What's up, everybody?
This is Cortland from IndieHackers.com, and you're listening to the IndieHackers podcast.
On this show, I talk to the founders of profitable internet businesses, and I try to get a sense
of what it's like to be in their shoes.
How do they get to where they are today?
How do they make decisions both in their 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 Tyler Trinkis, the founder of Earnest Capital.
Tyler, welcome to the show.
Why don't you tell us a little bit about what Earnest is?
Yeah, so Earnest Capital is basically, we call it funding for bootstrappers.
And it's a little bit paradoxical, which usually gets folks asking follow-up questions, which
is good.
But it really is that.
It's funding for entrepreneurs, founders, basically IndieHackers, folks building businesses
that are outside of the traditional kind of venture capital model and strategy and ecosystem
that want to be profitable and sustainable.
But they need a little bit of capital to sort of get started.
And we invest everywhere from very early stage.
So writing the check that lets you go from side hustle to working full time on your business,
all the way up to kind of growth capital for businesses doing maybe up to a million dollars
a year in revenue.
That's kind of the whole range we play in.
We do things a little bit differently.
So we invest with a financing structure called a shared earnings agreement that we kind of
invented collaboratively with a lot of folks in this community.
It's just kind of better aligned for folks who want to build the next base camp or wild
bit and maybe don't necessarily want to sell the business or ever raise other rounds of
funding.
And then we try to do more than just write checks.
So we have a community of mentors.
A lot of them are pretty well known CEO's, founders, operators in the space that are
kind of on hand to just provide mentorship and obviously a community of awesome founders,
including the 11 companies that we've invested in so far.
Very cool.
I talked to a lot of founders and by far for people who haven't gotten started, the hardest
hurdle for them to get over is the fact that they don't have the resources.
They don't have the time to get started on something.
They don't have the money to get started on something.
They're working a full time job.
They have a family.
But raising money has always sort of not been an option for bootstrappers for one reason
or another.
They don't know the investors in Silicon Valley who are going to write the check.
So they don't want to try to build a billion dollar company.
And earnest is sort of an option for them.
What makes earnest a better option for raising money than previously existing options?
Often I don't find that we're really competing with other options.
So in many cases, we're not really making the case that we're better.
We've sort of just found a huge group of entrepreneurs who are either looking to work with earnest
or just bootstrap.
It's sort of the only option for capital that aligns with where they are and what they're
looking at to do with their business.
So they just self-select.
They say, look, I don't want to build a business that's a fit for venture capital and I'm
too early for revenue based financing and that sort of thing.
So we often don't find ourselves having to make the case that we're better per se, although
that's something I'd like to change.
I hope there's going to be a lot more funds kind of moving into this space and that we'll
more and more have to make the case that we're one of many but better.
We want more competition.
I really do.
Yeah, absolutely.
I'll tell you why.
The reason here is that we need the number of companies and entrepreneurs that are a
fit for this kind of backing is vast.
It's almost definitionally much bigger than the whole of the venture ecosystem, right?
Because every good VC tells you they're looking for the outliers, the absolute most far edge
of the risk-return profile.
And so there should be tons more businesses that are actually a fit for what we're doing.
And so we need a lot more people in this space to help back these companies.
It's an interesting vision.
Obviously, there will always be some self-funded, some bootstrappers out there, but do you think
we're moving towards a world where that number will diminish and where a much larger number
of entrepreneurs will opt to raise funding because there are different models out there
that exist now that are more supportive and realistic for them?
I don't think the number of bootstrapped companies will go down in an absolute sense.
But I think that on a percentage basis, we're going to see more of everything and with the
percentage of companies raising some kind of funding growing, right?
So the problem has been – and look, when you have folks on your podcast that are successful
bootstrapped founders that are, let's say, 10 years in, go back and ask them about those
early days.
It was always just an absolute – just chaos, right?
They're living in their parents' basement.
They're using credit cards to make payroll.
I mean, everybody could use a little bit of capital at the early stage of a business.
So if you can find the right type of investors to back those businesses, I think a lot more
entrepreneurs are going to find that there is someone who wants to sort of help them
through that phase.
Yeah, I totally agree.
And it makes me wonder why hasn't this been a thing in the past?
The internet has been around for several decades now.
It's not exactly the most creative idea.
There have been plenty of bootstrapped founders as well who have been complaining about venture
capital.
Why hasn't anybody started an earnest capital in the past 20 years and what makes the time
right for something like Earnest now?
Well, I can tell you my theory on why – this is getting a little bit theoretical here – but
why this didn't exist before.
And the reason is you had this alignment between venture capital and software companies that
made sense like 15 years ago, right?
Because you had to rack millions of dollars worth of servers before you could even get
your website live to even see if anybody gave a crap at all about what you were trying to
do.
That's not right, you had this huge – you had all this greenfield space with no competitors
and so if you nailed it, you could just gobble up the whole market.
So it was perfectly aligned with the idea of venture capital, which is this big lump
of risk at the beginning, no idea if it's going to work.
But if it works, it's going to be massive, right?
And what happened over time is the tools for launching and building got cheaper and cheaper
and so you could start to build these kind of technology businesses in niche spaces and
only targeting a couple of people or just a small derivation of a different product
and this is great, vastly expanded the number of opportunities out there, kind of made them
not really venture scale, right?
Because you kind of can build them relatively cheaply and you're not necessarily going
to take out the whole market because there's a ton of competitors out there but that's
actually okay, you could still build a great business there.
The problem is they don't have any collateral, right?
When I sold my last business, it was like three clicks, I handed over a Stripe account,
a Roku account, a GitHub account and that was it, that was my whole business, now someone
else owned it.
And the entire banking industry is built around the idea of collateral, they'll write you
a million dollars to go open an Arby's because they know if that thing fails, there's real
estate, there's all kinds of assets that they can take back and they just had no model for
backing these kinds of companies even as they massively proliferated, right?
I mean, you've got data about the number of new indie hackers out there is just growing
exponentially.
Yeah, it's staggering.
Yeah, and there's just been no sort of financing mechanism that was aligned with them and we
had this legacy idea that like, oh well, venture capital is financing for software businesses
and that's just not true anymore and so we need a whole bunch of new kinds of financing
models that are for these kinds of software businesses that are just like businesses,
they're not ventures per se.
Walk me through how an entrepreneur should be thinking about all this because for the
last couple of decades, venture capitalists have been synonymous with raising money, which
means that raising money has always been equated with doing things like going through this
arduous process of sucking up to these gatekeepers and begging for money and probably being told
no and wasting a ton of time.
And even if you succeed, it usually means congratulations, you don't have a boss in
the form of an investor who can tell you what to do, they could take up board seats, potentially
even replace you, they might drive you to have all sorts of unhealthy growth goals,
that's a ton of objections as a founder to raising money.
Should people sort of maintain these objections or should their viewpoints be changing?
I think it should definitely be changing because I think folks are, we're seeing this big awakening
of the scale of this opportunity and what you're seeing is investors respond to exactly
those critiques and so what I think is you need to disaggregate this idea of raising money,
which like I said, for so long, if you were a software business and you didn't have a
physical retail location, your option for raising money was a one-to-one relationship.
It was raising money equals raising venture capital and that was it, there was no other
option.
Of course, if you're going to open a bakery, you have a whole bunch of options.
You can go to friends and family, you can go try to find a professional investor, you
can go raise a loan, you can go get an SBA loan, you've got this whole kind of spectrum
of stuff and you've got to figure out what's the right fit for you in that moment in your
business and all that sort of stuff and we're heading towards that equivalency for indie
hackers, for people building technology businesses that there's going to be a ton of different
options and a lot of these are emerging, a lot of them exist and you just kind of need
to figure out, well, which one actually is the right tool for the job and maybe that's
none of them.
I tell people I'm not in the business of talking folks out of bootstrapping, often people
come through our door and I end up telling them like, look, I think you should bootstrap.
I think this business makes a lot more sense for bootstrapping, which is fine.
It's about finding the right mix and but I totally empathize with a lot of those critiques
and in fact, if you go back to my Twitter account and my blog from five years ago, you'll
find me being one of the loudest voices making those critiques but one of the reasons we
tried to do this and one of the reasons we did it so transparently and kind of collaboratively
with folks is like, let's try and work backwards from first me as a bootstrapper, what would
I have wanted to work with and then let's kind of expand that and get more and more
input to say, what is this actually a fit for you?
And that goes everything from the way we design the financing structure to the fact that we
don't take a board seat, we don't do any of that stuff.
We want to just be as aligned as possible with these kinds of entrepreneurs basically.
I like your point that a lot of the criticisms that founders have of investors, investors
like yourself are actively listening to and you're creating new models and basically trying
to accommodate these founders and address their concerns.
And if this happens at scale, it means the entire basically ecosystem for raising money
is changing, which means the founders need to update their existing notions and ideas
of how it all works and then sort of come into the modern era.
But it's hard to do because this stuff changes so slowly.
I mean, this is stuff that's changing on the order of years or decades, not weeks or months.
So people aren't really used to updating.
It's like if you ask somebody from my generation, what's the population of the earth?
They're probably going to tell you 6 billion because that's just what it was for so long,
even though the answer today is closer to 8 billion, they haven't updated.
And so maybe the fundraising environment is a little bit like that.
Let's say you have updated and you're saying, okay, you know, I've been a bootstrapper in
the past, but now I'm going to consider raising money.
How can you determine if that's the right decision for you?
Because you mentioned that even companies that come to you sometimes, you tell them,
no, no, the better idea for you is to just stay bootstrapped.
How do you know if you should raise money or not?
Yeah, it's a tough question because there's a lot of like nuance and situation-specific
considerations.
But one of the things that I've found to be a useful frame is you kind of want to raise
money when you feel like the money is going to clearly unlock value in your business.
And that kind of contrasts with raising money just because you need it, right?
And this has the, I think the benefit of both being a good lens to look through for yourself
as an entrepreneur to say, should I be raising money right now?
And also it makes it more likely that you will be able to raise money, right?
So an example would be, you know, I have a side business, you know, I'm only able to
work on it, you know, 15, 20 hours a week.
And obviously it's not my full attention, but yet I'm able to ship features.
I'm answering ticket requests and, you know, the business is still growing, right?
That's pretty clear, almost canonical example of, hey, look, if I could just have my full-time
focus on this business, can't you see how much value that would unlock?
Great.
That makes a ton of sense.
And it contrasts with, you know, I literally have no time in my life right now.
I have all these great ideas.
If only I could just have six months of not working, I'm sure that I would be able to
turn those into a business, right?
That's like just coming from the need.
You need the money to take the six months.
That's not a good time to raise money.
And it's a good time because first of all, you don't have any good leverage.
Second of all, you're very unlikely to actually raise the money.
So you're much more likely to just end up wasting your time.
And you know, so I think looking through it from that lens of I have this pretty well
defined bit of value.
And if I can raise this much money, I can unlock it.
So like another example is if you have a business that's a little further along and you're a
small team, you have your kind of core team that's working on product, and you've got
inbound kind of traffic that's going, you have a pretty good funnel, you're converting
people from free trials and all that sort of stuff, but you want to hire like a head
of marketing and give them a budget to try to figure out paid acquisition.
I think that's a pretty good time to raise a bit of capital.
And that's something that a scenario that we've invested in already in the past, where
look, I can see that if I could just drive more eyeballs to this particular funnel, I
think it would unlock a ton of value.
But I need that upfront bit of capital to be able to hire a really strong head of marketing
and give them a budget.
So let's talk a little bit about how you got here.
Because the last time we spoke on the podcast, you were working on a very different business.
You're working on Storm Mapper, which is a SaaS application.
I think you're episode 12 of the podcast.
So that was well over two years ago, you eventually sold Storm Mapper, which is a pretty crazy
process to go through as a founder.
I mean, you have something that's been pretty much your entire life.
And you've poured your heart and soul into it and suddenly it's gone.
How do you decide what to do next as a founder if you're in that position?
I don't know if I can answer generally what folks should try to decide to do next.
I did write like a 9,000 word blog post about my decision behind deciding to sell my business
where I kind of touched on that a little bit in terms of figuring out what you want to
do next before you decide to sell, rather than kind of selling the business from a point
of just exhaustion with your current business and then sitting there and saying, oh crap,
what do I do now?
So step one is to have a step two.
I think so.
Yeah.
I mean, I think Derek Sivers has an example of this of calling it the Tarzan move where
he sort of like is swinging from one vine and grabs the next vine before letting go
of the last vine.
I think that's generally pretty good advice.
In my case, it's kind of weird if you look at, if you kind of surveyed the folks in Indie
Hackers, I think what you would find is very few of them have a background in finance that
I had.
So I actually started my career working for a kind of a startup that was advising investors
in the clean tech market.
We got acquired by Bloomberg and one of the things I did throughout that career was explain
a couple of very complicated financial models that were being used to finance wind farms
and solar farms and stuff like that.
So I had this strange background in finance, then I totally pivoted my career to being
an Indie Hacker building a micro SaaS and now I came out of it with this kind of angst
around wow, like people really struggle to finance or to sort of get their business off
the ground is a big problem with just capital at the early stages.
In my case, that was that I had $50,000 in credit card debt to get this business off
the ground.
It'd be great if there was, if you could take all the good parts of the venture model,
the community, the early stage capital and apply it to this incredible group of folks
building businesses, but like the model just doesn't work, right?
You can't just be writing people willy-nilly checks on convertible notes and you can't
just take Y Combinator and just apply it to Indie Hackers.
And so, but I was like, well, I don't know, maybe I'm the person who can kind of sit there
with a whiteboard and design something that kind of bridges these two things.
And so just we started pulling that thread, basically just seeing if we could make it
work.
And so far, so good.
So this kind of goes back to the question I was asking you earlier about why hasn't this
been done before?
Why aren't there already a ton of earnest capitals that have been in the startup investing
space for a while and making this work?
And if you look at the way that the VC investment model works, their returns follow a power
law distribution.
So if you're a venture capitalist, you invest in 50 companies, maybe 40 of them just outright
fail, eight of them give you a 2x or 3x return.
But then one or two of them are these unicorn companies, these outlier successes that become
worth billions of dollars, and they more than make up for all the failed companies you invest
in.
And so you still turn a profit as a VC.
And if you don't follow that model, if you don't really encourage the companies you invest
in to go for billion dollar exits, then what you really need is the vast majority of the
companies that you invest in to succeed, which is seen as kind of an insurmountable, very
difficult challenge.
I wonder how you think about this with earnest.
How do you get over that hurdle?
No, I mean, this is the principal bet of earnest is this idea that we will see fewer of the
companies that we back outright fail, because what you will hear, and this goes to the reason
why stuff like this doesn't exist, is that for most folks who control dollars that go
into early stage companies, this is mostly the venture ecosystem, and then the various
things adjacent to it, the service providers and the LPs of venture funds and all that,
they will tell you, look, there is an iron law of physics, which is that they'll use
some big number, 80%, 90% of startups fail.
And so to make up for the fact that almost all of them fail, you have to have your ones
that succeed be as big as possible.
Our position is, hey, I think that it is not an iron law of physics, how much companies
fail.
But the venture model kind of feeds back into itself, where it says, hey, when I give you
a million bucks, and then I say you need to grow 11% per week for the next 12 months in
order to hit the milestone to be able to raise your Series A or Series B, that that makes
you one, more likely to be a unicorn, correct, but also makes you more likely to fail, right?
That you are going to take more risks, you're going to try to grow faster, you're going
to spend more, you're going to hire faster, you're going to do paid marketing when maybe
it's not as efficient as it could be, and you're going to be more likely to also fail.
And so our bet is that you can also run that back into reverse and that if you give people
capital that is sized appropriately and aligned with their outcomes, you don't give them any
growth pressure, you're not working backwards from a next round of financing, you're saying
it's totally fine with me if you never raise another dollar ever again.
So I don't care what the Series B investors want to see.
I want your business to succeed, that they make trade-offs where they optimize for sustainability
and growth rather than growth, growth, growth, growth, growth.
And that's our central bet.
I mean, I tell the folks who invest in our fund, like we will fail, and failure is kind
of relative here.
It's like we may not provide an appropriately adjusted return, not that we'll burn up, but
we will fail if it turns out it is a law of physics and 90% of our companies fail too.
And the ones that succeed just don't do as well as we don't have any next Airbnbs or
Stripes.
So this is our basic bet.
And to me, I think that aligns us a lot better with founders.
I think one of the central critiques of venture is this idea that, look, most of you guys
are going to fail.
So my job is just to double down on the ones of you that succeed and right off the rest,
whereas we are really aligned to make sure that as many of the founders that we back
as possible succeed.
I love that.
One of my favorite things is having a company whose incentives are directly aligned with
your customers, or I guess in this case, your portfolio companies, and you sort of have
no company left behind policy.
You need almost all of your companies to succeed for you to succeed.
And so anybody who takes investment from you knows that you've got their back.
Let's talk about the reverse of this equation, which is that as an investor yourself, you
have people investing in you.
They're called LPs, and they're the people who give you the money that you invest.
What was it like finding people to believe in the vision for earnest and convincing them
to invest in you?
Yeah, it's an incredibly painful process.
One of the things that I kind of say is that I get to sort of take on the burden of fundraising
so that our founders don't have to waste an enormous amount of time doing that.
They can come to us, we make a decision, we write a check, and that's it.
And then I still have to spend probably a third of my time talking to an endless stream
of potential investors to make sure that we have enough funds in the coffers to keep investing.
The process is pretty painful.
It involves lots and lots and lots of pitches, lots and lots of no's, lots and lots of Zoom
calls.
But all that being said, I think we had an easier time of it than some folks do raising
venture funds.
A lot of people say it takes 18 to 24 months to raise a fund.
We were about six months from starting the process to write our first check into a company.
It's an ongoing thing.
You kind of basically never stop fundraising.
But we kind of got to critical mass pretty quickly.
And it came primarily from bootstrapped successful founders who intuitively understood what we
were trying to do.
So that's basically if you go to our website and you look at our mentor list, everyone
who is a mentor in earnest is also an investor in our fund.
We think that's very important for skin in the game reasons and things like that.
And they also represent about, I'm going to say, 70% of our total investors.
So we have some folks that are investors that are not mentors.
But it's a laundry list of folks that I find, frankly, very inspiring bootstrap founders
like Natalie and Chris from Wildbid, Jason and David from Basecamp, David Hauser from
Grasshopper.
Those are folks that you've had on the show, Maurice Dowsinger from Mailparcer.
Just an incredible roster of folks who both stepped up and wrote a check to back us and
also are super generous with their time.
Yeah.
Sounds like the past guest list of the Andy Hackers podcast.
It is.
Yeah.
You've mentioned a couple of really cool things that I want to talk about because I think
they're very related.
Earlier in this conversation, you talked about the fact that you want to bring much more
than just money to the table, but you want to actually mentor startups and help them succeed.
And a little bit more recently, you talked about the fact that you believe that significantly
fewer than 90% of businesses need to fail.
And if founders follow a particular model, their success can come a little bit easier,
a little bit more guaranteed.
How do you use this incredible list of mentors and successful founders that you have working
with you at Earnest to basically coach these fledgling founders and help them succeed?
Yeah.
So, one of the things I find hilarious is if you're on kind of VC Twitter, which I increasingly
have to be just to sort of keep up with how things are going on over there, you hear people
say constantly, just flatly as an undisputed truth that investors add no value or in many
cases they add negative value.
And man, I just think that has a lot more to say about the people who are currently
VCs than it does about the idea of investors adding value.
Because I mean, when you're talking about early stage founders, there are so many things
that can just waste a gigantic amount of time that having a mentor group around you can
just help you just knock that out.
So, everything from kind of tactical questions where you're trying to figure out, how do
I set up payroll if I have three freelancers in Utah, one in North Carolina, one in Canada,
and one in South Africa, what are my options here?
And you can just quickly poll 40 entrepreneurs who run the gamut across those kinds of remote
teams and get the best options instantly versus, you know, going down the rabbit hole of Reddit,
you know, trying to get a million different suggestions.
That's incredibly valuable.
And being able to just have a group of folks who can help you, you know, rapidly iterate
on feature ideas to help you prioritize things, to help you kind of think outside the box,
you know, actually how, you know, are you being too incrementalist, you know, with your
pricing strategies or should you 10X those things, you know, like just having folks in
your corner to help you solve those.
To me, I mean, you know, I think I've become certainly much less of a diehard, you know,
bootstrapper, obviously, but I mean, I just see the value that's being created in our
Slack and our Basecamp, you know, every day.
And frankly, as a former entrepreneur, like I'm jealous, like a lot of stuff that I know
I was sitting there banging my head against the wall for days just gets knocked out.
I mean, an example would be, you know, sometimes as a solo founder or something, you're dealing
with these kind of huge platforms that we all interact with now, you know, you're building
on top of, in my case, it was like Google Maps or you're building on top of Salesforce
or something, you know, huge like that.
And it's just hard enough to get a human being on the phone to help you with that.
Much less like speak directly to a decision maker, honestly, like, I mean, I tweeted about
this a little while ago, but we had an example where one of our founders was just like totally
stuck trying to integrate with a platform that is a part of one of these giant big co's.
And one of our most recent mentors just pipes into the Slack and says, you know, by the
way, I lead a 20 person engineering team working on that platform.
Let me see what I can do.
He just saved that founder like two weeks of work, right, you know.
And so I don't know.
I mean, I think it adds a ton of value, whether or not, you know, ultimately, it's not like
people can just hold your hand and walk you to business success, right?
I mean, there is still a huge amount of this is on the founders that we back to to solve
these problems, implement it correctly and make sure that they don't fail.
But I mean, I think it I think it meaningfully moves the needle on making it more likely
that you at least get your business to a sort of, you know, sustainable place where you
can keep working on it indefinitely, right?
How do you evaluate whether or not a company that you want to invest in is going to be
successful?
For your model to work as a fund, you basically need the vast majority of the companies that
you invest in to work out.
So you probably have some sort of process for how you look at this.
And I know that if somebody is a founder listening in, and you know, they want to start a company,
but they don't have an idea yet, they certainly want to choose an idea that has a high percentage
chance of success.
How do you go about determining that?
You know, one of the things I'm trying to do is pontificate less and less on what are
good business ideas.
I mean, being an investor is one of these jobs where just by officially becoming one,
the job becomes so much easier, because all of a sudden, you go from just a random person
with ideas to someone who sees hundreds and hundreds of pitches of ideas of what people
are working on their metrics, etc.
And you just instantly start to get this much bigger perspective on what's working.
And the main thing I've taken away from that is that it's very surprising.
It's surprising what is actually working in a lot of situations.
So I think my opinion on that is evolving quite a bit.
So yeah, so I'll try not to predict the future here, but I'll talk about two areas of really
interesting kind of themes that I'm seeing people successfully build companies in.
And then I think probably will continue.
And one of those is, you know, I think I've been converted pretty wholesale from a skeptic,
maybe even as recent as six months ago, to pretty diehard about the idea of people building
legitimate businesses on top of no code tools.
I looked at this, you know, obviously, people know, Ben Tossall started as our head of platform
and his side project maker pad, who's been on the podcast here, started making way too
much money and he had to go full time on it.
And he basically is the sort of hub of the no code movement.
And so he sees across all the folks kind of using these tools.
And I've started seeing folks coming in with actually very legitimate businesses that are
built on top of no code tools.
And those have, I think, two really distinct advantages that are fascinating that I didn't
really internalize until I saw it firsthand.
The first one is the speed.
Like, you know, I will frequently see Ben in our internal Slack or Basecamp just kind
of brainstorming an idea, he'll get feedback from some other founders, he'll get feedback
from some of the mentors, he'll kind of lock it in and say like, okay, I think we're doing
this.
And I'll be like, that's a great idea.
I really hope they launched that sometime this quarter.
And then I'll wake up the next day, and it's live, fully featured, done in like four hours.
And it's just remarkable how fast you can build with some of these and the ability to
iterate at that speed, I think is incredibly valuable.
And the second thing is cost, right?
So one of the big challenges of building a micro SAS business is, you know, you're the
founder, you maybe you're a technical founder, and you can code and you don't care that you're
not getting paid anywhere near your market rates, but eventually, you got to hire software
developers and designers.
And those folks are expensive these days.
I want to get paid.
Yeah.
And if you can build your business on top of no code tools, that's one thing that you
just completely sidestep and maybe eventually you end up replacing them.
But if you can get your business to a substantial run rate on top of no code tools, it's actually
very valuable.
And I think one of the companies we're likely to invest in soon, you know, got themselves
to basically just about break even for two founders, you know, entirely off of kind of
no code tools that they'd hacked together.
So I'm pretty, I'm pretty excited about those opportunities.
And I've got another one, which is, you know, pretty clearly, you can see if you scan through
our portfolio, I'm super excited about niche industry focused B2B SAS.
So you know, this pattern of folks who understand a particular industry, they've been working
in it for years, they know where people are using spreadsheets and post-it notes and doing
something incredibly inefficient.
And the market is too small for a venture capitalist to say, like, I really can't see
how this is going to be a $10 billion business.
But they see the opportunity, they learn to code, they find a technical co-founder, and
they build some incredible, you know, niche piece of software that only serves like a
relatively small market from your, you know, with your VC hat on.
But for our model, I mean, these are great businesses.
And this is folks like Riley Chase, who does hostify.
So he used to work for IT companies and noticed this one pain point around this particular
piece of software they were using over and over again, and built a hosted hosted version
of that.
One of our most recent investments was end crawl, which is SAS for building, for rendering
and collecting the end credits for feature films.
Same story, one of the founders ran a post-production house in Hollywood for 10 years and knows this
is a huge pain in the ass for all everybody in this industry, and nobody wants to deal
with it, and you're paying incredibly expensive, you know, post editors to do this kind of
grunt work, and they build software for it, and it's a great business.
So I think folks should be looking for opportunities there in particular industries.
I was contrasting that with, you know, like I tell you, don't think about the next, you
know, email marketing automation kind of platform.
Think about email marketing automation for industry and start looking for those industries
where you can apply some of these best practices in a really focused way.
I love those insights.
And for listeners who are curious about more details on both of those companies, Riley
from Hostify was on the Endackers podcast a couple months back, and Alan and John from
Endcrawl did an Endy Hackers interview where you can sort of read about the details of
their business on the website.
Tyler, we are limited to like a half hour for this episode, so I want to have you back
on.
We'll talk more about the model behind Earnest and how you're finding these founders and
the trends that you see in the future if you let me check back in with you.
Can you tell founders where they can go to learn more about what you're doing at Earnest
and whatever else you have going on?
Yeah, I'll just take the opportunity to do a sort of shameless plug.
You know, we are extremely remote first.
We have a remote community of founders and mentors.
We invest in entrepreneurs who are based everywhere, but I think it's super important to get folks
together in real life.
And to that end, we're throwing a founder summit, which is coming up in next March in
Mexico City, but the sort of pre-applications are live right now.
You can find that on our website, and we're going to start releasing the first couple
of batches of tickets in early to mid-November.
So I would definitely encourage, you know, Endy Hackers to check that out.
We are going to have a good number of sponsored tickets, both for sort of Endy Hackers who
maybe are a little bit earlier stage and can't pay full price, as well as some sponsored
tickets for underrepresented founders.
So if any of that sounds interesting, there's a part of the application form where you can
tell us more about that and apply for a sponsored ticket.
And where could founders go to learn more about Earnest Capital in general?
Yeah, easiest place is earnestcapital.com.
That's Earnest, E-A-R-N, like earning, not Earnest, like Hemingway.
And yeah, I'm Tyler Trinkis on Twitter.
We're Earnest Capital on Twitter.
We've got a lot of, pretty much everything comes out there.
All right, thanks so much, Tyler.
Thank you.
Listeners, if you enjoyed this episode, I would appreciate it if you reach out to Tyler
and let him know.
He is Tyler Trinkis on Twitter.
I also recently started a podcast newsletter.
So you go to endyhackers.com slash podcast, you can subscribe.
And pretty much every week when I release a new episode, I share some of my thoughts
with people on the newsletter and sort of discuss my takeaways.
So again, that's endyhackers.com slash podcast.
Thanks for listening, and I will see you next week.