What's up everybody, this is Cortland from IndieHackers.com, and today I've got a very
special guest on the podcast.
I'll be talking to Nathan Barry, the founder of ConvertKit, an email marketing company
that he grew from $5,000 a month to over $600,000 a month in about two years.
So he's somebody you're really going to want to listen to, and he's got a lot of great
stuff to say that not many other people will talk about.
For example, he talks about how you should cheat an online business by starting by growing
your own personal audience before you even start your business.
He talks about how having a giant competitor in your space is nothing to be afraid of,
and instead talks about how you can use that to your advantage to grow your business even
faster.
He also talks about how direct sales are the answer to pretty much everything, and how
content marketing can actually lead you astray.
So he's got a lot of interesting stuff to share that I think all of us can learn a lot
from, and I'm really excited to get into this interview.
So without further ado, I present to you Nathan Barry, the founder of ConvertKit.
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Cool, I'm here with Nathan Barry of ConvertKit.
Thanks so much for coming on the show, Nathan.
It's super cool to be talking to you.
Yeah, thanks for having me on.
Yeah, so for those of you who don't know, ConvertKit is an email marketing company
targeted at professional bloggers, and it's sort of a more powerful MailChimp, so that
people running blogs, or podcasts, or any other sort of website can send emails to people
in their audience.
Is that an accurate description, Nathan?
Yeah, exactly.
It's built for the content creator rather than for the generic business that could be
anything from, I don't know what, I feel like people using MailChimp could use it for anything
from a cupcake shop to a design agency to who knows what.
We're trying to build something specifically for the bloggers and content creators out
there.
The reason that I'm so excited to have you on the show is because, and I think the reason
that ConvertKit is so interesting is a combination of two or three things.
Number one, the growth of ConvertKit, specifically the revenue growth.
In 2013, you were making $0.
You just started, you didn't even have an idea for the app.
In 2015, you're making $5,000 a month.
And today, two years later, you're making almost $600,000 a month, which is humongous.
Number two, the transparency.
All of the revenue metrics for ConvertKit are public.
So anybody can just go to the ConvertKit dashboard on baremetrics and see exactly how much money
you're making from day to day.
Yesterday, it was $588,000 a month.
Today, it's $590,000.
And number three, the story.
You've been writing about ConvertKit from the beginning of your journey.
And I had before this conversation, I went back into my Gmail and I Googled Nathan Barry.
My first email from you is October 2013.
So after you had gotten started with ConvertKit.
But you've been sharing a story from the beginning and a lot of people will share their story
and talk about what they're doing for their companies.
But it's not often that you can follow along with somebody from the beginning and see them
build a company that goes on to make millions and millions of dollars.
Yeah, I think that's something that's been particularly interesting with having the public
metrics because people will see because we're growing at a really good pace.
I think baremetrics is showing that we grew 6% in the last month.
And so they're like, oh, well, it's easy for you to share your metrics publicly when everything
is going so well or when it's so successful.
But one thing that we made sure to do is to share the metrics publicly from the beginning
or as close to the beginning as possible.
So our baremetrics dashboard has been public since when we were making $2,000 a month in
the past.
And so it's not like bragging, well, things are going well type of idea.
It's that, no, this is a story and metrics add all the context and detail to the story
and hopefully it'll help other people learn.
Yeah, exactly.
The fact that you're actually talking about what you were doing when there was really
no guarantee of your success is really cool.
And I think there's some risks there because I've done the same thing with ND hackers and
it's there's a lot of anxiety that you can get from so publicly failing to meet your
goals.
But I think at the same time, it's so helpful for other people to actually see something
that's presented transparently from the beginning.
So on that note, I've got a ton of stuff I want to ask you.
But to start off and to kind of provide some context for listeners who may not know the
ConvertKit story, can you give us kind of an abridged version of how you grew ConvertKit
from nothing into a company that's doing $7 million a year, four years later?
Yeah, so I started the company in 2013.
My background is both as a blogger and content creator, but also as a designer.
So I used to work in user experience design and building web and iOS applications.
And then I'd gotten into teaching that.
So I wrote a couple books on how to design software, and then was using email marketing
to sell that software, or sorry, to sell those books.
And I wanted to get back into software.
So ConvertKit started out with something that I called the Web App Challenge.
And that was basically, hey, I want to start a SaaS company, and I'm going to do it all
in public.
So I'm going to blog about the entire process.
I don't know what I'm going to build yet, but I'm going to start January 1st, 2013.
And my goal is to get to $5,000 a month in monthly recurring revenue by July 1st.
So six months later.
And I put some constraints on that.
The first constraint was that I could only invest $5,000 of my own money.
And the reason was I'd seen a lot of people come off of one success and then waste $50,000,
$100,000 in their next big idea.
And that money effectively bought them the ability to not talk to customers or to not
make sure that they were building something people wanted.
So I gave myself a tiny bit of money to start, and I was going to augment that by doing a
lot of design and front-end code myself, but really to force myself to actually get pre-sales
from customers and to fund the development with that.
So that was the goal.
I blogged about it all publicly.
You can go on NathanBarry.com and read posts about how I chose the name, how we acquired
the domain name, how I found a developer, et cetera.
And then six months in, we had made progress, but we're sitting about $2,000 a month in
revenue.
So I don't know what that is, 35, 40% of the goal.
But from idea to two grand a month in revenue in six months is not bad, even though officially
it's a failure.
And I kind of expected that we just kind of make the slow steady progress going from $2,000
to $3,000, and it might take another six months before we cross $5,000, but that's okay.
And that's just not what happened.
Instead I found it was really hard to grow.
I lost a lot of inspiration and a lot of momentum once the initial push kind of wore off.
And I had this other business selling books and courses that was doing great.
So I was just splitting my time.
And fast forward like a year later, ConvertKit hasn't grown at all.
In fact, it's actually shrunk a little bit.
I think it was down to like 1700 a month.
And I was talking with a friend of mine, his name is Heaton Shaw, and he's very involved
in the SaaS world.
If anyone knows Kissmetrics or Crazy Egg, those are both companies that Heaton founded.
I was talking to Heaton as we're walking back from dinner at a conference, and he just
said, like, you know, I think it's time that you shut down ConvertKit.
And first, it's not a nice thing to say to someone like, hey, this project that you put
all this time into, you should shut it down.
Very blunt.
Yes.
That honesty is pretty important though.
Because otherwise people are just like, you know, man, just keep hustling, keep working
on it.
You'll get there eventually.
You'll get your break.
And Heaton was just like, shut it down.
You'll be successful at whatever you do.
You've put in a good amount of time into ConvertKit.
You've tried.
You're like a year and a half in at this point.
It's not working.
It's time to call it and shut it down.
And then he kind of let me think about that for a minute.
And then after a little bit of a pause, he said, or you can take it seriously and give
it the time, money, and attention it deserves.
But you're not going to build a meaningful business by working on it on the side.
You know, the 10, 20 hours a week that you're doing, you're just not going to get the results
that you want.
And so I did what anyone does when they hear really good advice.
And that's that I waited six months to act on it at all.
And so by that time we're at October, 2014, the revenues declined down to $1,300 a month.
And I just had this decision, like shut it down or double down.
And you know, I had a whole framework for it.
That's all in my blog.
If you go to NathanBarry.com slash quit, you can read the whole post I wrote about that.
But basically I decided to double down.
And so I put my other business on autopilot, which is code for letting it go to zero.
Then I put $50,000 into ConvertKit, hired a core team and started doing direct sales.
And the short version from there, you know, basically the last two years or so as ConvertKit
went from $1,300 a month to $1,600 to $2,000 to $2,500 and six months after that decision,
we hit the $5,000 a month in recurring revenue.
So only like 20 months late based on the original goal.
But then that $5,000 turned into, you know, the next month it went up to six and the month
after that it was eight and then 10.
And then like that July, we hit a big month and went from 10 to 15 in a single month.
And we started getting bigger customers to trust us.
And I found that even though direct sales was still driving so much of the revenue for
every sale that I made, the next sale got easier because people would refer, you know,
they would be like, well, who's using you?
And then I could name drop bigger and bigger names.
And then as we got into like those referrals really starting to kick in and we did a little
more affiliate marketing, the growth from there went from, you know, that 15,000 a month
to 20,000 the next month, like, you know, to like 24 and then 30.
And then, you know, then we started making bigger and bigger jumps where it went from
like 30 to, uh, I think 45 or 50 in a single month and then 50 to 80 or 50 to 70 in a month.
And we basically closed out 2015 at 98,000 MRR.
And then from 2015 to through the end of 2016, we went from basically that a hundred K to
500 K MRR, and then we've added about a hundred K since then.
I don't even know how I would react if I had a company that was growing that fast.
Yeah.
So now we've kind of settled into a nice pattern that works pretty well.
So like you, you reach a certain scale and the churn starts to kick in, right?
So, you know, five, 6% monthly churn, you start to really feel it.
Like now at this point, it's over a thousand dollars a day in churn.
And so like that side of it sucks.
And so we've kind of reached this nice pattern of growing anywhere from 30 to 50,000 a month
net of churn.
And so that's felt pretty consistent.
We want to be able to accelerate that obviously, but kind of our average is about that.
You know, today's the last day of February.
I think we, you know, we pulled off like 37, 38,000 of net growth after churn.
It sounds like there's really two phases to the ConvertKit story.
There's just kind of the first two years where you went from zero to 5,000 Avenue pretty
much or before that basically zero to 2000 and then back down to 1300.
And then there's the super high growth period where you kind of focused and doubled down
on ConvertKit and ended up building a humongous business and only a couple of years.
And I want to focus on the first half of the story first, just because I think a lot of
listeners are probably in the beginning stages where they might not have an idea or they
might have an idea, but they're not sure how to find their first customers.
And hopefully we'll have time to get into the latter half too.
And if not, I will have to bribe you to come back on the show for another hour at some
point in the future.
But in the very beginning, you mentioned that you started this thing called the web app
challenge and it was very last day of 2012, you wrote this blog post saying, Hey, here's
what I'm going to do.
I've made a lot of money from book sales, but I want to make recurring revenue.
So I'm going to start a software as a service application and try to do that.
And as you mentioned, you set a deadline to hit $5,000 a month and recurring revenue and
six months.
But you're starting from scratch.
You didn't even have an idea yet.
So what did you do immediately after you release that blog post?
Yeah, well, first I started on the last day of 2012 because I wanted to give myself an
extra day because, you know, use all the time you have.
And let's see, immediately after that, I started working on coming up with ideas.
Once I put it out there that, Hey, I'm going to do this, I'm going to do it in public.
You know what I did immediately after it was I probably responded to all the comments on
Hacker News and, you know, all the distractions from Twitter of people going like, wow, this
is so cool that you're going to do this because you need to get caught up in like, yeah, it
is so cool that I'm going to do this.
And you're like, wait a second.
I haven't done anything yet.
I just said I was going to do something.
Okay.
Let me get out of the comments.
Let me get off of Twitter and start coming up with an idea of what to build.
And on that note, I was looking at the comments for your web app challenge post and there's
all sorts of influential people who I follow on Twitter now who comment on it.
So David Houser, the founder of Grasshopper, who I interviewed for Indie Hackers in January
commented, movie shot, Iqbal, who's product hunts maker of the year for 2016 commented
on your post back in 2012, Justin Jackson, who I'm talking to for Indie Hackers this
week.
Even Amy Hoyle was helping you out back then.
So I'm sure it was super distracting just talking to all these people.
Yeah.
The first thing that the web app challenge helped me with was by publicly setting a goal
and where I wanted to go.
And that allowed a lot of, you know, successful, influential people to kind of rally alongside
and say, Hey, if you need anything, let me know.
Happy to help.
Because all these people get questions and comments from someone who's like, how to,
what advice do you have for me on how to start a company or something like that?
And there's not really anything that you can do with that.
You know, you're like, well, here's another bit of startup advice, but if someone comes
to you and they're already in motion, then there's something that you can work with.
You know that, Hey, there's a decent chance that if I invest 30 minutes into this person,
they'll actually bring it to fruition and it won't be just another 30 minutes that I
wasted on someone who's just going to fizzle out and never follow through and never put
in the work.
And so by having that clear goal, a bunch of people rallied alongside and I was able
to get access to help from people like, you know, Heaton Shaw and Amy Hawaii and others
that I don't think would have been available if I'd projected the same idea of like, I
don't know, I'm just out here to try something for a month or two.
Right.
And you had this kind of track record of launching your books too.
So people knew that you weren't, you weren't just messing around, you were actually serious
about getting things done.
And I think, you know, in my experience, I've seen people kind of fall into one of two camps
where you've got some people who have a lot of trouble with, you know, motivation or finding
the time and earn the money to get started.
And then you've got other people who are pretty good at getting started and they just need
like help with what they're actually doing.
And this latter half of people are a lot easier to give advice to.
How did you end up deciding on the idea for ConvertKit?
Because like I said, you had no idea what you're even going to work on January 31st
or December 31st of 2012.
How long did it take you to come up with the idea for ConvertKit and how did you go about
validating that idea?
Yeah, so initially I was trying out this, this concept called idea extraction that I
first heard about from Andy Drish and Dane Maxwell, who run a program called The Foundation.
And basically the idea behind it is, you know, pick any business, I don't know, real estate
agents, lawyers, accountants, et cetera, and really dig into their business, like interview
them and really dig into their day to day workflow, what problems they have, et cetera,
and look for these frustrating problems that could be solved by software.
And it's a lot of stuff that maybe they're using Excel for that kind of thing that you
could build the industry version of maybe it's a base camp or like a project management
tool or a workflow solution or something like that.
And so it's kind of the path that I started down.
I think I had about 10 interviews lined up with different people in those industries.
And those calls went well.
I definitely learned about a handful of different ideas.
I think I actually don't remember if I published notes from those or not.
But then at the same time, you know, I heard from people like Amy Hoy and then read stuff
from the guys at base camp and they're saying, you know, scratch your own itch.
And one thing like Amy Hoy said two things to me that stood out.
One was, do you really want to spend the next like five years or 10 years working with real
estate agents?
Are you really passionate about the real estate space or, you know, fill in the blank with
any random space where you think you could solve a problem?
And the answer is like, well, no, not really.
And the other thing she said is this is really, really hard.
And so don't underestimate any or don't throw away any competitive advantage that you already
have.
So in the world of designers and marketers and developers, I had an audience of about
5,000 people already.
And so she's saying, don't throw that away because like that's worth something.
And this whole process of building a SaaS company is going to be 10 to 100 times harder
than you think.
And so hold on to every advantage that you have.
So then I started looking at my own problems and I was like, well, I'm really frustrated
with MailChimp, you know, email marketing is doing amazingly well at selling my books
and courses, but I'm having to fight with MailChimp every time I want to implement a
best practice.
And so maybe I can build effectively MailChimp, but for people like me.
And so I think that whole process took like 10 days or less.
And you were just doing nothing but just thinking about ideas during this time period, huh?
Yeah.
And you know, responding to comments on Hacker News, because that's important, of course.
So were you at all intimidated by the fact that MailChimp was this huge behemoth company
that had a ton of users and that here you were going to create a MailChimp competitor
that was basically starting from scratch?
Did that worry you at all?
No, because I don't think people should be afraid of bigger competitors.
And I've had this perspective for a long time.
And so it didn't worry me one bit because that bigger competitor just demonstrates that
there's a big market there.
And you know, there's going to be a lot of people that they don't serve well, but they
can create the market, they can popularize it.
You know, to this day, people are like, what do you do, you know, if I'm meeting some random
person or someone in Uber is asking what I do, then, you know, I always say like, well,
you know, do email marketing for professional bloggers.
And then I might ask, have you heard of MailChimp?
Because that gives a nice frame of reference so that I can bracket it in with something
that they've already heard of.
And so I think it's really helpful when one company gets a really huge market share.
And then especially in the email space, like MailChimp is the biggest, but not even by
that much.
Like they put out this last year that 2016 they did, I think 400 million in revenue.
And Campaign Monitor announced that they did something like 200 million in revenue.
And so Campaign Monitor is doing that well.
And then like AWeber, for example, this isn't based on like a ton of facts, but I would
estimate their revenue somewhere between like 40 and 60 million a year.
And then we haven't even gotten it into like ActiveCampaign and Drip and Mad Mimi.
And you know, we could, I could sit here and name off 20 plus email marketing companies
that are making over like five to $10 million a year.
And so there's clearly tons of room.
And so that just got me excited that there was potential.
And early on, I was just trying to carve out like my little business doing 50K MRR.
That was my goal.
And so there's absolutely room for that.
Yeah, that's awesome.
I tell people a lot that they should avoid these winner take all markets, like trying
to compete with Facebook and the social networking game, because there's so many other markets
where there's a ton of companies that are making a lot of money.
And if your goal is not to not necessarily to be like a billion dollar company, but to
make, like you said, $50,000 or $20,000 a month, there's no reason to pick a winner
take all market.
And it's also pretty cool that what you mentioned earlier that having kind of a big well-known
competitor in the space saves you from having to educate and explain to people what the
market is or what your product is.
And in fact, like they're already ready and conditioned to buy because they know what
MailChimp is and because they know what these other tools are.
So it's kind of an advantage to have a big competitor.
I think so.
And I would never go into a space where I was defining the market, where I was having
to tell people this is the tool and have to explain what it is and why you should use
it and all of that.
Because it just saves so much time to be able to make comparisons.
And we make fun of everyone who says like, oh, I'm building the next Uber for this or
Airbnb for that, but it's a useful tool or a useful mental model to help people quickly
know what you do.
And so I can just say, yeah, we're building MailChimp for professional bloggers.
Or I can bracket it further for someone who knows the industry better.
And I can say something like, ConvertKit is the power of Infusionsoft, but easier to use
than MailChimp.
And now people are like, oh, I know exactly where you fit.
And actually, that sounds pretty good.
So I like being able to make those comparisons.
Yeah.
So what was your strategy for finding your first customers in the early day?
And why did you end up picking that strategy?
Yeah.
So in the early days, I really looked to the web app challenge to drive those customers.
Well, okay.
So I take that back.
And right at the very beginning, I was doing direct outreach.
And so I knew that I was going to focus on email marketing, or I thought I might.
And so then I got 10 people who did email marketing, you know, pretty well.
And these were people like Josh Kaufman, who wrote the book, the personal MBA, James Clear,
who is now very, very famous for his blog on habits, I think his is like the fastest
growing single author blog of all time or something like that now.
But I, you know, I'd known him years ago before I started that blog.
And then like Heaton Shaw from KISSmetrics and Crazy Egg.
And I just asked them all like, hey, you're using email.
And what are your frustrations?
What are your pain points?
And they would kind of describe it and then, and then I'd ask these two more questions
that I learned from Andy Drish.
And that's just, you know, asking what else and tell me more.
And so instead of saying like, what are your frustrations and the person says, oh, well,
it's a really, really a pain to set up autoresponders or set up these email courses, instead of
jumping in and saying like, oh, my system is going to solve that by making it really
easy.
Instead, you just wait and listen.
And when they stop talking, then you say like, okay, tell me more or elaborate on this part
of it.
And then you'll get to the real, real pain and frustrations to solve.
So the goal is to kind of keep them talking rather than directing the conversation yourself.
Well, yeah, you direct the conversation by asking questions rather than making statements.
Because too many people are just listening for the slightest door to open so they can
start talking about how awesome their solution is going to be.
But if you don't truly understand why something is frustrating to someone, then I don't know,
you haven't done enough listening yet.
So I went to those 10 people, kind of mapped out what the solution would be.
And then I even asked like, hey, is this something you'd pay for?
And they're all, you know, absolutely yes.
You know, I asked how much would you pay for it?
And there were varying answers anywhere from like $50 a month up to $200 or $300 a month.
And it usually just depended on their business.
And then from there, the next question that I asked was, you actually I stopped at that
point, you know, what would you pay for it?
And how much would you pay for it?
And since I had a yes and a dollar amount, I thought, awesome, I have 10 preorders.
Now I didn't have a way for people to preorder at that time.
So I went off on my own and, you know, kind of came back and well, I went off and started
building the product more, you know, because I had these wireframes, but actually like
turning it into something.
And then like a month later, I had a way for people to preorder.
And so I came back to them and said, hey, okay, this is a more clearly defined product
vision.
We actually have some working samples, will you pay to preorder it?
And that's when the real feedback came out, because I realized there's a difference between
asking someone, would you buy this and asking someone to buy it?
And so in one case, it's all hypothetical.
Would I buy this?
Sure.
Yeah, I'd buy it.
Is this a good idea?
Absolutely.
It's a great idea.
You know, then it's like, okay, credit card, please.
And they're like, well, does it have this functionality?
Or in order to switch from MailChimp or AWeber, I would really need it to have this other
thing.
Do you think if you could go back, you would, you would have kind of done it differently
and skipped the entire, would you hypothetically buy this section and just immediately start
asking people to buy it from the beginning?
Or do you think it was useful to kind of have two stages?
I think the two stages is totally good, because it kind of brings them into it slowly.
Like would you buy this?
And they're like, yeah, because people do think through it.
Is this something that I would want?
Yes.
Okay.
And you say, how much would you pay?
I'd pay this amount.
Great.
Can I have your credit card?
And like, you could do this in person with like a little square reader plugged into your
phone, or you could do it online with, you know, just a payment form through Stripe
or whatever.
And so I think it's useful to walk people through that as they're thinking, yes, I would
buy this.
And then when you actually ask for their credit card, they're making a purchasing decision
and the real feedback comes out.
So yeah, I think it's important to walk through that, but you just can't forget the last step
like I did.
Because when I went back to get people to, out of those 10 people, all of whom said they
were pre-order, only one of them actually did.
Wow.
On the other side, I also launched the pre-orders to everyone who'd been following along and
to my email list and got like, I don't know what the numbers were, 30 or 40 pre-orders.
And so it was successful, just the group that I thought was guaranteed actually wasn't because
I had stopped asking questions way too early.
So at that point, did you worry that perhaps you misunderstood your customers since the
people that you, you know, that you were confident will buy ended up not buying?
Or did you kind of go along with, with the fact that 30 or 40 people on your mailing
list bought and thought, you know what, I'm onto something regardless.
And so full steam ahead.
Yeah, so the people that I was talking to for the pre-sales, those were all like higher
end accounts.
These were all people who had 5,000, maybe 5,000 to 100,000, no, 5,000 to 50,000 email
subscribers already.
And so I kind of thought, well, maybe this isn't a good fit for people who are more advanced.
And what if instead I targeted it more at beginners, which by the way, is a terrible
way of thinking, don't do that.
Because that's what I did.
And so a lot more of the people that were responding to the pre-orders were beginners
or they had, you know, 500 or 300 or a thousand email subscribers.
And so I kind of made that pivot and we basically spent the next two years focused on beginners,
not very successfully.
Why was that terrible?
The amount of revenue per customer is very small.
Beginners are, they're going to churn a lot more frequently.
They're going to ask a lot more questions and in general, they're just going to be a
lot more demanding.
And so early on, there's not a lot that you can offer because you can't actually offer
the best product because, you know, maybe you've only been building it for three months
or six months and your competitors have been working on their products for 15 years.
And so you can't necessarily offer the best product or the best functionality.
So you have to compete on a great user experience and then a fantastic support and a great onboarding
experience and like all the intangibles of, hey, if you have an issue, you can call me.
Here's my cell phone.
And if you do that for bigger accounts, they'll respect it.
They won't use it much.
And even if they do use it, they're paying you enough money that that could even still
be profitable.
But if you do that with a $29 a month account or in some cases like a $10 or $5 a month
account, like that's a disaster and it takes so many of those to add up to be any kind
of meaningful revenue that it's just really, really rough.
One of the other things that we did it when I started to focus full time on ConvertKit
to almost two full years later is that I started going after larger and larger accounts because
I thought, you know what?
I can't compete on all the functionality, but I'm pretty damn good at email marketing
and I can augment it with like coaching and expertise and oh, you have a course launch
coming up to 10,000 subscribers.
Well, if you're using ConvertKit, why don't we get on a call and I'll teach you how to
make that a fantastic launch.
So I would augment it with those other services that only I could offer because like Mailchimp
can't ever compete with me on that and they have no desire to.
And that only pays off when you go after larger customers who are already successful and the
churn will be a lot lower.
So at the end of June in 2013, you'd basically reached half of your $5,000 goal.
You hit, you know, $2,480 a month or something in that ballpark.
What do you think were the biggest reasons that you didn't get to 5,000?
Also on the flip side, what do you think are the biggest reasons that you were able to
get to 2,500?
Because I know a lot of people who would love to be able to hit that goal and it's not
nothing.
Okay, biggest reason that I didn't get to 5,000, I think it was just a lot more work
than I first thought.
I didn't have the reach or the scale, you know, because effectively I just need to double
the number of pre-orders or double the number of people I was reaching out to or like that
kind of thing.
But that's the tall order to do while building a product.
I really think that for where I was at, the $5,000 a month goal was a little too ambitious.
And so I actually felt pretty good about reaching 2,500.
And maybe someone who is better at outreach, better at marketing, etc.
I'm sure could have pulled it off, but that's where I ended up.
As far as what was most helpful in reaching that number, I would say blogging about everything
publicly because so many people are writing like theoretical blog posts like if this were
to happen, then you should do this.
And instead I just said, hey, this is what I learned last week.
This is how I picked a domain name.
Oh, here's a photo of my notebook full of all kinds of scribbles that I plugged into
a lean domain search to try to come up with a name.
And here's how I picked a developer.
And so that story that went all the way through, people really liked that and that got attention
and that helped a lot.
The other thing is there's a bunch of stuff I didn't waste time on.
So for example, ConvertKit didn't have a logo for probably the first, I'd have to go back
and look at it, maybe two and a half years.
That's so funny because I've talked to so many companies who have that exact thing where
we didn't have a logo at all and it's pretty consistently the companies that do the best
go the longest without a logo.
Yeah, and there's probably a survivor's bias there because there's someone else who's terrible
at design and is like, oh, we don't need a logo, screw that.
And their business fails and we never hear about it.
But at the same time, it wasn't just a logo, it was business cards.
We didn't have business cards.
I'm trying to think, we're probably doing 25, no, when did we do business cards?
We were doing well over $100,000 a month in revenue before we designed business cards.
Wow.
So I just didn't waste time on a bunch of nonsense that didn't matter.
That's the end of your web app challenge.
It's been six months, you've hit half of your goal, which is absolutely awesome, but not
the exact outcome that you wanted to see.
And so you decided not to double down on ConvertKit.
And I've got kind of one more question about this beginning area, because one of the bigger
advantages that you had, that I've also seen a lot of other people who've launched successful
SaaS applications have, is that you had this audience before you started ConvertKit.
And it was a very engaged audience that followed you and really wanted to see you succeed.
And it's something that you put a lot of effort into building up.
And you ended up actually writing a book about putting an audience, I think, authority, right?
Yeah.
And that's when I started following you.
It was like the first email in my inbox is, authority is launching and here's where to
get it.
What tips do you have for people who today don't have an audience and are maybe considering
building a SaaS app, but they want to get started by building an audience first?
How do they go about doing that?
Yeah.
So we have two, I don't know if they're not really core values, maybe they're mottos at
ConvertKit and they're basically the secrets to growing an audience, right?
There's actually three of them.
And they're, if we do a video call, you'd see them as posters on the wall behind me.
The first one is teach everything you know.
And so people are like, I have no idea what to write about.
And so we just say, teach what you know.
And so for me, that was, you know, I wrote about design, I wrote about what I was working
on that day, you know, as I'm building ConvertKit, I wrote about every step of the process.
That was the web app challenge.
And people love that transparency and it came from a really authentic place.
So teach everything you know.
The next one is create every day, because you end up with a lot of people who they have
a lot to teach, but they'll run out if they're not actually making stuff.
And we all run into people online who are just blogging, they're just podcasting, and
they're not really actually making anything.
And after not very long, they get pretty boring to follow because they're not on their own
journey themselves and they're not learning and creating new things.
And so I think the second tenet of building an audience is to create every day.
And then the third one is one that we call work in public.
I've also heard this phrase as show your work.
So if you've ever, you know, going back to your original like math homework and in maybe
in high school or junior high or something like that, I would always get in trouble because
I would solve a problem in my head and I would never show the work of how I got there.
And so you want to do that in business where you don't just want to say, hey, here's how
we got to 500k MRR or whatever you want to say, you want to show the process and be transparent
about it.
So that's why we're public with our numbers.
That's why we'll write a blog post about how we're doing this or that customer support.
We're trying to be transparent about everything because that like that combined with creating
every day and teaching everything, you know, um, we'll get people to follow along.
And so even if you're at a really small scale, like how I built an iPhone app in the month
and launched the app store and what I learned along the way, like that's great.
Even if the iPhone app makes $50, I mean, whatever it is, telling the story and putting
it out there of how you do something working in public, that's how you build an audience.
And then you do that consistently.
And uh, that's pretty much all it takes.
And that consistently just has to be over like two or three years, not like the consistently
over two weeks.
Like most people seem to think it is.
Yeah, I've heard it said, uh, I think I saw a quote on Twitter the other day that people
greatly overestimate what they can do in a week and they greatly underestimate what they
can do in a year.
And I found that to be extremely true because people always make these ambitious plans about,
you know, what they're going to do in like the next month or two.
But going back to your three principles, all of those are dead on.
And I've had a lot of people read interviews on indie hackers about people who've built
an audience beforehand and then use that to help their subsequent businesses.
And there's just kind of weird negative, like ethos around it, like, Oh, that's cheating.
You know, it's cheating to start with an audience as if it's something that you just magically
do and it's pure luck and that not everybody can do it.
But there really is like, I don't want to say a formula, but the tips that you gave
are dead on.
Teaching what you know, a lot of people I've talked to say that they have anxiety because
they don't have anything to teach or they don't feel like they're qualified to teach.
But if you have a job, if you're working on anything, then you probably have something
that you know, that at least 50% of the population is like not that great at or doesn't have
time to think about every week like you do.
So it's not that hard to find something that you know to teach.
And then the second point that you may create every day is dead on as well.
When I first started any hackers, I just thought, man, I have like nothing to tweet about, nothing
to blog about.
And then as I started building the business, it's like every day I'm doing all these interesting
things.
And the number of things that I can tweet and blog and write about and email people
about is countless every week I have something new that I'm working on.
And it's this never ending stream of stuff that I can share with other people who aren't
working on that stuff or maybe who are but to less to less of a degree.
So I think that's an awesome tip.
And then your last one work in public.
And this I think it blends really in seamlessly with the whole transparency business.
When I'm doing an indie hackers interview with somebody and they share all the details
about how they did what they did, and they dive into the specifics, it's always way more
popular than people who are just kind of very press releasey and just say, Oh, yeah, we're
doing this.
And we're so great.
And we made this much money.
And it's just because we, you know, did hard work.
I think it's there's something about diving into the specifics and showing people how
you got to where you got that really resonates with people.
And it's, it's why I always recommend that people actually, you know, start an email
list or, or blog, you know, consistently about what's going on behind the scenes, even things
that don't necessarily go well, just because I think there's just a sense in which people
want to help other people, you know, and see the things that they're working on.
And I can tweet just random stuff, I can tweet, Hey, here's how my affiliate marketing links
are going.
Or, you know, my affiliate links are going on my website, what am I doing wrong?
And I'll have all sorts of people who I know or don't know chime in with tips and things
that they've learned.
And it helps me not only build an audience, but improve my product.
So I think all three of your tips are super awesome.
And hopefully people listening will take them to heart and get to work on building their
own audiences and whatever area that they like.
You know, I want to add to that a little bit.
You said people refer to having an audience is cheating.
And I agree with that.
And I think that you should give yourself whatever unfair advantages you possibly can.
So I wrote an article a few years ago titled how to cheat at online business.
And it's all about building an audience because it gives you this advantage to everything
you launch after that.
Like if you have an email list of 5,000 people, then like whatever project you do after that,
some portion of those people are going to be interested in it.
And yeah, you're cheating on that next launch and it's fantastic.
And I think you're foolish for not like going down that road.
Because even if like, in your case, if you do something after indie hackers, you have
this email list and you have this community and you're known for creating indie hackers
that like whatever you do next will be easier.
It might be 50% easier.
It might be 5% easier, but it will be some amount easier because of the work you did
now in the audience you built now.
And so I think everyone should do it.
Yeah, exactly.
If you can cheat, why would you not cheat?
Right.
Especially because you're doing it in a way that helps everyone who comes after you.
Yeah.
Like we ran into this, you know, I actually run into this probably every couple of weeks
where someone is like, you are an idiot for having your barometrics totally public.
Like all of your competitors can go through that.
They can see exactly what your turn is.
They can see which plans your turn is coming from.
You know, if your growth starts to stall, they'll see it as soon as you will.
You know, like there's all these terrible reasons that for your numbers to be public,
like you should really shut that down.
And I thought about it for a while.
I actually thought once we hit 100k MRR, we would turn off the public metrics.
And the reason is because I was thinking, you know what?
It's not that helpful to beginners anymore.
And it's not as helpful to the masses because like how many people are going to get to that
same 500k number or a million a month or whatever.
But then I looked at other companies like Buffer, they're at 1.1 million MRR.
I look at their public barometrics page because it helps me in getting to the next step.
And so I now have this attitude of, hey, if having, if being transparent is going to
help one other entrepreneur, then it's worth doing.
Yeah, totally.
I mean, you're giving back.
It actually helps people.
And I'm sure, I mean, I get emails all the time from indie hackers and it's way smaller
than ConvertKit.
So I'm sure you get tons of emails from people expressing their appreciation that you're
transparent in addition to the haters.
And you can actually feel that you're helping people and in a way and that's also self-serving
because people are inspired by and want to talk about the companies and the people that
help them.
And, you know, I'm having you on this podcast in part because you've been so transparent
about ConvertKit in part because everybody in the community really looks up to you and
respects what you've done.
So I think it pays dividends and people are overly worried about the competition.
You know, I mean, you're giving them information, but ultimately, if the competition is just
following in your footsteps and copying what you're doing, then it's not a bad position
to have them in.
Yeah, exactly.
So ConvertKit kept, I don't want to say growing, but it kept going.
And you at the time, probably the latter half of 2013, were kind of dividing your focus
between, you know, writing more ebooks, authority and other things and promoting those and working
on other projects.
And it wasn't until your conversation with Heaton Shaw that you decided, hey, I'm going
to double down on ConvertKit and actually grow this into, you know, to a big business
and focus on it 100%.
And one of the parallels that I've noticed between both the early phase of ConvertKit
and this later phase, a high growth phase of ConvertKit, is that they kind of started
in the same way.
And that's with direct sales with both businesses, you're actually, or at both times, you're
actually finding target customers and people that you wanted to be ConvertKit users, reaching
out to them and trying to sell them on the idea.
Did anything change in the second iteration of doing this compared to the first?
Yeah, so the first time I was very broad about, you know, trying to find people who have similar
problems to me, similar problems to these first few customers related to email.
And like, that's a very generic thing.
Email marketing for people who have problems like Nathan is not the best niche to go after.
Whereas the second time around, I was much more specific, we actually landed on the idea
of email marketing for authors, and that gave me a very direct group of people that I could
sell to.
It ended up that, you know, after two months or so of that, we decided authors is the wrong
term to describe who we are trying to reach.
A lot of people who I self identified as authors were like in the category of someday I'd love
to self publish a Kindle book for 99 cents, but that's kind of expensive and hard.
So maybe next year, whereas the people I was trying to reach were like the course creators
and the professional bloggers and, you know, the people who were making 100,000 plus a
year off of their, their audience sites.
And so we played around with a bunch of different terms and eventually landed on email marketing
for professional bloggers.
But that made it a lot easier to go after one to know who to go after.
Because now instead of trying to reach everyone, I was just trying to go after professional
bloggers.
And so I can narrow that down.
I can go after, okay, let me make a list of all the professional paleo recipe bloggers.
Cool.
Now a list of all the professional men's fashion bloggers and like go after all of those individual
little verticals, you know, that worked well because I could list them in the first place.
And then it made it easier to get on calls because people are like, well, I use Mailchimp
and it works fine for me, but what would you do if you were to build something just for
people like me?
And so they'd be more likely to take the call because of that narrow niche.
So I like having a really specific niche.
And that was probably the biggest thing that was different between round one and round
two.
What were you doing to evaluate the quality of these different niches?
Because I think a lot of people don't understand the advantages of targeting a niche.
And so it's pretty common for people to target a niche that's not really that great and to
not understand what it is.
It makes it not good for them.
Yeah.
I don't know that you can evaluate it from a distance very well or that you should for
evaluate it from a distance for very long.
So for example, with authors, I thought that was going to be the best or a good niche to
go after.
And so I started there and I tested the idea of a niche at all basically by the fact that
I started getting more customers signing up and I had an easier time getting on calls
and I could teach partner webinars because people were excited about that idea.
And then about a month later, I started to see, okay, the churn is pretty high.
These questions, these customers are asking a lot of very basic questions.
So I think, you know, your lead measures are going to be, does this niche help me identify
a list of customers to go after?
And does it help me get in the door?
And then your leg measures are going to be, do these customers stick around?
Is our tool actually a good fit for them?
And how much work are they to support?
And how much of a pain are they to support?
So I don't think you can evaluate it from distance.
I think you probably need to pick one and dive in and then conveniently changing like
your tagline on a website is really easy to do.
So if at first you don't succeed, try, try again.
And what do you think are the advantages to being able to tell people that your product
is for their niche?
Because there's a trade off and I think it holds a lot of people back.
If you say ConvertKit is for professional bloggers, then someone who comes to your site
and is not a professional blogger might be turned away.
I think this discourages a lot of people from picking a niche and so that you see a lot
of people with products that say, you know, our thing is for everybody or, you know, anybody
who needs to send an email can use our product.
It's easier than the competition or it's better designed than the competition or it's cheaper.
Why go after a specific niche rather than our advertising based on these very broad
advantages?
It just works so much better.
People either self identify with it like, wow, that's built just for me or they say,
I'm not a professional blogger, but, and they start to find reasons as to how it could work
for them.
It gives that context right away.
You know, they start to understand what it is.
I mean, you could try it both ways.
I, I tried it for a long time when, without a specific niche, uh, I can tell you it's
so much better when you narrow your focus, but you know, your mileage may vary.
I will say it's very easy advice to give out and very hard advice to take, but I haven't
seen many examples of people going too specific with a niche and failing because of that.
Actually, I can't think of a single example of that, but I've seen a ton of people not
getting any traction because they're going too broad.
It's almost like, uh, like charging money.
People tend to under price their offering because like intuitively it feels like it's
not worth as much as it is and people tend to intuitively feel like they're not going
to be able to pick a niche as small as they should because it just feels like it's too
small.
Yeah, and I would say if you, if you pick your niche that goes down to just say 50 people
where there's only 50 people in the entire world or 50 people in your city or whatever
it is that fit into that.
That's great.
Go get 25 of them as customers and then expand from there and you'll have traction and you'll
know how to talk to them because you know, like pricing, you can always raise your prices
later and you can always expand your niche later.
Like you know, you can pivot from the pay the recipe blogs to the slow carb recipe blogs.
Like you can, you can expand from there and it'll be easier if you do it when you have
a little bit of traction and who knows, we may still pivot beyond email marketing for
professional bloggers, uh, and expand from there because obviously we have tons of SAS
companies and e-commerce companies and tons of other people using convert kit, but our
work in this, what I would consider a very broad niche of professional bloggers is not
done yet.
And so, uh, we're going to stay here until, until we've come anywhere close to like saturation
and we're so far away from that, but it's not even funny.
Yeah.
I talked to David Houser from Grasshopper and he talked about his kind of 10, 13 year
journey with Grasshopper.
And at some point in the middle, they mistakenly believe that, oh, we've plateaued and we're
not going to be able to find any more entrepreneurs who need a virtual phone system.
And they started branching out on all these different directions, doing all sorts of other
things.
And then eventually came back to Grasshopper and realized that they hadn't been anywhere
near the plateau of the niche that they were targeting and they were able to grow a ton
more.
So I think it's, it's pretty insightful and people, you know, like I said earlier, really
underestimate the number of people that they'll be able to reach in any given niche.
And they, and they kind of give up too early and try to go broad.
I think.
Yeah.
I think that, so we have 12,000 customers.
I think that about 5% of our like potential market within professional bloggers even know
that we exist.
So not that we have 5% of our, or like that we've captured 5% of our potential market.
I think that 95% of them don't even know we exist yet.
And so I think there's so much more room and it would be far too early to move on.
Yeah.
And this might make you mad because I know about ConvertKit and I knew about ConvertKit
when I started IndieHackers.
And for whatever reason, I just immediately threw up like set up a MailChimp account the
first week that I launched it.
And I've had it like on the top of my to-do list, switched to ConvertKit for like six
months.
And I just haven't done it yet.
You know, we have a concierge migration team who will do it all for you.
I know.
I know.
I'm so lazy.
I just have so much other stuff to do too, but I will guaranteed switch pretty soon.
And I know it's going to be super simple to do anyway.
So you've ended up growing ConvertKit obviously much more rapidly during this whole second
phase.
What do you think are the biggest reasons that you've been able to grow so rapidly?
Is it because you picked a better niche or are there other factors that factored in as
well?
You know, one thing that I ran into in the early days that asked people how'd you grow
and they said, oh word of mouth.
And when you don't have any customers or you have 50 customers, like that's a really frustrating
thing to hear because you can't just like, oh, yes, let me turn on the word of mouth.
Um, channel.
Why didn't I think of that?
And cause really word of mouth takes traction.
Like you have to, something has to kickstart that.
And so what I'd encourage everyone to do is to use direct sales to kickstart that word
of mouth.
So we probably did direct sales for six to nine months, you know, in that we'll call
it phase two of ConvertKit before like the word of mouth started to really kick in.
So yeah, that drove a lot of growth.
I think that's interesting because you know, one thing I see with a lot of people is that
they look at, I mean the most visible businesses to any person, an entrepreneur or normal person
or the businesses that are the most successful because their names are everywhere.
They're huge.
They're well known.
And so people kind of intuitively when they want to start a business and they're trying
to figure out a strategy for growing or for building their product, they end up looking
at companies that are in the pretty late stages or they're pretty advanced.
And so they see, you know, something like you should grow via word of mouth and look
at, you know, Coca-Cola, they've got such a strong brand or Apple, you know, like everyone
talks about Apple and it's, it's really fascinating because what you do in the early days is almost
never exactly what you can rely on in the late days.
So, and what I found is like the early days almost always come down to a lot of hard work
and like getting your hands dirty and talking to customers one on one.
So this whole direct sales thing that you were focused on is something that hopefully
more listeners take to heart.
You really should be reaching out to customers on a one on one basis early on and talking
to them and trying to sell your product and finding out why they will or won't buy, you
know, and actually understanding your customer.
I think that's something where people don't have nearly enough conversations because they
want to, you know, you want to sell through content marketing, right?
Because content marketing is the highest leverage and, you know, blah, blah, blah.
Direct sales is too much work.
I have to talk to people, etc.
But with content marketing, what happens if you're selling through that channel, people
are rejecting you every day and they're not telling you why, right?
Because if I go to your blog post and it's saying, it's teaching me some great stuff
and that's saying, hey, this is why you should buy this product.
And I go, I don't know.
All I have to do is hit the back button.
Whereas if you and I are having a conversation and I'm like, and I say like, hey, will you
buy ConvertKit?
You can't just like awkwardly walk away.
You're socially obligated to respond in some way.
You could say like, oh, well, I'd like to, but I've been really busy or does it have
this feature or etc.
And then I can dig deeper in that and we have a full conversation and I get to know why
my product is being rejected rather than just like ghosting out of the conversation, which
is what happens with content.
And so so many people have no idea why they're being rejected and it's because they're have
this refusal to, you know, to do direct sales.
So I think direct sales are basically the answer to everything.
Yeah.
I mean, I totally agree.
I mean, as you just said, if you do direct sales, you end up learning way faster and
way more and way more accurately than people who are trying to rely on some form of mass
marketing early on.
And then even if you have content marketing is something that you want to do, you can
take the learnings and the insights that you get from doing direct sales and you can apply
that to your content marketing later.
So if you're learning that, hey, you know, professional bloggers seem to be the most
enthusiastic about my product and seem to have the most, you know, reason for using
it and here's the problems that they have as evidenced by my conversations with these
ten professional bloggers, then you're better equipped to go write a blog post that's actually
going to appeal to people and get them to buy anyway.
So like no matter how you slice it, even if you want to do content marketing, starting
with direct sales is probably the way to go.
Yep, I think so.
And everyone says like, Oh, it doesn't scale.
It's not profitable.
And it's like, look, your product makes $200 a month in revenue.
I know what that's like.
I've been there.
Like your time is not worth anything at this point.
You need to get traction at any cost and direct sales is a good way to do it.
Why don't we close out by zooming out to like a more of a broad perspective.
And I just want to ask you, you know, you've done a lot of things that are super successful.
You've written numerous books that have made you hundreds of thousands of dollars in sales.
You've launched ConvertKit and grown it into something huge.
And Heaton Shaw, when he suggested that you shut down ConvertKit, he told you, Hey, Nathan,
whatever you do is going to be successful.
So just work on something else.
What do you think it is that enables you to be successful at pretty much everything that
you do?
And is there anything that you, you know, that you practice personally that you see lots
of other people not doing that helps you succeed?
And what advice would you give for other people who are perhaps starting out or perhaps, you
know, not as successful who want to learn to emulate you and to have the success that
you've had?
Yeah.
You know, there's a lot of different ways to answer that, but my friend, Sean McCabe,
his stuff is at seanwes.com.
He has this phrase and I'm actually staring at a poster of it that he sent me and it's,
I haven't hung it up yet.
It's sitting on my desk.
His phrase is show up every day for two years.
And I've just kind of embodied that idea in everything that I do of this is going to take
time and so I'm going to work on it every single day.
And you know, Sean added this, this two years idea to it because so many people are like,
Hey, I tried to start an audience and you know, I just didn't get traction.
And you're like, wow, did you work on it every day?
And they're like, yeah.
I'm like, well, how many days in a row?
And they're like, like 30 of them.
You know, we laugh at that, but it's so easy to get discouraged after like, in 30 days,
say you put out like five or six blog posts and you didn't get traction on any of them.
That's pretty depressing.
And so I love this show up every day for two years because it sets your expectations from
the beginning that, hey, to do something meaningful, it's going to take time.
Like the first two years of ConvertKit, we had almost no traction.
Like two years in, that's where we made the decision of, should we shut this down?
Okay, no, let's keep going.
And you know, I also have that, like with the books and courses and other things in
the blog, you know, I wrote a thousand words a day every day for 650 days in a row.
So I didn't quite make the two years that Sean said I should, but really that, that
approach of create every day, show up every day for a long period of time, do that.
And I guarantee you'll be successful.
You might pivot five times in the process, but something fantastic is going to come out
of it.
That's amazing advice and I hope everybody follows it and I hope that I can follow it
too.
Nathan, thank you so much for coming on the show.
I will definitely annoy you and hit you up for another episode sometime in the next six
to eight months.
Sounds good.
I'll barter Switching to ConvertKit for another hour on the podcast.
Okay, for sure.
This is how hard sales are done, by the way.
This is it.
Well, you got me.
So you let people know where to find you online and where they can follow you and hear more
about what you're doing.
Yeah.
So my blog is at NathanBarry.com.
Barry's spelled B-A-R-R-Y and same Nathan Barry on Twitter, Instagram, et cetera.
And then ConvertKit is just at ConvertKit.com.
All right.
Thanks, Nathan.
Thanks.
If you enjoyed listening to this conversation, you should join me and a whole bunch of other
Andy hackers and entrepreneurs on the AndyHackers.com forum, where we talk about things like how
to come up with a good idea and how to find your first paying customers.
Also, if you're working on a business or a product of your own, it's a great place to
come and get feedback from the community on what you're working on.
Again, that's www.ndhackers.com slash forum.
Thanks, and I'll see you guys next time.