February 02, 2024

01:02:18

2024 Calculus

Hosted by

Brian Casel Jordan Gal
2024 Calculus
Bootstrapped Web
2024 Calculus

Feb 02 2024 | 01:02:18

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Show Notes

Homepage experiments.  Marketing is too expensive.  Product-led growth.  VC game.  Bootstrapper game.  Cold outreach.  Over-correcting.  Shingles.  Vienna.  Snowboarding.  

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Episode Transcript

[00:00:17] Speaker A: Welcome back, everybody. Another episode of Bootstrapped Web. Mr. Brian Castle. It's Friday. It's February. February period. [00:00:28] Speaker B: February. Yes. We're rolling right along here. [00:00:30] Speaker A: We are rolling. We're rolling. [00:00:32] Speaker B: So, yeah, good to be back on the air. I'm in between the two big snow, tiny comp trips that I go to every year around this time. Had a great week up in, instead of Vermont this year. We went up to Montreal, we went to Montre Blanc. [00:00:51] Speaker A: How's that? [00:00:52] Speaker B: That was a great time. We had a beautiful on mountain condo. Ski on, ski off. Really great group. Mostly the same faces, a couple of new faces, and, yeah, just a great strategic getaway. Good fun. Although I have had one of the worst weeks in between since then. I got shingles for the first time in my life, which has been rough. [00:01:21] Speaker A: Dude, that sounds like some old man, right? I don't know. [00:01:27] Speaker B: It's so weird because this year I also got into the best shape of my adult life. I'm not 70 years old, and I'm sure I carry some stress in general at all times, especially on the business front. Home has been fantastic this year, but the stress seemed like normal, like nothing out of the norm. So it just came out of nowhere. Maybe it was from the traveling or something, but I got this shingles thing, and I didn't even know what it was for the first few days, and then it just got worse and worse. Saw the doctor and it's definitely shingles on my back. And then it turned into this nerve pain that kind of traveled throughout my whole side of the body and. Yeah. Pro tip, don't get shingles. [00:02:16] Speaker A: Don't get shingles. [00:02:17] Speaker B: It kind of sucks. [00:02:18] Speaker A: Yeah, I think I'll follow that advice. I will need to do some research on how one gets shingles so that I can follow the advice properly. [00:02:26] Speaker B: Yeah, it has to do with the. If you've had the chickenpox or the vaccine when you were a kid, I guess it's in your system and it could reactivate at any time, which it did for me. And it's weird because it's like I'm not really sick. Like, I was still even able to snowboard through it and stuff like that. And then I've been still working, although I took it on the really bad days. I took a day off and watched a movie with my kids and stuff. [00:02:52] Speaker A: But just pain. [00:02:54] Speaker B: It's just pain. And some days, the worst days, which I think are behind me now, we're pretty unbearable. Not fun at all. And I kind of have, like a high threshold for pain. But when I'm complaining about pain, you know, it's really bad, bro. [00:03:17] Speaker A: Is this another argument for wearing gloves while you change diapers? [00:03:23] Speaker B: Maybe. Aaron, that was good. [00:03:24] Speaker A: Onto something. [00:03:26] Speaker B: Yeah, right. [00:03:27] Speaker A: Well, I'm sorry to hear that. I hope you get better. [00:03:31] Speaker B: I think I'm coming down, and it's getting better. I was actually 50 50 on whether or not I'm even going to go to the next trip on Colorado, but I think I'm feeling good today and yesterday. [00:03:42] Speaker A: Cool. Is that next week? [00:03:44] Speaker B: I'm going in two days. I'm going on. Okay. It's this weekend. [00:03:48] Speaker A: Well, I was doing the opposite. I was not in pain. I was gallivanting around Europe last weekend. My dad's 70th was recently. We asked him, dad, what do you want to do? Let's go big. He said, I want to go to Vienna. And we were like, all right, I guess let's go to Austria for a weekend and just had a ball, man. So much fun. So it was my two brothers, myself, so three boys, and my dad. So it's basically like a guy's trip. No pressure, no guilt, very little planning. [00:04:24] Speaker B: What does a trip like this look like? What's the itinerary here? [00:04:28] Speaker A: The itinerary is to make fun of each other mercilessly at every opportunity. [00:04:32] Speaker B: Yeah, you get a nice hotel. [00:04:35] Speaker A: Yeah, we got a nice hotel, and we basically had one cultural to do every day. So one day it's Shonebrune palace, and then we're done the other day. [00:04:48] Speaker B: Go get some steaks. [00:04:49] Speaker A: Yes. A lot of schnitzel. I'm a schnitzel fan. We explored the schnitzel landscape, for sure. And cakes. My dad's into cakes. So it was basically like, get some breakfast, take a walk, get some lunch, do a cultural event, get some cake, go back to the hotel, get some coffee, and laugh and tell stories, and then go to dinner and get more cake and go to bed and just do that for, like, four days in a row. [00:05:16] Speaker B: That doesn't sound too different from my family vacations with my kids. We do, like, one thing in the morning, and that's, like, all the energy we have, and then we think about, like, all right, let's do lunch, let's do dinner. The rest of the time, we'll hang out. [00:05:28] Speaker A: Oh, that's good for you. Good for you. My wife is much more ambitious with her energy and the energy of others. She doesn't like to sit around. She wants to go do stuff, which. [00:05:39] Speaker B: I respect because our idea helps me going and doing stuff is like finding things to go eat. Yes. [00:05:47] Speaker A: So it was great. What a beautiful city. It was almost like the best version of Europe. Right? Quiet. [00:05:55] Speaker B: Sounds amazing. I haven't been there. [00:05:59] Speaker A: So clean. It was weird. Like, the buildings look like they've never been dirty. They must wash them every few months. [00:06:05] Speaker B: It's one of those super modern european cities. [00:06:08] Speaker A: No, it is preserved in time. [00:06:11] Speaker B: Yeah. Historic. Yes. [00:06:13] Speaker A: So it is a modern city, and everyone just, like, classy, dressed up nicely. We kind of had fun. We went and had drinks at the Imperial Hotel. If I may tell a very quick story. The reason we went to the Imperial Hotel is because sometime over the last few years, I saw a story about Simon Wiesenthal, right, the famous jewish nazi hunter Simon Weizenthal, who has, like, museums named after him. So for Simon Weizenthal's nintieth birthday, his friends asked him what he wanted to do, and he said, I want to go have my birthday party at the Imperial Hotel. So I was like, all right, let's go do that. The reason he wanted to go to the Imperial Hotel in Vienna is because that was Hitler's favorite hotel. And Hitler made plans to basically run the war from the Imperial Hotel. So he got permanent suites. Him and Himmler, they got permanent suites there. And we're planning to run the war from there. Didn't work out that way. So Weizenthal wanted to basically go there and celebrate and basically be able to, you know, even in the imperial Hotel, the Jews can sing and dance, even if Hitler is no more. So it's kind of this triumphant thing. So I took my brothers, my dad there, didn't tell them anything about that story, and got there, sat down, dressed all nice, ordered some fancy cocktails, and then we got to clink glasses to. [00:07:40] Speaker B: That, which was beautiful. That's great, dude. So it was beautiful. Yeah. Sounds like fun. [00:07:45] Speaker A: Ton of history, great food, and. [00:07:49] Speaker B: Yeah. [00:07:49] Speaker A: Came back nice and energized and, yeah, let's get into stuff. I got some interesting things to talk about. I don't know what you got going. Yeah, me too. [00:07:59] Speaker B: The fun thing about big snow, tiny comp, and this seems to happen every single year. We've been doing it over ten years now, which is incredible. I always go into it thinking, like, I've got it all figured out for the upcoming year. Like, my plans, strategies. You're not going to change my mind on whatever it is. [00:08:18] Speaker A: Well, that was January. It's February now, so we got to move on. [00:08:21] Speaker B: And I go into big snow with, like, here's the recap here's my strategy going forward. And I end up coming out of big snow thinking like, all right, that has changed. [00:08:33] Speaker A: So the big snow, those events, they usually have an impact on you. [00:08:37] Speaker B: They do. I think they do. Even when I don't think that they will, they end up having some sort of impact on my. I think there's not a major change, but I have recalibrated some of my plans for at least the immediate future. So that's been interesting. [00:08:53] Speaker A: Okay. I too have recalibrated my plans. So let's get into what changes we're making. Let me know if you want me to start them. [00:09:03] Speaker B: Yeah, kick it off. [00:09:03] Speaker A: Okay, cool. So anyone listening, if you're not washing dishes or driving in the car, next time you get a chance to get on the web and go to rallyon.com, what you will see there is a very different looking website than yesterday. We just launched this morning. So what you'll see when you go to the site and what we are showing the world right now, small sliver of the world that visits our website, is that we are not showing the checkout product on our site. We are exclusively showing our new offers product. And. Right, we started talking about this a little bit last week. The offers product works with the merchant's existing checkout and gets added to it. So our post purchase offers and our order bumps and our basically personalized offers get added to an existing site. So the reason the checkout is off the site entirely alongside what you see is actually a full website with a home page that talks about two different products and then solutions pages, one for each version of the product, the checkout version and the offers version. All of that is hidden and all traffic is going to just the offers page because we are trying to accelerate our learning in this experiment. And the way to do that is to basically just get as many people talking to us about the offers product without the checkout product even being a factor. So we know everyone that's signing up, everyone that's asking for a demo, everyone that's reaching out is entirely focused on the offers product. [00:10:43] Speaker B: Yeah, I love it. I'm scrolling through it again now. I just saw it for the first time a few minutes ago. The headline here is like, turn your checkout into a sales machine. And I'm seeing a lot of what I, what I love in general is shots of the product. We see an iPhone showing the checkout, showing these order bumps, post purchase offers. As I was saying earlier, I think that the headlines and the pictures do tell me what it is. It makes a lot of sense. [00:11:15] Speaker A: And you'll see for a company that's been around for a couple of years, it's really thin. And I didn't want to wait to launch the site until it was totally done. I just wanted to launch it now to get as much feedback as possible. [00:11:28] Speaker B: You say it's thin. I know to you it feels like there's not much here, but I think for a fresh viewer, to me it doesn't look all that different from a typical clean, modern SaaS product website. Yeah. [00:11:43] Speaker A: The opposite side of thin is clear. It's dead clear. It's like this is what we do. Are you interested? Click here. So next up will be a price. [00:11:52] Speaker B: The thing that I'm seeing. Yeah, I was just going to say the get started call to action, it just leads to a lead form to request a demo. [00:12:00] Speaker A: Yes. [00:12:00] Speaker B: There's no pricing info. [00:12:02] Speaker A: No. We need to add the pricing page. And even though we'll have a pricing page, we will not be giving pricing information. And the page that I want to add next is a little bit more. So what you're seeing is the product as seen by the shopper. I now want to show the product for the merchant, the back end, how it works, how you build an offer, what the recommendation engine looks like. So that's like the next page. And then as soon as that's done, we need a middle of the funnel entry point. Right. Here's this case study and give us your email. Just so it's something in between visiting and requesting a demo that there's an intermediary step and what we're doing. [00:12:47] Speaker B: I have a question about the pricing and the demo. Sure. So with the new strategy of selling this offers product, is it still all about driving demos or is there going to be some shift in terms of there are going to be some sort of self serve customers that you then farm leads from, if they're larger, to go to a demo. [00:13:13] Speaker A: So this product for the first time offers us the ability to go self serve. [00:13:19] Speaker B: Right. [00:13:19] Speaker A: It's not nearly as complicated as the checkout, which is a disaster in being self serve. I don't have any plans to go self serve anytime soon. I'll talk more about this over the next few weeks as I learn more. But let me just allude a little bit to the packaging strategy I think would be the right way to put it. I'm trying to set up a scenario where we lower the bar to working with us as close to the floor as possible. Maybe that's not accurate. Because, well, for our customer segment, right? And what that means for us is a small, targeted, get enough skin in the game to get this thing off the ground. In our world, that is not $50 a month, that's something in the thousands of dollars. But three, four, 5000, something under $10,000 is one of those decisions that our customer segment doesn't need approval for. So if we're talking to the marketing department, they can just say, cool, here's the credit card. Right? So we're trying to keep the decision process in that realm of no approval required. And my real goal in that is to have a straightforward, high velocity sales process that then is able to pay for our marketing expense. Just play this out with me for a seC. Let's just say, for example, five people sign up in a given month for what is effectively like a proof of concept, right? Let's just call it $5,000. So $5,000 is the type of decision our customer segment does not really need approval for. They can just decide, okay, that upside is big enough and the downside is so limited. And you're telling us it's only a few days of work here and there, and you'll help us build the first offer sets that's digestible to that customer segment. If five sign up in a given month at $5,000 apiece, that $25,000, I want that to pay for our acquisition, for our customer acquisition. So ideally, it becomes a scenario where we don't know if all five of those are going to become great customers, but if two or three of those become good customers, and a good customer being like a larger annual contract in the 1020, 30, 40, $50,000 range, if we don't know how many of those are going to become a good customer, as long as the new customers are paying for our customer acquisition, then we potentially have a bit of an infinite flywheel. So that's the type of scenario that I'm trying to set up where if we have our sdrs, we have our AE, and we have a free trial that's paid, right. It's like a limited trial, but we do need skin in the game. We need them to put up a few thousand bucks. Ideally that can pay for our customer acquisition cost, and then we can just hit the gas on that. So it's a very different model from long sales cycle on the checkout. That leads into a 5100 thousand dollars agreement. It's a different model. [00:16:29] Speaker B: And by not showing any pricing, you're still indicating that the really small merchants are just going to not go through it. The assumption is anyone, even at the $5,000 level will want to get a demo. [00:16:50] Speaker A: Yes. That's how we want it to feel right now. [00:16:55] Speaker B: Right. [00:16:55] Speaker A: We don't want it to get into the realm of like. But this is comparable to a piece of software that I pay $100 a month for. Why wouldn't I just do that? We don't want it to feel comparable to that. That's a bad comparison for us and for the product. [00:17:07] Speaker B: And so this just launched today. [00:17:09] Speaker A: This launched today. [00:17:11] Speaker B: Nice. [00:17:11] Speaker A: So, yeah, the goal is to just get into as many conversations as possible and make this offer. Today was the first time we had a call with someone with this proof of concept in mind, with the site different. So we are officially underway. [00:17:28] Speaker B: Nice, dude. Yeah. [00:17:30] Speaker A: So over the next few weeks, my hope is to get feedback and see if our first stab at the price and how long the proof of concept should be. And if this makes sense, and if a merchant even wants to do that or they want to pay upfront for the year, there's a whole bunch of guessing there. [00:17:48] Speaker B: A lot of unknowns. Yes. [00:17:50] Speaker A: And we're kind of going and saying this is all a guess. It's an educated stab. Let's not drive ourselves crazy on exactly what these things should be because there's no way we have it. All right, so let's just go. [00:18:03] Speaker B: Yeah. [00:18:04] Speaker A: It feels like we're, like going back. [00:18:06] Speaker B: Toward startup, starting again. Yes. [00:18:08] Speaker A: It's kind of interesting. [00:18:09] Speaker B: Yeah, that's the thing. I think that this is maybe one of the absolute hardest things about any startup trajectory is once you're over a year or two into something, which means if you've lasted that long, you do have some customers. [00:18:32] Speaker A: Right. [00:18:33] Speaker B: If it's a complete failure, you would have been done long time before the two year point. But getting to two years in and it hasn't really clicked, and then making a big shift like this, and I've gone through it, obviously with clarity, flow, that is the hardest thing to pull the trigger on and just go do. And even though this is clearly an experiment that you're talking about, you changed the homepage of your business. It's not just like, let's just put something live for five days and see what happens. No, it's an experiment, but it's a long term bet here. [00:19:09] Speaker A: Yeah. Last week it was just a home page, and as we kept talking about it, we were like, we don't because we started to get into the muddied middle and a merchant would come into our sales process. And we would basically say, so we have this checkout product, but we also have this other thing, which one's right for you? And that's just never going to work as well as too many options, what we do. That's right. So we just said, you know what? Let's just take that landing page that we launched and just make that the homepage, and let's just let it run with it so we learn faster. [00:19:38] Speaker B: I think it just takes a level of really stepping back. And this is where things like not just mastermind groups, but I think, like doing trips and talking to advisors and mulling something over for months at a time and starting to connect the dots, where you get to a point where it's like, all right, we have some revenue, we've got some customers, a few people. Early people are excited, but let's rise above all that and be like, what if our whole world changed because there is some friction that I don't want to see in this business right now. What if we just remove that and think about our world completely differently and try that on and see what happens? [00:20:20] Speaker A: If I thought about this when I thought about something like this months ago, I would expect. I don't know if you can hear that insane. [00:20:29] Speaker B: I do. [00:20:30] Speaker A: Okay. I'm having construction done at the house. I'm just going to apologize to everyone. Maybe closing the door will help, but. [00:20:39] Speaker B: Somebody'S like riding a motorcycle outside your place. [00:20:41] Speaker A: There's a lot going on. I honestly don't know. So thinking about it, like, putting myself a few months back, I thought I would have more emotional distress because let's be honest with myself here, I want to pursue changing the ecommerce market through checkout and payments and liberating that part of the stack from platforms that goes back to my shopify experience. It turned into ideology, it turned into a belief system, and all the things that are attached to that in terms of, like, self identity and wanting to do all this other stuff, and I feel almost no emotional connection to it. I'm just like, I just cannot be ideological about it. You're like, this is what the market wants right now. I could be stubborn and have things just not be as good as they can be or just move. [00:21:54] Speaker B: Yeah. I think that at first it's sort of like getting over the fear of making such a big, drastic change in your business when some early things might have been working, but then, I don't know about you, but it sounds like it. But for me, then you reach the next phase, which is like excitement about like, all right, this has the potential to change everything, right? There's first like getting over the fear of like, am I going to fuck something up? Because I had some things working but not everything working, and I'm abandoning that to, okay, let's shift to this new worldview, this new sales model, this new product model. And then it's like, all right, now we're going to execute on that. And now it's like, let's just do our best. And that gets me excited. What's the best version of this new worldview? Right? [00:22:48] Speaker A: Yeah. It is very much the opposite of being emotionally attached to it. I'm actually super motivated and super excited and I'm up late working on ad copy because it does feel like this. It's like a renewal of optimism because we had this breakthrough, all of a sudden we can offer something different. And all of a sudden you start to look at the whole opportunity differently. I'm looking at integration partners differently. I'm looking at product feature roadmap. What makes sense to us is to add in aipowered recommendations instead of the merchant building things on their own. It's like, well, give us your order history and let us run that through some ML and come up with the offers directly ourselves without you intervening. All of a sudden new stuff starts to open up and it gets exciting. [00:23:42] Speaker B: Nice, dude. [00:23:42] Speaker A: So I'll report back on how the first few weeks are going. [00:23:47] Speaker B: It'll be interesting. Yeah. I want to hear more about your next steps in the experiment. What are the sub tiny experiments that you do next? The pricing and the offers. Yeah. [00:23:56] Speaker A: What we got right, what we got wrong. [00:23:58] Speaker B: We'll see good stuff. Before I get into the more big picture stuff, I mean, I'll do a clarity flow update. January was, I think, one of the best growth months that we've seen yet in the business. Feels good, especially coming on the month after we shipped clarity flow commerce. I think that definitely had a big piece of it that drove most of it because a, I think more customers were converting with it in the product than without. And also a big chunk of the MRR growth was lower plans, upgrading, expanding into the higher plan, which gives them access to clarity flow commerce. [00:24:41] Speaker A: That's interesting feedback. [00:24:42] Speaker B: That's been an interesting thing. I think another piece of the growth has been our, we've been doing cold email outreach and that's working somewhat well. We're definitely driving a handful of extra leads and paying customers than we otherwise would have. And it was such a grind and such a huge project to get that built out and the system and all the processes for getting that running the right way. But I think the key to this success with that because I've experimented with cold outreach in multiple businesses before, including zip message before clarity flow and audience ops and all these different ones. And I think the key difference in seeing a higher rate of replies is just the targeting and making sure that you have an offer, have a product that is so directly valuable to a very specific type of person or job title or something, and then really doing a lot of extra work on targeting that list and making sure that every person receiving it is your ideal target customer. That, believe it or not, that's when things like cold email outreach actually can work. I mean, that being said, just like every other marketing experiment that I've spent lots of time and effort and lots of dollars on, even though it's driving more customers, it still doesn't feel like it was actually worth the amount of dollars spent on it because it's just not enough. I have come to the conclusion after the past three years of trying to really accelerate growth on clarity flow that think what you will about this, but I just don't think that you can buy distribution. You have to either have an inroad with a distribution advantage and or have a huge wave of natural market demand that's going to drive really accelerated growth. And if you don't have those things, I think it just comes down to product. You can still win with a really good product. It's just going to take a lot more years of very slow, steady growth, of ramping it up. And that's just the reality that I'm in. I think that's the reality that most SaaS businesses are and they can be frankly deceived into like you have to spend a lot more money and time on marketing when you can't just expect to spend x thousands of dollars and triple your top of funnel unless you have again like a distribution advantage or a wave of demand, in my view, yeah, because even with that we grew and all the growth comes from the product being complete and word of mouth. Like good coaches refer other good coaches to our product and retention and conversion. We get an organic level and even like SEO, all the SEO stuff comes to our home page and a few strategic pages. Not the thousands of dollars I've spent on content marketing. [00:28:00] Speaker A: It does give you pay per click. [00:28:02] Speaker B: Thousands of dollars in experiments like no customers. Yeah, we've talked about this, even integrations. I know it's different for different businesses, but like thousands of dollars of dev work and it doesn't drive customers. It's word of mouth because the product fits. That's the thing that actually grows it. At that point. The formula is you need time. You need to be able to survive the years of growth. [00:28:25] Speaker A: Yeah, it's a little depressing because it feels like nothing works. There is a subset of product type and team type that does know how to do it. It is an exceptional, rare thing. It's why some B to B SaaS marketers are so rare and so highly sought after that know how to do it. It is very. [00:28:54] Speaker B: This might be a bit of a spicy take, and it's not that those high value marketers are not talented, because they absolutely are. But I feel like every time I really think about companies that have a great marketer behind them, I can still point to a product that is fundamentally in such high demand that it's about the product and the offer first and then the marketing throws fuel on that fire. [00:29:24] Speaker A: Okay. [00:29:26] Speaker B: You can't put a world class marketer on just any product and expect them to. You can't grow SEO traffic if the search volume is not there. [00:29:34] Speaker A: Yeah. It's almost like the marketing has to do the product justice. Like if the product is good enough that people are signing up and staying, then it does deserve to get more attention and more eyeballs and be more places. And it's not a direct response like you put in this much money. [00:29:59] Speaker B: Sometimes, like world class marketers or founders who are world class marketers, I feel like they get, again, not to take anything away from them and their talent, but I think that their actual talent, in my view, is identifying the right fundamental idea for the whole business and the product in the first place that enables them to use their marketing tools that they know how to use. It was the decision to do that business instead of the 1000 other business ideas that don't have the potential to meet the demand. It's identifying the demand before being a quote unquote good marketer. [00:30:38] Speaker A: Right. Then you can do the pr, you can do the advertising, you can do the marketing partnerships, you can do podcasts, you can give that feeling of being everywhere. And that can accelerate adoption, but only because it's already working. [00:30:54] Speaker B: Yeah. Which is. [00:30:57] Speaker A: That's a tricky conclusion to come to. [00:31:00] Speaker B: That's just been my experience. But it's been good to see clarity flow grow. That whole rant there leads me to my strategy for 2024, which is we're going to keep this cold email outreach running. It's a nice kind of low cost thing at this point to run and it adds a few customers in the door. I feel like we have a pretty good performing marketing site, but I am cutting costs in 2024 because the business has to become profitable eventually and I need to allocate, blah, blah, blah, a lot of stuff there. But the main strategy in 24 is like instead of investing in more expensive marketing experiments that aren't going to pay for themselves, put those dollars into customer success. And so Kat, the person who worked with me on audience ops for many years, is going to be rejoining me pretty soon. I was pretty surprised that I was pretty surprised and excited that she's available for this, but starting next week she's going to come on board and that's going to be like the one investment this year in clarity flow is like let's go all in on customer success and conversion and retention and I'm just not caring so much about trying to grow that top of funnel because again, I've just come to the conclusion that the way that this business keeps growing is converting more of our trials into customers because we get some baseline of organic trials, again because of product word of mouth, Google Search, SEO. The product has a viral loop as well, communities of coaches talking about it and I always have this feeling of like most of our trials are coaches and they are really perfect fits for our product and it pains me to see a really good fit coach just not convert. There's just no excuse in my view, why our product should not because if they were excited enough to organically come to our site and start the free trial and go through our videos and try to set it up themselves and they send a bunch of email support questions and then they still don't go on to convert. Something happened and so I feel like there are way too many of those who should have been perfect fits that if I had the time to really get on multiple calls with them or really do product workshops or another thing I want to launch soon, this year is like a paid onboarding service for coaches where they will get multiple weeks of like let's work together and set up your coaching programs on clarity flow. These are all things that I think will really, really help the business, but I can't give it that level of hours myself anymore. I'm bootstrapping now, so I can't just throw myself on that job for the rest of the year. So that's where Kat comes in to be that success person and I'm just really excited to just do everything we can to be best in the market on customer success. And you're going to come in here and you're going to get stellar support and talk to someone, and we're going to work together. And your coaching business is going to be amazing on clarity flow. [00:34:36] Speaker A: So if you boil it down to just the numbers, the goal of Cat's role is to maximize the conversion, conversion of trial to paid by basically paying more attention and understanding them better. [00:34:49] Speaker B: Yeah, that and being available for calls and taking the customer support load off of my plate. And my role is still product. Me and the developer work on improving the product and that's been fun. Now that we've shipped all the big features, now we're getting back around to all the little ux things to make the product easier to use and less frustrating and things like that. So that's where I'm reducing my time on clarity flow from like 100% of my time down to 20% so that I can rebuild my other portfolio of things. But with that 20%, I need to be on product with the developer and not customer support calls, but what the business needs is customer support and customer success. And that's where her role comes in. And I think that adding a paid version of that will be an interesting lever that we can try this year. Yeah, the other cool thing is that she's a content person. She's a writer, content creator. So when it comes to content, quote unquote content marketing, if you will. Again, I've tried so many years and thousands of dollars on SEO based content, and that's just not the game anymore. That has changed. What we actually need on content is like content that helps our customers be successful. Not just documentation, but like workshops and mini courses and things like that. And she could help out with that kind of stuff too. [00:36:25] Speaker A: Okay, you got some experiments coming up too. [00:36:28] Speaker B: Yeah. [00:36:32] Speaker A: I want to give a report from venture land. Things are not good in Ventureland. Things got very real, very quick. And a lot of my friends who have raised money from venture are in a similar predicament. There was a tweet by Gary Tan recently that talked about the bar for series a. It's so high right now that people who have, by all measures, except for venture measures, have amazing businesses. I'm thinking of a friend in particular who grew very nicely from millions in ARR to more millions in ARR. The market right now is a bit, I don't know how to say this selective, but like, to an extreme. So businesses that from the outside, if you looked at the numbers, you would think, well, that's an amazing business. That you have going and it's growing that quickly. That's great. You should be able to raise money, especially if you've already raised money. Founders are finding that when they go to market, things look a lot worse than expected. We are all a bit like crazy on the optimistic scale. Entrepreneurs, just to begin with, are optimistic people who raised money in 2019, 2021, 22 and so on. We know it's harder now. I don't think people realize how much harder. And what that is doing is creating a lot of very weird, difficult decisions to be made. [00:38:31] Speaker B: Why is it hard, really? What's the feedback from VC? What are they looking for? [00:38:41] Speaker A: The math is still what it is. You still need a few of your companies to have very large returns, and there's some residue, some hangover from valuations. So companies that raise in 2021, 22, less so, 22. If you raise at a pretty high valuation, you need to grow into that valuation, but the multiples are completely different, so you have to grow significantly more. And then when you go to market, investors still have the same math on their side of things. They still need huge 100 x plus. And if you come to them and you're doing 5 million in ARR and you've been around for three or four years, and you went from 3 million to 5 million last year, you don't seem likely to get to 100 million in ARR in the next two or three years. You are just not on that trajectory. Your growth curve is already slowing down at a few million ARR. You are not a good bet for. [00:39:48] Speaker B: That to be going from like five to ten or ten to 20 million, and that's just not good enough. [00:39:54] Speaker A: Right? That's kind of the bar that is. Then it gets into like margin. [00:40:01] Speaker B: But even that. All right, so if that's the worldview of VC in 2024, what qualifies for that? What are they biting on that? Is it AI startups? What is it? [00:40:17] Speaker A: Yes. So it is breakout, incredible growth, and AI companies are getting that. And some other software companies, they're still out there, they're still the super unbelievable growth, and that's what everyone clamors over and fights over. I'm not a VC. I don't know nearly as much about their universe. It's almost like we're extrapolating as founders. But on the founder side of things is where things get pretty tricky, and that's who we sympathize with and who we think about. So if you're running a company that does a few million dollars in ARR, a lot of founders are starting to come to the conclusion that they don't want to be in that position anymore. [00:41:00] Speaker B: Makes sense to me. [00:41:01] Speaker A: Right? If you're at 5 million ARR, let's say you're right on the verge of profitability. You look out in the market nobody wants. You can't raise series B because you're not hitting those metrics. If you raise a series A extension, you're just taking on more preference, stack more money that you have to pay back before you make any money yourselves as a team. Maybe the valuation stays about the same, but isn't it just that much harder to get over the hurdle of paying back the preferred shareholders? And you look around and you're like, well, that's not why I got into this. I got into this to fly and have the valuation grow really quickly and basically get extremely rich within a few years because of the math involved in the ability for the valuation of a venture funded company to grow. Now, if you're looking at that path and you're saying, well, the smart thing for me to do is to get profitable. If you're at 5 million ARR, you can probably find a way to cut yourself toward profitability, right? You look at your cash, you could make that work, especially if you're growing. [00:42:09] Speaker B: Especially if you're growing to more millions in ARR. To me, not like I know what it's like to run a SaaS business at that size, but it's not like an agency where you have to double and triple and quadruple your workforce every time you add a million in ARR. Yes, but here's it's SaaS profitable so you can scale, you can grow a little bit on the team, but technically, if you want to just grow a quote unquote good business, not a vc business, right? [00:42:39] Speaker A: Let's just say you're break even. Let's say you're at 5 million ARR and you're break even, you've got two or $3 million in the bank. If you go toward profitability, you're making the devil's bargain. You're saying, okay, we're going to get profitable. We're going to start making $100,000 a month in profit. We're going to get toward a million dollars in profit per year, right? Pretty damn good. You're doing that by cutting back and letting the growth get ahead of the expenses. And when you do that, you are consciously making the bargain to grow even slower. And then you get into this cycle of, well, now we're off the track, we've already raised. Call it 1015. $20 million. [00:43:19] Speaker B: Yeah, but we've already put ourselves on. [00:43:21] Speaker A: The venture track, and now we no longer make sense for it. [00:43:25] Speaker B: Again, I want to pause. This gets back to my lifelong rant against marketing, I guess. Okay, but if you are already growing from, let's say, 6 million to 9 million in the course of a year or more, the fact that you're cutting back on continuous growth of your team does not mean you're going to stop growing. It means you already have a product in the market that is working. [00:43:56] Speaker A: You're going to grow slower in the. [00:43:57] Speaker B: Sense that just because you're not raising more millions in investment and you're not tripling your headcount, to me, headcount does not equal growth. [00:44:09] Speaker A: Not directly, but there's a correlation to how many people you're paying to do outbound and do sales and do biz dev. So if you cut back, then you're not going to stop growing entirely, but you will grow slower. So let's just play it out. You're a founder, you own 30% of the company. At that point in time, you are looking at 5 million ARR. You think, okay, I can get profitable by this year, so we can make it. We don't need any more outside investment. So in the next year we'll get to a million dollars in annual profit. Then the next year we'll get to two, then the next year we'll get to four. So now you're looking at three or four years into the future. You'll have a business that does a few million dollars in profit and nobody wants to buy it. And what is your 30% worth? And does that make sense for you to invest another three or four years into? You don't own the business. It's not your three or $4 million. [00:45:00] Speaker B: That's the trade off that you end up hitting when you've taken any level of investment. Is that the exit math gets difficult. [00:45:10] Speaker A: Play it out. $3 million in profit annually. Awesome, right? Let's say you're doing that off of 10 million in ARR. How much is someone going to pay to buy your company? $30 million you raise at a $50 million valuation. If you've already raised 20 million, you got to pay the investors back to 20 million before you make a dollar. So the incentive just starts to get wacky, and everyone's trying to figure out, what do I do with this? It's not an easy thing. My instinct is go toward profitability, build in sustainability, be patient. You never know what's going to happen. You never know what product you're going to come up with. You know what I mean? Yeah, that's my take. But not everyone. [00:45:55] Speaker B: Here's the thing. Me too. Because it's like, even I know if your company has started on the vc track, but then you sort of shift into the more profitable track and you're growing a multi eight figure business here. I do think that there are going to be plenty of very great outcomes that you can reach in the next five. [00:46:18] Speaker A: That's my hunch, too. [00:46:20] Speaker B: And by the way, it's a great business to work in. [00:46:23] Speaker A: I think what really makes the difference there is if you enjoy the product that you built and the team that you built, because then five more years sounds like, hey, I like what I'm doing. I think we're onto something. But if you are looking around saying, I'm kind of starting to look elsewhere and this AI thing looks really interesting and I don't love this market anymore because I just got into it because it was hot. That's when people are like 5 million ARR cool, I'm going to shut down the business and I'm moving on my life and that's all over. [00:46:55] Speaker B: Yeah. Why would this SaaS company over here just like shut down when they actually have customers? It's like, oh, because they took all. [00:47:02] Speaker A: That VC and it doesn't make sense for people. I'm trying to think of the saying, I'm not into quoting Paul Graham these days. He's not my favorite person anymore. But it was basically, know, startups kind of end when their leaders kind of are done. They don't want to do anymore. They give up, or whatever you want to call that, if they don't want to do it anymore, that's kind of when, if you really just keep going, sure, you can run out of money, but some people just keep going anyway with the same idea. Anyway, that's my report from VC land. Things are weird. [00:47:38] Speaker B: Yeah, man. Well, I mean, over here in bootstrapper land, you know what I still am of the mindset of, because as I said, going between these big snows, it gives me a good opportunity to step back at a high level and think through where I'm at in my whole career. I feel like I'm in some sort of like midway point where it's like I've had multiple years of trying different approaches to entrepreneurship. I went through a bunch of years where I had sort of a portfolio of a couple of profitable bootstrapped, like stair stepping up different businesses and then I tried a couple of years of just going all in, selling off all the assets, going all in on one, taking a bit of investment on one. As we know from listening to this podcast, you basically know the story. And I'm now of the mindset of like, I think for me it was better in the portfolio, bootstrapped, self funded, not go all in on one thing, not be super urgent about having to hit growth targets in order for this thing to survive by x date. There was a time, and I'm working to get back to this now going forward, where I could invest a month or two or three months or six months on a business and get customers and build it and hire a person or two to run the processes that I put in place, or automate and have some passive income, whatever that business might be, and then hop over to here and sidestep to another business idea or product or service or consulting and make a little bit of money from there. And then that thing has some legs that can run for a few months with a team member or two or a VA or automated sales, and then I hop back to that and give that a bit more love. These little portfolio of bootstrapped companies do not necessarily decline during the months that I stop working on them because they're automated. I've delegated the work. I have processes that keep those revenue channels running. And I still believe that very good products with good customers can still continue on and not die, even when I'm giving it like 20% instead of 100% of my effort day to day or week to week. And that's just how I'm operating now going forward. That's sort of like my operating principle on this whole thing. I was talking a lot about the YouTube endeavor that I started. I'm still going to be kind of doing a bit of that, but I think I probably bit off more than I can chew there, getting a bit too ambitious. And I'm stepping back and I'm just thinking about multiple ideas for business revenue streams that I can start to. I don't know exactly when in 2024 or next year when these might come into play or come into the mix, but I have multiple ideas and I'm already doing a bit of consulting. I have an idea to do more of like a product development studio, maybe aimed at large audience influencers who want to sell a SaaS product to their audience. I've been talking to a few people in that realm about doing larger projects and sort of an interesting studio model there, like product development studio doing a bit of product development strategy, even developing other product ideas as part of my portfolio and then continuing to do some product work on clarity flow. That's sort of how it's coming together. And then taking learnings from these as I'm learning from product, getting into new technologies and building products, taking what I learned and teach it on the like as one thing in the mix. Getting back to actually investing some time in audience growth again through YouTube. But not going all in. Not going all in on any audience. [00:51:59] Speaker A: Growth as the end point. [00:52:01] Speaker B: Yeah, just keep it going a little bit more than I have in recent years, especially with YouTube. But the whole point now for me is like, I'm not all in on anything. There's nothing that's 100%. I'm totally fine with 20%, 30% at times. I'll be 80%, 100% on things, especially in the startup phase. And of all these different ideas, I have a few that I want to work on first and ones that I might do later. But I'm not all in on anything. It's not worth it to me to bet entire years of my career anymore on a single product idea. And especially if that means it's going to be unprofitable for a period of time or that I need to invest or raise investment. I'm done with that game. Okay. The bootstrapper game is cobbling it together, right? [00:53:02] Speaker A: You put a portfolio. [00:53:04] Speaker B: You put a portfolio. Most bootstrappers either have a job or consulting and then they do a product on the side. In my experience, it's actually been more effective to do some consulting when you need to here and there. But you can still build cash flowing, profitable businesses that are actually assets that could eventually be sold like I did with audience. The I probably rambled a bit there, but that's the shift in mindset that I have now coming out of big snow. Whereas going in, I was like, I think I need to go all in on audience and YouTube and courses and all that. And I think I sort of overcorrected in getting too excited about that. And now I'm like, all right, I know how to build businesses that make money. Let's just build some of them. And also just less about. Again, I'm not going all in for a whole year or years at a time, so I'm thinking much more in short term increments. I'm only really focused on the next 90 days. What are the big projects that I want to be working on in the next 90 days? That's all I kind of care about at this point. [00:54:17] Speaker A: Yeah, if one of them pops off and rightfully commands more of your attention, you can figure that out. Then it will be very interesting to see what happens with clarity flow over the next six months. [00:54:32] Speaker B: I mean, looking at the MRR graph, especially the MRR, has been slow because we still churn off what we call legacy customers, people who are around since the zip message days. But the majority of our customers at this point, and MRR is from new customers who've discovered us after we became clarity flow. And that graph is up and to the right. So the conclusion is like, that graph just needs more years to grow. It's not up to a level that can be profitable, it's not even close, but it's up and to the right direction. So we need to just make sure that we are converting as many of those trials and we need to make sure that we're continuing to make the product better. We've shipped the big pieces, and now this year on the product, just me and I've cut down to one developer. Is ux improvements seemingly small, but like high impact little things that make the product better? That's the kind of stuff that people get less frustrated, less support. They stick around for attention. Cool. [00:55:46] Speaker A: Well, we'll see where it goes. My last question to you before we call it a day, on a scale of one to ten, how badly do you want a vision pro? [00:55:55] Speaker B: Oh, dude, I don't want version one. I expect I'll probably buy like maybe version three in a couple of years. [00:56:06] Speaker A: Not like a stupid little gimmick thing. [00:56:07] Speaker B: 100%, yeah. I think it's going to be massive. I think it's going to be huge. I think version one is probably mostly terrible and not worth the price tag. But the excitement over what it means and the spatial computing and the entertainment value and the work value, it's clearly going to be awesome. Yeah. [00:56:27] Speaker A: And it's good to see companies, right. It's like an operating system. Right. [00:56:35] Speaker B: Spatial computing, it's going to be a new frontier, really, but you need people. [00:56:39] Speaker A: To hook into it. You need Netflix on board, you need developers to kind of get on board. And that's. [00:56:47] Speaker B: I'm a big fan of the podcast called is. It's actually the one paid podcast. It's $5 a month from John Gruber and Ben Thompson. So two, like, really my two favorite tech journalists. They do this twice a week podcast, 15 minutes, just talking about the big tech news of the week. And obviously they've done a lot of coverage of the vision pro. They had a really good one that I think came out today talking about. And I completely agree with this take. I'm so excited that Apple still shipped this and, and that Apple, what are they, the most valuable company? Them and Microsoft. One and two, right? Yeah. They still took a huge mean. It's not like they're betting it's not going to be a revenue driver for them now, but it will be in the future, I believe. [00:57:48] Speaker A: First real product bet since jobs, right? [00:57:50] Speaker B: Yeah. I mean, this honestly is like a Steve Jobs move that Tim Cook. And I think this is the kind of thing that you got to give a ton of respect to cook. Like, this is the CEO's call to be like, we're doing this. It's a little out of the left field. People are going to probably hate it in different ways. And we're doing it anyway. And we're shipping it with bugs. We're shipping it with shortcomings. You got to put a battery in your pocket to use this thing. That's ridiculous. But they shipped it anyway. For Apple to do that, I think, is awesome. And it's pretty exciting. [00:58:27] Speaker A: I like it. [00:58:28] Speaker B: Yeah. [00:58:29] Speaker A: And the FoMO is strong, which is important for adoption. Almost like, remember how Tesla came out with the unaffordable? [00:58:38] Speaker B: Yeah, exactly. [00:58:39] Speaker A: The sports version. And then it made its way mainstream. And then at some point, you're like, oh, shit, I can afford a Tesla. [00:58:46] Speaker B: I was hearing these guys, Gruber and Thompson, talking about the first version of the iPhone, if you remember that. I think I probably got, like, the second or third version. But the first one was. Oh, dude. I mean, in so many, like, first of all, the first version did not have an App Store. There was no App Store. The other thing that they were talking about, and I sort of remember this. In the earliest version, when you scroll a web page on the first iPhone, they didn't have the tech enough advanced enough to be able to render the entire web page. So if you scroll down. [00:59:28] Speaker A: Oh, it would wait. [00:59:29] Speaker B: You would see, like, a checkered background before they could even load the rest of the web page into memory. [00:59:37] Speaker A: Think of the Apple experience. [00:59:39] Speaker B: No. Yeah, but they shipped it anyway, right? And then it became the iPhone. Best product of all time. Especially hearing about what it's like to having a work environment in the thing. And then, yeah, once all entertainment. What I am really excited about is the idea of sports. Like, seeing live sports in a VR. That's pretty interesting world. Like, being able to sit courtside at the Knicks through the VR on any game you want. That sounds kind of insane. [01:00:14] Speaker A: And you can see how events and venues can see that as a new revenue channel. And so that just gives everyone access. If that means I don't have to spend $10,000 to let my kids watch a Taylor Swift concert, I'm all in. [01:00:27] Speaker B: Oh, man. Yes. What's also interesting is Roblox. How much this thing has grown. My kids, they make and they ship these Roblox games, and now all these big brands are advertising inside. Like, my younger one made, like, a McDonald's in Roblox land. Interesting. [01:00:49] Speaker A: Okay. [01:00:52] Speaker B: I was watching the NFL game the other day, and they had on this tv screen, like, a QR code to scan. You get some, I don't know, some chiefs thing in Roblox. If you scan this thing, I don't know what it was, but they're promoting this on national television. It's such a weird world we're in now. [01:01:12] Speaker A: Yeah, look, the metaverse is actually going to happen. It's just a few years away. It's not. When everyone thought it was going to happen, as evidenced by our boy Zuckerberg back on top. [01:01:24] Speaker B: This stock out of control. [01:01:26] Speaker A: It's very interesting to see. [01:01:28] Speaker B: Crazy. [01:01:29] Speaker A: All right, dude, it's Friday. [01:01:31] Speaker B: All right, dude. [01:01:32] Speaker A: Let's call it a day. I got my wife's birthday coming up on birthday season. My wife, my daughter, then Valentine's Day, then myself, then my other daughter. Things are crazy. I'm just like. I'm walking through a minefield of screwing up present expectations. It's like a man's worst nightmare. [01:01:49] Speaker B: Yeah, man. I think I'm feeling good enough to get on this plane and go out to Colorado in two days and do another one of these big snows. And I'm psyched, man. Yeah. Hope you got it. See you. All right, later, folks.

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