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 it 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 Dave Sents.
Dave, welcome to the show.
Hey, thanks so much for having me, Cortland.
I'm excited to be here.
Thanks for joining.
You are the founder of two different tech companies, both of which are self-funded,
both of which are profitable and generate many millions of dollars in revenue, and both
of which have dozens of employees.
So my first question for you right out of the gate is, how do you do that?
How do you juggle running two multi-million dollar businesses simultaneously?
Oh, well, first you start with naivete, you don't know what you're getting into, right?
So first business, I started way back in 2000, and it was my third attempt that year.
So in 2000, I tried three different businesses.
The first two just sort of, I knew they weren't going anywhere, and I gave up on them, but
the third one seemed to take hold.
And then the next one wasn't all the way till 13 years later, 2013.
So I just had the energy.
And by then, we had grown, I was able to recruit and retain some really talented folks.
And so that makes all the difference in being able to run two organizations at the same
time.
How much time would you say you devote to each of your businesses, Flux, which you started
back in 2000, and Flowify, which you started in 2013?
Right.
So lately with Flowify just charging hard, I've been like 90 to 95% Flowify, and 5 to
10% Flux.
And let's just call it 90-10 these days, just that's where the attention seems to go.
Cool.
So you must have a lot of delegation going on.
You mentioned you have employees and good hires that you've made at Flux.
You've got, I think, six employees at Flux and 35 at Flowify?
That's right.
You got it right on the head.
So six at Flux, 35 at Flowify.
Flowify grew out of Flux.
So in the beginning, Flowify was just a part of Flux, and we spun it off, and it's been
growing really hard.
Yeah, we're up to 35 now.
We talked a little bit before this podcast, and you must be really good at delegation
because two businesses even isn't really enough for you.
You're considering a way to potentially partner up and maybe help start a third business,
a third venture somehow.
What would that even look like with you spending so much of your time on these first two businesses?
So that's a really good question.
So I've learned from some of my customers at mortgage companies.
These are folks who have a successful mortgage company, they have 400 to 800 employees or
sometimes more, and they're the CEOs, and they spin off these little side ventures,
if you will.
But what they've done is they don't do it all themselves.
It doesn't become an in-house thing.
They partner with people that they know well, entrepreneurs, who are really motivated.
And so I think it's a way for them to tap into that excitement of entrepreneurial excitement
where maybe that mortgage CEO couldn't recruit someone to join the mortgage company, but
they can say, hey, let's partner up legally, I'll own some shares, you'll own some shares,
and let's do it together.
And one of the really neat things about working with mortgage CEOs, they do it for cash money.
They work hard, and their companies pump out profit.
So it's very different than the tech world, where it's all about your valuation and who's
going to acquire you, and there's none of that.
And it's very grounding.
Yeah, I have so many questions I want to ask you about that, about the mortgage industry
in general, and also some of the things you've learned from working with some of these founders,
because it's completely off my radar as a tech founder, and I'm sure people listening
don't know very much about it.
But I think it's interesting you mentioned entrepreneurial energy, because every time
I talk to a successful founder who's running a very profitable business, and yet they're
still working super hard on their business, and talking about starting more businesses,
they have some kind of a reason why they keep working hard, that stops them from just retiring
to a life of leisure on a beach somewhere.
What's that reason for you, Dave?
Yeah, I just think that there's always something really exciting that you really get pumped
up about, and you really want to go after it.
I am thinking, a friend of mine, we are considering going on a joint venture, and now I wouldn't
work in it day to day, but I'm really pumped about the idea.
I like to say, Dave doesn't scale, I know I don't, and this is a way I can have my fingers
and a few additional pies.
My wife and I own Flux and Flowify completely, and so I feel like I have my thing, my little
sandbox, and I can play in my sandbox, and it's great, and it's great.
All of our employees have what I call ownership and trust.
That really means autonomy and trust.
They get to expand their sphere of influence, the more and more they lay down a really good
track record.
Maybe if they break trust, maybe that sphere collapses a little bit.
I've got Flux and Flowify, I really feel that it would be a great opportunity to tap into
that entrepreneurial energy, and I no longer feel like any additional businesses I do might
need to be the sole founder of, I'm really happy to partner with special folks that I
already know.
Is it safe to say that you're doing this as cliche as it sounds, more for the journey
rather than some sort of destination you want to hit, or is there a destination that you
really want to get to?
There's a little bit of a destination.
It's just like Flowify and this alternate business, there's a synergy to it.
It's not like completely this new completely different thing, like jet ski tours in the
Caribbean.
No, it's nothing like that.
There is a connection and I want to see where we can go with it.
Let's talk about your most recent business, Flowify.
Your older business Flux, you started back in 2000, it's been going for almost 20 years
now, but Flowify, you spun out of Flux and you started it in order to solve one of your
own problems.
I want to dive into exactly what that looks like.
What was the problem you were facing and how did that lead to the idea for Flowify?
My wife and I moved here to Boulder, Colorado.
We used some short-term financing to get into our home, but then after 90 days, I wanted
to refinance my house for a long-term loan.
I went through a local credit union to do the refinance.
I just discovered, oh my goodness, the loan officer, he was great.
He gave me all these auctions.
When I finally took me about, took a little while to decide, okay, I'm going to go with
the local credit union.
He handed me over to his loan officer assistant and then I thought, oh my goodness, her job,
I could make it so much better.
She lived in her Outlook email.
That was her job, saying, hey, I need your tax returns, I need your W-2s, I need your
bank statements, all this kind of thing.
She'd email her requests and she'd send this long list of things and I sent most of them
back and I missed a couple of things because I'm just a human.
She'd remind me, hey, you missed a couple of things and then when I sent her my tax
returns, being a geek, I was not going to email tax returns, security and all that,
so I encrypted them, sent them off and I started waiting.
I waited a couple of days, I didn't hear anything, so I called her up and I said, hey, did she
get my tax returns?
She's like, yes.
I was like, so, and she's like, well, I couldn't open them.
That was really the genesis of everything.
I thought, I really thought that I could make it so she could be a loan officer assistant
to five loan officers, let alone one.
Also me as a borrower, I knew I could make my own experience so much better.
That's the origin story for Flow-Fi.
I think plenty of people encounter problems and annoyances in their everyday life, whether
it's with trying to get around a new city or renting an apartment or something that's
annoying about buying groceries or cooking, but what made this particular problem stand
out to you as something you should start a business to solve?
At the time, I was looking for a new business to enter into.
Flux had been going strong for a long time, 13 years by that point, and I was starting
to hunt around.
I was thinking, what else could we go into?
I had no idea what that might be.
That was in the back of my mind.
I did dig into it, I dug into the industry, I learned that there were about 400,000 loan
officers in the United States, and I thought without doing too much deep analysis, I thought
this is probably a big enough market, didn't need to become a unicorn or anything like
that because I knew how the structure of it was going to be ahead of time, it just needed
to be able to get to 10 million.
You're already an idea generation lookout mode when you encountered this marine financing
situation and you were extra aware that anything you ran into could be a business idea.
Are there any other ideas you considered or was this the first one that popped into your
head when you decided that you wanted to start something new?
There was one other idea, and I won't even go into too much about it, but it centers
around creating bank accounts electronically.
We had a meeting with JPMorgan Chase, and there was an initiative there, so basically
you could create bank accounts via API.
After meeting with the Chase folks, they were excited about it, but I could just tell this
was going nowhere.
There weren't a sufficient number of people interested, and when you're working with a
big bank, things just don't move as fast.
I was juggling this create bank accounts via API idea, the mortgage idea, and in the end
it just became crystal clear that something was going to start happening, it was going
to be with a mortgage idea.
I'm curious how you think about coming up with business ideas, because I've talked to
so many different ID hackers at meetups or online who are in the same phase that you
were, like, I want to start something, but I'm not sure what it should be, let me keep
my eyes peeled for different opportunities.
How did you go into that situation?
How do you evaluate whether a business idea is good?
Did you have any sort of criteria or requirements, or are you just willing to work on whatever
excited you?
I'm not going to say that I was so smart and brilliant and had a deep analytical mind.
I'm a little bit of a type where I just tend to dive in, if it feels right intuitively,
and so there was a little bit of research there, you know, how big is this market?
Of course, we all kind of intuitively know how big is the United States mortgage market.
We do know, we hear numbers coming out of the news all the time, so it was kind of a
medium level of effort of insight, and yeah, sometimes you just don't know, and everyone
talks about, like, you know, work on what you know, but some of these industries are
so deep, so you start on what you know, and you get into it a little bit, and then you
find, like, whole other areas that you never knew even existed, and so that part's really
fun when you just go deeper, either in the industry you're in or, like, some adjacent
technology or some adjacent business need, something like that, so that's how it's been
going for me.
Did you know anything about the mortgage industry before you started doing this research?
No, I knew nothing other than I've gotten a couple mortgages before then, and so I think
it's the old fresh look, you know, like, hey, I'm going to put a fresh look on this industry.
I haven't been in it in, like, 20 years, like, a lot of other folks, and I think the fresh
look worked.
Yeah, that's pretty scary, though.
I was talking to John O'Nolan way back earlier on the podcast, and he had a really good point
about how when you look at an industry that you don't know very much about, you might
see a gap in the market, you might see an opportunity, but a lot of times that hole
is only there because you don't understand what's going on, and there's actually a lot
more that when you learn, you realize, oh, there's a reason why this hole is there, there's
a reason why no one's done this.
Were you at all curious, you know, why hasn't somebody made this easier for these loan officers?
I was curious, and I did my digging around, and I found, like, a couple small software
companies in the United States who had ostensibly been doing the same thing.
They didn't seem that big, they didn't seem to have a whole lot of traction, so it seemed
like from the perspective of as a borrower or a loan officer, assistant, and what I now
know to be, like, mortgage processors and everyone involved in mortgage operations,
I know they don't get the same kind of love that either loan officers get or compliance
people get because in the mortgage industry, compliance is huge, as you might imagine,
and if you don't do things just right, you will get a very large parking ticket from
the federal government, and nobody wants that.
It's pretty fascinating to look at the different industries that get different amounts of love
from developers and entrepreneurs.
I mean, if you're, for example, a software engineer, there's probably a startup out there
that could fix every imaginable problem because there's so many software engineers who want
to solve their own problems.
If you're in the mortgage industry, it's like you said, unless it's something that's super
important like compliance, there's not as much love and so it's easier for you to enter
that industry.
It is.
And again, I do feel like I'm lucky just stumbling across something that needed love.
We brought the love that it needed and we're still going, but it's great to be able to
provide the people who are not necessarily at the front of the house, you know, when
you walk into a mortgage company or a bank or a credit union, you're not necessarily
shaking hands with the back office staff, but that back office staff still needs lots
of love.
And then we're going through, over the last couple of years especially, there's been lots
of changes with rates going up, up, up, and recently they've been going down, of course.
And the mortgage industry is really trying to figure out how do they do the same amount
of loan volume?
Actually, how do they increase the amount of loan volume with the same staff?
So when I started six years ago, we were kind of in a boom time.
Some of the loan officers who did tons of loan volume, they would say, oh, I have a
greater need.
No problem.
Just go hire somebody because that was the kind of climate where they could do that.
They could go hire somebody.
And me just thinking like, okay, this can't last, right?
The solutions never just go hire a small army of people.
But it was maybe slightly ahead of time, the right time.
But that was all okay.
The need was still there and we fulfilled it, but then over the last 18, 24 months with
rates going up and they're still volatile, of course, it's become abundantly clear.
Everyone wants to do more loan volume than they're doing today with the same number of
staff.
So explain to me the idea behind Flowify, at least the initial idea when you first came
out with it.
What was the exact business that you wanted to start?
What was the product you wanted to build?
Yeah.
I wanted to create that one screen that a borrower could go to and interact completely
with their mortgage loan officer and the mortgage company or the bank or the credit union behind
that mortgage.
And to make it easy to do things like provide the documents like my encrypted tax returns
or my W-2s and my pay stubs, my driver's license, all that kind of information.
That's how it was in the very, very beginning.
And then I got connected with our very first customer, her name's Melanie Taliaferro.
She's down in Austin, Texas.
She's awesome, still a customer, love her.
And I started talking a lot to her.
I'd go visit her office for a couple of days at a time and just hang out and just see what's
going on.
And so lots of great ideas came from spending time with Melanie down in Austin.
And so we built some additional capabilities, capabilities for messaging out to realtors
and like, hey, realtor, here's generally where we are in the process.
So realtors send lots and lots of deals to mortgage loan officers.
So loan officers love their realtors.
They would love to bring them cookies every day, but there are federal laws against giving
any kind of compensation to realtors.
You can't do it.
It's illegal.
You cannot give tickets to the game, nothing like that.
So what's the one way you can thank a realtor?
You can thank them by keeping them up to date, you know, don't let them wonder whether what's
going on with their deal and number two, get the loan closed on time.
That's the way you can thank your realtor.
So a lot of these additional ideas came out in the early days just by I literally went
and physically hung out with our first customer.
Yeah, I love that.
It's the way to compensate basically for really not understanding an industry not being someone
who's worked there for 20 years, you just got to find someone who has and sort of attach
yourself to them at the hip.
How do you convince a customer to let you shadow them and just hang out in their office
and what are some of the things you look for when you're in that situation to come up with
business ideas and feature ideas?
So that part's pretty easy because you're there to help them really.
So you're there to understand their business.
And I've met very few people who have said to me, no, I don't want you to understand
my business better.
So everyone's got that open arms kind of perspective.
And so I think everyone's always been willing to let us in.
But in the beginning, it was just me, you know, I would just go hang out for eight hours
a day for a couple nights, a couple days, and just talk to the crew there.
And they were all just happy to share with me whatever they were doing.
Do you remember any of the surprising things you learned or maybe any of the hypotheses
and assumptions you made that ended up not being true as a result of talking to them
and figuring how things really worked?
I mean, there were just there was a ton of things that like just with my own intuition,
they got right from the start.
I think the fundamental premise for how our software works turned out to be a good guess
and a good bet on how it all worked.
And then there were other things that was just like a total whiff.
Like I didn't fully understand that.
First of all, that there could be like at the very beginning, I just thought a loan
officer would be my customer.
That's it.
And it took a little while to realize, wait, multiple loan officers roll up into a single
company.
So that took a little additional coding a couple of years down the road.
Different things like that.
So sometimes I made the right guess in the beginning, and sometimes it didn't.
And we'd have to go back and recode, re-understand what the requirements ought to be.
So yeah, about half the guesses were right and half the guesses were wrong.
I want to say on this topic of entering an industry that you don't know very much about,
one of the most off shared pieces of advice is that you want to start a business where
you actually like your customers.
At the very least, you like what you're doing so that when the going gets tough, you stick
with it.
Or 10 years down the road, you don't want to abandon your business.
With Endy Hackers, I have that.
I've always been kind of an Endy Hacker.
I get to talk to people like you about your stories, which is super exciting to me.
I get to talk to people on the forum and meetups all the time.
With you, you're entering a completely new industry.
It probably wasn't a guarantee that you were going to really enjoy dealing with loan officers
and people in the mortgage industry.
How did that turn out?
Did you end up liking your customers?
Do you think that if you hadn't, you would have stuck with LoFi?
It turns out I do like my customers.
They're just like a crazy bunch.
When you get with them in person and it's an evening celebrating maybe a great year
or a great month or what have you, these are like a partying bunch of people who are kind
of a complete opposite of me.
I just want to go back to my hotel room with my book.
They're all so friendly and they love what we build and they recognize that we help them.
So they're always just been super welcoming.
I just wanted to – they became effectively my friends and I want to help my friends.
Even if I've only met my friend once over the last five years, I still consider them
that way and I want to deliver something that's really high value for them and makes their
day better and their whole team's day better.
That's a cool idea that becoming friends with your customers is probably the best motivation
and hack because now you have a whole extra reason why you actually want to do a good
job and actually build something that they want rather than focusing too much on what
you think they want or some misconception of what you should be building.
It's sort of a forcing function for building the right thing.
Yeah.
One of my customers told me a couple months ago, he said, hey Dave, I know you like to
please people and like to please us.
He's talking about his company, his mortgage company and I thought about it.
I hadn't really heard about it that way but I was like, yeah, you're right.
I want the people using our software, even if they're borrowers and don't pay us a dime,
that doesn't matter.
I want the borrowers to come in and just have like the seamless experience and I don't even
really think about the software.
They just think about like how quickly they're loan closed and how easy it was to get into
their house and yeah, I think in the end you do it for people.
It's crazy that you're able to, in 2013, find an industry, the mortgage industry, which
is huge and they were still doing everything over email and I've heard it said that one
of the best ways to come up with a business idea is to look at things that companies are
doing over Excel or spreadsheets, build a web app for that but yours was basically look
at what people are doing over email, all this swapping of files and communication and asking
for different documents and not being able to encrypt things and just build a dashboard
for that.
I wonder how many other industries exist where like that doesn't, that's not happening or
people are just sending emails and it makes no sense but there haven't been a developer
or an entrepreneur who's come in and built something better for communicating that way.
I think that is a really excellent way to think about it because I've heard that too,
spreadsheets.
What's happening in spreadsheets?
What am I going to do next?
What's happening in email?
We have most, almost all of our customers are in residential real estate but we have
a few who are like in solar or commercial real estate and we never really went down
those particular niches.
I mean, Flowify could ostensibly be used for attorneys and accountants as well.
We just didn't go down that route because we wanted to stay specialized and niche because
then we could build highly specific features that met the needs of the mortgage folks.
But oh my goodness, when was the last time any of us used an attorney?
Talk about email.
It's very email like sending Word documents back and forth.
Obviously, SaaS is for attorneys exist but I think you're on to something when you're
sending email back and forth, boom, automatically, there's got to be a better way.
You started Flowify almost seven years ago.
The benefit of hindsight, what do you think is harder, keeping the business running once
it's big and it's growing and you have employees to manage or the initial phases where you're
just trying to get this fledgling idea off the ground and you don't have any momentum
but you also don't have any overhead yet?
I'll probably say a little bit of all of the above.
In the beginning, of course, it's hard to find something that somebody else really wants
to exchange their hard-earned dollars with you for.
That's really hard and it's really hard to know if there's enough of them who want to
exchange those hard-earned dollars for what you're willing to build for them.
Once I got into that and it's worked out for me twice in my life and it's not worked out
for me about eight times in my life.
Once you hit that, it's really exciting and it's just so easy for me anyway to want to
talk to customers and say, what are you feeling?
What are the pain points you're feeling right now?
Then we go away and we build, we write code.
That's easy and we sell and we market and we repeat, repeat, repeat until the business
starts getting big enough when you think like, oh my goodness, I'm ready to hire my first
two salespeople because per Jason Lemkin, I won't just hire one, I'll always hire two
when I'm starting out.
That became really hard.
The business of finding and trying, people who would join your startup and trying to
create that attractive environment where they can have autonomy and trust and really build
their sphere of the organization.
It's hard in the beginning, especially when you're really, really small and people think
like, oh, you're just a small company and maybe you don't get as much respect as when
the company grows and grows and grows and people really see that you're a true going
concern.
This thing is going to be around for the long term.
Let's talk about that early phase you mentioned where it's hard to get people to part with
their hard earned dollars to use this tiny little app that you're just now getting out
the door.
How long did it take you to convince anybody to pay for Flowify?
Let's see.
I still have a GitHub check-in from June of 2013.
That was the first code check-in, although I've been thinking a lot about it prior
to that.
But anyway, first code check-ins when in June 2013, I think we launched, I remember I wrote
a press release that went out in August of 2013.
Within a couple of days, we had the first couple of leads, one of which was Melanie
Talifero from Austin.
Back then, I was doing 30-day trials.
One of our loan officers signed up for a 30-day trial.
I called right away.
We did screen share trainings over the phone and at the end of 30 days, just like Jason
Fried of Basecamp fame, we didn't have credit card processing code.
I just called and took the credit card over the phone and we read it manually.
That was in September.
First code check-in in June, launch in August, first paying customer in September.
Three months.
That's super fast.
Especially for 2013, when there weren't quite as many tools for building web apps and there
wasn't as much knowledge shared for how to get things out the door, you also had a super
bare bones MVP.
I think so.
Thinking back, but it solved a real problem.
So it was MVP, but while still solving a real problem, not dancing around the edges of utility,
it was a real problem solver.
And then we just focused in on, it was another developer and I just focused on bringing real
value and not bringing fluff.
It was just real value.
The user interface was utilitarian.
One of the things I still feel lucky about to this day, it was written in Bootstrap.
Everyone who's seen a Bootstrap web application recognizes, they're like, aha, that was written
in Bootstrap.
But we're selling to loan officers.
They didn't know.
And so they didn't care.
All they cared about was ease of use.
And so that worked as long as the software was easy to use and it was fast.
That was okay.
What about on the back end?
Like, do you remember what you were using for your database and for the server side
code and things like that?
Yeah.
So the back end was all in Java and we were using a no SQL database at the time, no longer
on that.
But it really helped just with speed of development.
So I didn't have what I would have found, clumsy tools and architecture.
And this other developer I was working with, and he's still with us, we just put together
a development system that we could iterate on really, really fast.
And we worried about some other problems.
We kicked that can down the road because what if this business never took off?
So we took on some technical debt and it was okay.
Because once the business was rolling, we went back and addressed that.
There's a lot of things and starting a business that I think sound counterintuitive.
They sound like things you don't want to do.
They sound like problems to be avoided, but they actually are good problems to have, like
taking on technical debt.
If you don't know if this business is going to work, you don't know if you're building
the right features, you probably don't want to unit test every single function in your
code and make sure everything is using the perfect technology.
You just want to get things out the door as quickly as possible because you might throw
all this code away next month and it can kind of seem like you're doing the wrong thing.
But in reality, I think that's definitely the right way to approach it.
Yeah.
I'm a big believer in speed, just speed, go, go, go.
Bring that value just as fast as you can because as one person said to me many years ago, Yagney,
you ain't going to need it.
Don't develop for this scalability or this functionality set that you think you're going
to need in a year's time because you're probably not guessing right.
You're probably not guessing that the bulk of your code is working, it needs to scale
in one particular area of the app versus another particular area of the app.
Don't pre-optimize.
I think was it Paul Graham who says that kind of thing, but it's so true.
There's a good anecdote.
I don't know if it's actually true, but it's about survivorship bias and how the planes
would come back from the war and they would look where all the bullet holes are and they
would say, oh, the bullet holes are on the wings, so we should put more armor on the
wings.
But it turned out like that's the wrong conclusion.
Those are the planes that came back, so if they got shot in the wings, obviously it's
fine to get shot in the wings.
You should put armor where you don't see bullet holes and maybe that's true for companies.
You can look at companies like yours or bigger companies, look at all the different problems
that you still have today and conclude that those problems aren't the most important problems
to solve.
If Facebook has a lot of technical debt, then that probably is evidence that you can start
a successful startup and grow to billions of dollars while having lots of technical
debt and you shouldn't worry about that.
What are some of the problems that you still have at Flowify, Dave, that perhaps someone
who's starting a company shouldn't worry about because you've been able to build something
successful despite having those problems?
I mean, we still have technical debt and sometimes we're interviewing developer candidates and
maybe they get a little bit too focused in on that technical debt and I'm like, hey,
how about serving our customers and our real estate agents and our borrowers?
That's the most exciting thing, but let's focus on serving them in a very useful, timely,
fast way and technical debt is always going to be there.
Like you were just saying, Facebook has technical debt, who doesn't?
There's that joke, legacy code is any code that was written last month.
It's real easy and I did it too earlier on in my career.
It's easy to go into a new shop and look at it and say, oh my goodness, what were these
people thinking?
And I've done that too, but when a developer does that, they're really looking at...
Maybe like the bigger picture?
Yeah, the developer is really thinking about their outlook on things.
Their outlook is, how does the code run?
How do I keep this software running 24-7, 365?
Maybe their focus isn't quite on serving customers.
The important thing is to be serving those customers and yes, they do need new features
and we're not lucky enough to be like a Twitter that is a very small feature set or
look at Basecamp, we use Basecamp here and Flowify is far more complex than Basecamp,
but good on DHH and Jason Fried for building this wonderful business that doesn't have
a hyper complex set of features.
Now, in our industry, it just doesn't work that way.
There's just so much that goes into doing a mortgage.
I would think, again, keep sight of the bigger picture.
It's not all about refactoring the code.
But scalability is the real deal.
You will hit scalability bumps and so when I finally stepped out of an engineering role
and a long friend of mine of 20 years prior, he came in and headed up our engineering team,
he did take that look at things, more scalability, addressing some of the technical debt and
he's done a great job and I'd say that was the right time.
When I was heading up our engineering team, I was like, no, let's deliver value, value,
value.
Let's go faster and that was what we needed in the beginning as we were coming up towards
like a million in revenue and then sometime past that, all right, we need to bring in
someone that's more talented than me, smarter than me at these engineering things and can
look at them while still not forgetting about the customer.
You did an interview back on the IndiaXers website a little while ago and we asked you
about attracting users and growing your company and you said that in the beginning, it was
very difficult, the first few years are pretty rough, you're asking for referrals, you're
creating content on your website, you're spreading the word through friends, just using pretty
much every different method that you could to grow in the early days.
Give us a picture of what that looked like and how it turned out because I know now you've
got I think a million customers for Flowify or something ridiculous but in the early days,
how did you scrape together those first few users and keep it going?
Yeah, in the early days, I just tried everything that I knew, right?
So I knew press releases, I knew content, I knew having a mailing list, email list,
all those things, asking for referrals, I always ask for referrals especially in the
mortgage and real estate industries.
Everybody lives on referrals so they get it and so I did what I knew and then it took
like two years to get to 100K in annual revenue, in annual recurring revenue which is freaking
forever like I'm a little bit surprised in hindsight that we didn't give up on the whole
idea but every month, our revenue always grew so even with churn and so that was encouraging
even though it took two years to get to 100K revenue and then things start speeding up,
we're able to hire different additional people and it did get to the point just like with
our head of engineering, we hired a head of marketing and this head of marketing is just
he's really good at lead generation, far better than me and so he was able to come in and
start cranking in the lead so we have tons of inbound leads which are great.
We do our share of outbounding, in our space, we do have six figure customers and we have
$59 a month customers so we don't outbound for the $59 a month customer but the six figures
absolutely we do so it just became kind of a mix of which approaches to use but again
our head of marketing so much better at generating leads than I ever was and so the way I look
at it is I did what I as best as I knew how to do drive some revenue and then we got some
revenue going and I'm like oh thank goodness people much smarter than me but I had to be
the first one to do it.
I had to be the first one to sell initially.
I was doing all the initial sales, all the initial marketing because you don't really
know who would be the right person even though it's so much more talented than you, you still
have to be able to recognize some of the right qualities to come in after you and then do
a better job of you at sales, marketing, engineering, so on.
Yeah, hiring is not easy and if you don't know what you're doing then how are you going
to hire somebody who's better than you?
Probably just going to hire somebody worse than you.
Yeah and you do hear a lot about like someone's working on a startup and they were like oh
we'd have sales if I could just find that right VP of sales and it totally doesn't work
that way.
You have to sell yourself.
What was the inflection point that helped you start growing faster?
Was it just that you had a certain size and word of mouth growth really became meaningful
or was it that you hired someone and that flip a switch or was growing faster what allowed
you to hire somebody?
Yeah, there was no like inflection point along the way.
It was just steady growth throughout and when I got the steady growth growing, I and a couple
of the small, the folks who were with us in the beginning and then we all got the growth
growing a little bit and we got a little bit bigger and a little bigger and we got to the
point where we're ready to hire some folks who could take over ownership of certain segments
of the business and really run with that.
I won't say it was like this one particular point.
It's just been sort of a continuous path.
Slow and steady.
Yeah, yeah, totally.
It's been that way.
So you are out in Boulder, Colorado.
I've been meaning to get out there and visit at some point, but I haven't yet.
What's the tech scene like in Boulder?
Yeah, it's a really good tech scene in Boulder and Denver is nearby and all up and down the
mountains, the Colorado Front Range.
There's lots of good tech folks doing all kinds of things, certainly nothing like San
Francisco, of course, the Bay Area, absolutely not, but there's a lot of folks who are just
into tech here, it's become a kind of tech hub all of its own.
Are there a lot of companies raising money or are there a lot of self-funded companies
like the ones that you've started?
Well, the funny thing is, I only hear about people raising money because the press picks
it up.
Who can blame reporters?
Reporters need to write about something and small companies don't really want to reveal
their revenue and why should they?
It doesn't exactly help them to do it.
So when someone raises money and say, hey, I raised 10 million bucks, well, news outlets
will pick it up because it's like hard factual news.
So I don't hear much about self-funded folks, but that doesn't mean they're not out there.
You've mentioned a couple of Jason's, a couple of times in this episode, Jason Lemkin who
runs Saster and Jason Fried, he runs Basecamp and it gets me thinking about who you learn
from as a founder.
When you're in these early stages, there's a lot of books out there, there's a lot of
stories of people getting started.
As you get bigger, the number of companies who've reached the same size of you as you
are bigger that you can look up to shrinks, especially in a particular space.
How many SaaS companies in the mortgage industry can you really look to for a playbook?
So I'm curious, Dave, how do you learn and how do you gut check yourself and figure out
am I doing the right things when you're running multi-million dollar SaaS companies?
So the way that I do it and the way I've always done it is I just read everything I get my
hands on.
I listen to every podcast I get my ears on like Indie Hackers and Saster and I read the
books that Jason Fried and DHH put out.
When you're reading a tweet or reading a blog post or a Quora post, there's usually not
any one thing in there that you say, oh my goodness, this is going to change my year.
But collectively, they all add up and you do need to be a little bit wary of internet
startup wisdom.
There's a lot of internet startup wisdom that we all just assume to be the case.
One of that is you cannot start a tech company without raising money.
In fact, I think some part of the internet wisdom is starting a tech company and raising
money and go hand in hand, like running, going out for a run and putting on shoes, they go
hand in hand.
Just forget about the barefoot runners for a second.
You wouldn't normally think of going running without your shoes hand in hand.
I think it's good for folks to realize that there are other ways.
There's lots of other ways like Tyler Tringus, Earnest Capital, folks like that.
There's going to be 10 other ways to make it possible.
Not all markets are going to be these markets that can generate billion dollar evaluations.
What's wrong with running a $10 million a year company?
There's really nothing wrong with that.
Maybe you're not going to be able to compete in some markets, and a lot of markets, in
fact, you're not going to be able to compete, but also in lots and lots of markets.
You compete really well.
How do you compete in the industry that you're in?
Because I know there are probably some well-funded competitors who've raised from venture capitalists
who are trying to swallow the entire market.
How do you continue growing your business and do you think about the competition at
all?
Yeah, I think that some of our top competitors, they've all raised money.
How do we compete?
We go out, we listen to customers, and we move fast on what we hear.
I still say, I say speed wins.
It's what I've said for a long time.
You can take that analogy too far.
You can say, oh, you become reckless.
No, don't take the analogy too far.
But by having that tight feedback loop, staying agile and moving fast, it can beat a lot of
the bigger companies.
Some of our competitors, in my opinion, my humble opinion, they've over-raised.
They raise too much money, and so they have to start looking at adjacent markets.
That's all well and good, but it's a little bit harder.
It's a little bit harder when you're looking at six different things that you need, six
different business units within your company, perhaps.
That's not to knock them at all.
They all serve their customers well, as do we.
But we also naturally become rather unique because we're only just serving folks who
are doing mortgages, and we do it in a particular way.
We've all read about your software will naturally and normally become differentiated in some
way.
You never want your software, as much as you can help it, to be a total clone of another
because then you're just competing on price and nobody wants to compete on price.
Yeah, it's interesting to think about the fact that because you haven't raised money,
you don't have any pressure to go into these adjacent markets.
You mentioned this earlier in the episode.
You focus very much on your segment, and that allows you to basically serve them better
than anybody else because you can only focus on their needs.
You don't have to give them these watered down solutions that help two different types
of customers, whereas a company who's raised from venture capitalist needs to be worth
a billion dollars to justify their company even existing.
Now they've got to target all these other markets.
I think a big part of the equation here is just being part of a market that's not quite
big enough for any one company to own it all and still get the returns that a VC would
want is a huge advantage.
Yeah, and I definitely am not the type I want to knock competitors or anything like that,
but maybe you look at Google, for example, Google does a lot of things well, but everything
they do, they don't do well.
We really like doing one thing particularly well, and the market is still big enough for
us to serve our customers well.
We're growing towards $10 million in annual revenue, and our top competitors can also
exist.
It actually works out that way, and that's okay.
Another thing you've mentioned a couple of times is working with people that you give
a lot of autonomy to and a lot of trust to, and that seems inherently appealing to me.
I'm not someone who loves being a manager, I'm not someone who loves building out a team
and having to transition from working on the things that I like doing, and I'm sure lots
of listeners are the same way.
They're developers, they're creatives, they really like working on the business.
They don't want to manage other people, and so having a team of other people who are similarly
minded, who can take responsibility for things you can trust to get a lot done when you're
not looking over their shoulder sounds, quite frankly, pretty awesome.
The only catch is how do you do that?
It sounds like it's much harder to hire someone like that than it is to hire more of a normal
type of employee.
How do you build a business full of people who you can give so much autonomy and trust
to?
It helps a lot of times when you've known someone before previously in your career,
but that happens to me pretty rarely.
I try to look for people, I never discount anybody depending on their background, but
I love seeing people who've had to be scrappy at smaller companies.
If you've been working at IBM, just think of how easy it would be to become complacent.
I'll go in every day.
I know even if I totally screw up and I accidentally delete a database table out of production,
the business is still going to pay me my salary, but in a startup, no, that could probably
not happen, bad things could happen.
I do look for people who have been scrappy and had to really scramble and had to own
a lot of responsibility and be left alone to run with that responsibility and be very
well organized and could be left alone for weeks at a time, even though I do do weekly
one-on-ones with my direct reports, but still, you just want to provide overall guidance,
see how you can help, let them know what some of the principles of the company are.
Customers first, speed, simplicity, don't overcomplicate solutions, don't get so narrow
focused with tunnel vision, so all I can think about is whether my code is running on the
latest version of my development framework or not.
Different things like that.
Yeah, it's tough.
When you're the founder, because you're wearing every different hat and you think about the
overall business outcomes, but as an employee with a specific role, sometimes you need a
reminder that it's not all about your particular role and sometimes you might have to make
sacrifices for the greater good of everything going on at the company and it's not the natural
way to think if you're not at the top.
Yeah, I would agree with that.
I do even talk about succession plans.
Everyone, not just me, but everyone.
Who are you starting to groom to take over your spot?
You never know what's going to happen.
I'm not married to being CEO, right?
I just love being a part of these great organizations that bring such awesome benefits to customers.
I personally don't necessarily need to be at the top.
I love being part of these organizations and that's what I think about.
So I do talk to my direct reports about succession plans from time to time.
Well, you may not be married to being CEO, but you are married to your co-founder.
You are a husband and wife duo running both Flowify and Flux, is that right?
That's right.
We are.
How do you make that work?
I've met a lot of couples who have not made it work and there's a little bit of selection
bias going on.
They don't ever come onto the podcast, but you're here.
You guys are making it work.
How do you keep your relationship healthy and then how do you manage your personal lives
when you basically work together all the time?
Yeah, I don't know.
I think it just works.
We work at home a lot.
We work in the office a lot.
When we come to the office, we're usually riding together.
We talk a lot about the businesses, what's going on, high level, of course, and for us,
it works.
It's a lot of fun.
I love working with her, Michelle, and it just worked out for us, but I totally get
some couples that may very much not work out okay.
How did it start?
Did one of you or the other suggest the other to get involved or was your wife already sort
of entrepreneurial?
For Flowify, for example, in the beginning, just a lot of code needed to be written.
Initially it was being another developer.
His name is a rule.
He's in Texas these days.
Initially it was just a rule in me, writing lots of code, and then I naturally handled
like support and sales and marketing, but eventually when things got a little bit traction
and momentum, my wife started coming in and she started working a lot on marketing.
That seemed like a good role for her.
Ironically, she's an operating room nurse, so she's a nurse and that's what she's done
most of her career, but she really adapted well into marketing and she eventually took
over management of our support team.
She runs our finance.
I've sort of just mostly fallen back to engineering and product and she mostly... I think of
us as co-CEOs really, but I hold the title and she's our CFO.
It's just worked out well for us.
What would you say are some of the biggest challenges that you've had running Flowify
in particular in the last six and a half years?
It sounds like things have been pretty smooth running.
Your partnership with your wife is going well.
Your hires seem to have gone well.
You've been able to build more or less the right product and grow to millions of dollars
in revenue.
What have been some of the speed bumps?
They've been lots, right?
It all looks like peaches and roses on the outside, right?
Making sure that we're moving at the right pace.
Sometimes I feel like we're moving too slow, whether it may be sales or customer success
growing our existing accounts or making sure our customer satisfaction scores coming out
of our support team are high enough.
There's lots and lots to worry about.
There's lots and lots to... Initially, back in the early, early days, I just doubled down.
If I thought we were moving too slow, and I often did, I just... We would sit down
and talk about it and we say, how could we figure out how to move faster?
That still happens today.
It happens with more people.
Sometimes I still think that, hey, we move a little too slow.
I would say, you ask what are some of the greatest challenges.
Some of them are, of course, sales.
We always want to be increasing our sales.
We want to be selling so much in monthly recurring revenue, but we also want to figure out how
to be increasing that amount of new MRR that's coming in every month, right?
It's great.
If you're adding 1,000 in MRR every month, that's great, but if 12 months later, you're
only still adding 1,000 a month in new MRR.
It's a little tough.
You do want to be looking for ways to how to increase it from 1,000 to 1,500 to 2,500
over time.
It doesn't happen month to month.
That's pretty tough to sustain.
Right there.
I've always said sales cures all.
I say that mostly because I'm the introverted software developer.
If I see a problem, a challenge that could be solved in software or talking to customers
and seeing what their real pain points are, to me, that's a much easier problem than getting
out there and getting new customers to come in and see the awesome things you've built
for them.
To me, that's a much harder problem.
In a nutshell, those are a few of the challenges that we faced along the way.
Two of the things I think a lot of founders underestimate in growing their businesses
are churn and monetization.
Obviously, you want to keep your churn as low as possible.
Otherwise, it's hard to grow your revenue, but also monetization.
The more money you can charge, the more frequently you can charge, the easier it is to grow your
revenue.
Have you thought about those two problems with Flowify?
Have you had any challenges with either one of those?
Yeah, so those are always tough, churn especially.
We have both small customers pay us 59 bucks, customers who pay us six figures and up.
Those are two different segments, two different cohorts, if you will.
We have different churn numbers with both those segments.
You just always want to be working on driving them down.
Driving them down.
Find out what's a good churn number for you and your industry and take that as a benchmark
and just work at chipping away at it, chipping away at it.
Churn is always a concern in parallel with getting the sales numbers up.
Yeah, I've spoken to some founders who've had the good fortune of being in an industry
and having the type of product where churn is just intrinsically low.
I spoke to the guys at Honey Badger, for example.
It's a monitoring service you set up on your servers.
You install Honey Badger, you just forget about it.
They have something like half a percent monthly churn.
It's basically minuscule.
They can grow super slowly and acquire new customers, and they never lose anybody, so
they actually grow pretty steadily over time.
With what I'm working on, any hackers, it's literally the polar opposite.
I'm talking to founders.
Founders quit all the time, building an online forum.
People churn out of an online forum all the time, and so it's a huge problem.
Where would you say the natural churn levels are for your industry?
I would probably say, if you're selling $50 a month subscriptions, you want to be trying
to get under 2% churn per month.
Half a percent is just amazing.
Shoot really hard for getting under 2% if you're selling something that's less than $100
a month, I would say.
What about monetization?
You've talked about how you've got customers who pay you $55, $60 a month, and you have
customers who pay you six figures.
Which customers did you go after first, and how did you decide to expand into the second
segment?
I went after the smaller customers first, the sales cycle was much, much shorter.
In the beginning, when I'm making sales calls, if I wasn't talking to a loan officer who
had her boots on the ground, and she was actually doing loans, if I talked to someone higher
up in the organization, that person would tell me, I've already got software that does
that.
I don't need your software.
It's true, they did have software that did it.
The problem was, it was really poor.
The early adopter loan officers knew that.
They knew it was poor.
They knew that there were people out there on the interwebs thinking about making this
a better experience.
Very much, it was early adopters and the small folks.
It took time for the folks who weren't in the trenches, but they were higher up in the
lending organizations, to realize that our software could really benefit them.
It did not hurt that a few years ago, Rocket Mortgage had a Super Bowl commercial that
said, if you tap the face of your phone, you'll get a mortgage in 15 seconds.
That actually really helped us a lot, because lots and lots of mortgage company owners were
like, uh-oh, things are changing now.
No, by the way, you can't get a mortgage in 15 seconds.
We would all love that to be the case, but there are lots and lots of laws in place that
require mortgage disclosures to be sent out three days in advance, and it's not easy to
borrow $400,000.
People want to make sure that you're going to be able to repay that money.
But the Rocket Mortgage commercial helped us a ton.
Let's talk about some of the broader learnings that you've had as a founder, Dave, because
you've been doing this for a long time.
As you said, you've had a couple businesses that have succeeded.
You've had eight or so where things didn't quite work out.
You're also serving a lot of business owners, as people you've mentioned who started mortgage
companies, and they're making millions of dollars a year, not in an industry that I'm
familiar with at all.
So I guess my first question is, what have you learned from your customers and the businesses
that they run?
I've learned it's all about relationships, all of it.
It's all about relationships.
It's about how you can partner with and serve other folks in different areas of the entire
mortgage spectrum, but in the end, it really all does come down to relationships.
Are you a good partner?
Do I love working with you, or do you let me down?
Do you deplete the trust battery, or are you always growing and filling up the trust battery?
How good and reliable of a partner are you?
It all comes down to those relationships.
The CEOs that I text with, they know if they hit me up for anything, they know that either
I personally or someone on my team will address it, or we're helping them by getting out ahead
of the curve.
We're thinking about some of the problems that we anticipate that they're going to anticipate.
They look at us, too, as a partner.
We care about their business.
We want them.
We want to help them recruit more high-performing loan officers to their organizations.
It goes both ways, too.
They know that if I and our team are asking some questions, hey, can we hang out in your
office for a couple days and just learn?
They're doing their part, too, as part of that relationship.
I really think it comes down to relationships.
It would be different if we're like a Netflix.
Netflix charges 13 bucks a month.
You can't invest in relationships at 13 bucks, and kudos to Netflix.
They're massive, and they made it work for them, but for me, it's come down to relationships.
What about the differences between starting a business back when you started Flux in 2000
and starting a business when you started Flow Find in 2013?
I'm sure a lot has changed and a lot has remained the same.
What are some of the learnings you've gotten as a result of seeing the differences between
these two businesses?
The biggest, most obvious difference for me when I started Flux way back in 2000 because
back then, the software was on-premise.
There was downloading the software and installing it on your server or what have you.
I missed the early wave of cloud.
I certainly was not there for Salesforce when they launched in 99 or 98, whatever it was.
It took me a little while to come around to the cloud idea.
I remember having an employee, and he said to me once, I don't want to rent my software.
I want to own it, meaning I want the CD or I want the download.
He was a software developer.
I know that he would have changed his mind over the years as well, just like I did too.
I know that I missed some of those early cloud learnings, and I know I miss a lot of the
early things.
The one thing I like to joke about is I'm old enough to date myself a little bit here.
Way back in 1984, I was post-graduation from high school, and I wasn't even on the internet
yet.
With all the old dial-up modems and bulletin board systems, I was running one of them,
and other hobbyists could dial in and store their files on my computer, and they could
dial in later and download them again.
That's how I like to talk about how I missed the whole Dropbox phenomenon.
I could have hit it in 1984.
I remember thinking back then, I was thinking, who would want to store their files on someone
else's computer?
I want it on my computer, so I missed that too.
There's just so much I've missed.
Do you think having such a long career in the tech space and seeing these different
trends that you miss makes you more attuned or better at spotting new trends as they appear?
Is it always different every time?
I think in my case, it doesn't necessarily help me, because I still miss tons of trends.
I think the one thing that's maybe helped me is to realize that change happens, really.
That's not that exciting or profound, but change happens, and what's happening.
We all came to age using our electronic devices in high school or middle school or elementary
school.
If things change and what you learned when you were 10 years old is different at age
20, just be open to the change.
Just be open to the change.
Yeah.
Well, Dave, I've kept you for an hour.
It's been super cool hearing your story with Flux and with Flowify and talking about how
much relationships matter.
I could not agree more.
A lot of people listening in are just getting started in their careers as founders.
They hope to someday build a business as successful as the two that you've built.
What would your advice be for someone just getting started, and what do you think they
can learn from your story and your learnings?
I would probably say, be passionate about it, be hard charging about it, move fast.
As they say, move fast, break things.
That's all great stuff in the beginning.
Also know when to let go.
In 2000, I started three businesses.
The first two, I realized along the way they weren't going to work, and I knew when to
let them go, even though at times it was hard because I'd put in so much work.
I would say, know when to let go, but then try to spot when you should keep going forward
and something might start clicking.
You'll see the future and to stick with it.
Dave Sims, thank you so much for coming on the podcast.
Thanks so much.
It's been a blast.
Can you tell listeners where they can go to learn more about what you're up to with Flux
and Flowify?
Flowify.com, F-L-O-I-F-Y.com, and Flux is at Flux.ly.
All right.
Thank you so much, Dave.
Listeners, if you enjoyed listening to this episode, I would really appreciate it if you
get in touch with Dave and let him know.
He's on Twitter at FlowifyDave.
Also I am now writing about each episode.
I share my thoughts and some of my takeaways and key learnings from each episode.
So if you want to sign up for that newsletter, go to AndyHackers.com slash podcast and subscribe.
Once again, that's AndyHackers.com slash podcast.
Thanks for listening and I will see you next week.