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 did they get to where they are today?
How did they make decisions, both of 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.
If you've been enjoying the podcast and you want an easy way to support it, you should
leave a review on Apple podcasts.
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Today I'm talking to Nathan Latka.
Nathan's a polarizing figure, to say the least, and he's a really tough guy to describe.
He runs multiple businesses that have done millions of revenue, and I think I would describe
him as an Indie Hacker with an emphasis on the word hacker.
It always feels like Nathan is hacking systems to figure out how to get things cheaper, faster,
easier, and more exclusively than he really has any right to do.
And it's fascinating just looking at the way that Nathan approaches problems, because he
just figures out how to get the most bang for his buck in pretty much every situation.
Nathan is also a strong believer in media first, distribution first.
He believes you should build out an audience and build out a channel to reach that audience
before you build your product.
I think there's a lot to learn from his approach, so enjoy Nathan's story.
You've got a lot going on right now.
You've got a podcast with millions of downloads.
You've got a magazine that you're publishing.
You've got your subscription business, FounderPath, and a bunch of other products that you've
released in the past.
And you've made a ton of money doing all this stuff and generated your fair share of controversy
at the same time.
So I guess right from the top, why do any of this?
Why not just go get a normal job somewhere like a normal person?
I would just be very bored, I think.
My first job was at Target during high school.
I would work as much as I can over the weekends, and I just remember I'd get so bored.
So my supervisor came over and said, Nathan, one of the things that I really need to do
and our boss is pushing down on us is we need to sell more Target credit cards.
So if you can start figuring out ways to upsell these Target credit cards when people are
checking out their candy and their gum and their milk, that's something fun for you to
do.
But I still even got bored with that.
But the answer to that question is I really enjoy deconstructing how things work, then
trying to replicate it, then trying to improve it.
And with that improvement, typically comes opportunity to generate cash and build a real
business.
How much does the generating cash factor into the motivation side of things?
I mean, if you get a normal job, there's usually an upside to how much money you can make.
As an entrepreneur, there really is no upside, sky's the limit.
How much does that factor into your motivation?
Well, I mean, sometimes I'll sit down, like you read these posts on Bezos right now on
Twitter about, you know, he's making a billion per minute, which is like divided by X equals
like 7000 million years on earth, no one will ever catch up with him.
And, you know, the money question to me, it truly is a measuring stick.
I mean, I think as a founder, and this is what I try to get at when I interview my founders
on my podcast, too, is I try and decode their first big cash moment in life, right?
So for me, many people think my first big cash moment in life was in 2015 when I sold
Heyo.
And what most people don't realize is I sold Heyo for a loss.
I mean, we had raised two and a half million bucks.
The company hit, you know, we had five million in total sales over four and a half, five
years.
The highest run rate rate we ever reached was about one and a half million.
We had, and this is on page 243 in my book, I just put the LOI in there for my contact
when I was 21.
They offered to buy the company for 7.5 million bucks, Portland, and I thought I was the crap.
I thought I was a stud, I still do, by the way, but maybe it's a little toned down now.
But I said no.
And our board said no, because I had raised VC, they wanted me to go for a billion dollar
exit.
And that was one of the biggest mistakes in my life.
So the point is, we sold for way less than 7.5 million in 2016.
I didn't make money on that.
And my actually the first big cash moment was the salary I paid myself from my dorm
room, both pre raising capital, so we grew to about 60 grand a month in revenue before
we raised capital.
I was making and paying myself like 10, 15 grand a month in a dorm room as a college
kid.
I mean, and so I saved up a ton of money.
And so my early cash moment was actually an accumulation of salary over three to four
years between ages 19 and 24, where my expenses were very low relative to the salary I paid
myself for my own company.
And so bringing back that all back to your question about like, what's enough money?
For me, it's really truly a measuring stick, and I'm very competitive.
So it's points for me.
But right now, you've got, I think, at least three major sources of revenue, your podcast,
which I mentioned, your subscription database, and now founder path, which one of those is
making the most money.
Let me sort of break down how we make money on all those things, right?
So an order like sequential.
So 2015, I sold heyo.com, that was my first SaaS company, right, understood, learned everything
else asked there.
I then launched the podcast in 2015, I didn't know what to name it.
So I Google searched the word, you know, you ever use keyword explorer, Portland?
Yeah.
So back in 2015, I typed in podcast, just to see what the most searched term related
to podcast was, and it was, what's the top podcast?
So I said, heck, I'll just name my podcast, the top podcast, and get all this free SEO
juice.
So that's what you name the podcast.
And quickly, what happened was, I had people asking to sponsor, I just put the email in
the meta description on iTunes, and people would start reaching out, but it was like,
nothing, it was like 100 bucks an episode, I'm like, this is not even worth recording
60 second mid roll.
And what I realized is a lot of these sponsors reaching out asking to sponsor would anchor
to CPM, which essentially cost per 1000 downloads.
And I realized you would have to make a million dollars via podcast, you would have to have
serial like numbers, 40, 50, $100 million a year, if you were going to place on a CPM
model.
And what they were doing is when sponsors reached out, I said, what is your current
CAC customer acquisition costs on other channels you're spending money on?
And then I told them if I thought I could beat it or not.
So I anchored to what their CAC was, and their other channels versus CPM.
And that's how we grew the podcast where, you know, last year, I'm trying to remember
what my tax folks sent me, but I mean, last year, we did over $700,000 in sponsor revenue
directly from the podcast, our largest sponsor pays six figures a year, and all sponsors
start out on our test, which is $5,000 a month for a three month test, so 15 grand paid up
front.
And if that goes well, they typically then extend to a year.
So that's how the podcast started, I'll pause there before I go into the other two revenue
streams.
I think, first of all, it's a pretty fascinating transition to go from having this venture
funded business that you're in talks to sell for millions of dollars.
And then after that's done, decide to start a podcast, especially knowing the podcast
didn't really make that much money on a CPM basis, at least you'd have to innovate.
It probably wasn't obvious to you right at the beginning, okay, how am I gonna make this
make a ton of money?
Why go into the meeting industry?
Why start a podcast instead of starting another SaaS company?
My bigger belief back in 2015 was that distribution was more important than product.
And so when I was growing Heyo as founder, one of the things I spent so much time on
was trying to convince people with distribution channels to talk about Heyo, whether that
was convincing a big blog that wrote a post about the space to put our link in the top
header so we get backlinks or convincing an affiliate that a 30% cut during first year
revenue was better than 10% in perpetuity or like scanning YouTube, I would type in
the word webinar plus the competitor name and then all the webinar recordings they did
with other affiliate partners would show up on YouTube and then I would go hunt all those
other like hunt them to do a thing with me and it would take so much effort.
And so I realized, wow, the real power here is not necessarily building a software company,
but it's building a media business that locks down distribution in the industry you want
to own.
And I knew that long back in 2015, I knew that long term, I wanted to plan a B2B SaaS
space.
So I said, I'm going to go build a distribution channel on the space and I happen to choose
podcasting to do that.
This is something that a lot of first time founders end up learning is that even if you
build a product and that product is great, it doesn't matter if nobody can find it.
And so you have to kind of go to where the people are that usually means going to other
distribution channels owned by other companies, you know, trying to get to the top of the
app store rankings or the top of the Google rankings are trying to get the press to write
about you or trying to show up on Facebook ads or something.
And that's just like a lot of time, a lot of money, a lot of effort spent, basically
begging other people to feature you on their distribution channels.
So then your second at bat, you're like, screw that, I'm going to build my own audience,
my own channel, my own podcast or newsletter or whatever it is, and then I don't have to
beg anybody else to let me get in front of their audience because I already have my own.
What was your long term plan for your podcast?
How did you plan to actually grow this thing and turn it into a distribution channel that
you could use?
All of the people that I knew in podcasting in 2015 that had top shows, there wasn't anything
magical about their shows other than they launched in like 2006.
They had been doing the same thing, the longest, most consistently.
So I knew launching, I had to figure out, Nathan, can I do this thing for a long period
of time, extremely consistently, and high quality.
And the only way that I could say yes to that was to make sure I could produce each episode
as cheaply as possible so that even if nobody listened and I had no revenue, I could afford
to make it keep going for as long as possible.
And that's what would ultimately help us generate revenue.
So I was prepared to do 100 to 300 episodes even if like 5 people downloaded each episode.
Yeah, we talked about this a few weeks back and the advice I give to everybody who asked
me, what should I do if I start a podcast is don't quit, no matter what you do, prepare
to keep going.
You're going to want to quit after the first 4 or 5 episodes when it's hard to produce
an episode and it's hard to find guests and you don't have that many downloads.
But when I started Indie Hackers, I put a triple digit episode number before every episode.
So the first episode was 001.
So I knew I had to go at least until 100 episodes, otherwise I would look dumb.
And I think you hit the nail in the head.
People with successful podcasts often just have the longest running podcast.
They never quit.
That's exactly right.
I mean, look at you right now and look at me, right?
Everyone's locked down.
We've changed locations.
A lot of people think they can't get into podcasting until they spend like 10 grand
building a fancy studio.
But like when you add up all my equipment that I have right now, it's probably like
80 bucks.
And what's most important is it all fits in my backpack.
So I never have an excuse not to record because I can take my studio with me.
You've done the same thing.
What is your equipment?
Do you have your headphones?
Do you have the mic?
What else?
Yeah, I've got my headphones, my mic.
I've got an audio interface.
And it all fits my backpack.
And I just don't see any point in building up this huge wall of things that you need before
you get started.
I'm going to go out camping right now and tether for my phone and record this podcast
episode.
And you have to tell someone where you are right now.
It's super cool what you're doing.
Yeah.
I'm in Mount Shasta at the moment.
I'm probably going to be in a different place for every podcast episode I record for the
foreseeable future.
I'm doing sort of an indefinite road trip.
And I've just been driving around California for a while, just making sort of last minute
stops to see where I want to stay.
It's all been incredibly beautiful, Mount Shasta in particular.
And this whole trip, I've just been thinking about just how much COVID-19 has changed things.
Like seeing the different ways that cities are open right now, all the things that are
closed, what people are doing, and just my own trip and other people making similar trips.
It's crazy.
I mean, even big technological shifts like computing, like how much has the world really
changed as a result of us having computers?
Well, it's changed a lot, but it hasn't really changed how people move around in the world.
It hasn't really changed the layout of our cities and our suburbs.
But I think if COVID sticks around long enough, which it looks like it might, that's actually
going to have a big change.
And it's going to force us to fully embrace some of the technology that we've had that
we haven't really fully embraced.
Most companies could have been fully remote for years now, and yet they just aren't.
And now suddenly, they are.
Not because we have new technology, but just because we've had a shift in social norms
because of this disease.
So I'm really enjoying traveling.
I think most indie hackers who have the ability should try changing it up a little bit rather
than just sitting at home in one place.
It's important.
I mean, I think I have a bit of an advantage and I forget your situation.
But I don't think you have kids and I don't think you're married and I don't think you're
dating right now.
Completely unbounded.
Yeah.
So we have a bit of an advantage.
So there might be listeners listening right now that are like married with like two kids,
right?
A little bit different situation, but still sort of same concept.
I mean, I remember when this all started, I was reviewing our month closeout and I was
paying Verizon like 300 bucks a month for my phone plus Wi-Fi.
I'm like, this is ridiculous.
So I switched to Google Fi, which is 70 bucks a month.
I have the same thing.
Yeah.
It's like, this is incredible.
So I'm here at this house in LA with four other tech executives.
They're all complaining the first two days that the ethernet Wi-Fi is not strong enough.
We were only getting like, what was it, we were getting like 300 megabits down, but up
is really what matters.
We were only getting like three or four up and they're complaining and I turn on my Google
Fi and I'm getting like 15 up, it was like high speed.
I mean, I'm shooting high quality YouTube lives on my Google Fi thing, which is like,
wow, I could be in the middle of the woods and still wear my own business out.
And they give you so much data to like, I've been getting notifications from them.
Yeah, just it's free.
To a certain point, they're like, oh, you hit your six gigabyte limit, everything here
is free until you get to like 100 or something and then we'll start throttling you.
But I'm not going to get there every month.
So it's incredible.
It's pretty amazing.
Yeah, we've got the technology to do.
And I think the lifestyle is pretty good.
How much does that factor into your decision to be sort of an indie hacker?
I mean, if your lifestyle, yeah, the ability to choose basically when and where you work.
When you sort of define what it means to be rich, rich is sort of like, you can buy whatever
you want.
But I mean, you know, wealth to me is more interesting, which I sort of have to find
for myself as being able to do whatever I want, whenever I want to do it.
And by nature to do that, you have to go you have to be an indie hacker, I mean, you have
to have your own stuff going on because you can't answer to a boss where you have to check
into Slack at 8am every day.
What if you're camping in the middle of the Sequoia forest, and you just on your little
Coleman camp stove made coffee and it's 755, you don't want to have to like fix your hair
and do shit and pop up your computer to make that Slack call that kick off the day, right?
So you have to be an indie hacker if you want to be wealthy, in my opinion.
Yeah, I think I agree, I think wealth comes a lot from freedom, like you said, the power
to do what you want to do when you want to do it.
And it's really hard to have freedom if you're not taking control of your life into your own
hands.
But on the flip side, there's a lot of risk.
Like there was just a post on any hackers yesterday about basically just like a small
hit rate.
You have an indie hacker's product directory, and you sort by the number of solo founders
who have never hired an employee in their life, who are making at least 10 grand a month
in revenue.
It's like 50 people.
And of course, most people have not uploaded their product to any hackers.
It's orders of math.
I've had more than that on the podcast.
But out of the thousands you've tried, like the numbers seem pretty small.
Why aren't you dissuaded by the chances of failure?
You know, why are you dissuaded by the idea that you might just fail and not make as much
money as you would otherwise?
I just I mean, one of the things that I care very little about and this sort of also goes
into how I deal with and work with in some cases, sometimes it's friendly, sometimes
not so friendly the press is I just know it's a numbers game.
Like as long as you've got the sort of genes to not be scared to like swing, swing, swing,
swing, swing.
It's just a matter of time before you hit sort of that one thing that really works.
And you only I mean, you could have 99 things not work.
And one thing worked really well.
And that's all you need.
Everyone forgets about things that don't work.
I mean, does anyone talk about the Amazon fire phone anymore?
That failed miserably?
No, we're talking about how basis is making like a billion dollars a day.
So I think the answer that question directly, it's I am confident my ability to keep swinging,
which means I don't get dissuaded by the chances of failure because I know one day I will hit
it's just a matter of time.
Yeah, I think that point is so underrated because if you really understand that, and
you're really willing to put in the reps and just keep taking swings, then you'll work
to I think, create a lifestyle and an environment that allows you to keep taking swings, right?
If that means living more cheaply so that you can start your next project.
If that means even having slightly less ambitious projects aren't going to take three years
to build, but you can get them out the door and see if they succeed or fail in a couple
months.
I think that's really one of the keys to being able to succeed.
And most people that I talked to like did not, you know, hit a home run on their first
step at it took me six, seven years of building startups before I started and the hackers are
had DHH on here the other day talking about work-life balance.
And 37signals as a company existed for five years before they launched Basecamp.
And there's so much said about how easy it was in the launch Basecamp and how much, you
know, somebody successful can't understand the plight of somebody who's not.
But how many people are really putting five, six years into it?
How many people are just expecting to succeed after one or two years and then complaining
that they haven't?
It's a lot.
And that's why I appreciate what you're building, right?
A lot of the mainstream press where they have to generate clicks, more people will click
a headline that says Basecamp goes from zero to five million in one year.
I mean, look at all the people posting their ink listings right now, right?
I mean, this is like clickbait 101 stuff.
It's way less sexy to say, you know, Basecamp started off as an agency, barely made payroll
first year, five years later, finally launched their first tech product, which is three years
late, by the way.
Right.
And then now it's a success.
It's just it's less sexy to talk about the marathon, sprints and quick success always
get more clicks because that's what people want, but it's not how it's actually done
usually.
So again, that's why I appreciate things, you know, folks like you who really shine
a light on the marathons, not just the sprints.
It's pretty fascinating how badly everybody wants that quick story, though, like they'll
say they don't.
They say, Oh, no, I want the most realistic picture, but you put the realistic picture
out there and everybody ignores it and everybody focuses on a quick success.
Like somebody can literally say, it took me seven years to succeed.
And I did all this stuff and then I finally got there.
And then people will be like, Wow, you got there so fast, you know, how can I succeed
in the next six months?
And it's like, wait, that's not what I said.
I said it took me seven years to do all this other stuff and build an email list and pick
up all the skills and I failed a bunch of times.
But no matter what you write, like people really crave that fast success.
And I think it's unfortunate.
I think it's much better to take a lot of it bats to take your time to realize, as you
said, it's a marathon, not a sprint, and to enjoy the actual process of starting a business
instead of trying to rush to the finish line as fast as you possibly can.
And I would underscore and say, I think the main reason people don't do that is the first
point you brought up, it's keeping your baseline expenses low, so that you have very so it's
easy to pick up the bat and swing again, most people spend way more than what they should
be spending.
And so I just encourage everyone to focus like one Sunday a month on decreasing your
expenses.
That's almost, I think probably 10 times more powerful than spending spending that same
day on how to drive 10 grand a month of new sales.
The tricky thing when it comes to expenditures is that it's so easy to go in kind of the
upward direction, but it's hard to downgrade.
It's really easy to improve your quality of life to start eating out more, eat nicer food
or move into a better, bigger apartment.
But when you think about downgrading, it just seems so painful.
But the thing is that you just acclimate, it's like getting a shot, you know, it hurts
at first.
And so you don't want to get one, but then you do and you're like, I wasn't so bad.
And you just adjust to the new normal.
So I think that's great advice.
What was your financial situation like after you sold your company Heyo, you said you sold
it for a loss and you started your podcast.
How much money do you have in the bank?
Yeah, I mean, I started and I actually I'm looking this up as you're asking the question,
I started keeping track of like my net worth just because I figured one day when I'm 50,
if I want to give up, you know, someone writing a bio on me or something like my history,
this document will be really valuable.
And so I'm just opening it right now and scrolling down to see how much history I have.
Yeah, okay, so I have October 29th of 2015, which is right after I sold Heyo and launched
the podcast.
So I'm scrolling over to my net worth column.
Yeah, so I had in terms of how I calculated my net worth about 100,000 bucks.
So I was 25 at the time, right?
And then, you know, scale up.
Yes, the podcast is what took me past a million.
But you know, I measured two things.
I measured net worth, and I measure cash in under seven days.
So if I wanted cash quickly, how much cash type one or seven days, and now those numbers
put together obviously are much larger than a million dollars, and the podcast is really
what got me there.
So let's talk about growing the podcast and helping you get there.
Because as we mentioned, most podcasts don't make very much money.
And you're able to sort of figure out this hack where instead of selling ads on a CPM
basis, based on how many people listen to your podcast, you would sell ads based on
a CAC basis based on how expensive it was for your sponsors to acquire customers through
other channels, you would try to basically match that or beat that on your podcast.
Exactly.
So if, for example, I don't know, ConvertKit came to you and said, Hey, Nathan, you know,
we usually spend $100 a year to require a customer, you might say, Well, listen, I'm
gonna get you customers for $90, right?
So pay me, you know, $20,000 to sponsor my podcast, and I'm gonna get you whatever that
is divided by 90, that number of customers.
200 and 230 customers.
Exactly.
Right.
Yeah, that's exactly right.
And so, and what that also did is I would put that calculation in the SOW, the statement
of work that we signed for the sponsorship, I'd put that in there, I'd say, ConvertKit's
expectation for this $15,000 spend, because it'd be five grand for three months paid upfront.
So for 15 grand, their CAC on their other channels are about $100 to get a new customer.
If Nathan can bring in X amount of customers, right, it is clearly outperforming other
channels, which means it's very obvious.
Everybody knows there's no ambiguity.
It's very obvious if ConvertKit would renew that sponsorship for a full year, either beat
the number, right, didn't beat the number, there's no ambiguity.
So that allowed me to really focus on getting the amount of customers I needed into those
sponsors so that they could renew.
And how exactly did you go about beating those numbers?
A couple things.
I think one of the big secrets in podcast advertising is people always assume that mid-rolls
are like, they're either profitable or not.
You know, for me, what I do is I tell my sponsors, yes, this is for podcast placement.
But if I know I need to bring you 100 customers in a month, and I'm only at 86, and there's
a week left in the month, guess what I'm going to do?
I'm going to put you on our blog, I'm going to email you to our list, and I'm going to
figure out a way to get above that number.
So the trick is, in terms of hitting those numbers, is really to not just use one media
asset that you've built, in my case, the podcast, but try and use all your media assets
to drive past that number.
I love the alignment of incentives here, where if you actually contractually hold your feet
to the fire, and you have to get them to these customer numbers, then you're going to think
outside the box, you're going to think about, okay, what channels can I use to get them
those customer numbers?
Yeah, they're ostensibly my podcast advertisers, but I have all these other channels, I have
my email list, I have my Twitter, I have my blog, I can use these to try to help these
companies hit their numbers so they reinvest with me as a podcast host.
That's right.
We haven't really talked about what your podcast is about, or how you go about producing it,
but I think about you, I think you're a guy who's really into different hacks.
You always seem to find ways to do less with more.
The number of episodes you've released on your podcast is absolutely insane.
And just the entire format of the show, I think, is part of the strategy.
How does your podcast work, and what's it about?
I'm curious, so I can tell you what I think it is, but I'm curious from your perspective.
You've listened to one or two episodes, if you're talking to someone else, and I'm not
there, so I won't be offended, what would you say about the podcast?
I would say Nathan's podcast is one where he brings on basically the founders of successful
SaaS businesses, and just grills them on the numbers.
He asks all of acquisition numbers, and retention numbers, and revenue numbers, and expenses,
and gets the story behind what they do.
And about 15, 20 minutes, I think it's the length of your episodes, so they're very fast,
they're very rapid fire, and they're really no bullshit.
And behind the scenes, from what I understand, your calendar is crazy.
I've seen screenshots of you recording something like 20 episodes in a single day, the entire
thing just blocked out, and you've done, I don't know how many, over a thousand episodes
of your podcast now?
Yeah, we're about to pass 3,000 recorded episodes.
3,000 recorded episodes, and it's been five years, which is insane.
And I think one of the things a lot of people don't understand about podcasting is when
you're thinking about download numbers, it's not just downloads per episode that matter.
If you release more episodes, you're going to get more downloads overall.
If you release five episodes a week, you're probably going to get five times as many downloads
as you would if you release one episode every week, which allows you, I think, to basically
get more sponsors and charge more money.
Well, usually, yes.
So the way people game the CPM model is they do exactly what you just described.
You'll go to these podcasts, and they'll be like a daily thing, but it's like two minutes,
it's like the founder, the host talking about their favorite quote, right?
But what happens is, let's say you only influence one person, you have one person listening.
Well, if you release one episode a week, you get 52 downloads a year, right?
If you release one a day, you get 365 downloads a year, which do you prefer?
Most people would prefer 365 downloads.
But what I'm trying to measure is actually influence.
Can I get customers from my audience to make it worth my sponsors?
So there is a blend, I mean, what I am playing for, my show is never going to be serial.
It's probably never going to be Tim Ferriss or Joe Rogan level, right?
It's never going to do 10 million downloads a month.
But what I can tell you is every single day when we release an episode, that episode will
100% get at least, you know, 6000-ish downloads in the first week and about 10,000 downloads
in the first two months that it's live.
So it's basically like me doing a webinar every day to thousands of people.
That's valuable to me because it's all hyper-targeted on B2B SaaS.
And how do you actually get to those numbers?
Because I think even someone listening who's like, okay, I've got the work ethic, I'll
hit it consistently.
I'm not going to quit.
When you first release your first 2030 podcast, and you're still getting like 100 people listening
to an episode, it's pretty easy to feel dejected.
How did you grow your listenership?
You have to realize what you're building.
So if you're building a consumer play where you care about number of downloads, fine,
go build that.
But let's say that example you just gave, those 100 listeners, it's the Fortune 100
and it's every CRO, right, from the Fortune 100.
And you only get $100 per episode, you're never going to be bigger.
You know how much money people would pay for that podcast for that kind of access to influence?
Major, major, major ticket prices.
So that's what you have to understand is are you trying to just go for volume or are you
going for influence?
And if you're going for influence, understand that's very different than the volume game.
In fact, by nature, if you're playing the influence game, you're going to do less volume
and vice versa.
There's been a lot said recently on the topic of just paid content.
It's been really growing, I think, the last year or so, especially recently with the advent
of Substack.
It seems like everybody's got a paid newsletter now.
And what's cool about it is it seems to be working.
People are actually paying for content.
But it's consistently kind of what you say, like you're more likely to have people pay
for your content and pay more money for your content.
If you're helping them make money or if they're influential, then you are.
If you have some sort of mass appeal podcast or mass appeal newsletter that doesn't really
help anybody make money, it's kind of going out to the everyday person and it just isn't
really tied to improving people's lives in a very measurable financial way.
One of the metrics I wish we had for sort of this, I'll call the Substack movement is
churn.
We don't know, we know there are successful newsletters with thousands of people paying
$5, $10, $20, $50 a month.
What we don't know is how sticky are these things.
It reminds me back in the day when I used to interview people that ran membership sites
and I'd always be impressed by their numbers, except their churn.
Because churn would be something like 30% or 40% a month, a month, not a year, a month.
And it's because they have to continually upload new content every month to get people to stick
and convince people to consume the content.
Even if you create quality content and they don't consume it, they're still likely to
churn.
So my question, do you think this lasts or is it sort of a flash pan sort of situation?
I think readers' willingness to pay for content will last.
And in the aggregate, I think the broader trend of people will pay for actually good
stuff will last.
I think in terms of what people write and how they deal with this churn problem, which
is very real, that will evolve over time.
I think people haven't really, the playbook hasn't really been written for the indie hacker
who wants to create a media business and figure out a way to continually churn out this new
content that's novel and refreshing enough that people don't tune out after a while.
Sort of an example I like to talk about is education versus news, sort of a psychotomy.
Educational content is wildly popular.
People pay a lot to take courses.
People pay tens of thousands of dollars to go to school.
But education is almost 100% churn.
Nobody takes algebra 35 times the rest of their life.
Once you graduate from a particular educational challenge, you're done.
And I think a lot of the content people are putting out in the form of courses or like
how-to guides, that kind of stuff will have super high churn.
But also I think when people create these newsletters, one of the things they're not
realizing is that you kind of have to be, for lack of a better word, newsy, in my opinion.
I think you need to be constantly fresh.
You need to be talking about current events.
You need to be up to date.
Like Ben Thompson is with Stratecory, for example.
He probably has very low churn numbers.
He's been growing his revenue in a subscriber base for the last 6, 7 years.
And his content is almost always focused on what's happening right now in the world.
Which I think, number one, relieve some of the burden of having to be super creative
and figure out what to write about.
Because guess what?
It's always coming in.
It's always like top news headlines.
And number two, I think it's something people don't graduate from.
There's never an age at which you're like, you know what, I no longer need to know what's
going on in the world.
You know, I learned everything that was happening the past 10 years, 10 years ago.
So I'm done.
And so he probably has low churn numbers.
So I agree with you, I think that there's some real structural problems with a lot of
these content businesses.
And not many of them will sort of stand the test of time.
But I think some will.
And they'll figure out how to engage an audience consistently over a longer period of time.
I mean, this is why I think less about, should I launch a paid sub-stack newsletter?
And more about branding how I think as a product.
What I mean by that is, I guarantee you when the congressional testimony was happening,
whatever it was last week with the four big tech CEOs, there were people watching who
know of Ben that were wondering, I wonder what Ben thinks about this.
And they're gonna read his newsletter that week because they want his voice brand analyzing
and reacting.
And so that's where I think a lot of people get mistaken is they think it's more about
the medium.
Do I have a sub-stack newsletter?
When really what it's about is what is your brand of thinking that makes people curious
about who you're gonna react to current news.
For me, people anytime something pops up in the B2B SaaS world, people will wonder two
things.
One, has Nathan grilled the CEO yet?
And two, does Nathan think this thing's gonna work or not work?
And if I can stay relevant and write about those things with my brand and voice, I think
that's what creates super high retention on the content.
I think that's so true.
It also gives you sort of a moat where nobody can come and be like a new Nathan Lockhead.
People who have listened to your podcast, who like your personality, who trust what
you have to say and want to hear your opinion on the news, they can't find a replacement
for you.
It doesn't exist out there.
And so it's such a good way, like you said, to prevent churn, to keep growing your brand.
And I think the podcast that you have and the podcast medium in general is probably
one of the best mediums besides maybe YouTube for developing a personality-based affinity
with your audience.
Yeah, I agree.
So what drives to your question that you asked for five minutes into the chatting about sort
of other revenue streams and magazines and books and things like that, the way I think
about my business today in terms of just media is we're in a world where whoever has can
keep attention among his twins.
So my sort of mousetrap, right?
My onboarding to your attention is podcast, but that's only 15 minutes a day.
How do I get to the 16th minute, the 17th minute, the 18th minute, the 19th minute?
This is how I think about building other sort of media brands.
And so when people were flying, I was thinking, how can I get that hour-long flight?
How can I get your attention on that?
And that's one of the reasons we launched the magazine, right?
Is because I knew that I could get into airports because the book was already in airports.
And then I could get another hour of these people's week if they're flying once per week
on an hour-long flight.
And so that's how I think about all my media is take my current audience, send them a type
form, ask them where else they consume content, and then go launch my voice and brand in whatever
that medium is to get more of their day.
Yeah, so let's talk about your magazine.
Because it's not often that somebody decides to launch a physical media product in an age
where pretty much everything is digital.
And I think the way that your brain sort of turns over the problem, which is the scarce
resource is actually attention.
People have only so many hours in their day.
There's a ton of stuff fighting for their attention, and what you're trying to do if
you have a media business is get more of those minutes, more of that time by ideally hitting
them in places where the competition is less or providing more value.
What was your thinking behind starting a magazine and how did that process go?
The first thought is it'll get a lot of attention just because it's the opposite of what everyone
else is doing.
I mean, magazines are going out of business right now.
So people are going to stop and go, wait, why is Nathan launching a magazine?
So that's like one big piece.
The second piece is, to our conversation earlier, we talked about keeping life expenses low.
When you're launching new business lines, keeping production and expenses low on that
new idea is also important.
And so I might be able to get the magazine out for very, very cheap because if you look
at it, for example, like all these, this is the July 2020 issue, so this is the one that
just came out.
Like all these headlines, it's basically just a podcast recording transcribed with my design
team adding charts.
And so the like my fall in cost to produce this are like just the content are under two
grand a month, but we sell it for 29 per issue.
So it's a it's a new, profitable, attention grabbing distribution channel.
What's cool about this is you're kind of re utilizing the same skills over and over again.
If you stay in media, you basically learn how to tell a story or you learn how to generate
controversy, or you learn how to write a headline, and you're doing that with your podcast.
And then you move to the magazine medium, not only can you reuse a lot of the content
like you're saying, but it's basically the same skill set.
Well, how do I get people to read this, you know, magazine, how to get them to open when
they see the cover?
How do I get them to, you know, keep reading once they hit an article, probably no different
than the same, you know, tactics that you use to make an episode of a podcast engaging,
etc.
So my question for you here is what, what have you learned about producing compelling
content and getting people to care?
And I guess grabbing people's attention in a world where it's so competitive to get people's
attention.
So in my opinion, to really understand this, you have to study how people are consuming
that content, right?
So podcasts are usually consumed where someone's driving, they're at the gym, they're washing
dishes.
So you have to have audio typically works better in terms of retention, that's very
dense information, tight and dense, much denser than writing a longer form story.
So podcasts, keeping attention is about at the beginning of the episode saying things
like, okay, sassy, oh, how much are you charging customers?
What was your last round valuation?
The CEO says, I'm not telling you evaluation, and I say, we'll get back to that in five
minutes, right?
Because then people are going to keep listening to see if I come back in.
So, so like that open loop with the magazine, and this is very similar to book, there's
no ears involved, it's actually like all like physical touch.
So like, literally, I mean, if you look at sort of how this magazine looks, and those
people are really listening, you can't see this, but like, we spent a lot of time deciding
like the weight of the back cover and the front cover, because when you open it, and
you start flipping, if the weight of the cover is not, there's not a big enough delta between
the weight of the inner pages, when you when you flick it open for the first time, more
than just the cover will pop out.
So when our cover pops out, and you look at this, what you see is like very dense information
on SAS metrics, which is meant to drive your curiosity to future pages.
And like, that's what gets you flipping, and then ultimately, what you want to do is no
matter where the reader opens to in the magazine, there's something that catches their attention
and makes them keep reading.
And for me, it's just data export, like I just take all the data I've captured from
the podcast in terms of revenue of SAS companies, valuations, customer accounts, I just print
it in the thing.
And so we've seen investors and folks like on their desks, when I visit, they will have
this open, and they will have circled like deals to go after I'm like, okay, I'm doing
this whole physical media thing, right?
Yeah.
And that goes exactly back to what you were saying earlier about, you know, when you really
want to have a podcast that was only listened to by like, you know, the 100 top CEOs, well,
your podcast and your magazine are listened to and subscribed by actual investors who
are investing 10s of millions of dollars, and it's like making them money, they're making
real business decisions as a result of that.
And that is super valuable in terms of the advertisers that you can get.
It's super valuable in terms of whether or not people will pay to subscribe, of course
they'll pay to subscribe because this is actually, you know, 30 bucks a month is a rounding area
compared to how much money they might make if they catch a deal, and what you're doing.
And so I love the fact that it's not just pure entertainment, it's not just clickbait,
but it's actually real numbers, real data, and it all works together so nicely since
this data is actually coming out of your podcast interviews.
That's right.
And by charging 30 per issue, it allows me to use the subject email line, the most expensive
magazine in the world, which gets people paying attention.
I had Sam Parr from The Hustle On earlier this year, and he recommended a copywriting
book called Advertising Secrets of the Written Word by, I think, Joseph Sugarman.
It's like a classic, you can't even find it on Amazon.
I think it's like it's all sold out, or like it's only like hardcover copies for like 150
bucks or something crazy.
But you can find...
Yeah, or like it's super, it's like 800 bucks.
Yeah, yeah, just like crazy.
But you can find the PDF online if you look for it.
And there's just so many different copywriting tips to it.
And I've noticed like in your posts on any hackers, for example, or the things you've
written online, you've like, you seem like a seasoned student of long form copywriting.
You're always engaging with your first sentence.
It's always short.
It's always easy to get in.
And then you always open what I call story gaps, where you basically arouse someone's
curiosity like you're saying by asking a question, but then not answering it until later.
So people keep reading because they have that question in the back of their mind, which
is pretty much what any good TV show or book or story does.
You nailed it.
There are a lot of ways to get attention in today's world.
I have found myself defaulting though to one tactic that's just worked the best, which
is curiosity.
I mean, so like looking at my last indie hackers post actually, right?
And we tested the headline I wrote for indie hackers versus the one we used on Product
Hunt versus the one that I emailed out to my list.
They're all different.
So the one we put up on indie hackers on August 6, the headline is why hackers are taking
money from founder path.
Probably what I should have said because no one knows what founder path is, is why hackers
are taking so much money from this weird new tool.
And then don't mention founder path until the last sentence, right?
But like, yes, it is very difficult for people, most people.
I haven't been able to hire anyone for this to figure out how to generate an open loop
in the first sentence that also directly correlates with whatever it is you're trying to get attention
on.
That's the hard part.
You did a post when you talked about how your magazine was making money on indie hackers.
I love the intro.
I think it's the first or the second sentence it says.
Even my mom laughed at me.
More on her in a second.
Exactly.
Why don't you go and tell the story about you putting together this magazine.
Let's go through that story.
Because I think it's pretty fascinating.
What are the first steps to actually creating a magazine when you have no idea what you're
doing and you've never created a magazine before?
Yeah.
So the first step is to figure out sort of the first, like, what are you going to put
in the magazine?
Why are people going to read this thing?
And what I thought was, well, founders and investors love Excel files.
Can I make, like, a physical Excel file?
Because I, you know, I don't, you know, when I read, like, ink or four, actually, that's
how I started.
Whenever I was flying, I would just buy all the other magazines.
And I would look, like, whatever held my attention, I would make a note of it and say, my audience
probably will like this, too.
So I loved any time in a magazine where I saw a big chart with, like, revenue data or
valuation data or things like that or, you know, 100 ways this CEO got their first 100
numbers or something like that.
So I knew that I wanted to do, like, a lot of sort of listicle stuff with data that people
can't get anywhere else, even pitch book, crunch base.
I mean, if you search any software company like GitLab plus the word revenue or IPO or
valuation, we ranked number one even above TechCrunch, above Bloomberg, above Forbes,
all these spots because it's so focused.
So that is how I started the magazine.
It was actually with the open loop, which is why are people going to literally open
this every day?
Like, rise in their mailbox.
Why will they open it?
And how do you actually get the physical product printed?
Like, who do you talk to about that?
How much does it cost?
So the first, yeah, yeah, these are good questions.
So literally, the first version was we put a big PDF together.
I walked to my local, you know, I emailed print and go at FedEx.com to get my code,
which I took to the local FedEx store and I just printed it at the FedEx store.
I then walked it to the front of the store and said, hey, can I pay to put, like, the
cover make it, you know, glossy?
And it was like 60 bucks, something ridiculously high.
I'm like, okay, well, this isn't going to work.
And I also don't want to physically mail all these myself, everything.
So I started searching for options to this at scale.
The one I landed on was a company called smartpress.com, which is pretty darn good.
I mean, you know, you know, we now ship, you know, thousands of magazines and the magazine
altogether has done, you know, over $100,000 in revenue and it's still been profitable.
So they handle the process today is I upload the PDF, I upload an Excel file, all the shipping
addresses of the buyers, and they take everything from their smartpress.com.
And how did you get your first customers for your magazine?
Because I imagine it's a little bit different than, you know, putting out a digital product
or a podcast.
This is simpler than you would think.
It sounded like this, courtland, I'm watching a podcast, I'm watching a magazine, it's going
to be the most expensive magazine in the world.
Every VC is going to read it.
It's 29 bucks.
I'm thinking of putting it on the cover first, will you buy a copy?
And whoever said they buy a copy first, that's what I put on the cover.
I forget who it was, but that's how I got my first sale.
That's pretty interesting.
Does it got cold email to somebody that you didn't know or was it like a previous podcast
guest?
No, no, I emailed all the CEOs, I interviewed on the podcast, which is probably a thousand.
So basically just advertise your magazine to a thousand CEOs and promise to put one
of them on the cover.
How many people subscribed as a result of that campaign?
I do not know the exact numbers on top of my head, but it wasn't big numbers.
I mean, I'm talking less than 10 sales, right, on those first couple issues.
What really started to scale, like here's a good example.
The next issue coming out, we're putting Diego Gomez on the cover for two reasons.
One, he asked and said he would market the heck out of the magazine if we did it.
But then I had to say, well, it's kind of like an event.
People who pay to be on stage are usually terrible speakers.
So I had to make sure there was compelling content behind it.
Otherwise, magazine would flop.
And so I did an interview with Diego and he told me how they went from 13 million revenue
last year to 24 million in terms of run rate today.
So they've doubled even during COVID.
They're also in Brazil.
They are hiring people away from HubSpot and a lot of people are saying to the next HubSpot,
which is interesting.
So that's the subject line.
He just emailed me this morning and said, Nathan, we love how the rough draft looks.
We'd love to buy several hundred copies.
What's the cost?
Michael, great.
What does that cost, we'll give you a bulk discount of sort of $25 per issue.
So you can start to do the math.
Basically, just the person I put on the cover and just the bulk order they place makes that
magazine highly profitable.
You've also done similar things with your book.
I'm hearing this recurring theme of you're going to put out some content, you contact
someone who's famous or successful and you say, hey, you know, will you be my partner
in this?
You know, I'm not going to do this unilaterally, but like if you will agree to order some magazines
or promote it or do something, then I will put content about you on the cover or inside
the magazine.
From our previous conversations, I know you've done the same with your book.
So give me the story there.
How did you write a book?
Why did you write a book and how did you actually grow the sales?
I wrote a book because I was jealous of Ryan Holiday and I wanted to see if I could sell
more books than him.
That's the real answer.
Same thing with everyone who was like a big writer.
I'm like, this is a new board game to play.
Let me see if I can write a book.
It also was like sexy that like I failed high school English and like sending the best seller
article in the Washington role to like Mr. Bone.
My English teacher in high school would just be like amazing.
So that's why I wanted to do it.
But what prompted me to actually like start writing was organically when the podcast started
ranking really high in the business category on iTunes, book publishers with business authors
started reaching me asking to put their writers on my show, their authors on the show.
And what I started doing was taking a screenshot of their Amazon rank before they came on the
show, which was terrible usually and a screenshot after they came on the show, which was always
way better because the show drove sales and I would send that email to the publisher after
every interview and let them know just so you know, like we killed it here.
And what happened is a couple of them started saying like, well crap, if you can sell so
many books like whenever you want to write a book, tell us because that's the biggest
issue we have is there's great writers that can't sell.
They don't want to give that writer a big advance.
They need people that can sell who happen to also be potentially an okay writer, right?
You can fix the writing.
It's harder to get the sales.
And so that's what happened is I signed with an agent named Jim Levine in New York, who
was also the agent to Ray Dalia principles.
I mean, I know business being signed with this guy.
But what I did is I brought him pre-orders.
It was like crazy.
He's like, wait, people have committed to spending thousands of dollars to buy your
book.
And they don't even know what the book's gonna be about and I said, yeah, Jim, they came
on my podcast.
They loved it.
And so that's, that's what we did.
He helped me then fine tune the book outline.
He emailed it to about 10 publishers, three or four of them wanted in person meetings
in New York.
And in those in person meetings, I had my backpack on my side because I knew eventually
if they were interested, they say, who had a plan to sell the book.
And I look him in the eye.
I pause for a minute.
I clench my jaw.
I look very confident.
I'd slowly look it out of my bag, reach in, ruffle around, pull out these, you know, six
copies of these printed purchase orders that were already signed for thousands of dollars,
face them down on the table, push them slowly across the boardroom table to the publishers.
Be quiet as they read them.
They look back up and go, you have $30,000 in pre-sales and you don't even know what
the title is.
And I said, we'll have no problem selling the book.
It was the ultimate ND Hacker, MVP, smoke test, whatever you want to call it.
You know, you haven't written a book.
You don't know what the title is.
And you're getting sales, $30,000 in sales, which is crazy.
How did you get that many people to pre-order your book?
We put together a one-pader just like we do with the podcast.
We call it book sponsorship.
I mean, we didn't even like try and hide the fact that we were going to basically sell
branded content in the book.
And so what it was is if you pre-ordered and committed to spending $5,000 on copies, I
couldn't even tell them how many copies they were going to because I didn't know what the
price of the book was going to be.
So what I had to do is get them to sign purchase orders for just an amount of spend.
So we'll buy as many books as we can with $5,000.
And what they would get for that is in some cases, it was like three sentences talking
about their company in the book.
In some cases, it was sort of a full example of them plus a screenshot of their business
in the book, like of their home site or something.
And then if they paid like a lot, I would even type the link back to their website in
the book.
I like that.
Nobody can click.
Yeah, nobody can click though because what I'm selling, what I'm selling is ego here.
What I'm selling is I told these people this is going to be a best-selling book.
It's going to be with a top publisher.
I'm already signed with Jim Levine.
Look at his other books he's published.
Do you want a spot in the book?
And look, I emailed 1,000.
I don't care if 900 of them say, 950 say no.
If I got five, that'll come in at $5,000.
Boom, that's all I need.
You're doing a lot of smart stuff and I want to go over some of it just in case people
have missed it.
The first thing is that you're very keen from endeavor to endeavor.
I think you're very consistent at looking at things from the other person's point of
view and trying to figure out what it is that they want.
And then thinking about how you can get it to them and then crucially demonstrating to
them that you know that and you can do it and you care.
And only then do you ask about what you want.
So it's really apparent with your podcast story, how you're showing these publishers,
you know, hey, I know you're trying to move books and hey, here's how I can prove that
I'll do that for you.
Here's the Amazon rankings before and after.
Probably nobody does that.
Publishers email me to get authors on this podcast.
I've never replied like that.
So it's super smart and just mutually beneficial if you want to establish a relationship and
get more pitches like that.
With your book, it's the same thing.
Like you understand the CEOs who come on your show, they're human, they have egos, they
want to be in a case study in a bestselling business book.
So if you appeal to that, you're really giving them something that they want, right?
And then you can ask them to buy a bunch of books.
And I think that feeds into the second thing, which is the way that you're asking for what
you want is in alignment with what they want.
So you're not just like, Hey, you know, give me a bunch of money and I'll put you and my
book.
I mean, it's very much a sponsorship, but you're saying, Hey, you know, if you support
the book and buy a bunch of copies, I'll put your case study in the book.
And the difference is really subtle, but I think it just feels much better if you're
in that person's shoes to be able to tell others, Oh yeah, I really supported Nathan
with this book.
You know, I'm a case study in the book too, right?
That's just more an alignment with what the way that they want to look.
And I think it's, it's really underrated.
I mean, another example from a case study that I've read actually is there was a social
network.
I forget the name, but it was kind of a Q and a site and they experimented with paying people
to answer questions on the site and it didn't work.
Nobody was there to make money.
They had jobs that just wasn't in alignment with why they were there.
So they changed it.
And the new system was they started giving people sort of reputation points for answering
questions on the site.
And that worked spectacularly because people were there to sort of boost their egos and
be seen as smart and help others.
And they wanted like a credit system proving that that's what they were doing.
They didn't want money.
So it makes sense to, it matters to align with how people get rewarded with what they
actually are there to do.
And then I think the final thing that you do really, really intelligently is that you're
not afraid to write a lot.
Like you said, you send out this one pager, you're doing these long posts on any hackers.
All the wisdom on the internet right now says you need to be concise.
You need to only have like five words on your landing page.
And I think that's bull.
I think you need to take the time to convince people and sell them.
And that often requires writing a lot of words.
And you just have to write those words intelligently and be compelling and get people hooked in
the beginning.
And this goes back to all those copywriting books.
You really take the time to do that.
And I think that's super smart.
You did a great job summarizing those three points.
But I imagine if you're listening right now and you are an indie hacker, you might be
thinking, well, wait a second.
What if the book wasn't a best seller?
Does Nathan refund everybody?
Or what a sec, wait a second.
Isn't Nathan get really embarrassed if he had people on the podcast and he said it would
get a million downloads and only gets one download?
Why isn't court on pushing Nathan on this thing?
And what I would tell you is yes, that's a massive risk.
There is a lot to be said for just Elon Musk saying we're going to Mars.
And me and my own little world that's much smaller than Elon Musk was saying we will
have a billion downloads.
You sort of make things happen by how confidently you say them.
And that's key.
But anyway, when you have $30,000 in pre-sales, you can use that money to go buy newsletter
placement in the hustle, which will help make sure you become a best seller.
So it all kind of fuels together.
Yeah, I think it affects your mindset as well.
If you set this goal for yourself, you're going to be a best seller, you're going to
go to Mars, and then you tell a bunch of people about it, you got to hold your feet to the
fire at this point where you have this extra motivation that you might not have otherwise.
And if you fail, it's going to be embarrassing and it's going to suck.
But because you know that, you're going to work harder.
If you tell your podcast sponsors, hey, what's your cap, I'm going to beat that, they're
going to work harder to get them a better lower cost of customer acquisition.
So I think it just works together in so many ways.
It's true.
And I mean, this sums up one of my favorite things I live by every time.
And I think about it now a lot when people are sitting at home bored, they can't go out,
people are, there's mental health issues, there's emotional issues in general.
One of the big things that, and I think Walt Disney has actually said this, one of the
interesting things about people is we tend to become what we imagine.
But the issue is, very few of us have large imaginations, there's not a lot of imagining
going on.
So I would just encourage people to block off 10 minutes once a week with your coffee
in the morning or your latte, and just give yourself permission, just barf imagination
onto your notebook without any reservations.
And I think that will do powerful things in terms of your psyche.
So, in terms of your imagination, at some point, you had this triple media threat going
on.
You've got a book, you're a published author, it did become, I think, a Wall Street Journal
bestseller.
It did, yeah.
Washington, New York Times, but Washington Journal.
Yeah, so you check that box, you've got your magazine, which is going strong and growing,
you've got your podcast, which is getting tens of thousands of downloads and generating
hundreds of thousands and sometimes millions of dollars in revenue a year.
But you sort of turned a corner where your businesses after that were more SaaS-based.
So you've got getlocka.com, which is kind of a giant subscription-based database of
SaaS metrics and information that people subscribe to.
And you've also got FounderPath, which you referenced earlier when you talked about the
most recent posts you made on ND hackers, where you're basically helping finance companies.
Why not continue with the sort of media stuff?
Why not build a media empire?
Why go in the direction of SaaS businesses?
I read Bloomberg's biography many years ago, and you start to learn that Bloomberg magazine
was meant to deepen the mode for the Bloomberg terminal.
You start to realize the power of media brands relative to actual products on the back of
their software, physical products.
And so the answer is both.
This is a unique situation where it's not a one plus one is two sort of thing.
It's a one plus one equals like eight or nine sort of thing.
Why does Bezos own the Washington Post?
Well, if the number one way that Amazon Martins are going to get hit is by government regulation,
guess how he can fight back against that?
Well, he has the Washington Post.
Now, he'll say that he obviously is never going to do that, but you're silly if you
think that media plus product is not more powerful than just all media or all product.
There's a lot of big media brands right now that I think would do them a lot of good to
actually launch a sort of product and use the media brand to build a mode around the
product.
And at what point does that switch sort of flip in your brain when you say, OK, my media
brand is big enough, strong enough that I should start building products?
When you have sponsors that don't blink when you're increasing your sponsor fees, because
what that means is they have a product and they're willing to pay you almost anything
to get in your channel.
Maybe you should go build that product, right?
Or build that product with a spin, right?
It's just it's clear that you have influence and purchasing power under you.
You should use that so that you get the margin, not go build MailChimp.com, right?
Yeah.
And so then how do you decide what product to build?
I mean, you could do what you're saying.
You could say, OK, my sponsors are paying me to get on the show.
I should just build what they're building.
But it doesn't seem to be the path that you took with FounderPath and with Gitlaca.
So the way I did this, and I tend not, and I would never say that I knew this is what
was going to happen when I launched the show back in 2015.
But what happened was, you mentioned this earlier, I'll have one day a week where it's
literally 20 minute interview stack on top of each other for seven, eight, nine hours.
I mean, I'll knock out 23 interviews in a day.
So there's 20 minutes reserved for the founder, but we only record for 15, which means there's
five minutes of downtime after we're done recording.
And what started happening is in that downtime, founders started saying, Nathan, I think you
understand my business in 15 minutes better than anyone I've ever talked to.
You know, what would you value it at?
Or hey, we're looking to raise, who do you think I should raise from?
Or listen, Nathan, I know that episode just sounded really great.
But actually, my co-founder is about to leave and my wife is divorced to me.
I need to sell the company.
Can you help me sell it?
And what happened is I started helping founders do all these things.
And one of the things back in 2016 that a lot of them asked me to help them do was they
started asking me to help them raise debt and going, what do you mean, Damien VC would
mean debt.
And I started learning, oh my gosh, there's this new thing where if people are not wanting
to go after some billion dollar VC back hole sort of thing, but they just want to build
a $10 million, $5 million, $1 million a year business that generates a lot of profit that
they can live on and the cash flow.
A lot of founders were starting to use debt.
And so I started getting very, very close to debt providers because I was helping them
do loans in the founders I had on my show.
And so I sourced many, many millions, over $100 million worth of debt, they call it loan
tape into some of the largest debt providers today for software companies like Lidar Capital,
SaaS Capital, Clearbank, Tamiya, Hercules, CIBC, there's about a hundred major players
in the space.
And I kept a big Excel file of all the players, kind of my founders into matchmaking.
And what I realized, Courtland, is when you started looking at these debt deals that like,
I'll pick on Lidar Capital, I like those guys, but I'm gonna pick on them for a second.
They do debt deals that are what's called an RBF, revenue based financing.
And it's very difficult to actually calculate the cost of capital.
But what I realized was when I helped a founder raise, I think it was like 500 grand from
Lidar back in 2016.
And I watched that founder how they paid back the loan, the effective interest rate was
over 25%.
Wow.
And I'm going, oh my gosh, there's a real opportunity here.
This is a healthy SaaS company, there's a real opportunity to get them capital weight
under 25%.
And that was the genesis for founder path today, which is, again, there's so many founders
taking money from founderpath.com.
It's something I'm very excited about.
So this is yet another advantage to starting with the distribution, starting with some
sort of media endeavor is you get to talk to so many different people, if you have any
sort of successful media business, you're probably putting out content at least once
a week, often more often than that.
And you're gonna get a lot of reps in, you're gonna learn a lot of things, you're gonna
build trust with your listeners, you didn't say, okay, well, Nathan is, you know, talking
to these other big shots, like, he's a connector, I should actually get to know Nathan, I should
ask him for advice, he knows what's up, you get to spot trends, because you're constantly
meeting new people and talking to new people and seeing what they're doing, just like you
spotted the sort of debt financing trend.
It's just such an unfair advantage to start there, I think.
And it's usually the last place that founders start.
When you start to learn.
Yeah, exactly.
You start to learn.
And it's forced learning, right?
Like anyone could learn, right?
Anyone at home right now could learn.
But if your business doesn't depend on you learning, well, then all the motivation to
learn has to come from you, you have to get up every day and say, I'm gonna set aside
this many hours to read and learn and talk to people, but like, you're probably not going
to be able to do that.
Right?
But if you have to get up and go to work to produce a podcast every week, then like, whether
you want to learn or not, you're going to.
And that compounded over years and years of learning, it's just like such an unfair hack,
just have this wind at your back that's pushing you to learn.
Yeah, my learning, my learning velocity, I would argue is is top point 5% of anyone to
be to be SAS space.
In my opinion, like, you're gonna ask how to quantify that, I'm just saying, I think
I get exposed to more data points at a higher velocity in B2B SAS than almost anyone else
in the space.
So the people listening to this are ND hackers, they've never really considered raising money.
They also haven't considered this new trend really of raising debt.
So talk to me about this trend of revenue based financing, and what makes founder path
different and why people might consider going down this path when traditionally they just
wanted to bootstrap their companies.
So a couple things here, most founders don't realize how valuable their $10,000 a month
of revenue stream is.
Banks won't value it.
Banks won't give you a loan against it because they don't understand software.
And there's, it's not like a house mortgage, there's no house to take over.
So you can't raise debt from a bank at a SAS company, unless you've raised VC.
And then SVB and CIBC and her kid will put money in, but they're really just trusting
that the VC did good due diligence, and they're banking on the VC.
But what if, what if you're a $5 million bootstrap company, you don't want to raise VC?
Does that mean that you shouldn't go get debt?
No, you're probably healthier than the VC backed company that's burning money.
You're a better candidate for debt.
So who's servicing that need?
And where the only answer was these sort of, you know, lighter capital SAS cap, I mean,
these ones I already talked about.
And so that's why I started helping them build their loan tape.
But one night I looked at their terms that were very confusing, I said, there's got to
be a way to get money to founders at cheaper interest rates.
And when those companies are much younger, meaning maybe they only have 10 grand a month
in revenue, and 12 months of history.
And so my ultimate goal is to be able, you know, we built this tech platform at founderpath.com,
where founders can connect their Stripe account, their QuickBooks, their Xero, their Google
Analytics, etc.
The sooner a credit score, and the better your credit score, the cheaper we can give
you money.
And so right now we have 1500 companies connected to that we're tracking almost 25 billion real
time and private SAS company annual revenue, and almost 30 billion in expenses, expenses
are greater than revenue because some of the companies that connected have raised VC, so
they spend more than they make.
It's a massive data set, which allows us to have a very good credit score, which allows
us to really understand SAS companies, even at fairly early stages.
So my goal is to be able to like a year from now, almost close my eyes and say, anyone
that hits $10,000 a month in revenue that's connected to founderpath, I can write you
a $30,000 check at a very low interest rate, you click a button, you take the money.
Because what happens then is founderpath then becomes basically on the balance sheet of
every SAS company on earth, right?
That's more than 10 grand in error, and then you can help the founder do anything else
they want, raise more debt, scale, sell, raise equity maybe one day if they decide to go
down that path.
And it's like, that's the ultimate vision is how can we build founderpath to the point
where there are billions and billions of dollars flowing through it, getting money to early
stage SAS founders.
So I want to understand kind of the early stages of how you built this business.
And I think because you started in media first, we have to understand just like the fundamentals
of how you run this business.
Because there's only one of you, there's only so many hours in the day, but you've got the
podcast still coming out, you've got your magazine still coming out, you've got your
online database, a subscription is still being updated.
How is all that working?
And how much time do you spend on founderpath?
Yeah.
So almost all my time today is spent on founderpath.
Okay, everyone knows drift.
Drift has a book, like dip can somebody wrote a book, they also just launched a podcast,
by the way, like, they do all these things inside the company, I just did those things
first, and now like the product that they're all promoting is founderpath.
And so all my time is spent connecting with B2B SAS founders, it's just, you know, some
of them, it's just the podcast episode, others, the podcast episode turns into, you know,
we featured them on get latke, and then they really like me, and then they connect on founderpath
and end up taking money from founderpath in terms of debt.
It just really depends.
I mean, one thing I will underscore, though, is get latke, all the data we capture there
is data that we get publicly, by interviewing the founder or from press releases or things
like that.
I mean, it's a very powerful data set.
And a lot of times, by the way, I get these big founders on that have raised a bunch of
money, they come on, they brag, they brag, they brag.
And they say they're the fastest growing in the space.
And I say, well, what's your revenue?
And I'm like, well, we went from $1 to three, it's 300% year real growth, I'm like, that's
like not great.
And oh, by the way, they're burning $3 million a month, like,
and then when I hit them really hard like this, they get mad when we list them on the website
and they complain to press and then the press hits me really hard, you know, Vox wrote this
disgusting hit piece on me would by the way, Vox is going to be bankrupt here shortly anyway,
because they don't understand our business, but it's nasty headlines.
They saw that Nathan Maca search line was increasing.
So they wrote this hit piece, but they did call me a best selling author and a top podcaster
in the headline.
They just put con man on the end of it, which was like a beautiful thing of who knows what
we call that.
So the point being is like, get latke data is completely set.
It's a whole different company.
It's the latke agency LLC founder path is a Delaware C Corp, where it's a fintech company,
really, there's a balance sheet business, there's a fund that we use to do the loans.
And then it's a tech business founder path that does the actual underwriting and sort
of understanding actually founder path, the tech companies a lot like their metrics or
profit.
Well, it's just we use we give away free analytics tools.
And then we're generating a credit score to then help us understand where we should loan
money to.
So who's working with you?
Do you have employees?
Do you have contractors?
Who's helping you out?
Yeah, so on the founder path side, I really want to find someone that was kind of opposite
than me that was also an engineer.
So I wanted to find someone that, again, was sort of launching and making a lot of things.
And I'm like, well, wait a second, I should just go find who like the product hunt maker
of the year was in 2016.
And his name was moves.
Yeah.
So mooch art ball, he essentially is the co founder on founder path.
So so he has done all the development work, you know, I tell him mugs, do not stop launching
side projects, use founder path, like connector side projects to founder path to help us build
better analytics for indie hackers.
Because remember, a lot of people using founder path that don't want to raise debt, they use
it just to track all their analytics and get recommendations and benchmarks.
So we have now two full time engineers on founder path.
I am obviously bleeding on marketing distribution.
We have unbelievable advisors, we have a major announcement, the top bank in the world, I'm
not going to say which bank but the top bank in the world, the former CFO and CIO is actually
joining on as an advisor.
We have a lot of pension funds and family offices wanting to give money to early stage
SaaS founders, but they don't know how to do that analysis.
They want to put that through founder path since we do great analysis.
So we're going very quickly.
Our, you know, our goal is to, you know, in 20 next year, so 2021, put out $100 million
into bb SaaS companies this year will easily pass 10 million, but next year we want to
keep basically 10 X in year over year to the point where in 2022, 2023, we've got a billion,
$2 billion
in
a book, publishing a magazine, you actually have to do this hard analysis of generating
these credit scores basically off a pretty limited data set.
I mean there's a lot there, but that's a whole career path in and of itself.
Just being able to value a company and assess risk.
How are you handling that part of FounderPath and how much of it is a work in progress?
Over the past four years, again, I've helped founders get almost $100 million of loans
from other debt providers.
I would sit on the calls when those debt providers would ask, like the underwriters would ask
the founder questions, and I would take notes.
And so one of the underwriters one day would say, well, what's your customer concentration
risk?
Can I write down customer concentration risk?
And I would then figure out how to code those things into FounderPath.
So basically, I have this massive list of hundreds of things that other debt providers
would ask founders.
And I said, mubs, we have to build this into the analysis to get the credit score.
So for example, if your retention in month 13 is really poor, so annual renewals is really
poor, your credit score gets dinged.
But if your churn score, you know, really, really low, in other words, you retain a lot
of your customers, you put high credit score.
And the higher you keep your credit score, even if you only have 10 grand a month in
revenue, we can get you capital that is super, super cheap, like under 15% interest rate,
which compare that to VCs that need to make 40% annually to be a top forming fund 40%
IRR.
It's such cheap capital.
And so the idea is not only cheap capital, but how quickly can we get it out?
And so we have had someone connect to founderpath.com, and in under 24 hours, get a $250,000 check
wired with a bank out of the system loans done.
So fast and cheap is really what we want to build.
And again, that's not even my original idea.
Amazon, what is Amazon?
Fast and cheap.
It's just I'm going to apply those same human principles that everyone wants fast and cheap
to SAS DEV.
Yeah, it's pretty cool to go to your website and play around with the calculator and just
put in, okay, how much capital do you want today?
I put in, I want 250K, maybe I want to hire a couple of expensive developers.
You know, on the left, you say, okay, well, you know, here's the cost of the loan, here's
the interest, here's the fees, $0 in fees, here's the interest rate, you know, 15%, pay
it back in four years.
And I can just basically click apply, you're just going to run all that magic you just
talked about.
And then we read this, we've worked very hard on this very critical sense, it's maybe the
most important sentence on founderpath.
What is the sentence right above the purple apply button, say when you type in $250,000?
Can you spend $250,000 today and add more than $6,958 and new monthly recurring revenue?
And so it's kind of telling me like, this is how much money I need to basically make
in order to make this loan basically free.
Exactly.
Exactly.
So like, to that point...
You gotta put this in bold, man, it's in like great tax, I barely can see it.
I know, we're still experimenting, but that is the sentence.
That is the sentence.
Like, think about it, seven grand a month, if you can give you 200, let's do an indie
hacker example.
Let's say someone's listening right now with only 10 grand a month in revenue.
So if you type in $30,000, what's it say?
Probably said, what would the loan be on that?
Let me see.
Yeah.
$30,000 it says?
$835,000.
So if you're doing 10 grand a month in revenue, you go to founderpath, you type in 30 grand
is what you want.
The question is, can you take 30 grand today and add more than $800 in new monthly recurring
revenue?
Right?
Or about 10 grand in new ARR.
So like, think about that.
Can you take 30 grand today and add 10 grand in new ARR?
That's $3.00 CAC.
Because people can spend $1.00 and get $1.00.
Imagine taking $3.00, you can get $3.00.
You just like seriously increased your valuation without giving up any equity using cheap debt
from founderpath.
Why aren't banks doing this?
Why haven't traditional institutions figured out how to basically do what you're doing?
Two reasons.
One, they're FDIC insured and they're OCC regulated, which to anyone else, what that
means is the regulatory risk of doing this is too high to jeopardize their banking business.
They don't want to lose their FDIC insurance by getting into a new asset class.
That's why SVP doesn't do this with non VC backed companies.
Give me your vision for the future here.
We've talked about a few trends.
People are paying more for content.
People are working more remotely.
There's this new trend where founders are just raising more money and the hackers are
raising debt.
What does the world look like five, 10 years from now and your wildest guesses?
More polarization.
So you're going to on a net basis have a less volume of software companies raising VC, but
the ones that do are going to be much larger rounds.
The reason is because the federal government, especially if Trump gets reelected, you're
printing money.
All that money is flowing into corporate bonds, ETFs, places it's never flowed before.
All that money eventually finds itself, a lot of it, in VC funds that now have to deploy
more money and generate bigger returns, which means they have to do bigger deals.
They have to like an idea and instead of a billion dollar exit, they have to see a clear
path to a 10 billion dollar exit to write your initial check.
So everything can be more polarized, but with more money in the system, if somebody understands
data of software companies and just early software companies in general and founders,
they can deploy more debt at scale.
So I think you're going to see a lot more quantity, number of founders doing debt.
The asset class of B2B SaaS debt will be growing.
But also on the VC and equity side, that asset class will grow, but it will go to a smaller
number of people at the top.
Very interesting.
What do you think about sort of any hacker side of things?
There's more and more people getting into this, more and more people serving companies.
It's easier than ever to start a company, arguably, I mean, there's so much technology
to help one person accomplish so much.
But there's also arguably, you know, more competition as a result of that.
We're just talking about these sort of distribution channels, you know, becoming a little bit
clogged up.
There's so many people fighting to get you to subscribe to their newsletter on sub stack.
How do you see that playing out?
I know I'm asking you to speculate here.
I mean, look, I'm happy.
I think that's a ton.
But power, I mean, you have so much more power today, even if you're at 510, 20 grand a
month in revenue than you did three, four years ago.
And so, look, Amazon brought down the price of hosting, right?
Power's law has generally made tech everything much cheaper, which is why we can launch companies
now without having to put servers in the back closet.
So the scarcity now, in terms of building a great company, is actually not capital.
It's attention.
And the way you win attention as an indie hacker is by building media.
So the big companies a decade from now are going to be ones today launching media brands
alongside their software products.
That's the future.
I think the same thing.
I mean, and people complain so much about the competition.
Every SaaS idea is taken and everyone's making so much money.
But again, if you can build some of these personality driven media businesses, whether
you're a YouTuber, or a podcaster, or a blogger, or a newsletter writer, however you get started,
you can carve out your niche.
No one can compete with you because you're the only person with your personality.
And you can use that to grow into a bigger, more successful media company and hopefully
do what Nathan's saying and go on to build products that actually make millions of dollars
and work nicely with your media business.
In sort of a tradition on the podcast, I always ask people for the last question, what's your
general high level advice to indie hackers who are just getting started, who maybe don't
have an idea yet, or maybe they're just getting started writing the first lines of code for
what they're building?
My usual answer would be build the attention first, the product second, but we beat that
to death already.
So I'll give something fresh here, which is like momentum is always key.
The difference between, in my opinion, Elizabeth Holmes at Theranos and Elon Musk is Elizabeth
was pitching a vision and eventually people stopped believing her and dug deeper and realized
what she was projecting isn't actually true and ultimately end up in fraud.
There are things that big visionaries say as if they already exist, that do not exist,
that don't get in trouble and the building billion dollar businesses.
And the difference between an Elizabeth Holmes and an Elon Musk is, in my opinion, momentum
to people still believe you can do it.
So even at the early stages, start putting big visions out there.
And no matter what you have to create week over week momentum, put out a big vision and
follow up with the weekly momentum, Nathan latke.
Thanks so much for coming out of the podcast.
Thanks.
Can you let us know where we can go to find your podcast, founder path and anything else
that you're working on?
Yeah.
You can check out with me, Twitter's great at Nathan latke.
That's L A T K a on the end.
And then again, if you're curious, uh, how much money you could get and what it would
cost you just go to founder path.com.
You don't have to put in your email.
There's a scroll down to the second section, there's a calculator court and I were using
just type in how much you want and see how much you can get.
I'd love to work with you.
All right.
Thanks again, Nathan listeners.
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Thank you so much for listening and as always, I will see you next time.