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[00:00:00.240 --> 00:00:04.640] Being an entrepreneur is making calculated gambles.
[00:00:04.640 --> 00:00:07.360] When I hear de-risk, that feels like hedging.
[00:00:07.360 --> 00:00:10.000] It feels like, well, I'm going to have a contingency.
[00:00:10.000 --> 00:00:11.920] The contingency is to pivot.
[00:00:11.920 --> 00:00:25.680] The contingency is if there's not enough demand that you either figure out how to generate the demand, or if the niche isn't big enough, or the market isn't big enough, or the total reachable market isn't big enough, then you expand later.
[00:00:40.400 --> 00:00:42.480] You're listening to Startups for the Rest of Us.
[00:00:42.480 --> 00:00:53.840] This is the podcast that focuses on helping founders build incredible businesses that don't make a dent in the universe, but might just change your little corner of it.
[00:00:53.840 --> 00:01:09.040] And while you're building that incredible business, and maybe you bootstrap it, maybe you raise funding, it kind of doesn't matter, you're not sacrificing your freedom, your purpose, your relationships, your sanity, your mental health in order to grow it.
[00:01:09.040 --> 00:01:19.520] It's not growth at all costs, but it's build incredible businesses that provide us with an incredible life and also improve the lives of those around you.
[00:01:19.520 --> 00:01:22.560] I've been recording this podcast for more than 15 years.
[00:01:22.560 --> 00:01:28.640] This is episode 778, and today I'm going to be answering listener questions.
[00:01:28.960 --> 00:01:30.960] Some great questions in the queue.
[00:01:30.960 --> 00:01:41.440] And if you have a question you'd like me or me and a guest to answer in a future episode, you can go to startupforthrestofus.com and click ask a question in the top nav.
[00:01:41.440 --> 00:01:54.800] Audio and video questions tend to go to the top of the stack, although this time it looks like I have a question from X Twitter, and also more advanced questions tend to go to the top of the stack rather than how do I get started early stage stuff.
[00:01:54.800 --> 00:01:55.920] Today is going to be a mix.
[00:01:55.920 --> 00:01:56.640] It's going to be fun.
[00:01:56.640 --> 00:01:58.160] We're going to have a great time.
[00:01:58.160 --> 00:02:03.000] Before I dive into my first question, I want to tell you about Microconf Connect.
[00:02:03.000 --> 00:02:08.760] It is the best paid community for bootstrapped and mostly bootstrapped SaaS founders in the world.
[00:02:08.760 --> 00:02:13.720] You can head to microconfconnect.com if you want to check it out because building a startup can be lonely.
[00:02:13.720 --> 00:02:17.880] And if you join Connect, you're going to be surrounded by like-minded founders.
[00:02:17.880 --> 00:02:21.320] This is our extension of our MicroConf hallway track.
[00:02:21.320 --> 00:02:27.160] In addition to the forums, the conversations, the DMs, you get access to live events.
[00:02:27.160 --> 00:02:37.000] So, for example, on June 19th, which is next week, Matt Heyman is a sales expert and he's going to be doing a one-hour session about using LinkedIn as a sales channel.
[00:02:37.000 --> 00:02:45.960] And it will be a live virtual event, meaning you can join via, I don't know, what is Zoom or whatever we use, but you're there in real time and you can ask questions.
[00:02:45.960 --> 00:03:01.480] If you want to apply, because we do not let everyone in, we are pretty quick on the draw to not let folks in who are trying to infiltrate and let's say reduce the value of the community by them trying to sell stuff or being whatever.
[00:03:01.480 --> 00:03:02.280] You get the idea.
[00:03:02.280 --> 00:03:07.240] We try to keep the quality of the participants and the quality of the conversation very high.
[00:03:07.240 --> 00:03:13.880] We have a full-time moderator who is making sure it's the best community it can be.
[00:03:13.880 --> 00:03:16.360] Microconfconnect.com, if you want to check it out.
[00:03:16.360 --> 00:03:25.240] And with that, let's dive into our first question, which this one is actually a thank you and some feedback about Tiny Seed Tales.
[00:03:29.720 --> 00:03:34.520] Hey, Rob, long-time listener, I just wanted to say thank you for the Tiny Seed Tales.
[00:03:34.520 --> 00:03:36.520] I've been a long-time listener for a couple of years now.
[00:03:36.520 --> 00:03:39.080] I don't have a startup of my own.
[00:03:39.080 --> 00:03:41.400] I would love to have one, but I don't.
[00:03:41.400 --> 00:04:01.920] And the Tiny Seed Tales just showed me, you know, how much uncertainty there is behind a business, a business that has been backed by you guys, but a business by a person that sounds like they have an idea what they want to do and they still cannot find product market fit, which is really, really helpful.
[00:04:01.920 --> 00:04:03.280] I love all of your episodes.
[00:04:03.280 --> 00:04:04.320] I love listening to them.
[00:04:04.320 --> 00:04:09.040] I love listening to all of your guys' experience and what you go through and suggestions.
[00:04:09.040 --> 00:04:19.440] But Tiny Sea Tales showed me, even for a person like that and for a company like that, how much unknown there is.
[00:04:19.680 --> 00:04:21.840] I'm the type of person that's interested in IT.
[00:04:21.840 --> 00:04:27.600] I work as a project manager and a product manager, depending on the company and on the project.
[00:04:27.600 --> 00:04:29.600] But I love coding.
[00:04:29.840 --> 00:04:35.040] I'm very interested in that, but I still, you know, I don't have a startup because I have no idea what to do.
[00:04:36.480 --> 00:04:39.920] I'm having trouble finding the problem to solve.
[00:04:39.920 --> 00:04:48.640] And listening to these episodes with you and blanking on the name of the founder, I'm sorry, in the fourth season, it's just, you know, eye-opening.
[00:04:48.640 --> 00:04:55.920] Even for somebody that they thought they know what they wanted to do and what problem they wanted to solve, it's still so much uncertainty.
[00:04:55.920 --> 00:04:57.760] So just a huge thank you.
[00:04:57.760 --> 00:05:03.200] And if you can do like three founders per season, that'd be great.
[00:05:03.200 --> 00:05:06.160] I absolutely love the tiny seed tales.
[00:05:06.160 --> 00:05:09.680] So yeah, a huge, huge, huge thank you for those episodes.
[00:05:09.680 --> 00:05:10.800] Love hearing those.
[00:05:11.120 --> 00:05:12.640] I'm looking forward to new ones.
[00:05:12.640 --> 00:05:18.960] And if you can find more founders to follow and update us on their progress, I would listen to it until I die.
[00:05:18.960 --> 00:05:19.840] Thank you.
[00:05:19.840 --> 00:05:22.160] I would listen to it until I die.
[00:05:22.160 --> 00:05:24.560] That is deep praise indeed.
[00:05:24.560 --> 00:05:26.560] Thank you for that, Antonio.
[00:05:26.560 --> 00:05:31.640] I've received a lot of positive feedback about that season of the most recent season of Tiny Seed Tales.
[00:05:31.800 --> 00:05:46.440] If you skipped it, because for whatever reason you didn't want to listen to it, it is a profoundly impactful experience to listen to Colleen have some early success and then lose a co-founder and then scrape and claw.
[00:05:46.440 --> 00:05:51.640] And I believe we recorded, what is it, eight or nine episodes over like almost two years?
[00:05:51.640 --> 00:05:53.640] Yeah, two years almost to the day.
[00:05:53.640 --> 00:06:01.080] So you get to hear this long journey and dot dot dot, you get to hear how it pans out in the end.
[00:06:01.080 --> 00:06:12.600] If you want to hear 90 minutes of a similarly recorded show, it's kind of just a single audio documentary, head to startupstoriespodcast.com.
[00:06:12.600 --> 00:06:20.920] And that was recorded over, I don't even remember 15 months with Derek Reimer and I when we were first starting Drip.
[00:06:20.920 --> 00:06:28.840] And it is agonizing for me to listen to because it's before we had product market fit and then it kind of jumps to where we do at a certain point.
[00:06:28.840 --> 00:06:34.520] And that is a similar journey, but perhaps with a you know a different end result.
[00:06:34.600 --> 00:06:39.720] Really appreciate the positive words, the kind sentiments around it, Antonio.
[00:06:39.720 --> 00:06:41.160] And I plan to keep doing it.
[00:06:41.160 --> 00:06:52.760] I mean, Tiny Seed Tales is, I'll tell you what, per audio minute, it is way more work than anything else that we do just because of the heavy editing and the voiceover and the production value of it.
[00:06:52.760 --> 00:06:55.800] It's also, for me, there's no instant gratification.
[00:06:55.800 --> 00:06:59.160] So I get to record these things over the course of a year.
[00:06:59.160 --> 00:07:01.320] The original idea was to do it over 12 months.
[00:07:01.320 --> 00:07:05.000] Colleen's adventure lasted a lot longer than that.
[00:07:05.000 --> 00:07:20.800] But to record things for a year and not put them out in public is really hard for me because that's where I get the dopamine rush is when I launch a book, when I launch a podcast episode, when I ship a YouTube video, that's when I'm like, Yeah, the world is consuming this now.
[00:07:21.040 --> 00:07:25.040] And then I get to hear feedback and thoughts from people about it.
[00:07:25.280 --> 00:07:31.120] So it's actually really hard for me to do that, to wait and to have the delayed gratification.
[00:07:31.120 --> 00:07:51.360] But I have heard from multiple Tiny Seed founders and investors that the reason they wanted to be part of Tiny Seed was because of what they heard on Tiny Seed Tales and they heard the struggles for the earlier seasons and they heard the victories of the earlier seasons and just generally heard the thought process and it made it more human.
[00:07:51.360 --> 00:07:59.440] So I plan to keep producing them and I'm glad that you have enjoyed this last season.
[00:07:59.440 --> 00:08:03.680] The next season is almost halfway done.
[00:08:03.680 --> 00:08:10.320] And so every couple months I sit down with the victim slash subject of season five.
[00:08:10.320 --> 00:08:19.840] And fingers crossed, I would love to launch that in September of this year and fall of this year to coincide with Tiny Seed Applications opening.
[00:08:19.840 --> 00:08:20.960] But it all depends.
[00:08:20.960 --> 00:08:22.320] These are things we can't predict.
[00:08:22.320 --> 00:08:27.440] I literally don't know if the startup is going to succeed when this season starts.
[00:08:27.440 --> 00:08:33.280] And I don't know how long the season is going to be because we don't know when the story kind of trails out.
[00:08:33.280 --> 00:08:35.040] When do you ride off into the sunset?
[00:08:35.040 --> 00:08:37.760] It's certainly hard to tell at the start.
[00:08:37.760 --> 00:08:42.640] And we will do our best to keep shipping those episodes.
[00:08:42.640 --> 00:08:46.000] So thanks again for your voicemail, Antonio.
[00:08:46.000 --> 00:08:50.800] My next question is about pricing and pilot projects.
[00:08:55.600 --> 00:08:58.400] Hey, Rob, it's John from Whatify here.
[00:08:58.400 --> 00:09:03.080] What if I is a highly visual, low-cove financial business simulator.
[00:09:03.080 --> 00:09:12.680] We make it easy for decision makers to visually ask and answer their gnarliest what-if business questions in seconds, all without formulas or spreadsheets.
[00:09:12.680 --> 00:09:21.880] Users can build out dozens, if not hundreds, if not thousands of what-if scenarios all in real time, and then analyze those trends of the data and make better business decisions.
[00:09:21.880 --> 00:09:23.320] Our solution is quite novel.
[00:09:23.320 --> 00:09:30.040] The tech was not easy to build, and we're flirting precariously with some of those category creation type problems that you've mentioned in the past.
[00:09:30.040 --> 00:09:40.920] My background is the visual effects industry, and our go-to-market is targeting large visual effects studios that have this complex relationship between revenue and capacity planning.
[00:09:40.920 --> 00:09:51.800] Artist resources are a huge expense, and our solution proposes a better way to forecast artist resources, reduce overtime, and mitigate unnecessary or poorly timed hires.
[00:09:51.800 --> 00:09:55.560] So, my question is about pilots and how to think and not overthink them.
[00:09:55.560 --> 00:10:00.600] For example, we're pitching a pilot for one of the top five visual effects studios in the world right now.
[00:10:00.600 --> 00:10:03.240] They did $120 million worth of work in 2022.
[00:10:03.240 --> 00:10:05.160] They've got a thousand employees.
[00:10:05.160 --> 00:10:10.760] And I think we can help them save between $2 and $3 million a year once our tech is fully implemented.
[00:10:10.760 --> 00:10:12.600] So, we've proposed a phased pilot.
[00:10:12.600 --> 00:10:19.560] We're focusing on one office, a subset of projects, so they can get a sense of the tech and help us build out more functionality.
[00:10:19.560 --> 00:10:25.720] I subscribe to the theory that pricing should be 10% of the value the customer receives.
[00:10:25.720 --> 00:10:32.600] And here, the obvious benefit is that we're going to get sort of brand recognition from a top-tier company.
[00:10:32.600 --> 00:10:36.040] And I also don't want to give away too much value in the process, though.
[00:10:36.040 --> 00:10:39.160] We're still bootstrapped, and I'm trying to recapture some of those sunk costs.
[00:10:39.160 --> 00:10:40.920] So, how would you think about pilot pricing?
[00:10:40.920 --> 00:10:42.040] Something so different?
[00:10:42.040 --> 00:10:46.720] This is an industry that's been slammed by the writer's strike, and they are cash-sensitive right now.
[00:10:46.720 --> 00:10:47.760] Thanks for everything you do, Rob.
[00:10:47.920 --> 00:10:48.480] Appreciate it.
[00:10:48.480 --> 00:10:49.520] Bye.
[00:10:49.840 --> 00:10:51.840] Thanks for that question, John.
[00:10:51.840 --> 00:10:58.000] I like that you called out the charging 10% of the value theory.
[00:10:58.000 --> 00:10:59.760] I think that's a good rule of thumb.
[00:10:59.760 --> 00:11:04.000] It's not something that you have to adhere to, but it's a great starting point.
[00:11:04.000 --> 00:11:12.240] And if you're going to save them two to three million a year and you charge $200,000 to $300,000 a year, it feels kind of fair, you know, and that's a nice contract size.
[00:11:12.240 --> 00:11:16.000] So, there are a couple schools of thought on pricing pilots.
[00:11:16.000 --> 00:11:27.600] See, I'm a believer for sure that you should be charging for them because, as opposed to just comping it, which is not anything that you indicated, some founders are so desperate to get the business that they want to try to give it away.
[00:11:27.600 --> 00:11:29.280] And there's so many problems with that.
[00:11:29.280 --> 00:11:31.600] Number one, you can waste a bunch of time.
[00:11:31.600 --> 00:11:34.320] And number two, they don't have any skin in the game.
[00:11:34.320 --> 00:11:38.480] And people don't value what they don't pay for generally.
[00:11:38.480 --> 00:11:44.080] And so, again, you didn't say any of that, but I want I'm doing this for listeners who think, well, why wouldn't I just comp this?
[00:11:44.080 --> 00:11:45.760] Pilot project pricing.
[00:11:45.760 --> 00:11:50.640] I mean, my default is to usually start with how you would price it if it wasn't a pilot project.
[00:11:50.640 --> 00:11:54.000] How much value do you think you'll save them at just one office?
[00:11:54.000 --> 00:12:02.560] And so, if that number is $100,000 or $200,000, then you charge $10,000 or $20,000 a year, right?
[00:12:02.560 --> 00:12:04.640] I guess that's what we're talking annual.
[00:12:04.640 --> 00:12:05.920] Probably how I think about it.
[00:12:05.920 --> 00:12:10.800] Now, then there's, are we doing a bunch of custom work for them?
[00:12:10.800 --> 00:12:13.760] Because we may want to charge that separately, right?
[00:12:13.760 --> 00:12:21.280] We may want to say, hey, there truly is some integrations and some stuff we're going to do that we don't need for future customers or we don't think we will.
[00:12:21.280 --> 00:12:23.280] And so then you can do one-off stuff for that, right?
[00:12:23.280 --> 00:12:27.440] Yeah, we're going to charge you $100 bucks an hour or just quote a fixed price, right?
[00:12:27.440 --> 00:12:33.160] $10,000 one time to do all this work for you in addition to the 10 or 20,000 a year.
[00:12:33.480 --> 00:12:40.680] Now, if instead they're giving you a bunch of guidance and you're gonna build a bunch of features that you think other companies are going to use, you can do one of two things.
[00:12:40.680 --> 00:12:42.360] You can charge them a discounted rate for that.
[00:12:42.360 --> 00:12:46.040] You can say, hey, I'm gonna charge you half, or usually it's about half, right?
[00:12:46.040 --> 00:12:52.760] So if it's like $10,000 worth of work, but I think I can reuse it, we're gonna charge you five grand to get it done into be number one in the priority list, right?
[00:12:52.760 --> 00:12:56.360] To be number one on our roadmap, in essence.
[00:12:56.360 --> 00:12:59.720] The thing I think about is who's getting more value out of this?
[00:12:59.720 --> 00:13:12.280] Or is it an even value exchange potentially that you get not only input to your roadmap, you get to have this customer zero, you know, that you really are building it for, but they also are gonna get a lot of value.
[00:13:12.280 --> 00:13:14.280] And you're both gonna have to invest time into it, right?
[00:13:14.280 --> 00:13:16.840] They have to invest time into the implementation and working with you.
[00:13:16.840 --> 00:13:21.240] And then you, of course, are investing the time to build out what needs to happen.
[00:13:21.240 --> 00:13:29.560] And then the other thing I think about with the pilot project is the reason it's called a pilot project and it's not just a contract is that the idea is it should lead somewhere.
[00:13:29.560 --> 00:13:32.200] So that's part of the conversation I'd be having.
[00:13:32.200 --> 00:13:35.400] And it's not that you need a written commitment.
[00:13:35.400 --> 00:13:37.720] That'd be perfect, but it's gonna be really hard to get that.
[00:13:37.720 --> 00:13:43.000] But it's getting that verbal commitment of if this works, our expectation is we're gonna keep rolling it out, right?
[00:13:43.000 --> 00:13:43.400] Right?
[00:13:43.400 --> 00:13:46.360] If this does everything you need it to do, we're gonna be rolling it out, right?
[00:13:46.360 --> 00:13:50.680] And so that's why it's called a pilot, is it is the tip of the spear, right?
[00:13:50.680 --> 00:14:04.760] Or it's the wedge that gets you into a company that then proves your value to this large company and proves to them that you are reliable and that you can, in fact, produce the results that you've promised.
[00:14:04.760 --> 00:14:06.920] So, that's that's such a big thing of it.
[00:14:06.920 --> 00:14:17.440] And the way I think about it is, let's say you do the pilot and it works, and they move forward to implementing you across the entire company, or you do the pilot and it doesn't work.
[00:14:14.200 --> 00:14:21.120] In both cases, I want to feel okay about the pricing.
[00:14:21.440 --> 00:14:31.920] Like, if this is the only work I ever do for them, and they basically say, you know what, we don't have the budget, or it didn't work, or leadership change, or whatever else happens, they go out of business.
[00:14:31.920 --> 00:14:37.440] I don't particularly want to be in a position where I'm thinking to myself, oh man, we just did a bunch of work for free.
[00:14:37.440 --> 00:14:39.040] We just ate a bunch of money.
[00:14:39.040 --> 00:14:45.120] I underpriced this because I thought that we were going to get all this work because that's not a sure thing.
[00:14:45.120 --> 00:14:50.480] So, even if it's not my most profitable pricing I ever implement, that's fine.
[00:14:50.480 --> 00:14:56.800] It doesn't need to be a huge cash cow, but I want to minimize the regret as I'm going to grind through this pilot.
[00:14:56.800 --> 00:14:59.760] A lot of pilots can be kind of grindy and a lot more work than you think.
[00:14:59.760 --> 00:15:04.400] I want to feel okay about the work that my team and I are putting into it.
[00:15:04.400 --> 00:15:08.960] So, that's probably the high-level overview of how I would think about pricing pilots.
[00:15:08.960 --> 00:15:10.080] Thanks for that question, John.
[00:15:10.160 --> 00:15:11.600] Hope it was helpful.
[00:15:11.600 --> 00:15:16.960] My next question is from ex Twitter from Kenny Alami several months ago.
[00:15:16.960 --> 00:15:19.120] Well, geez, it was almost a year ago now.
[00:15:19.120 --> 00:15:24.960] I said, There's a noticeable lack of intermediate and advanced questions on StartupsPod.
[00:15:24.960 --> 00:15:27.600] Do you have any more advanced questions?
[00:15:27.600 --> 00:15:36.880] And Kenny asks, How do you niche down to take advantage of industry knowledge and how do you de-risk the bet in case there is not enough demand?
[00:15:36.880 --> 00:15:39.920] So, first of all, I don't think you de-risk the bet.
[00:15:39.920 --> 00:15:45.520] I think being an entrepreneur is making calculated gambles.
[00:15:45.520 --> 00:15:49.600] And I think trying to de-when I hear de-risk, that feels like hedging.
[00:15:49.600 --> 00:15:52.160] It feels like, well, I'm going to have a contingency.
[00:15:52.160 --> 00:15:54.160] The contingency is to pivot.
[00:15:54.160 --> 00:16:08.760] The contingency is if there's not enough demand that you either figure out how to generate the demand, or if the niche isn't big enough, or the market isn't big enough, or the total reachable market isn't big enough, then you expand later once you've tapped that out.
[00:16:08.760 --> 00:16:14.280] What I don't mean is once you've plateaued, because usually plateaus are not because you've tapped out your market.
[00:16:14.280 --> 00:16:29.800] Usually, they're because you have tapped out your present marketing expertise or you have only not really done very much marketing, which unfortunately is what a lot of the kind of indie hacker folks on Twitter that I see saying, oh, I'm tapped out.
[00:16:29.800 --> 00:16:35.240] And it's like, oh, it's because you thought building an audience on social media was going to be your marketing channel.
[00:16:35.240 --> 00:16:38.440] And that is catastrophically misguided.
[00:16:38.440 --> 00:16:42.360] So de-risking the bet is not something I'd particularly be doing in an early stage startup.
[00:16:42.360 --> 00:16:46.520] There's going to be a lot of risk in it, but the risk, here's the thing: it's not like you're betting your house on it.
[00:16:46.520 --> 00:16:50.920] The risk is that it doesn't work and it's some time and maybe some money.
[00:16:50.920 --> 00:17:05.480] And the answer to that is as you get new information and you learn and you have more data, then you, again, you pivot, you expand, you change it, you know, you make these adjustments, these course corrections.
[00:17:05.480 --> 00:17:09.800] This is something that experienced and successful founders do.
[00:17:09.800 --> 00:17:29.960] That inexperienced and I'll say the folks who I see, the founders who I see getting in their way over and over and over are the ones that either don't try stuff because they say, oh, it doesn't work, or they try it half-ass and they don't go all in and they don't course correct.
[00:17:29.960 --> 00:17:33.160] They try it, and if it doesn't work, they just quit.
[00:17:33.320 --> 00:17:33.960] That doesn't work.
[00:17:33.960 --> 00:17:36.200] You know, AdsWords doesn't work in 2020.
[00:17:36.360 --> 00:17:39.000] SEO, it doesn't work anymore in 2025.
[00:17:39.000 --> 00:17:39.800] It just isn't the thing.
[00:17:39.800 --> 00:17:43.000] And it's like, no, actually, both of those things work.
[00:17:43.560 --> 00:17:45.040] So does outbound sales.
[00:17:44.760 --> 00:17:51.040] The playbook is not identical to what it was 10 years ago, but I'm invested in 224 B2B SaaS companies.
[00:17:51.360 --> 00:17:55.360] Dozens of them are doing seven or eight figures.
[00:17:55.360 --> 00:18:00.000] And there's WP Engine, which is what do we think the worth of them is a billion.
[00:18:00.000 --> 00:18:01.360] It's a unicorn, right?
[00:18:01.360 --> 00:18:08.960] And across all those companies, the successful ones are doing the stuff that I hear some people saying, it doesn't work in 2025.
[00:18:08.960 --> 00:18:13.040] Well, if it doesn't work, then how is it working for these companies that are growing?
[00:18:13.680 --> 00:18:20.400] So all that said, de-risking, course corrections, it's what experienced founders do.
[00:18:20.400 --> 00:18:22.880] Now, how do you niche down to take advantage of industry knowledge?
[00:18:22.880 --> 00:18:25.680] Kind of hard to answer without a specific.
[00:18:25.680 --> 00:18:28.640] So I'm going to invent a contrived example.
[00:18:28.640 --> 00:18:35.040] Let's say that I have industry knowledge of electrical construction.
[00:18:35.040 --> 00:18:42.240] Because let's just say my dad worked in construction for 42 years and my older brother still works in it and I worked in it for many, many, many years.
[00:18:42.240 --> 00:18:49.440] I could think about any app, about an accounting app, about a booking link, like a scheduling link.
[00:18:49.440 --> 00:18:52.560] I could think about a calendaring app.
[00:18:52.560 --> 00:18:53.920] I could think about project management.
[00:18:53.920 --> 00:19:00.320] I can think about anything and then say for electrical contractors or more broadly, like for the trades.
[00:19:00.320 --> 00:19:08.400] You know, we think of the HVAC and electricians, your plumbers, your carpenters, your GC, your general contractors.
[00:19:08.400 --> 00:19:12.800] You know, any of these things could be narrowed down or niched down.
[00:19:12.800 --> 00:19:19.360] And usually, if I'm a bootstrap founder, I'm going to probably try to focus it on one of those, but I'm going to be open to others.
[00:19:19.360 --> 00:19:22.960] I'm going to be open to where the interest is highest, right?
[00:19:22.960 --> 00:19:30.680] I'm going to be looking for where the thing that I have in mind sparks that twinkle in their eye.
[00:19:29.840 --> 00:19:36.040] I'm looking for when they have that moment of, wow, this could really help me in my business.
[00:19:36.360 --> 00:19:39.480] And usually I'm not coming up with a solution.
[00:19:39.480 --> 00:19:43.400] Usually I'm poking at a problem that they have, right?
[00:19:43.720 --> 00:19:47.400] What problem does your idea solve and for whom?
[00:19:47.400 --> 00:19:48.840] Don't tell me your idea.
[00:19:48.840 --> 00:19:51.480] Tell me what problem it solves and for whom.
[00:19:51.480 --> 00:19:52.520] That's what I'm thinking about.
[00:19:52.520 --> 00:20:01.640] And so the way I would niche down is probably to start pretty small and then kind of keep my ears open as to, oh, are there other verticals that are requesting this for me?
[00:20:01.640 --> 00:20:09.560] There's a tiny C company right now that is serving, was serving one vertical of car dealerships.
[00:20:09.560 --> 00:20:19.320] And then rental car companies came about and they have been looking at both of them now because they kept their head on a swivel and because they kept their ears open.
[00:20:19.320 --> 00:20:21.000] And there's a balance here.
[00:20:21.000 --> 00:20:25.320] You can go too far and listen to everybody and be like, well, we're going to have 20 ICPs.
[00:20:25.320 --> 00:20:34.600] Or you can go too narrow and not listen and say, well, we're only going to have one and keep our head down and not make any possibility that that's going to happen, not be open to it.
[00:20:34.600 --> 00:20:36.680] Neither of those is probably correct.
[00:20:36.680 --> 00:20:42.440] The hardest part, one of the hardest parts of being a founder is making hard decisions with incomplete information.
[00:20:42.440 --> 00:20:46.440] And all the information is incomplete, especially in the early days.
[00:20:46.440 --> 00:20:53.560] Until you're, you know, what at some number, 5 million, 10 million, 100 million in annual recurring revenue, everything's incomplete.
[00:20:53.560 --> 00:20:57.640] Even at those points, it's still not super complete, but at least you have a more mature business.
[00:20:57.640 --> 00:21:02.200] So in these early days, that's how I'd be thinking about it: I niche down.
[00:21:02.200 --> 00:21:05.400] My H1, it says I'm for this type of contractor.
[00:21:05.400 --> 00:21:11.240] My sales conversations, my landing page, whatever I'm doing is focused on a particular niche.
[00:21:11.240 --> 00:21:16.240] If you think about the early days of DRIP, I picked a couple of ICPs.
[00:21:14.600 --> 00:21:18.800] One was SaaS founders because I had that reach.
[00:21:19.440 --> 00:21:24.000] And another quickly became information product and course creators.
[00:21:24.000 --> 00:21:26.560] These days we call makers or the creator economy or whatever.
[00:21:26.560 --> 00:21:30.160] That term didn't exist back in 2012 when we started building it.
[00:21:30.160 --> 00:21:37.920] But it quickly became apparent I didn't have a ton of reach into that second category, but really quickly realized it was a valuable market.
[00:21:37.920 --> 00:21:42.080] Bloggers came along as well because bloggers and those course creators, there's a lot of overlap.
[00:21:42.080 --> 00:21:45.920] And not necessarily it's not a one-for-one Venn diagram, but there's a lot of overlap.
[00:21:45.920 --> 00:21:50.960] So I allowed, I guess, our number of ICPs to expand as I felt the demand.
[00:21:50.960 --> 00:21:54.320] I felt the market pull from these different verticals.
[00:21:54.320 --> 00:21:59.520] And while I didn't have expertise really as a course creator, I had, well, I had a little bit, right?
[00:21:59.520 --> 00:22:06.320] Because I sold MicroPrender Academy, which was a membership site and I'd sold books and stuff, but it isn't how I identified for sure.
[00:22:06.320 --> 00:22:13.520] And yet, we could listen to them and listen to their feature requests and have solid conversations with them.
[00:22:13.520 --> 00:22:18.800] Even though I knew SAS so much more, it was still, I think, the right decision.
[00:22:18.800 --> 00:22:26.560] I think it really helped accelerate our growth to be open to adding, you know, and expanding even early on our focus.
[00:22:26.880 --> 00:22:28.640] So thanks for that question, Kenny.
[00:22:28.640 --> 00:22:30.000] Hope it was helpful.
[00:22:30.000 --> 00:22:35.840] My next question is from Mike about starting a business like Sidekick.
[00:22:40.320 --> 00:22:41.440] Hi, Rob.
[00:22:41.440 --> 00:22:42.640] My name is Mike.
[00:22:42.880 --> 00:22:47.600] I was listening to your interview with Mike Burham, the creator of Sidekick.
[00:22:47.600 --> 00:22:51.760] I've been thinking of starting a similar business to Sidekick.
[00:22:51.760 --> 00:22:58.600] I have a background in technology, been software, doing software engineering for a long time, seen lots and lots of issues.
[00:22:58.600 --> 00:23:11.160] Seeing a problem that I'd like to tackle, let's assume that I validated the problem with customer development conversations, Reddit, various tech communities, Slack, Discord, et cetera.
[00:23:11.160 --> 00:23:15.000] I'm wondering, how would you approach starting a business like this?
[00:23:15.000 --> 00:23:18.280] What would you focus on in the first six to 12 months?
[00:23:18.280 --> 00:23:30.040] For example, I don't have an audience similar to how Mike was present in the Ruby on Rails space conferences, blog posts, et cetera, for quite a while before he launched Sidekick.
[00:23:30.040 --> 00:23:34.360] Something I don't have, and I know you preach against building an audience.
[00:23:34.360 --> 00:23:40.600] This feels like it's something that might require an audience, given that the core component is open source.
[00:23:40.600 --> 00:23:43.640] But just wondering, how would you go about starting this?
[00:23:43.640 --> 00:23:45.080] What would you focus on?
[00:23:45.080 --> 00:23:50.120] And how would you think about charging money and when to start charging money?
[00:23:50.120 --> 00:23:51.160] Thank you.
[00:23:51.160 --> 00:24:01.080] So I want to start by saying trying to start a business like Sidekick is a little, it's not exactly the same, but it's a little like saying, I really want to go out and win the lottery today.
[00:24:01.400 --> 00:24:03.320] There is a lot of luck involved.
[00:24:03.320 --> 00:24:12.280] And it's not to take anything away from Mike Perham, but on the episode, do you remember how many open source projects he launched that just didn't get traction?
[00:24:12.280 --> 00:24:24.600] The reason Sidekick works as a business is because he has this enormously successful, broadly adopted open source project.
[00:24:24.600 --> 00:24:30.840] And if you had that today, you could turn it into a business.
[00:24:30.840 --> 00:24:33.480] And so, the question then is, how do you get that?
[00:24:33.480 --> 00:24:34.680] Now, I've never done that.
[00:24:34.680 --> 00:24:37.400] I have talked to people and watched people who have done it.
[00:24:37.400 --> 00:24:39.880] And usually there's it's unfortunate.
[00:24:39.880 --> 00:24:41.720] Usually, there's a ton of luck involved.
[00:24:41.960 --> 00:24:45.120] It's shocking that I do think it's a repetition.
[00:24:44.760 --> 00:24:48.000] It's like you got to get a bunch of shots on goal to do it.
[00:24:48.240 --> 00:24:52.960] Now, with that said, what I'm not saying is build 100 open source projects in 100 days and launch them.
[00:24:52.960 --> 00:25:00.160] I do think there is some logic to this of research and thinking about where the other open source projects are failing.
[00:25:00.160 --> 00:25:04.880] You know, this would be hard because there obviously are a ton already out there.
[00:25:04.880 --> 00:25:06.880] And how do you find the gap in the market?
[00:25:06.880 --> 00:25:10.480] I guess this is as hard as finding any idea, any type of business idea.
[00:25:10.480 --> 00:25:13.760] But you said there's a problem and you assume it's validated.
[00:25:13.760 --> 00:25:14.960] What would your first steps be?
[00:25:14.960 --> 00:25:20.640] My first steps would be: I want to launch an open source project that is going to get traction.
[00:25:20.640 --> 00:25:27.280] And so, I would look at every open source project that I know of that I've seen get traction, and I would study how they did it.
[00:25:27.280 --> 00:25:29.600] So, I'd listen to all the other interviews with Mike.
[00:25:29.600 --> 00:25:33.360] I would listen to, I don't know, early interviews with Matt Mullenweg if he did them.
[00:25:33.360 --> 00:25:36.080] Just pick an open source project that is wildly successful.
[00:25:36.080 --> 00:25:40.640] Adam Wathens, Tailwind, CSS, just any, there's a ton of them out there, right?
[00:25:40.640 --> 00:25:43.040] How did they get traction in the early days?
[00:25:43.040 --> 00:25:46.640] There was probably some belief in the developer.
[00:25:46.640 --> 00:25:50.880] Did most of these developers have some kind of audience before they launched it?
[00:25:50.880 --> 00:25:52.240] I'm guessing they did.
[00:25:52.240 --> 00:25:55.920] So, in that case, you probably want to go against my advice.
[00:25:55.920 --> 00:25:58.240] So, my advice is not that you shouldn't build an audience.
[00:25:58.240 --> 00:25:59.920] I get misquoted on this a lot.
[00:25:59.920 --> 00:26:13.520] My advice is: all things being equal, dollar for dollar, hour for hour, building an audience is not anywhere near the best marketing approach that you can use to build a SaaS.
[00:26:13.520 --> 00:26:20.560] I have seen so many people with large audiences, fail miserably at SaaS and plateau and build that no one wants.
[00:26:20.560 --> 00:26:22.240] There's a curse of an audience that goes with it.
[00:26:22.240 --> 00:26:25.760] I've talked about this stuff a bunch, but the idea: I'm not saying an audience is worth nothing.
[00:26:25.760 --> 00:26:41.800] I have an audience, it's very valuable, but the amount of time that I have spent since 2005, 20 years, my first blog post was in late 2005, and I blog hard, hundreds of hours a year for six years.
[00:26:41.880 --> 00:26:44.520] Then I've written five books, that's all audience.
[00:26:44.520 --> 00:26:53.000] Then the YouTube channel, 515 YouTube videos, 778 episodes of this podcast, plus the Zen Founder, you know, on and MicroConf, on and on and on.
[00:26:53.000 --> 00:26:53.320] Great.
[00:26:53.320 --> 00:26:54.360] So now I have an audience.
[00:26:54.360 --> 00:27:00.280] I'm not saying it's not valuable, but there are shorter routes to marketing your SaaS product.
[00:27:00.280 --> 00:27:07.320] So that's really what I'm saying: the amount of time invested, you'd be better off getting better at other things.
[00:27:07.320 --> 00:27:09.320] But when I say that, I'm saying for SaaS.
[00:27:09.320 --> 00:27:13.080] So if you were doing info products for courses, I'd say build a audience.
[00:27:13.080 --> 00:27:14.040] Absolutely.
[00:27:14.040 --> 00:27:16.280] That's a reason that why am I building an audience?
[00:27:16.280 --> 00:27:17.080] Why do I have an audience?
[00:27:17.160 --> 00:27:20.520] Because we sell SaaS info products, event tickets, we're in accelerator.
[00:27:20.520 --> 00:27:21.720] We're not SaaS.
[00:27:21.720 --> 00:27:24.520] Similarly, open source projects.
[00:27:24.520 --> 00:27:42.920] If in fact, most of the folks who today have amazingly successful open source projects, if they had some type of audience or respect or they were book authors in their particular technology or whatever it is, if that's what they did, then I would try to copy their approach if that's the one that works the most.
[00:27:42.920 --> 00:27:44.040] I'm not an expert on it.
[00:27:44.040 --> 00:27:45.800] And so that's where I have a tough time giving advice.
[00:27:45.800 --> 00:27:47.240] If you ask me, how do you start a SaaS?
[00:27:47.240 --> 00:27:51.160] I can tell you, I consider myself quite knowledgeable on that front.
[00:27:51.160 --> 00:27:53.800] But starting an open source project, I don't know.
[00:27:53.800 --> 00:27:54.600] How do you do that?
[00:27:54.600 --> 00:27:58.600] You know, I would then go and certainly research that.
[00:27:58.600 --> 00:28:02.360] From there, let's just say you had a wildly successful open source project.
[00:28:02.360 --> 00:28:03.480] When do you start charging?
[00:28:03.480 --> 00:28:06.920] Well, I mean, I would start charging as soon as I could, right?
[00:28:06.920 --> 00:28:09.800] You have add-ons, you have paid add-ons, you have paid support.
[00:28:09.800 --> 00:28:15.920] The moment that big companies come knocking at your door and they start saying, hey, where's the enterprise support plan?
[00:28:16.240 --> 00:28:21.280] It's been a while since I talked with Mike about Sidekick, but frankly, he's criminally underpriced.
[00:28:21.280 --> 00:28:23.680] You know, he's leaving a lot of money on the table and he knows that.
[00:28:23.680 --> 00:28:30.160] I believe I pointed that out in the interview: that it could be a much more lucrative business.
[00:28:30.160 --> 00:28:38.880] It could be a larger business, and he gets to make that choice of keeping it to a single developer with no employees and to keep his pricing simple.
[00:28:38.880 --> 00:28:41.040] And that's the choice he makes.
[00:28:41.040 --> 00:28:43.200] I would make different choices, but that's okay.
[00:28:43.200 --> 00:28:44.400] We're bootstrappers.
[00:28:44.400 --> 00:28:46.320] We don't have to agree on this stuff, right?
[00:28:46.320 --> 00:28:49.520] He can run his business in the way that he wants.
[00:28:49.520 --> 00:28:54.640] But I would say to Mike, the question asker: be careful.
[00:28:54.640 --> 00:28:56.400] We all want to start a business like Sidekick.
[00:28:56.880 --> 00:29:03.520] I want to run a, I forget what his revenue is: $3 million, $4,5 million, single, you know, no employees or whatever, single founder.
[00:29:03.520 --> 00:29:08.960] I want a business like that too, but I am under no illusion that I could just go do that.
[00:29:08.960 --> 00:29:10.960] Like, that's not just going to happen.
[00:29:10.960 --> 00:29:14.480] It's going to be a tremendous amount, not just of work.
[00:29:14.800 --> 00:29:17.680] It's going to be a ton of hard work, which usually I'm fine to put in.
[00:29:17.680 --> 00:29:19.760] Obviously, you need some skills.
[00:29:19.760 --> 00:29:22.800] I think there's going to be quite a bit of luck involved with it.
[00:29:22.800 --> 00:29:27.200] And unless you do have that audience, audience could offset that.
[00:29:27.200 --> 00:29:28.800] If you have more audience, you need less luck.
[00:29:28.800 --> 00:29:30.640] Yeah, that's the part I'm not sure about.
[00:29:31.200 --> 00:29:42.880] So I would just caution you on thinking, you know, it's cool to have that goal, but I think it's going to be quite the uphill battle to try to build a business like Sidekick because there just aren't that many.
[00:29:42.880 --> 00:29:44.080] So thanks for that question, Mike.
[00:29:44.160 --> 00:29:45.360] Hope it was helpful.
[00:29:45.360 --> 00:29:49.040] And my last question of the day comes from Anonymous.
[00:29:53.520 --> 00:29:59.040] Hey, Rob, wanted to start by thanking you for all the amazing stuff you've been doing in the bootstrap community.
[00:29:59.040 --> 00:30:04.200] I'm new to this community, but this idea of a bootstrap startup really resonates with me.
[00:30:04.520 --> 00:30:10.120] And I've been loving all the content that I've been reading and listening to on your podcast.
[00:30:10.120 --> 00:30:20.760] So I read on your stereotypic blog posts, but have also heard you say in some more recent podcast episodes that you can potentially skip steps depending on your life circumstances.
[00:30:21.000 --> 00:30:23.640] So this question is about that.
[00:30:23.640 --> 00:30:25.400] So a little bit more about me.
[00:30:25.400 --> 00:30:28.920] I've been working at a fan equivalent for a few years now.
[00:30:28.920 --> 00:30:33.480] So nowhere near financially independent, but I do have a decent safety net.
[00:30:33.800 --> 00:30:38.120] In addition, I do really actually really like my job at the product I'm working on.
[00:30:38.120 --> 00:30:50.360] So I'm not in a rush to escape anything, but I do have that itch, that desire, that sickness, as you've sometimes jokingly referred to it, of entrepreneurship and wanted to build something on my own.
[00:30:50.360 --> 00:30:56.440] So I'm curious how you would think about skipping steps in this stereo step model, if you would do that.
[00:30:56.680 --> 00:31:02.040] So I guess the first question is, how would you skip some of those first steps?
[00:31:02.040 --> 00:31:05.720] Would you go straight to building a SaaS on the side as you worked your full-time job?
[00:31:05.720 --> 00:31:10.040] Would you start by acquiring something small and less established?
[00:31:10.360 --> 00:31:16.120] Maybe like $10,000, $15,000, $20,000 kind of range, just to learn that sales and marketing side of things?
[00:31:16.120 --> 00:31:18.040] Or, you know, would you do something else?
[00:31:18.040 --> 00:31:24.440] And then the second part of the question is, what would you think next steps would be if you were acquiring something small?
[00:31:24.440 --> 00:31:25.640] Like, where would you look?
[00:31:25.640 --> 00:31:27.800] What kind of businesses would you be looking for?
[00:31:27.800 --> 00:31:28.920] Things like that.
[00:31:29.080 --> 00:31:29.880] Thanks so much.
[00:31:29.880 --> 00:31:32.120] Look forward to hearing your answer.
[00:31:32.120 --> 00:31:33.800] Thanks for that, Anonymous.
[00:31:33.800 --> 00:31:34.680] It's interesting.
[00:31:34.680 --> 00:31:41.080] Yeah, whenever I have a framework, there's always that question of when, when should I not do it?
[00:31:41.080 --> 00:31:44.920] Because certainly these frameworks, they don't apply to exactly 100% of everyone all the time.
[00:31:45.440 --> 00:31:46.720] There are exceptions.
[00:31:46.720 --> 00:31:49.760] But I do find that there are fewer exceptions than a lot of people think.
[00:31:49.760 --> 00:31:58.080] And most of us, I see this a lot with tiny C companies where I'll come out with like, hey, in general, you want to do this certain thing or you should think about your pricing this way.
[00:31:58.080 --> 00:32:01.760] And some founders perpetually think, well, I'm a snowflake.
[00:32:01.760 --> 00:32:09.040] Like my business is so unique, you know, that I should skip this or I should not do the yours are grinding or mine's not going to take hard work.
[00:32:09.040 --> 00:32:10.560] It's just going to be luck and skill or whatever.
[00:32:10.560 --> 00:32:11.440] And folks have that.
[00:32:11.440 --> 00:32:15.600] And I'm not saying that's necessarily the case here, but I do want to caution you against that.
[00:32:15.600 --> 00:32:18.880] There's a reason that I say the things I do.
[00:32:18.880 --> 00:32:21.280] It's not just whimsical.
[00:32:21.280 --> 00:32:23.840] It's not just because I want to sound smart.
[00:32:23.840 --> 00:32:30.880] It's because I have seen patterns develop across thousands, tens of thousands of entrepreneurs.
[00:32:30.880 --> 00:32:41.040] And so when I think about the stair-step approach, like do I literally mean that you have to start something in a walled garden, in an ecosystem, and then build up and then buy out your time and then do a SAS?
[00:32:41.040 --> 00:32:42.160] Well, of course not.
[00:32:42.480 --> 00:32:44.160] There are other paths to it.
[00:32:44.160 --> 00:32:56.960] But the stair-step approach allows you to build your skills, to gain experience, to get confidence in your abilities, to buy your own time, to have some money coming in.
[00:32:56.960 --> 00:33:06.960] It's just everything, everything just builds and snowballs versus you certainly don't learn launching 20 things and seeing what sticks.
[00:33:06.960 --> 00:33:10.480] You learn that luck is the way to go or something.
[00:33:10.480 --> 00:33:13.040] I mean, I've railed on this for a long time.
[00:33:13.040 --> 00:33:14.400] So that approach I don't like.
[00:33:14.400 --> 00:33:18.000] The one of just jumping directly to building a SaaS is not the worst.
[00:33:18.000 --> 00:33:26.560] Like that, I could see some people doing that, but what I see over and over on social media or people writing into this podcast is, man, this is so complicated.
[00:33:26.560 --> 00:33:27.680] Man, this is really hard.
[00:33:27.680 --> 00:33:28.800] Now I built it.
[00:33:28.800 --> 00:33:29.440] Now what?
[00:33:29.440 --> 00:33:31.720] This is way more moving parts than I thought.
[00:33:31.720 --> 00:33:33.720] And it's like, yeah, that's why the stair step exists.
[00:33:33.720 --> 00:33:44.120] You know, that's why the real purpose of the stair step approach is to get you the confidence, experience, skills, time, and money to be able to do that next thing that's a little harder.
[00:33:44.120 --> 00:33:47.160] So you're not trying to eat an entire watermelon at once.
[00:33:47.160 --> 00:33:48.440] You're trying to eat it in small pieces.
[00:33:48.440 --> 00:33:50.120] You're not trying to boil the ocean.
[00:33:50.120 --> 00:33:58.200] You are trying to look for yet another analogy about how doing things that are too big or too complicated right from the start can be challenging.
[00:33:58.600 --> 00:34:02.360] Does it mean that you won't succeed if you don't do the stair step?
[00:34:02.360 --> 00:34:03.160] Well, of course not.
[00:34:03.160 --> 00:34:03.800] It doesn't.
[00:34:04.040 --> 00:34:09.000] You can get lucky, and some founders have more confidence, experience, skills, time, and money than others.
[00:34:09.000 --> 00:34:11.240] And so maybe you can skip some steps.
[00:34:11.240 --> 00:34:12.760] But that's how I think about it.
[00:34:12.760 --> 00:34:18.120] It's not just about, you know, let's say you had half a million dollars in the bank and you own all your own time.
[00:34:18.120 --> 00:34:20.680] Therefore, you can just burn it down and you have a little bit of money.
[00:34:20.680 --> 00:34:22.920] Should you still skip the early stages?
[00:34:22.920 --> 00:34:31.720] I mean, do you have the confidence, the experience, and the skills to build, launch, market, support, grow, manage engineers, do all these things to a SaaS?
[00:34:31.720 --> 00:34:33.320] If you've never done it, probably not.
[00:34:33.320 --> 00:34:35.240] Like, it's really complicated.
[00:34:35.240 --> 00:34:38.120] I don't know how else to say how complicated and how hard it's going to be.
[00:34:38.120 --> 00:34:39.800] If you've never done it, you just don't know.
[00:34:39.800 --> 00:34:45.320] And I'm not saying that to toot my own horn or the horn of SaaS founders around the world.
[00:34:45.320 --> 00:34:50.520] It is just one of the more complicated businesses you can build on the internet.
[00:34:50.520 --> 00:34:56.040] Because building a content website or an email newsletter, there's hard work that goes into that.
[00:34:56.040 --> 00:34:59.080] But you grind, you get better, you can just do it.
[00:34:59.080 --> 00:35:00.440] E-commerce, it's not as complex.
[00:35:00.440 --> 00:35:03.720] No, e-commerce is a pain in the ass with products and physical things and maybe manufacturing.
[00:35:03.720 --> 00:35:05.160] Yeah, there's things.
[00:35:05.160 --> 00:35:15.520] But ask anybody who has tried to start a SaaS, even when they have multiple successful businesses under their belt, if they haven't done SaaS before, it completely knocks them on their ass in general.
[00:35:15.520 --> 00:35:17.760] That's what happens, and most people underestimate how hard it is.
[00:35:14.680 --> 00:35:20.160] And that is the point of the stair-step method.
[00:35:20.480 --> 00:35:22.160] So, should you skip?
[00:35:22.160 --> 00:35:24.000] I don't know, probably up to you.
[00:35:24.000 --> 00:35:26.720] Do I think people should acquire more businesses than they build?
[00:35:26.720 --> 00:35:27.360] I do.
[00:35:27.360 --> 00:35:31.520] And in fact, several of my early successes were actually acquisitions.
[00:35:31.520 --> 00:35:35.760] And for years, I preached this to anyone who would listen.
[00:35:35.760 --> 00:35:37.920] And no one wanted to listen.
[00:35:38.080 --> 00:35:40.160] It became this thing of like, well, I don't want to buy.
[00:35:40.160 --> 00:35:41.440] Well, what if the code quality is low?
[00:35:41.440 --> 00:35:42.480] Well, how do I know what's good?
[00:35:42.480 --> 00:35:43.840] Well, how am I taking a gamble?
[00:35:43.840 --> 00:35:44.880] I just want to build my own thing.
[00:35:44.880 --> 00:35:45.440] I really want to.
[00:35:45.440 --> 00:35:47.520] And fine, I heard that enough.
[00:35:47.520 --> 00:35:48.560] I listened to the market.
[00:35:48.560 --> 00:35:50.560] I pivoted my approach.
[00:35:50.560 --> 00:35:52.640] I pivoted my message from these early days.
[00:35:52.640 --> 00:35:54.160] But I love acquisitions.
[00:35:54.320 --> 00:35:55.840] You can find, I mean, think about it.
[00:35:55.920 --> 00:35:57.600] I made a million dollars from Hittail.
[00:35:57.600 --> 00:35:59.920] I spent $31,000 on that thing.
[00:35:59.920 --> 00:36:05.520] And all the revenue plus the exit sale price was a million dollars.
[00:36:05.520 --> 00:36:07.360] It completely changed our life.
[00:36:07.360 --> 00:36:07.840] That was it.
[00:36:07.840 --> 00:36:11.360] It had like a 90% net profit margin too, because it was just me with a couple contractors.
[00:36:11.360 --> 00:36:12.400] I bought that.
[00:36:12.400 --> 00:36:14.320] I couldn't have gotten there that quickly.
[00:36:14.320 --> 00:36:21.280] It would have taken me years longer to build it and find product market fit and do it, but I was able to acquire it.NET Invoice, I acquired that.
[00:36:21.280 --> 00:36:22.560] And that changed my life.
[00:36:22.560 --> 00:36:28.080] Not in the way of, oh, it made us wealthy, but it showed me that I could really do this and that I had the skills.
[00:36:28.080 --> 00:36:28.880] And I learned a ton.
[00:36:28.880 --> 00:36:30.240] Talk about stair-stepping.
[00:36:30.240 --> 00:36:37.280] It really, it wasn't part of an ecosystem because there weren't these app stores back then, but it kind of just had SEO and then as the marketing channel.
[00:36:37.280 --> 00:36:40.800] And that's what I talk about with stair-stepping: you pick that one thing and it's kind of got one marketing channel.
[00:36:40.800 --> 00:36:42.640] So you're not trying to learn all marketing.
[00:36:42.640 --> 00:36:49.440] You're just trying to learn support and product and shipping and maybe sales if you need.
[00:36:49.440 --> 00:36:52.400] You know, you're learning these other things along the way, and you're kind of scaffolded with it.
[00:36:52.400 --> 00:36:59.360] So .NET Invoice was great because it made three to, I guess at a peak, it made five grand one month, but it was one-time sales, it wasn't subscription.
[00:36:59.360 --> 00:37:05.480] So, in a lot of months, between two and $4,000, and that made our house payment plus our, we didn't have car payments, but you get the idea.
[00:37:05.480 --> 00:37:10.920] It was just a lot of extra money for us because I was working full-time at the time, Sherry was still in grad school.
[00:37:10.920 --> 00:37:13.240] And so, I like acquisitions.
[00:37:13.240 --> 00:37:20.280] And I think if you could, yeah, jump to that point of acquiring a full-blown SaaS and you have the money to do it, cool.
[00:37:20.280 --> 00:37:25.320] The challenge with what you said anonymous in the voicemail is like buying something for 20 or 30K.
[00:37:25.320 --> 00:37:29.320] Most of the time, those things are so early stage, there's not much there.
[00:37:29.320 --> 00:37:35.240] And so, the fact that I bought Hito for 30K, it was doing two or three, doing two grand a month, maybe?
[00:37:35.240 --> 00:37:36.440] I don't even remember.
[00:37:36.440 --> 00:37:39.320] Somewhere in that range, it was pretty early.
[00:37:39.320 --> 00:37:48.760] These days, if you buy something for 30 grand, I just don't know if there's going to be enough there to teach you anything, or if it's still this super pre-product market fit thing that's done.
[00:37:48.920 --> 00:37:51.480] We did a lifetime deal with a Rapsumo, and now we're selling it for 30.
[00:37:51.640 --> 00:37:53.800] It's like, do you even, do you have anything there?
[00:37:53.800 --> 00:38:10.520] Like, that's the big thing I'd be thinking about: is there enough here that A, I can learn from it, but B, I have actually improved my chance of success because the acquisitions that I've done and that I've seen work are the ones where it does have you in that product market fit range.
[00:38:10.520 --> 00:38:15.960] Because finding product market fit, if I'm going to build SaaS from scratch these days, it's like what, 12 months, 18 months, 24 months is a long time.
[00:38:15.960 --> 00:38:21.320] And if I can jump ahead to that, well, I've saved myself a ton of heartache and headache.
[00:38:21.320 --> 00:38:25.080] That's really the way, probably the only way I'd be thinking about it.
[00:38:25.080 --> 00:38:27.320] So, thanks for that question, Anonymous.
[00:38:27.400 --> 00:38:28.920] Hope that was helpful.
[00:38:28.920 --> 00:38:33.560] And thank you for listening to this episode of Startups for the Rest of Us.
[00:38:33.560 --> 00:38:37.000] If you keep listening, I'll keep recording.
[00:38:37.000 --> 00:38:46.720] And be sure to send any questions you have into questions at startupsthrestofus.com, or you can go to the website, click ask a question in the top navigation.
[00:38:44.840 --> 00:38:50.000] It's been amazing having you here today, this week, and every week.
[00:38:50.240 --> 00:38:54.480] This is Rob Walling signing off from episode 778.

Prompt 2: Key Takeaways

Now please extract the key takeaways from the transcript content I provided.

Extract the most important key takeaways from this part of the conversation. Use a single sentence statement (the key takeaway) rather than milquetoast descriptions like "the hosts discuss...". 

Limit the key takeaways to a maximum of 3. The key takeaways should be insightful and knowledge-additive. 

IMPORTANT: Return ONLY valid JSON, no explanations or markdown. Ensure:
- All strings are properly quoted and escaped
- No trailing commas
- All braces and brackets are balanced
Format: {"key_takeaways": ["takeaway 1", "takeaway 2"]}

Prompt 3: Segments

Now identify 2-4 distinct topical segments from this part of the conversation.

For each segment, identify:
- Descriptive title (3-6 words)  
- START timestamp when this topic begins (HH:MM:SS format)
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Most important Key takeaway from that segment. Key takeaway must be specific and knowledge-additive.
- Brief summary of the discussion

IMPORTANT: The timestamp should mark when the topic/segment STARTS, not a range. Look for topic transitions and conversation shifts.

Return ONLY valid JSON. Ensure all strings are properly quoted, no trailing commas:
{
  "segments": [
    {
      "segment_title": "Topic Discussion", 
      "timestamp": "01:15:30",
      "key_takeaway": "main point from this segment",
      "segment_summary": "brief description of what was discussed"
    }
  ]
}

Timestamp format: HH:MM:SS (e.g., 00:05:30, 01:22:45) marking the START of each segment.

Prompt 4: Media Mentions

Now scan the transcript content I provided for ACTUAL mentions of specific media titles:

Find explicit mentions of:
- Books (with specific titles)
- Movies (with specific titles)  
- TV Shows (with specific titles)
- Music/Songs (with specific titles)

DO NOT include:
- Websites, URLs, or web services
- Other podcasts or podcast names

IMPORTANT: 
- Only include items explicitly mentioned by name. Do not invent titles.
- Valid categories are: "Book", "Movie", "TV Show", "Music"
- Include the exact phrase where each item was mentioned
- Find the nearest proximate timestamp where it appears in the conversation
- THE TIMESTAMP OF THE MEDIA MENTION IS IMPORTANT - DO NOT INVENT TIMESTAMPS AND DO NOT MISATTRIBUTE TIMESTAMPS
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Timestamps are given as ranges, e.g. 01:13:42.520 --> 01:13:46.720. Use the EARLIER of the 2 timestamps in the range.

Return ONLY valid JSON. Ensure all strings are properly quoted and escaped, no trailing commas:
{
  "media_mentions": [
    {
      "title": "Exact Title as Mentioned",
      "category": "Book",
      "author_artist": "N/A",
      "context": "Brief context of why it was mentioned",
      "context_phrase": "The exact sentence or phrase where it was mentioned",
      "timestamp": "estimated time like 01:15:30"
    }
  ]
}

If no media is mentioned, return: {"media_mentions": []}

Full Transcript

[00:00:00.240 --> 00:00:04.640] Being an entrepreneur is making calculated gambles.
[00:00:04.640 --> 00:00:07.360] When I hear de-risk, that feels like hedging.
[00:00:07.360 --> 00:00:10.000] It feels like, well, I'm going to have a contingency.
[00:00:10.000 --> 00:00:11.920] The contingency is to pivot.
[00:00:11.920 --> 00:00:25.680] The contingency is if there's not enough demand that you either figure out how to generate the demand, or if the niche isn't big enough, or the market isn't big enough, or the total reachable market isn't big enough, then you expand later.
[00:00:40.400 --> 00:00:42.480] You're listening to Startups for the Rest of Us.
[00:00:42.480 --> 00:00:53.840] This is the podcast that focuses on helping founders build incredible businesses that don't make a dent in the universe, but might just change your little corner of it.
[00:00:53.840 --> 00:01:09.040] And while you're building that incredible business, and maybe you bootstrap it, maybe you raise funding, it kind of doesn't matter, you're not sacrificing your freedom, your purpose, your relationships, your sanity, your mental health in order to grow it.
[00:01:09.040 --> 00:01:19.520] It's not growth at all costs, but it's build incredible businesses that provide us with an incredible life and also improve the lives of those around you.
[00:01:19.520 --> 00:01:22.560] I've been recording this podcast for more than 15 years.
[00:01:22.560 --> 00:01:28.640] This is episode 778, and today I'm going to be answering listener questions.
[00:01:28.960 --> 00:01:30.960] Some great questions in the queue.
[00:01:30.960 --> 00:01:41.440] And if you have a question you'd like me or me and a guest to answer in a future episode, you can go to startupforthrestofus.com and click ask a question in the top nav.
[00:01:41.440 --> 00:01:54.800] Audio and video questions tend to go to the top of the stack, although this time it looks like I have a question from X Twitter, and also more advanced questions tend to go to the top of the stack rather than how do I get started early stage stuff.
[00:01:54.800 --> 00:01:55.920] Today is going to be a mix.
[00:01:55.920 --> 00:01:56.640] It's going to be fun.
[00:01:56.640 --> 00:01:58.160] We're going to have a great time.
[00:01:58.160 --> 00:02:03.000] Before I dive into my first question, I want to tell you about Microconf Connect.
[00:02:03.000 --> 00:02:08.760] It is the best paid community for bootstrapped and mostly bootstrapped SaaS founders in the world.
[00:02:08.760 --> 00:02:13.720] You can head to microconfconnect.com if you want to check it out because building a startup can be lonely.
[00:02:13.720 --> 00:02:17.880] And if you join Connect, you're going to be surrounded by like-minded founders.
[00:02:17.880 --> 00:02:21.320] This is our extension of our MicroConf hallway track.
[00:02:21.320 --> 00:02:27.160] In addition to the forums, the conversations, the DMs, you get access to live events.
[00:02:27.160 --> 00:02:37.000] So, for example, on June 19th, which is next week, Matt Heyman is a sales expert and he's going to be doing a one-hour session about using LinkedIn as a sales channel.
[00:02:37.000 --> 00:02:45.960] And it will be a live virtual event, meaning you can join via, I don't know, what is Zoom or whatever we use, but you're there in real time and you can ask questions.
[00:02:45.960 --> 00:03:01.480] If you want to apply, because we do not let everyone in, we are pretty quick on the draw to not let folks in who are trying to infiltrate and let's say reduce the value of the community by them trying to sell stuff or being whatever.
[00:03:01.480 --> 00:03:02.280] You get the idea.
[00:03:02.280 --> 00:03:07.240] We try to keep the quality of the participants and the quality of the conversation very high.
[00:03:07.240 --> 00:03:13.880] We have a full-time moderator who is making sure it's the best community it can be.
[00:03:13.880 --> 00:03:16.360] Microconfconnect.com, if you want to check it out.
[00:03:16.360 --> 00:03:25.240] And with that, let's dive into our first question, which this one is actually a thank you and some feedback about Tiny Seed Tales.
[00:03:29.720 --> 00:03:34.520] Hey, Rob, long-time listener, I just wanted to say thank you for the Tiny Seed Tales.
[00:03:34.520 --> 00:03:36.520] I've been a long-time listener for a couple of years now.
[00:03:36.520 --> 00:03:39.080] I don't have a startup of my own.
[00:03:39.080 --> 00:03:41.400] I would love to have one, but I don't.
[00:03:41.400 --> 00:04:01.920] And the Tiny Seed Tales just showed me, you know, how much uncertainty there is behind a business, a business that has been backed by you guys, but a business by a person that sounds like they have an idea what they want to do and they still cannot find product market fit, which is really, really helpful.
[00:04:01.920 --> 00:04:03.280] I love all of your episodes.
[00:04:03.280 --> 00:04:04.320] I love listening to them.
[00:04:04.320 --> 00:04:09.040] I love listening to all of your guys' experience and what you go through and suggestions.
[00:04:09.040 --> 00:04:19.440] But Tiny Sea Tales showed me, even for a person like that and for a company like that, how much unknown there is.
[00:04:19.680 --> 00:04:21.840] I'm the type of person that's interested in IT.
[00:04:21.840 --> 00:04:27.600] I work as a project manager and a product manager, depending on the company and on the project.
[00:04:27.600 --> 00:04:29.600] But I love coding.
[00:04:29.840 --> 00:04:35.040] I'm very interested in that, but I still, you know, I don't have a startup because I have no idea what to do.
[00:04:36.480 --> 00:04:39.920] I'm having trouble finding the problem to solve.
[00:04:39.920 --> 00:04:48.640] And listening to these episodes with you and blanking on the name of the founder, I'm sorry, in the fourth season, it's just, you know, eye-opening.
[00:04:48.640 --> 00:04:55.920] Even for somebody that they thought they know what they wanted to do and what problem they wanted to solve, it's still so much uncertainty.
[00:04:55.920 --> 00:04:57.760] So just a huge thank you.
[00:04:57.760 --> 00:05:03.200] And if you can do like three founders per season, that'd be great.
[00:05:03.200 --> 00:05:06.160] I absolutely love the tiny seed tales.
[00:05:06.160 --> 00:05:09.680] So yeah, a huge, huge, huge thank you for those episodes.
[00:05:09.680 --> 00:05:10.800] Love hearing those.
[00:05:11.120 --> 00:05:12.640] I'm looking forward to new ones.
[00:05:12.640 --> 00:05:18.960] And if you can find more founders to follow and update us on their progress, I would listen to it until I die.
[00:05:18.960 --> 00:05:19.840] Thank you.
[00:05:19.840 --> 00:05:22.160] I would listen to it until I die.
[00:05:22.160 --> 00:05:24.560] That is deep praise indeed.
[00:05:24.560 --> 00:05:26.560] Thank you for that, Antonio.
[00:05:26.560 --> 00:05:31.640] I've received a lot of positive feedback about that season of the most recent season of Tiny Seed Tales.
[00:05:31.800 --> 00:05:46.440] If you skipped it, because for whatever reason you didn't want to listen to it, it is a profoundly impactful experience to listen to Colleen have some early success and then lose a co-founder and then scrape and claw.
[00:05:46.440 --> 00:05:51.640] And I believe we recorded, what is it, eight or nine episodes over like almost two years?
[00:05:51.640 --> 00:05:53.640] Yeah, two years almost to the day.
[00:05:53.640 --> 00:06:01.080] So you get to hear this long journey and dot dot dot, you get to hear how it pans out in the end.
[00:06:01.080 --> 00:06:12.600] If you want to hear 90 minutes of a similarly recorded show, it's kind of just a single audio documentary, head to startupstoriespodcast.com.
[00:06:12.600 --> 00:06:20.920] And that was recorded over, I don't even remember 15 months with Derek Reimer and I when we were first starting Drip.
[00:06:20.920 --> 00:06:28.840] And it is agonizing for me to listen to because it's before we had product market fit and then it kind of jumps to where we do at a certain point.
[00:06:28.840 --> 00:06:34.520] And that is a similar journey, but perhaps with a you know a different end result.
[00:06:34.600 --> 00:06:39.720] Really appreciate the positive words, the kind sentiments around it, Antonio.
[00:06:39.720 --> 00:06:41.160] And I plan to keep doing it.
[00:06:41.160 --> 00:06:52.760] I mean, Tiny Seed Tales is, I'll tell you what, per audio minute, it is way more work than anything else that we do just because of the heavy editing and the voiceover and the production value of it.
[00:06:52.760 --> 00:06:55.800] It's also, for me, there's no instant gratification.
[00:06:55.800 --> 00:06:59.160] So I get to record these things over the course of a year.
[00:06:59.160 --> 00:07:01.320] The original idea was to do it over 12 months.
[00:07:01.320 --> 00:07:05.000] Colleen's adventure lasted a lot longer than that.
[00:07:05.000 --> 00:07:20.800] But to record things for a year and not put them out in public is really hard for me because that's where I get the dopamine rush is when I launch a book, when I launch a podcast episode, when I ship a YouTube video, that's when I'm like, Yeah, the world is consuming this now.
[00:07:21.040 --> 00:07:25.040] And then I get to hear feedback and thoughts from people about it.
[00:07:25.280 --> 00:07:31.120] So it's actually really hard for me to do that, to wait and to have the delayed gratification.
[00:07:31.120 --> 00:07:51.360] But I have heard from multiple Tiny Seed founders and investors that the reason they wanted to be part of Tiny Seed was because of what they heard on Tiny Seed Tales and they heard the struggles for the earlier seasons and they heard the victories of the earlier seasons and just generally heard the thought process and it made it more human.
[00:07:51.360 --> 00:07:59.440] So I plan to keep producing them and I'm glad that you have enjoyed this last season.
[00:07:59.440 --> 00:08:03.680] The next season is almost halfway done.
[00:08:03.680 --> 00:08:10.320] And so every couple months I sit down with the victim slash subject of season five.
[00:08:10.320 --> 00:08:19.840] And fingers crossed, I would love to launch that in September of this year and fall of this year to coincide with Tiny Seed Applications opening.
[00:08:19.840 --> 00:08:20.960] But it all depends.
[00:08:20.960 --> 00:08:22.320] These are things we can't predict.
[00:08:22.320 --> 00:08:27.440] I literally don't know if the startup is going to succeed when this season starts.
[00:08:27.440 --> 00:08:33.280] And I don't know how long the season is going to be because we don't know when the story kind of trails out.
[00:08:33.280 --> 00:08:35.040] When do you ride off into the sunset?
[00:08:35.040 --> 00:08:37.760] It's certainly hard to tell at the start.
[00:08:37.760 --> 00:08:42.640] And we will do our best to keep shipping those episodes.
[00:08:42.640 --> 00:08:46.000] So thanks again for your voicemail, Antonio.
[00:08:46.000 --> 00:08:50.800] My next question is about pricing and pilot projects.
[00:08:55.600 --> 00:08:58.400] Hey, Rob, it's John from Whatify here.
[00:08:58.400 --> 00:09:03.080] What if I is a highly visual, low-cove financial business simulator.
[00:09:03.080 --> 00:09:12.680] We make it easy for decision makers to visually ask and answer their gnarliest what-if business questions in seconds, all without formulas or spreadsheets.
[00:09:12.680 --> 00:09:21.880] Users can build out dozens, if not hundreds, if not thousands of what-if scenarios all in real time, and then analyze those trends of the data and make better business decisions.
[00:09:21.880 --> 00:09:23.320] Our solution is quite novel.
[00:09:23.320 --> 00:09:30.040] The tech was not easy to build, and we're flirting precariously with some of those category creation type problems that you've mentioned in the past.
[00:09:30.040 --> 00:09:40.920] My background is the visual effects industry, and our go-to-market is targeting large visual effects studios that have this complex relationship between revenue and capacity planning.
[00:09:40.920 --> 00:09:51.800] Artist resources are a huge expense, and our solution proposes a better way to forecast artist resources, reduce overtime, and mitigate unnecessary or poorly timed hires.
[00:09:51.800 --> 00:09:55.560] So, my question is about pilots and how to think and not overthink them.
[00:09:55.560 --> 00:10:00.600] For example, we're pitching a pilot for one of the top five visual effects studios in the world right now.
[00:10:00.600 --> 00:10:03.240] They did $120 million worth of work in 2022.
[00:10:03.240 --> 00:10:05.160] They've got a thousand employees.
[00:10:05.160 --> 00:10:10.760] And I think we can help them save between $2 and $3 million a year once our tech is fully implemented.
[00:10:10.760 --> 00:10:12.600] So, we've proposed a phased pilot.
[00:10:12.600 --> 00:10:19.560] We're focusing on one office, a subset of projects, so they can get a sense of the tech and help us build out more functionality.
[00:10:19.560 --> 00:10:25.720] I subscribe to the theory that pricing should be 10% of the value the customer receives.
[00:10:25.720 --> 00:10:32.600] And here, the obvious benefit is that we're going to get sort of brand recognition from a top-tier company.
[00:10:32.600 --> 00:10:36.040] And I also don't want to give away too much value in the process, though.
[00:10:36.040 --> 00:10:39.160] We're still bootstrapped, and I'm trying to recapture some of those sunk costs.
[00:10:39.160 --> 00:10:40.920] So, how would you think about pilot pricing?
[00:10:40.920 --> 00:10:42.040] Something so different?
[00:10:42.040 --> 00:10:46.720] This is an industry that's been slammed by the writer's strike, and they are cash-sensitive right now.
[00:10:46.720 --> 00:10:47.760] Thanks for everything you do, Rob.
[00:10:47.920 --> 00:10:48.480] Appreciate it.
[00:10:48.480 --> 00:10:49.520] Bye.
[00:10:49.840 --> 00:10:51.840] Thanks for that question, John.
[00:10:51.840 --> 00:10:58.000] I like that you called out the charging 10% of the value theory.
[00:10:58.000 --> 00:10:59.760] I think that's a good rule of thumb.
[00:10:59.760 --> 00:11:04.000] It's not something that you have to adhere to, but it's a great starting point.
[00:11:04.000 --> 00:11:12.240] And if you're going to save them two to three million a year and you charge $200,000 to $300,000 a year, it feels kind of fair, you know, and that's a nice contract size.
[00:11:12.240 --> 00:11:16.000] So, there are a couple schools of thought on pricing pilots.
[00:11:16.000 --> 00:11:27.600] See, I'm a believer for sure that you should be charging for them because, as opposed to just comping it, which is not anything that you indicated, some founders are so desperate to get the business that they want to try to give it away.
[00:11:27.600 --> 00:11:29.280] And there's so many problems with that.
[00:11:29.280 --> 00:11:31.600] Number one, you can waste a bunch of time.
[00:11:31.600 --> 00:11:34.320] And number two, they don't have any skin in the game.
[00:11:34.320 --> 00:11:38.480] And people don't value what they don't pay for generally.
[00:11:38.480 --> 00:11:44.080] And so, again, you didn't say any of that, but I want I'm doing this for listeners who think, well, why wouldn't I just comp this?
[00:11:44.080 --> 00:11:45.760] Pilot project pricing.
[00:11:45.760 --> 00:11:50.640] I mean, my default is to usually start with how you would price it if it wasn't a pilot project.
[00:11:50.640 --> 00:11:54.000] How much value do you think you'll save them at just one office?
[00:11:54.000 --> 00:12:02.560] And so, if that number is $100,000 or $200,000, then you charge $10,000 or $20,000 a year, right?
[00:12:02.560 --> 00:12:04.640] I guess that's what we're talking annual.
[00:12:04.640 --> 00:12:05.920] Probably how I think about it.
[00:12:05.920 --> 00:12:10.800] Now, then there's, are we doing a bunch of custom work for them?
[00:12:10.800 --> 00:12:13.760] Because we may want to charge that separately, right?
[00:12:13.760 --> 00:12:21.280] We may want to say, hey, there truly is some integrations and some stuff we're going to do that we don't need for future customers or we don't think we will.
[00:12:21.280 --> 00:12:23.280] And so then you can do one-off stuff for that, right?
[00:12:23.280 --> 00:12:27.440] Yeah, we're going to charge you $100 bucks an hour or just quote a fixed price, right?
[00:12:27.440 --> 00:12:33.160] $10,000 one time to do all this work for you in addition to the 10 or 20,000 a year.
[00:12:33.480 --> 00:12:40.680] Now, if instead they're giving you a bunch of guidance and you're gonna build a bunch of features that you think other companies are going to use, you can do one of two things.
[00:12:40.680 --> 00:12:42.360] You can charge them a discounted rate for that.
[00:12:42.360 --> 00:12:46.040] You can say, hey, I'm gonna charge you half, or usually it's about half, right?
[00:12:46.040 --> 00:12:52.760] So if it's like $10,000 worth of work, but I think I can reuse it, we're gonna charge you five grand to get it done into be number one in the priority list, right?
[00:12:52.760 --> 00:12:56.360] To be number one on our roadmap, in essence.
[00:12:56.360 --> 00:12:59.720] The thing I think about is who's getting more value out of this?
[00:12:59.720 --> 00:13:12.280] Or is it an even value exchange potentially that you get not only input to your roadmap, you get to have this customer zero, you know, that you really are building it for, but they also are gonna get a lot of value.
[00:13:12.280 --> 00:13:14.280] And you're both gonna have to invest time into it, right?
[00:13:14.280 --> 00:13:16.840] They have to invest time into the implementation and working with you.
[00:13:16.840 --> 00:13:21.240] And then you, of course, are investing the time to build out what needs to happen.
[00:13:21.240 --> 00:13:29.560] And then the other thing I think about with the pilot project is the reason it's called a pilot project and it's not just a contract is that the idea is it should lead somewhere.
[00:13:29.560 --> 00:13:32.200] So that's part of the conversation I'd be having.
[00:13:32.200 --> 00:13:35.400] And it's not that you need a written commitment.
[00:13:35.400 --> 00:13:37.720] That'd be perfect, but it's gonna be really hard to get that.
[00:13:37.720 --> 00:13:43.000] But it's getting that verbal commitment of if this works, our expectation is we're gonna keep rolling it out, right?
[00:13:43.000 --> 00:13:43.400] Right?
[00:13:43.400 --> 00:13:46.360] If this does everything you need it to do, we're gonna be rolling it out, right?
[00:13:46.360 --> 00:13:50.680] And so that's why it's called a pilot, is it is the tip of the spear, right?
[00:13:50.680 --> 00:14:04.760] Or it's the wedge that gets you into a company that then proves your value to this large company and proves to them that you are reliable and that you can, in fact, produce the results that you've promised.
[00:14:04.760 --> 00:14:06.920] So, that's that's such a big thing of it.
[00:14:06.920 --> 00:14:17.440] And the way I think about it is, let's say you do the pilot and it works, and they move forward to implementing you across the entire company, or you do the pilot and it doesn't work.
[00:14:14.200 --> 00:14:21.120] In both cases, I want to feel okay about the pricing.
[00:14:21.440 --> 00:14:31.920] Like, if this is the only work I ever do for them, and they basically say, you know what, we don't have the budget, or it didn't work, or leadership change, or whatever else happens, they go out of business.
[00:14:31.920 --> 00:14:37.440] I don't particularly want to be in a position where I'm thinking to myself, oh man, we just did a bunch of work for free.
[00:14:37.440 --> 00:14:39.040] We just ate a bunch of money.
[00:14:39.040 --> 00:14:45.120] I underpriced this because I thought that we were going to get all this work because that's not a sure thing.
[00:14:45.120 --> 00:14:50.480] So, even if it's not my most profitable pricing I ever implement, that's fine.
[00:14:50.480 --> 00:14:56.800] It doesn't need to be a huge cash cow, but I want to minimize the regret as I'm going to grind through this pilot.
[00:14:56.800 --> 00:14:59.760] A lot of pilots can be kind of grindy and a lot more work than you think.
[00:14:59.760 --> 00:15:04.400] I want to feel okay about the work that my team and I are putting into it.
[00:15:04.400 --> 00:15:08.960] So, that's probably the high-level overview of how I would think about pricing pilots.
[00:15:08.960 --> 00:15:10.080] Thanks for that question, John.
[00:15:10.160 --> 00:15:11.600] Hope it was helpful.
[00:15:11.600 --> 00:15:16.960] My next question is from ex Twitter from Kenny Alami several months ago.
[00:15:16.960 --> 00:15:19.120] Well, geez, it was almost a year ago now.
[00:15:19.120 --> 00:15:24.960] I said, There's a noticeable lack of intermediate and advanced questions on StartupsPod.
[00:15:24.960 --> 00:15:27.600] Do you have any more advanced questions?
[00:15:27.600 --> 00:15:36.880] And Kenny asks, How do you niche down to take advantage of industry knowledge and how do you de-risk the bet in case there is not enough demand?
[00:15:36.880 --> 00:15:39.920] So, first of all, I don't think you de-risk the bet.
[00:15:39.920 --> 00:15:45.520] I think being an entrepreneur is making calculated gambles.
[00:15:45.520 --> 00:15:49.600] And I think trying to de-when I hear de-risk, that feels like hedging.
[00:15:49.600 --> 00:15:52.160] It feels like, well, I'm going to have a contingency.
[00:15:52.160 --> 00:15:54.160] The contingency is to pivot.
[00:15:54.160 --> 00:16:08.760] The contingency is if there's not enough demand that you either figure out how to generate the demand, or if the niche isn't big enough, or the market isn't big enough, or the total reachable market isn't big enough, then you expand later once you've tapped that out.
[00:16:08.760 --> 00:16:14.280] What I don't mean is once you've plateaued, because usually plateaus are not because you've tapped out your market.
[00:16:14.280 --> 00:16:29.800] Usually, they're because you have tapped out your present marketing expertise or you have only not really done very much marketing, which unfortunately is what a lot of the kind of indie hacker folks on Twitter that I see saying, oh, I'm tapped out.
[00:16:29.800 --> 00:16:35.240] And it's like, oh, it's because you thought building an audience on social media was going to be your marketing channel.
[00:16:35.240 --> 00:16:38.440] And that is catastrophically misguided.
[00:16:38.440 --> 00:16:42.360] So de-risking the bet is not something I'd particularly be doing in an early stage startup.
[00:16:42.360 --> 00:16:46.520] There's going to be a lot of risk in it, but the risk, here's the thing: it's not like you're betting your house on it.
[00:16:46.520 --> 00:16:50.920] The risk is that it doesn't work and it's some time and maybe some money.
[00:16:50.920 --> 00:17:05.480] And the answer to that is as you get new information and you learn and you have more data, then you, again, you pivot, you expand, you change it, you know, you make these adjustments, these course corrections.
[00:17:05.480 --> 00:17:09.800] This is something that experienced and successful founders do.
[00:17:09.800 --> 00:17:29.960] That inexperienced and I'll say the folks who I see, the founders who I see getting in their way over and over and over are the ones that either don't try stuff because they say, oh, it doesn't work, or they try it half-ass and they don't go all in and they don't course correct.
[00:17:29.960 --> 00:17:33.160] They try it, and if it doesn't work, they just quit.
[00:17:33.320 --> 00:17:33.960] That doesn't work.
[00:17:33.960 --> 00:17:36.200] You know, AdsWords doesn't work in 2020.
[00:17:36.360 --> 00:17:39.000] SEO, it doesn't work anymore in 2025.
[00:17:39.000 --> 00:17:39.800] It just isn't the thing.
[00:17:39.800 --> 00:17:43.000] And it's like, no, actually, both of those things work.
[00:17:43.560 --> 00:17:45.040] So does outbound sales.
[00:17:44.760 --> 00:17:51.040] The playbook is not identical to what it was 10 years ago, but I'm invested in 224 B2B SaaS companies.
[00:17:51.360 --> 00:17:55.360] Dozens of them are doing seven or eight figures.
[00:17:55.360 --> 00:18:00.000] And there's WP Engine, which is what do we think the worth of them is a billion.
[00:18:00.000 --> 00:18:01.360] It's a unicorn, right?
[00:18:01.360 --> 00:18:08.960] And across all those companies, the successful ones are doing the stuff that I hear some people saying, it doesn't work in 2025.
[00:18:08.960 --> 00:18:13.040] Well, if it doesn't work, then how is it working for these companies that are growing?
[00:18:13.680 --> 00:18:20.400] So all that said, de-risking, course corrections, it's what experienced founders do.
[00:18:20.400 --> 00:18:22.880] Now, how do you niche down to take advantage of industry knowledge?
[00:18:22.880 --> 00:18:25.680] Kind of hard to answer without a specific.
[00:18:25.680 --> 00:18:28.640] So I'm going to invent a contrived example.
[00:18:28.640 --> 00:18:35.040] Let's say that I have industry knowledge of electrical construction.
[00:18:35.040 --> 00:18:42.240] Because let's just say my dad worked in construction for 42 years and my older brother still works in it and I worked in it for many, many, many years.
[00:18:42.240 --> 00:18:49.440] I could think about any app, about an accounting app, about a booking link, like a scheduling link.
[00:18:49.440 --> 00:18:52.560] I could think about a calendaring app.
[00:18:52.560 --> 00:18:53.920] I could think about project management.
[00:18:53.920 --> 00:19:00.320] I can think about anything and then say for electrical contractors or more broadly, like for the trades.
[00:19:00.320 --> 00:19:08.400] You know, we think of the HVAC and electricians, your plumbers, your carpenters, your GC, your general contractors.
[00:19:08.400 --> 00:19:12.800] You know, any of these things could be narrowed down or niched down.
[00:19:12.800 --> 00:19:19.360] And usually, if I'm a bootstrap founder, I'm going to probably try to focus it on one of those, but I'm going to be open to others.
[00:19:19.360 --> 00:19:22.960] I'm going to be open to where the interest is highest, right?
[00:19:22.960 --> 00:19:30.680] I'm going to be looking for where the thing that I have in mind sparks that twinkle in their eye.
[00:19:29.840 --> 00:19:36.040] I'm looking for when they have that moment of, wow, this could really help me in my business.
[00:19:36.360 --> 00:19:39.480] And usually I'm not coming up with a solution.
[00:19:39.480 --> 00:19:43.400] Usually I'm poking at a problem that they have, right?
[00:19:43.720 --> 00:19:47.400] What problem does your idea solve and for whom?
[00:19:47.400 --> 00:19:48.840] Don't tell me your idea.
[00:19:48.840 --> 00:19:51.480] Tell me what problem it solves and for whom.
[00:19:51.480 --> 00:19:52.520] That's what I'm thinking about.
[00:19:52.520 --> 00:20:01.640] And so the way I would niche down is probably to start pretty small and then kind of keep my ears open as to, oh, are there other verticals that are requesting this for me?
[00:20:01.640 --> 00:20:09.560] There's a tiny C company right now that is serving, was serving one vertical of car dealerships.
[00:20:09.560 --> 00:20:19.320] And then rental car companies came about and they have been looking at both of them now because they kept their head on a swivel and because they kept their ears open.
[00:20:19.320 --> 00:20:21.000] And there's a balance here.
[00:20:21.000 --> 00:20:25.320] You can go too far and listen to everybody and be like, well, we're going to have 20 ICPs.
[00:20:25.320 --> 00:20:34.600] Or you can go too narrow and not listen and say, well, we're only going to have one and keep our head down and not make any possibility that that's going to happen, not be open to it.
[00:20:34.600 --> 00:20:36.680] Neither of those is probably correct.
[00:20:36.680 --> 00:20:42.440] The hardest part, one of the hardest parts of being a founder is making hard decisions with incomplete information.
[00:20:42.440 --> 00:20:46.440] And all the information is incomplete, especially in the early days.
[00:20:46.440 --> 00:20:53.560] Until you're, you know, what at some number, 5 million, 10 million, 100 million in annual recurring revenue, everything's incomplete.
[00:20:53.560 --> 00:20:57.640] Even at those points, it's still not super complete, but at least you have a more mature business.
[00:20:57.640 --> 00:21:02.200] So in these early days, that's how I'd be thinking about it: I niche down.
[00:21:02.200 --> 00:21:05.400] My H1, it says I'm for this type of contractor.
[00:21:05.400 --> 00:21:11.240] My sales conversations, my landing page, whatever I'm doing is focused on a particular niche.
[00:21:11.240 --> 00:21:16.240] If you think about the early days of DRIP, I picked a couple of ICPs.
[00:21:14.600 --> 00:21:18.800] One was SaaS founders because I had that reach.
[00:21:19.440 --> 00:21:24.000] And another quickly became information product and course creators.
[00:21:24.000 --> 00:21:26.560] These days we call makers or the creator economy or whatever.
[00:21:26.560 --> 00:21:30.160] That term didn't exist back in 2012 when we started building it.
[00:21:30.160 --> 00:21:37.920] But it quickly became apparent I didn't have a ton of reach into that second category, but really quickly realized it was a valuable market.
[00:21:37.920 --> 00:21:42.080] Bloggers came along as well because bloggers and those course creators, there's a lot of overlap.
[00:21:42.080 --> 00:21:45.920] And not necessarily it's not a one-for-one Venn diagram, but there's a lot of overlap.
[00:21:45.920 --> 00:21:50.960] So I allowed, I guess, our number of ICPs to expand as I felt the demand.
[00:21:50.960 --> 00:21:54.320] I felt the market pull from these different verticals.
[00:21:54.320 --> 00:21:59.520] And while I didn't have expertise really as a course creator, I had, well, I had a little bit, right?
[00:21:59.520 --> 00:22:06.320] Because I sold MicroPrender Academy, which was a membership site and I'd sold books and stuff, but it isn't how I identified for sure.
[00:22:06.320 --> 00:22:13.520] And yet, we could listen to them and listen to their feature requests and have solid conversations with them.
[00:22:13.520 --> 00:22:18.800] Even though I knew SAS so much more, it was still, I think, the right decision.
[00:22:18.800 --> 00:22:26.560] I think it really helped accelerate our growth to be open to adding, you know, and expanding even early on our focus.
[00:22:26.880 --> 00:22:28.640] So thanks for that question, Kenny.
[00:22:28.640 --> 00:22:30.000] Hope it was helpful.
[00:22:30.000 --> 00:22:35.840] My next question is from Mike about starting a business like Sidekick.
[00:22:40.320 --> 00:22:41.440] Hi, Rob.
[00:22:41.440 --> 00:22:42.640] My name is Mike.
[00:22:42.880 --> 00:22:47.600] I was listening to your interview with Mike Burham, the creator of Sidekick.
[00:22:47.600 --> 00:22:51.760] I've been thinking of starting a similar business to Sidekick.
[00:22:51.760 --> 00:22:58.600] I have a background in technology, been software, doing software engineering for a long time, seen lots and lots of issues.
[00:22:58.600 --> 00:23:11.160] Seeing a problem that I'd like to tackle, let's assume that I validated the problem with customer development conversations, Reddit, various tech communities, Slack, Discord, et cetera.
[00:23:11.160 --> 00:23:15.000] I'm wondering, how would you approach starting a business like this?
[00:23:15.000 --> 00:23:18.280] What would you focus on in the first six to 12 months?
[00:23:18.280 --> 00:23:30.040] For example, I don't have an audience similar to how Mike was present in the Ruby on Rails space conferences, blog posts, et cetera, for quite a while before he launched Sidekick.
[00:23:30.040 --> 00:23:34.360] Something I don't have, and I know you preach against building an audience.
[00:23:34.360 --> 00:23:40.600] This feels like it's something that might require an audience, given that the core component is open source.
[00:23:40.600 --> 00:23:43.640] But just wondering, how would you go about starting this?
[00:23:43.640 --> 00:23:45.080] What would you focus on?
[00:23:45.080 --> 00:23:50.120] And how would you think about charging money and when to start charging money?
[00:23:50.120 --> 00:23:51.160] Thank you.
[00:23:51.160 --> 00:24:01.080] So I want to start by saying trying to start a business like Sidekick is a little, it's not exactly the same, but it's a little like saying, I really want to go out and win the lottery today.
[00:24:01.400 --> 00:24:03.320] There is a lot of luck involved.
[00:24:03.320 --> 00:24:12.280] And it's not to take anything away from Mike Perham, but on the episode, do you remember how many open source projects he launched that just didn't get traction?
[00:24:12.280 --> 00:24:24.600] The reason Sidekick works as a business is because he has this enormously successful, broadly adopted open source project.
[00:24:24.600 --> 00:24:30.840] And if you had that today, you could turn it into a business.
[00:24:30.840 --> 00:24:33.480] And so, the question then is, how do you get that?
[00:24:33.480 --> 00:24:34.680] Now, I've never done that.
[00:24:34.680 --> 00:24:37.400] I have talked to people and watched people who have done it.
[00:24:37.400 --> 00:24:39.880] And usually there's it's unfortunate.
[00:24:39.880 --> 00:24:41.720] Usually, there's a ton of luck involved.
[00:24:41.960 --> 00:24:45.120] It's shocking that I do think it's a repetition.
[00:24:44.760 --> 00:24:48.000] It's like you got to get a bunch of shots on goal to do it.
[00:24:48.240 --> 00:24:52.960] Now, with that said, what I'm not saying is build 100 open source projects in 100 days and launch them.
[00:24:52.960 --> 00:25:00.160] I do think there is some logic to this of research and thinking about where the other open source projects are failing.
[00:25:00.160 --> 00:25:04.880] You know, this would be hard because there obviously are a ton already out there.
[00:25:04.880 --> 00:25:06.880] And how do you find the gap in the market?
[00:25:06.880 --> 00:25:10.480] I guess this is as hard as finding any idea, any type of business idea.
[00:25:10.480 --> 00:25:13.760] But you said there's a problem and you assume it's validated.
[00:25:13.760 --> 00:25:14.960] What would your first steps be?
[00:25:14.960 --> 00:25:20.640] My first steps would be: I want to launch an open source project that is going to get traction.
[00:25:20.640 --> 00:25:27.280] And so, I would look at every open source project that I know of that I've seen get traction, and I would study how they did it.
[00:25:27.280 --> 00:25:29.600] So, I'd listen to all the other interviews with Mike.
[00:25:29.600 --> 00:25:33.360] I would listen to, I don't know, early interviews with Matt Mullenweg if he did them.
[00:25:33.360 --> 00:25:36.080] Just pick an open source project that is wildly successful.
[00:25:36.080 --> 00:25:40.640] Adam Wathens, Tailwind, CSS, just any, there's a ton of them out there, right?
[00:25:40.640 --> 00:25:43.040] How did they get traction in the early days?
[00:25:43.040 --> 00:25:46.640] There was probably some belief in the developer.
[00:25:46.640 --> 00:25:50.880] Did most of these developers have some kind of audience before they launched it?
[00:25:50.880 --> 00:25:52.240] I'm guessing they did.
[00:25:52.240 --> 00:25:55.920] So, in that case, you probably want to go against my advice.
[00:25:55.920 --> 00:25:58.240] So, my advice is not that you shouldn't build an audience.
[00:25:58.240 --> 00:25:59.920] I get misquoted on this a lot.
[00:25:59.920 --> 00:26:13.520] My advice is: all things being equal, dollar for dollar, hour for hour, building an audience is not anywhere near the best marketing approach that you can use to build a SaaS.
[00:26:13.520 --> 00:26:20.560] I have seen so many people with large audiences, fail miserably at SaaS and plateau and build that no one wants.
[00:26:20.560 --> 00:26:22.240] There's a curse of an audience that goes with it.
[00:26:22.240 --> 00:26:25.760] I've talked about this stuff a bunch, but the idea: I'm not saying an audience is worth nothing.
[00:26:25.760 --> 00:26:41.800] I have an audience, it's very valuable, but the amount of time that I have spent since 2005, 20 years, my first blog post was in late 2005, and I blog hard, hundreds of hours a year for six years.
[00:26:41.880 --> 00:26:44.520] Then I've written five books, that's all audience.
[00:26:44.520 --> 00:26:53.000] Then the YouTube channel, 515 YouTube videos, 778 episodes of this podcast, plus the Zen Founder, you know, on and MicroConf, on and on and on.
[00:26:53.000 --> 00:26:53.320] Great.
[00:26:53.320 --> 00:26:54.360] So now I have an audience.
[00:26:54.360 --> 00:27:00.280] I'm not saying it's not valuable, but there are shorter routes to marketing your SaaS product.
[00:27:00.280 --> 00:27:07.320] So that's really what I'm saying: the amount of time invested, you'd be better off getting better at other things.
[00:27:07.320 --> 00:27:09.320] But when I say that, I'm saying for SaaS.
[00:27:09.320 --> 00:27:13.080] So if you were doing info products for courses, I'd say build a audience.
[00:27:13.080 --> 00:27:14.040] Absolutely.
[00:27:14.040 --> 00:27:16.280] That's a reason that why am I building an audience?
[00:27:16.280 --> 00:27:17.080] Why do I have an audience?
[00:27:17.160 --> 00:27:20.520] Because we sell SaaS info products, event tickets, we're in accelerator.
[00:27:20.520 --> 00:27:21.720] We're not SaaS.
[00:27:21.720 --> 00:27:24.520] Similarly, open source projects.
[00:27:24.520 --> 00:27:42.920] If in fact, most of the folks who today have amazingly successful open source projects, if they had some type of audience or respect or they were book authors in their particular technology or whatever it is, if that's what they did, then I would try to copy their approach if that's the one that works the most.
[00:27:42.920 --> 00:27:44.040] I'm not an expert on it.
[00:27:44.040 --> 00:27:45.800] And so that's where I have a tough time giving advice.
[00:27:45.800 --> 00:27:47.240] If you ask me, how do you start a SaaS?
[00:27:47.240 --> 00:27:51.160] I can tell you, I consider myself quite knowledgeable on that front.
[00:27:51.160 --> 00:27:53.800] But starting an open source project, I don't know.
[00:27:53.800 --> 00:27:54.600] How do you do that?
[00:27:54.600 --> 00:27:58.600] You know, I would then go and certainly research that.
[00:27:58.600 --> 00:28:02.360] From there, let's just say you had a wildly successful open source project.
[00:28:02.360 --> 00:28:03.480] When do you start charging?
[00:28:03.480 --> 00:28:06.920] Well, I mean, I would start charging as soon as I could, right?
[00:28:06.920 --> 00:28:09.800] You have add-ons, you have paid add-ons, you have paid support.
[00:28:09.800 --> 00:28:15.920] The moment that big companies come knocking at your door and they start saying, hey, where's the enterprise support plan?
[00:28:16.240 --> 00:28:21.280] It's been a while since I talked with Mike about Sidekick, but frankly, he's criminally underpriced.
[00:28:21.280 --> 00:28:23.680] You know, he's leaving a lot of money on the table and he knows that.
[00:28:23.680 --> 00:28:30.160] I believe I pointed that out in the interview: that it could be a much more lucrative business.
[00:28:30.160 --> 00:28:38.880] It could be a larger business, and he gets to make that choice of keeping it to a single developer with no employees and to keep his pricing simple.
[00:28:38.880 --> 00:28:41.040] And that's the choice he makes.
[00:28:41.040 --> 00:28:43.200] I would make different choices, but that's okay.
[00:28:43.200 --> 00:28:44.400] We're bootstrappers.
[00:28:44.400 --> 00:28:46.320] We don't have to agree on this stuff, right?
[00:28:46.320 --> 00:28:49.520] He can run his business in the way that he wants.
[00:28:49.520 --> 00:28:54.640] But I would say to Mike, the question asker: be careful.
[00:28:54.640 --> 00:28:56.400] We all want to start a business like Sidekick.
[00:28:56.880 --> 00:29:03.520] I want to run a, I forget what his revenue is: $3 million, $4,5 million, single, you know, no employees or whatever, single founder.
[00:29:03.520 --> 00:29:08.960] I want a business like that too, but I am under no illusion that I could just go do that.
[00:29:08.960 --> 00:29:10.960] Like, that's not just going to happen.
[00:29:10.960 --> 00:29:14.480] It's going to be a tremendous amount, not just of work.
[00:29:14.800 --> 00:29:17.680] It's going to be a ton of hard work, which usually I'm fine to put in.
[00:29:17.680 --> 00:29:19.760] Obviously, you need some skills.
[00:29:19.760 --> 00:29:22.800] I think there's going to be quite a bit of luck involved with it.
[00:29:22.800 --> 00:29:27.200] And unless you do have that audience, audience could offset that.
[00:29:27.200 --> 00:29:28.800] If you have more audience, you need less luck.
[00:29:28.800 --> 00:29:30.640] Yeah, that's the part I'm not sure about.
[00:29:31.200 --> 00:29:42.880] So I would just caution you on thinking, you know, it's cool to have that goal, but I think it's going to be quite the uphill battle to try to build a business like Sidekick because there just aren't that many.
[00:29:42.880 --> 00:29:44.080] So thanks for that question, Mike.
[00:29:44.160 --> 00:29:45.360] Hope it was helpful.
[00:29:45.360 --> 00:29:49.040] And my last question of the day comes from Anonymous.
[00:29:53.520 --> 00:29:59.040] Hey, Rob, wanted to start by thanking you for all the amazing stuff you've been doing in the bootstrap community.
[00:29:59.040 --> 00:30:04.200] I'm new to this community, but this idea of a bootstrap startup really resonates with me.
[00:30:04.520 --> 00:30:10.120] And I've been loving all the content that I've been reading and listening to on your podcast.
[00:30:10.120 --> 00:30:20.760] So I read on your stereotypic blog posts, but have also heard you say in some more recent podcast episodes that you can potentially skip steps depending on your life circumstances.
[00:30:21.000 --> 00:30:23.640] So this question is about that.
[00:30:23.640 --> 00:30:25.400] So a little bit more about me.
[00:30:25.400 --> 00:30:28.920] I've been working at a fan equivalent for a few years now.
[00:30:28.920 --> 00:30:33.480] So nowhere near financially independent, but I do have a decent safety net.
[00:30:33.800 --> 00:30:38.120] In addition, I do really actually really like my job at the product I'm working on.
[00:30:38.120 --> 00:30:50.360] So I'm not in a rush to escape anything, but I do have that itch, that desire, that sickness, as you've sometimes jokingly referred to it, of entrepreneurship and wanted to build something on my own.
[00:30:50.360 --> 00:30:56.440] So I'm curious how you would think about skipping steps in this stereo step model, if you would do that.
[00:30:56.680 --> 00:31:02.040] So I guess the first question is, how would you skip some of those first steps?
[00:31:02.040 --> 00:31:05.720] Would you go straight to building a SaaS on the side as you worked your full-time job?
[00:31:05.720 --> 00:31:10.040] Would you start by acquiring something small and less established?
[00:31:10.360 --> 00:31:16.120] Maybe like $10,000, $15,000, $20,000 kind of range, just to learn that sales and marketing side of things?
[00:31:16.120 --> 00:31:18.040] Or, you know, would you do something else?
[00:31:18.040 --> 00:31:24.440] And then the second part of the question is, what would you think next steps would be if you were acquiring something small?
[00:31:24.440 --> 00:31:25.640] Like, where would you look?
[00:31:25.640 --> 00:31:27.800] What kind of businesses would you be looking for?
[00:31:27.800 --> 00:31:28.920] Things like that.
[00:31:29.080 --> 00:31:29.880] Thanks so much.
[00:31:29.880 --> 00:31:32.120] Look forward to hearing your answer.
[00:31:32.120 --> 00:31:33.800] Thanks for that, Anonymous.
[00:31:33.800 --> 00:31:34.680] It's interesting.
[00:31:34.680 --> 00:31:41.080] Yeah, whenever I have a framework, there's always that question of when, when should I not do it?
[00:31:41.080 --> 00:31:44.920] Because certainly these frameworks, they don't apply to exactly 100% of everyone all the time.
[00:31:45.440 --> 00:31:46.720] There are exceptions.
[00:31:46.720 --> 00:31:49.760] But I do find that there are fewer exceptions than a lot of people think.
[00:31:49.760 --> 00:31:58.080] And most of us, I see this a lot with tiny C companies where I'll come out with like, hey, in general, you want to do this certain thing or you should think about your pricing this way.
[00:31:58.080 --> 00:32:01.760] And some founders perpetually think, well, I'm a snowflake.
[00:32:01.760 --> 00:32:09.040] Like my business is so unique, you know, that I should skip this or I should not do the yours are grinding or mine's not going to take hard work.
[00:32:09.040 --> 00:32:10.560] It's just going to be luck and skill or whatever.
[00:32:10.560 --> 00:32:11.440] And folks have that.
[00:32:11.440 --> 00:32:15.600] And I'm not saying that's necessarily the case here, but I do want to caution you against that.
[00:32:15.600 --> 00:32:18.880] There's a reason that I say the things I do.
[00:32:18.880 --> 00:32:21.280] It's not just whimsical.
[00:32:21.280 --> 00:32:23.840] It's not just because I want to sound smart.
[00:32:23.840 --> 00:32:30.880] It's because I have seen patterns develop across thousands, tens of thousands of entrepreneurs.
[00:32:30.880 --> 00:32:41.040] And so when I think about the stair-step approach, like do I literally mean that you have to start something in a walled garden, in an ecosystem, and then build up and then buy out your time and then do a SAS?
[00:32:41.040 --> 00:32:42.160] Well, of course not.
[00:32:42.480 --> 00:32:44.160] There are other paths to it.
[00:32:44.160 --> 00:32:56.960] But the stair-step approach allows you to build your skills, to gain experience, to get confidence in your abilities, to buy your own time, to have some money coming in.
[00:32:56.960 --> 00:33:06.960] It's just everything, everything just builds and snowballs versus you certainly don't learn launching 20 things and seeing what sticks.
[00:33:06.960 --> 00:33:10.480] You learn that luck is the way to go or something.
[00:33:10.480 --> 00:33:13.040] I mean, I've railed on this for a long time.
[00:33:13.040 --> 00:33:14.400] So that approach I don't like.
[00:33:14.400 --> 00:33:18.000] The one of just jumping directly to building a SaaS is not the worst.
[00:33:18.000 --> 00:33:26.560] Like that, I could see some people doing that, but what I see over and over on social media or people writing into this podcast is, man, this is so complicated.
[00:33:26.560 --> 00:33:27.680] Man, this is really hard.
[00:33:27.680 --> 00:33:28.800] Now I built it.
[00:33:28.800 --> 00:33:29.440] Now what?
[00:33:29.440 --> 00:33:31.720] This is way more moving parts than I thought.
[00:33:31.720 --> 00:33:33.720] And it's like, yeah, that's why the stair step exists.
[00:33:33.720 --> 00:33:44.120] You know, that's why the real purpose of the stair step approach is to get you the confidence, experience, skills, time, and money to be able to do that next thing that's a little harder.
[00:33:44.120 --> 00:33:47.160] So you're not trying to eat an entire watermelon at once.
[00:33:47.160 --> 00:33:48.440] You're trying to eat it in small pieces.
[00:33:48.440 --> 00:33:50.120] You're not trying to boil the ocean.
[00:33:50.120 --> 00:33:58.200] You are trying to look for yet another analogy about how doing things that are too big or too complicated right from the start can be challenging.
[00:33:58.600 --> 00:34:02.360] Does it mean that you won't succeed if you don't do the stair step?
[00:34:02.360 --> 00:34:03.160] Well, of course not.
[00:34:03.160 --> 00:34:03.800] It doesn't.
[00:34:04.040 --> 00:34:09.000] You can get lucky, and some founders have more confidence, experience, skills, time, and money than others.
[00:34:09.000 --> 00:34:11.240] And so maybe you can skip some steps.
[00:34:11.240 --> 00:34:12.760] But that's how I think about it.
[00:34:12.760 --> 00:34:18.120] It's not just about, you know, let's say you had half a million dollars in the bank and you own all your own time.
[00:34:18.120 --> 00:34:20.680] Therefore, you can just burn it down and you have a little bit of money.
[00:34:20.680 --> 00:34:22.920] Should you still skip the early stages?
[00:34:22.920 --> 00:34:31.720] I mean, do you have the confidence, the experience, and the skills to build, launch, market, support, grow, manage engineers, do all these things to a SaaS?
[00:34:31.720 --> 00:34:33.320] If you've never done it, probably not.
[00:34:33.320 --> 00:34:35.240] Like, it's really complicated.
[00:34:35.240 --> 00:34:38.120] I don't know how else to say how complicated and how hard it's going to be.
[00:34:38.120 --> 00:34:39.800] If you've never done it, you just don't know.
[00:34:39.800 --> 00:34:45.320] And I'm not saying that to toot my own horn or the horn of SaaS founders around the world.
[00:34:45.320 --> 00:34:50.520] It is just one of the more complicated businesses you can build on the internet.
[00:34:50.520 --> 00:34:56.040] Because building a content website or an email newsletter, there's hard work that goes into that.
[00:34:56.040 --> 00:34:59.080] But you grind, you get better, you can just do it.
[00:34:59.080 --> 00:35:00.440] E-commerce, it's not as complex.
[00:35:00.440 --> 00:35:03.720] No, e-commerce is a pain in the ass with products and physical things and maybe manufacturing.
[00:35:03.720 --> 00:35:05.160] Yeah, there's things.
[00:35:05.160 --> 00:35:15.520] But ask anybody who has tried to start a SaaS, even when they have multiple successful businesses under their belt, if they haven't done SaaS before, it completely knocks them on their ass in general.
[00:35:15.520 --> 00:35:17.760] That's what happens, and most people underestimate how hard it is.
[00:35:14.680 --> 00:35:20.160] And that is the point of the stair-step method.
[00:35:20.480 --> 00:35:22.160] So, should you skip?
[00:35:22.160 --> 00:35:24.000] I don't know, probably up to you.
[00:35:24.000 --> 00:35:26.720] Do I think people should acquire more businesses than they build?
[00:35:26.720 --> 00:35:27.360] I do.
[00:35:27.360 --> 00:35:31.520] And in fact, several of my early successes were actually acquisitions.
[00:35:31.520 --> 00:35:35.760] And for years, I preached this to anyone who would listen.
[00:35:35.760 --> 00:35:37.920] And no one wanted to listen.
[00:35:38.080 --> 00:35:40.160] It became this thing of like, well, I don't want to buy.
[00:35:40.160 --> 00:35:41.440] Well, what if the code quality is low?
[00:35:41.440 --> 00:35:42.480] Well, how do I know what's good?
[00:35:42.480 --> 00:35:43.840] Well, how am I taking a gamble?
[00:35:43.840 --> 00:35:44.880] I just want to build my own thing.
[00:35:44.880 --> 00:35:45.440] I really want to.
[00:35:45.440 --> 00:35:47.520] And fine, I heard that enough.
[00:35:47.520 --> 00:35:48.560] I listened to the market.
[00:35:48.560 --> 00:35:50.560] I pivoted my approach.
[00:35:50.560 --> 00:35:52.640] I pivoted my message from these early days.
[00:35:52.640 --> 00:35:54.160] But I love acquisitions.
[00:35:54.320 --> 00:35:55.840] You can find, I mean, think about it.
[00:35:55.920 --> 00:35:57.600] I made a million dollars from Hittail.
[00:35:57.600 --> 00:35:59.920] I spent $31,000 on that thing.
[00:35:59.920 --> 00:36:05.520] And all the revenue plus the exit sale price was a million dollars.
[00:36:05.520 --> 00:36:07.360] It completely changed our life.
[00:36:07.360 --> 00:36:07.840] That was it.
[00:36:07.840 --> 00:36:11.360] It had like a 90% net profit margin too, because it was just me with a couple contractors.
[00:36:11.360 --> 00:36:12.400] I bought that.
[00:36:12.400 --> 00:36:14.320] I couldn't have gotten there that quickly.
[00:36:14.320 --> 00:36:21.280] It would have taken me years longer to build it and find product market fit and do it, but I was able to acquire it.NET Invoice, I acquired that.
[00:36:21.280 --> 00:36:22.560] And that changed my life.
[00:36:22.560 --> 00:36:28.080] Not in the way of, oh, it made us wealthy, but it showed me that I could really do this and that I had the skills.
[00:36:28.080 --> 00:36:28.880] And I learned a ton.
[00:36:28.880 --> 00:36:30.240] Talk about stair-stepping.
[00:36:30.240 --> 00:36:37.280] It really, it wasn't part of an ecosystem because there weren't these app stores back then, but it kind of just had SEO and then as the marketing channel.
[00:36:37.280 --> 00:36:40.800] And that's what I talk about with stair-stepping: you pick that one thing and it's kind of got one marketing channel.
[00:36:40.800 --> 00:36:42.640] So you're not trying to learn all marketing.
[00:36:42.640 --> 00:36:49.440] You're just trying to learn support and product and shipping and maybe sales if you need.
[00:36:49.440 --> 00:36:52.400] You know, you're learning these other things along the way, and you're kind of scaffolded with it.
[00:36:52.400 --> 00:36:59.360] So .NET Invoice was great because it made three to, I guess at a peak, it made five grand one month, but it was one-time sales, it wasn't subscription.
[00:36:59.360 --> 00:37:05.480] So, in a lot of months, between two and $4,000, and that made our house payment plus our, we didn't have car payments, but you get the idea.
[00:37:05.480 --> 00:37:10.920] It was just a lot of extra money for us because I was working full-time at the time, Sherry was still in grad school.
[00:37:10.920 --> 00:37:13.240] And so, I like acquisitions.
[00:37:13.240 --> 00:37:20.280] And I think if you could, yeah, jump to that point of acquiring a full-blown SaaS and you have the money to do it, cool.
[00:37:20.280 --> 00:37:25.320] The challenge with what you said anonymous in the voicemail is like buying something for 20 or 30K.
[00:37:25.320 --> 00:37:29.320] Most of the time, those things are so early stage, there's not much there.
[00:37:29.320 --> 00:37:35.240] And so, the fact that I bought Hito for 30K, it was doing two or three, doing two grand a month, maybe?
[00:37:35.240 --> 00:37:36.440] I don't even remember.
[00:37:36.440 --> 00:37:39.320] Somewhere in that range, it was pretty early.
[00:37:39.320 --> 00:37:48.760] These days, if you buy something for 30 grand, I just don't know if there's going to be enough there to teach you anything, or if it's still this super pre-product market fit thing that's done.
[00:37:48.920 --> 00:37:51.480] We did a lifetime deal with a Rapsumo, and now we're selling it for 30.
[00:37:51.640 --> 00:37:53.800] It's like, do you even, do you have anything there?
[00:37:53.800 --> 00:38:10.520] Like, that's the big thing I'd be thinking about: is there enough here that A, I can learn from it, but B, I have actually improved my chance of success because the acquisitions that I've done and that I've seen work are the ones where it does have you in that product market fit range.
[00:38:10.520 --> 00:38:15.960] Because finding product market fit, if I'm going to build SaaS from scratch these days, it's like what, 12 months, 18 months, 24 months is a long time.
[00:38:15.960 --> 00:38:21.320] And if I can jump ahead to that, well, I've saved myself a ton of heartache and headache.
[00:38:21.320 --> 00:38:25.080] That's really the way, probably the only way I'd be thinking about it.
[00:38:25.080 --> 00:38:27.320] So, thanks for that question, Anonymous.
[00:38:27.400 --> 00:38:28.920] Hope that was helpful.
[00:38:28.920 --> 00:38:33.560] And thank you for listening to this episode of Startups for the Rest of Us.
[00:38:33.560 --> 00:38:37.000] If you keep listening, I'll keep recording.
[00:38:37.000 --> 00:38:46.720] And be sure to send any questions you have into questions at startupsthrestofus.com, or you can go to the website, click ask a question in the top navigation.
[00:38:44.840 --> 00:38:50.000] It's been amazing having you here today, this week, and every week.
[00:38:50.240 --> 00:38:54.480] This is Rob Walling signing off from episode 778.