-S-A-L-L-E-N.
If you learned something useful from the show, let me know.
Or if you have any suggestions at all
for guests I should bring on, topics I could cover,
or ways that I can improve the show, I'm all ears.
It's pretty hard to get feedback on a podcast
so I love it when you reach out
and send me messages on Twitter.
As always, thank you so much for listening
and I will see you next time.
Thanks for watching, I'll see you next time.