Bootstrapping To 20+ Million ARR (Nathan Barry Saas Interview)

so guys I'm not gonna start this video off with jokes because this video is very important to me because what's important to me is number one on this channel helping new entrepreneurs or veteran entrepreneurs avoid the mistakes I made in my first decade of entrepreneurship one of the biggest mistakes that I made is interpreting what's loud to be right and when you look at the Entrepreneurship space loudness is really the only thing that really stands out because people that are actually doing the work are building companies the right way or doing the smart moves they're very they're in the trenches they're working they're not big talkers and one of the big mistakes I made was not understanding that early on and so whenever I'm on the live stream or I look in the comment section I'm always being compared to people that are very loud or I'm being asked my opinion on people that are very loud now I'm not saying being loud as a sign that you're wrong but I'm saying is that if that's where you're looking at you're going to miss out on such great lessons from people that really know what they're doing and really know their stuff and while the people that I'm referencing right here they're not being ignored they're not being overshadowed or hiding out in the corner somewhere however they're not really putting their most of their effort into getting tons of attention so and the cool thing is they're often sharing what they know very freely you just have to perk your ears up to it because it's not gonna be shoved in your face like every other form of marketing information and so as you guys know one of the things I love to do is go find very successful CEOs and try and learn something by watching YouTube videos the person I'm having on the day I've been actually watching for years he actually whupped the crap out of one of my first SAS companies market hero and when our companies went head-to-head they've won all their stats and their financial information is online at bear metrics and this companies of course convertkit and their CEO Nathan Berry's a person I've been watching for a long time and I've actually been devouring all of his interviews on YouTube because he's you'll see when we get into this interview how he built his company and I think they built it so right and it's so polar opposite to how you think most people would grow companies online and the reason why I say it is this is one of the most insightful interviews I ever saw when it comes to building a company as 187 views now of course there's other views with Nathan they have a few thousand views and stuff like that you really have to look for this information because Nathan for example is busy working in his company not promoting his social media and the results really speak for themselves whether a beginner or veteran there's so much in this interview so useful because you can see right here Nathan started the company with his team right here and it took them a long time you get a lot of traction even break ten thousand a month and so if your beginner is making how do I start off with the SAS company how do I build this they actually started at bootstrapped without a lot of investment money without a lot of money in fact I started at all compared to most SAS companies and through word of mouth manual selling they took the company to sell a hundred thousand month a million a month the point right now where it's doing 1.7 million dollars per month that's around over 20 million dollars a year in annual revenue teachable has around the same revenue and they just exited for 250 million dollars even at a 4x multiple this is an 80 million dollar company that's the low end very few people have ever done something like this I can't really name any pity who's running their mouth on YouTube and constantly marking themselves it has results like this and I'm not saying those people are wrong I'm saying it's just a shame because this information right here and learning from people like this has helped me so much and sometimes you have to go and dig and really seek these people out and look them up and say what is this person think about this the way I found this information was going in googling them saying convert kits a great company I wonder what this guy is thinking this has benefited me so much and so the reason why one do interviews like this more often it's because I want to help benefit you guys in a way that has benefitted me the most and bringing these people to you is one of the best ways I can think of that and I think if you can find people particularly like this and listen to them it's helped me so much and so the best way I can help you is helping you in ways that I help myself one other tip it before we get to the end of this interview mention in your view you can sign up for convertkit for free below this I'm not taking an affiliate link or anything like that and I'm going to mention a link near the end of this interview so you actually watch it and if you go through the link and get convertkit for free and then send your signup email to the email that I will have listed I will deliver to you a course based on email marketing because this is one of the ways I got my start in business that's worth over $500 so just get that for free and that's just my way of saying hey this is a good thing and this will help you out because I want to help you out again that will be mentioned deep in this interview so you actually have to watch it take away from it it'll be very clear when we get to that part an interview so without further ado guys I'm super excited I want to do is about once a week with you guys let's begin okay guys what is going on so this is Nathan actually you guys have seen me talk about him in the channel and livestreams a lot he's the CEO of convertkit and so I wanted to bring him on because in particular how we started convertkit is super interesting and I'll let him kind of talk more about it in a sec but it's really interesting because I learned a lot Nathan actually watching convertkit because I had a competing company which didn't do as well as yours it was in the email market place called market hero and it's really interesting to me and I'm really excited to do the interview because we were the complete opposite we were super ads focused and we blew up real fast and then didn't go and hit the market fit like you guys it took you to I think you're close I think you're at like one a little bit past 1.7 mor so a little bit over 20 mil a year yeah cool and so yeah that's basically just what I wanted to dive into um but the thing I wanted to ask you about first it I think is super interesting is cuz when most people start thinking about building a SAS company or getting going or building a business they picture you know getting all this funding and millions of dollars and investments and taking this huge leap and I was watching an interview that was really interesting me where you were kind of working on convertkit as your side business and your first goal was to get to about 5,000 M RR and when you look at most internet marketers and especially people talking on YouTube that seems so compared to what you were doing in your internet marketing way that seems almost so slow burned focus and so could you kind of can you explain how you start a convertkit and how you decided on the idea and then how you kind of set on that 5k go on how you went about that yes design so first you know building websites back in high school and then like transitioning into building web applications and then when the iPad came out I go into building an iOS apps and so I got bands to the like online marketing building an audience world from that blogging perspective so some people go from like direct response marketing or these are the things I came in at the blogger teaching people how to design iPhone apps and that's how I got an email marketing as I wrote a book that's on handbook I had a list of 800 people hunt MailChimp like it was you know really small getting going but that book sold 12 grand worth in the first day and I was like wait what you know I wasn't in any of the like internet marketing community or anything like that I was in the blogging community sounds blown away that you could do that but the other thing is I was also blown away by the fact that email not social not you know these are the channels for driving on sales and I'm in Boise Idaho and there's like a like kind of a old-school online marketing community that's been around at Boise for a while I think that's where I think that's where Russell and clickfunnels are at last Jeff Bank is here bodybuilding.com like a bunch of the old school that's the old school old school yeah bunch of people who have been doing it for a long time and I started my friend Ron who is here he's done online marketing and all that since like 2002 maybe and I was talking as I hate email marketing like it's working it's converting better than social in everything else things like dude we have known that for like more than a decade at this point like congratulations like you you know you've caught up to us good job what he's doing and so I just became fascinated with learning all the best practices for you know offering lead magnets incentives to grow a list you know technique subscriber segmenting in alpha and in that process I basically realized that MailChimp was not going to work so I was pretty frustrated with having to write custom code and all that you know being a designer developer I could do that yeah and so I wrote a bunch of custom code to build in these best practices and that's kind of like that okay what if I built a tool that's not for the broader market right it's not for all of small business or everybody instead it's just for starting out you know bloggers like me who are looking to sell products and build audience and has some of those best practices built-in by default so that was the start in the early days you know my books I went from making very little money from iPhone up say like three to five mmm my phone apps - then when I got into self publishing books I was making more like twenty five thousand a month that was actually doing the most the more interesting things of your story that you told because there's a point where you're doing very very well from these books and you'd started convertkit from kind of your email experience and then you really had to make the choice from almost taking a downgrade in income - and make this leap of faith into that and so one thing always talked on the channel is like how hard it is to pick on one thing pick one thing because I destroyed me almost my last day I'd focus on ten project of time you know how did you you obviously built convertkit out of the your interest in the email how did you decide this is the one thing I want to do yeah so I tried to do multiple things for a long time right you talk to somebody I feel like I'm a serial entrepreneur you know you have one business I okay same thing with me forever and so I thought that like that's what great entrepreneurs did they had a lot of businesses they always had a bunch of things going and they were diversified when I crossed I finally had to come to the realization but that may work for them it does not work for me I am I am a one thing type of person all right I can do one thing and then have like a little side project or a little hobby thing but I need to be focused on one thing it took me a long time to come around to that idea so I was I had the you know the books of courses that I was selling that was doing well I built up my own emails that I did anything crazy but I think it was about twenty thousand people on my email list over a couple of years so basically we fast forward starting work at January of 2013 so I was I was 22 years old and a small audience but and was earning a living you know through books and courses he fast forward 18 months convertkit was making not even 2 grand a month and the books and courses were doing well but like I had this problem or it wasn't even paying I could server bills and development costs and a friend of mine named Keaton Shaw if you're the tools like KISSmetrics or crazy egg yeah hello bar like Heaton sent a lot of cool stuff his current project is called FY we were at a conference walking back from the speaker's dinner and he like just kind of pulled me aside news like hey man can work it is not working out like you're 18 months into the project it's making you had a goal of getting to five grand a month you didn't hit that's making less than the peak like its declining you've been successful lots of other things you'll be successful again and other projects and ventures but like this isn't it shut it down move on and I distinctly remember like walking down the street in Las Vegas and he stopped to tell me that mm-hm and then he like concludes his thought and keeps walking again and I like still stood there for a second because I remember thinking that it's not a nice thing to say to somebody that's project that you love and care about like yeah show no sorry it's not working and then when I come back up to him you know like five ten steps behind him but then he goes like or you could take it seriously and give it the time money and attention it deserves stop treating as a side project and like actually make it happen but this middle ground of like oh I'm working on the side well you these are the things and all that it's just not working and so you know the gist of the message was shut it down or double down and that was exactly what I needed to hear because I realized that I was not the person who could multitask and work on television for men Cheers yep that was like one big realization I had actually I didn't have this little back in 2013 I had this back like a year and a half ago because I was working on my SAS product I had a supplement company and then I have like my internet marketing guru company and the SAS command I was most important part I never was able to go all in on it because I was like well the Guru company's doing really well and like this projects working so I could never really allow myself to take that leap of faith and like kind of deal with the fear that came with it I'm jumping down so how did you kind of I think a lot people when they're deciding to get started internet marketing or maybe they're getting the blogging or something they they have that trouble going all-in on something and at this time this wasn't your big income earner so how did you get past the mental block allowing you to just go I'm gonna go all-in on this project even though it isn't my top earner right now yeah well there's two ways to think about it one is like what's the potential upside if this works out to maybe not the wildest best case possible scenario but like the the oh yeah it'd still be blown away right and the internet marketing side of it the so for me the books and courses if this does really really well like the absolute best I ever expected it to I could see targeting say 500,000 to a million dollars a year relevant and obviously there's plenty of people who have built like audience based course in downloadable products all that businesses to much larger than that but it starts to get really difficult yeah huh whereas like on that on the south side you know if I'm like okay with this and I didn't even have this level goals then but I knew okay if this works out really well then it could be a hundred thousand a month it could be two hundred thousand a month and actually what I was thinking background is okay I could build this into something that I could sell the multiples on SAS are really good and so the potential upside was way way higher and so there's one one leverage now I think of everything in terms of leverage back then I didn't have to do that the other side of like the shut it down or double down decision which I think we come to on a lot of projects I broke down into basically a two-part like a two-question framework the first question is do I still want this as much today as the day that I started alright cuz we dive in and there's all kinds of energy and excitement and all that around I'm gonna write this book I'm going to do this projects that's you to channel whatever and then like a week later or a month later or a year later it's like okay there's no I'm not working off of motivation anymore and since like should I shut this down or double down on it it's like well good do I still want this the answer is yes I still want it just as much the day that I started then that great okay proceed to question number two this is like no I thought it would be cool but it's actually not then like shut it down and move on and get in good conscience mmm but if you still want it which I did with converted I still wanted to run a software company you know I wanted to get into recurring revenue rather than one-off revenue this is like okay question number two is how am i given this every possible chance to succeed I have I really given it my best effort because if you really want it and you've given it your best effort and it's not working then like you can shut it down and in good faith move on right you won't have these lingering doubts in the future but for me I knew that I really wanted it and I put in a half time effort have to you know money and that kind of thing and I knew that if I shut could work it down at that point I would always wonder could I have made that work and that was not something that I was willing to live with and so I saw that it was basically hypocritical of me to say I really want this and I'm gonna have passed the effort and so I basically decided that for me to feel good about you know myself and my commitment to projects and all that I had to give it a real shot no and so that's why I decided to Double Down yeah I saw I saw you tell that story in an interview that I was watching it's it's really it's a really small and so I did like dig deep to find this one I was like that's kind of the trial by far I had to go through because I was doing those 10 different things I had to think myself might am I actually going to go all and in this and give it my best shot or not and then over ten years you know can I look back at it so you guys went and and you grew this kind of from the interview I watch you guys did some launches and traditional kind of internet marketing stuff but I don't think when you guys were originally growing it you bought many ads I don't I don't know if you buy many ads really yeah and so you you were able to scale I mean I'm looking at the the bear metrics numbers and just by the way if you're watching this you're only company that I know that shares all their numbers online I think there's other ones but you know if you converted that biometrics comm you'll see our public dashboard yeah open you'll see about a dozen other companies they do it yeah and I remember when you guys really started the pick up pace I'm not sure it's at this time but Pat Flynn you did an interview with you and you start promoting it but the big change was really August 15 - I found the August 16 you guys went from if I'm reading this from 15 to that you went from 18,000 a month Mr are to over 400,000 a month or around that over 300 thousand a month definitely I'm just bad at reading charts yeah was was i from watching and studying your company it seems like the driving force behind that was really almost word-of-mouth and almost organically I mean I don't think you guys were feeling that with ads what was the okay so obviously you guys nailed this with product market fit and I believe originally you were going and you did it manually first and you did you did everything the slow way and you just worked with the customer and you worked with the customer and you work with the customer can you kind of explain how you went from your manual process first off but then how you how you really listen to the customer nailed exactly what they wanted because I've never seen a company that I know I've also taught my hand do what you guys did and that's one of the reason want to interview I've never seen a company grow this well and so healthy and so happy and it's only done by really listening to the customer and so what was kind of your process to listen to customer and choosing what to develop I mean I know I'm filling in a lot of blanks here I just want to get as much interviewing as possible cuz you didn't you almost had limited development cost I believe your hard cost was about nine to 13 thousand months and so you really had to snipe the features that you needed how did you listen to the customer and develop that and get such a strong product market yeah so the first thing is it came from a conversation that I had with another SAS founder and I think we were at like maybe 2000 a month of Revenue at the time that had this conversation and they had gone they had a public post about going from 2000 mr are 50,000 and mr are in 12 months and I was blown away like that was just incredible results and so I thought yeah I like was that a conference is I asked a cross-table like okay how did you do that he said oh it was all word of mouth and I remember thinking like Oh word of mouth but why didn't I just think to like pull the word of mouth blocker like I tried everything else but I forgot to use that tactic you know I never I did yeah and just thinking like it's kind of useless advice because how do you even do that and everybody says oh they grew by word and so I got really frustrated coming out of that conversation because it I didn't know how to do that but what I realized is that it requires getting this initial traction and so what we did is instead or I said we what I did was I turned to direct sales at that point and went after a very specific niche you know and so instead of being like email marketing for I remember how I defined it we narrowed specifically and like own the market for email marketing for professional bloggers and then I would do a lot of cold outreach to get people to switch and I'd go into even like a very specific major so like I'd look at the few customers that we did have that were successful one of them was a men's fashion blogger in New York another was a paleo recipe blogger and so when I did my cool outreach I would go specifically to a very narrow market so no not just professional bloggers but you know professional paleo recipe bloggers who are women mmm or men's fashion bloggers in New York because then you get down to a list that's so tiny right it's 25 people I mean yeah you can really have a good subject line with that yeah and and I can reach out to them and then when I name drop who's using convert so the email would look like this you know hey so-and-so I saw that you're using MailChimp and I was wondering is there anything that's frustrating you about about mail the reason I ask is I run an email marketing company for professional bloggers called convertkit and were used by and I would name drop the three most relevant people so if I you know my paleo recipe blogger and then two other customers that I thought there might be a chance they would have heard of you know thanks so much for your time Nega so it's super short and basically what happen is I get pretty good response rate maybe thirty to forty percent because it called out which email provider they were using and they come back and say oh this is what I'm pressure with right I can't tag subscribers I have duplicates across lists it's hard to do content upgrades and so then I'd go okay you know that's actually like I had the exact same like genuine that had the exact same frustrations with no job and that's why I started convertkit and so then I can try it like from there get them on a call talk through the problems with them and then probably the most important thing is they would say like okay this is great I love it oh but actually I'm not gonna switch it's too much work and so what I would do and because they're right it's it's a pain to switch email tools yeah and so what I would do is say okay I will do it for you for free so you know in order to get fifty dollars and mor you know hundra dollars no more I would get access to their site I would you know so WordPress FTP their MailChimp or Aweber account or whatever and I would go in there I would switch everything over to convertkit I would set up like improve any processes as it went along because I also had a bit of reputation right it's like starting to be an expert in this space mhm oh I like throwing basically free consultations as well in order to get this you know 50 or $100 of em are and that worked really well and so in January of 2015 we're at 2000 and M are by June where um let's see by May it was 5000 by June it was 10 and then in July we started to get like lands some bigger accounts so on one side actually made a single day they went from 10,000 to 15,000 Mr Pat Flynn signed up and that was through like I flew to San Diego I'm at with him you know we've met at a conference and stuff before but then a popular health and wellness blog called wellness mama signed up and then we got a it was a barbecue blog they had like a hundred thousand even scrubbed all the same base we go like grow by 50% one day and I was like okay this is great and then so around that time that's when we started having a fraction that every sale I made made the next sale easier cuz now I in that name dropping the second list actually I couldn't list Kaplan yet he wouldn't let me until we like had contraction and the migration went really well and all that but then we started to get people asking Pat okay what two are using asking mmm wellness mom or two while they were using and so by September October like the word of mouth was starting to kick in and this was really working and so in July we were at 15,000 and by December we hit 98 thousand amar yeah and I just see when I was growing my email company because I've been I've been an email only email for for so long and so I was I was kind of growing it's kind of sort of the same time you were but I was I the reason why I think your approach was so cool is because it's so polar opposite and what people think and how I thought I considered myself real good marketer and my strategy was ads ads ads ads ads since we'd have like 18,000 subscriptions and we'd be sending all these customers in but we didn't have the stick and it didn't hit me like wait you have this completely backwards you need to go back and do things the slow way and work with the customer and nail what they need and then go from there and it just kind of shows and if you're watching this right here if you look at YouTube where you to look at how people are they talk about growing their businesses it's always the big sexy things it's never work with the customer do the manual things and if you look at a lot of really good sass companies like yours like it's like the definition of that you did things manually first and then it grew from there so quickly and so I just think that's so cool well yeah work for us but it ends up being also incredibly frustrating yeah there's a Gil Goodman he started constant content mm-hmm she gave a business of software talk writing constant contacts people can make fun of them for being old school or whatever else but like they built the industry yeah them and a what right yeah that's really and you know she talks about what she calls the long slow sass ramp of death I think the title of the talk yeah I watched that talk way back when yeah and it's like just how long it took them to get to meaningful revenue right and they sold for over a billion dollars so they ended up being massively successful but it just took so long to get going and that's how a convertkit was as well of like really trying to talk to every customer of nail product market fit set every customer manually understand what it is that they need you know redesigned features to manage that and I mean I wish it went faster but that's the thing now it's like yet over ten years it's the most profitable thing month the month it's it's it doesn't look good at all and if you're going off the normal hypetrain of marketing is going on you think you're doing something wrong almost when that's like deep if you look at all the best companies that's they grow so the other questions I have here are really interesting and kind of more greedy focused on on my part because I want to know what you're thinking so I have a SAS company right now we're at about two hundred thousand a month but obviously when you guys got to around two hundred thousand a month its slung shot to I believe almost a million a month within about a year in a year and a half's time yeah so how is your job as CEO change or I think the better question is like you go from this point where you kind of know what you're doing and you kind of use the marketing you know what's gonna work when you didn't you jump into this this pool where you're scaling for maybe 100k month and past that where it's just a complete you've never been there before and there aren't very many people that have experienced going from that level if you look at SAS companies to go from a hundred thousand to a million a month there's there's a lot of those companies but not in the grand scheme of people you know it's very few people even understand what's supposed to happen or how it's supposed to look at that point how did you kind of navigate that yeah that stage of the company was definitely just trying to keep up with everything it was it was the most hectic time of the company so for example we were I remember that first summer let's see that we actually had a real team right because there in 2015 it was like me and a couple of contractors in one full-time guy you know and then but then the end of 2015 we started hiring and by summer of 2016 I remember we had our first team retreat we had 21 people on the team a little over 200,000 a month in revenue mm-hmm and we you know of those 21 people we'd hired five in the previous month and a half you know like that's when we were really trying to go fast and thank prophet on the whole time but right this is all customer money but I remember like we were getting attacked by spammers we had that first team retreat we were supposed to go paddle boarding down the river and like for the people who had flown in early and I remember all the engineers were served five at the time six ended up in a coffee shop trying to just keep the app online because I have the funniest story in relation to I have to tell you so st. Patrick's Day I think 2016-2017 me and my CEO are on a float pretty drunk and I can relate to you with the delivery and in spammers and so that day we're going down it JD gets a text message it says okay so Google just blocked all your IPS because of the spammers and so literally everything is days there and so we're like running back to houses no no and so I just same exact thing happened to us delivery is no is no joke yeah in this basically we had these spammers that we were fighting and they're smart they find all sorts of ways to sign up and did everything and they would do things on the weekends late at night on the weekends when they knew we were paying attention so they would find something to exploit and then they would and they test it just enough to make sure they work and that they would wait until you know like a bunch of us were on a plane and of course we're working in public right we're sharing things on Twitter we're like that's just who we are as a company and so yeah okay headed on to Madrid they're like oh yes perfect walked a bunch of it and pissed them off and they ran into now service attack as some jolly aged and so like the apps going down and all this stuff so that whole time period like that summer was just us trying to like keep up like keep the app online customer support was a serious problem to that retreat we did a lot of just All Hands customer support it was less than ideal but we were still growing like crazy cool so how did you what was kind of your strategy to maintain the customer experience because one thing I'm kind of struggling with right now so once you got start getting a lot of customers it's really easy when you're doing it kind of manually and you're able to work with the customer how would you maintain a really good customer experience and make the sign up um from from my point of view the only way to really grow that sign is to make it so most people don't have to start a ticket when they sign up how would you keep the customer experience high how do you make people when they sign and go I get it and yeah keep that just keep the quality super high and that because you guys have very low churn and so obviously people are seeing they're getting it in there constantly continuing I would one use the tool like it has a customer so this is where it's helpful that right I still have a blog I still have this stuff going on the same way that I don't really sell like courses and other products like I used to but I still have a reason to use convertkit as a customer and I really encourage actually just did a tweet thread on this yesterday a lot of companies like discouraged side hassles or side projects they want their you know all their team to be a hundred percent focused on work and we actually encourage side projects because we want you know so if one of our engineers won't start a blog or our designer has a name Charlie she has a popular YouTube channel what we really encourage that because then they end up using the tool as a customer that's really until they go through and they're like oh oh this is annoying and then they like and then go fix that thing and so you can't always well I guess yeah try to use the tool as a customer as absolute as much as possible and then just spend as much time talking to customers as possible so we'll do now we're down to doing about ten customer calls a month between me and my director of product all right product manager yeah so yeah 10 to 15 a month but then we also use a tool called full story that records the whole screen so as someone's using the tool I can have an event that fires so that if they encounter a certain flow that I'm trying to improve then it records that whole session and I can go back and watch all their interactions well detect in and everything there and I can see where they got stuck so for example I have this flow for now that can work as a freak line of this flow that lets people build a landing page before they even create an account mm-hmm and the conversion rate on that isn't quite as high as I want such an on full story to watch that mm-hm and so now I can see okay where people dropping off what exactly you can watch them clicking around and building in and seeing where they're getting confused yep so I see like okay people are like you're watching okay oh you're trying to have an image there okay oh that's not obvious how to do that and then when you see them cancel out I'm not actually create the county lockup oh yeah you're in frustrating experience so it's really paying close attention to that a lot of talking to customers and then you know just a lot of manually fixing stuff for customers and then that that thing that they ran into it's like okay now let's fix it in an automated way for everyone else I see I see okay cool so another big one so obviously your job as CEO at 12 K or 5km RR and in your job as CEO at a million a month member are how is that change what have you had to do differently just to kind of phrase the question better I've had the I'm not near the level you are but I've had to go from being like to do it all to you know looking at the product or working with engineers buying ads and everything to the point where I have to really put this in other people's hands and almost be more of a coach I can't really do much I'm almost useless unless I'm acting through other people what how have you changes a CEO and how is your job changed as the leader of the company well yeah and I think that's the advice right you have to get as you grow the organization if you want a well-run organization you have to have people in each category you know work on each thing what I've done instead because I've like almost entirely done that but I've kept a hold of our we call our product organization so we've got with success operations engineering marketing and then product and so product is our designers and you know it's what we're building in the product strategy in Ottawa and so I wear two hats I can work your one is CEO and the other is director product so I kind of strangely like if you look at our org chart it doesn't you know like I exist on it in two places yeah and so probably like when I followed the best advice it would be to hire the best person in each area and what I basically decided is I did that in every area except for product designs because I feel like that's what I'm uniquely good at and so I'm still very hands-on and so maybe in your case for example maybe you're hiring someone a good leader in engineering a good leader in design and product really good leader in customer success but you like marketing that's the area where I think I mean Ethan good or whatever that is and like that part that gives you energy and all that so I've like that advice that everybody gives I'm like okay I'm gonna take that 90% of the way then this thing that I love I think you could get up I'm gonna go all in on that no that makes that makes perfect sense but I I started noticing as it started to grow so I was actually like ruining certain parts of the company because like my display my weaknesses what things how did you kind of identify like what things you shouldn't touch and how did you kind of learn those lessons yeah I'm not a systems person yeah me too yeah like I may get this done yeah it's never the best solution long term but it works but yeah so one is identifying and so hiring people that help balance that out like now we have some really great data driven systems thinkers who may the best solution is probably halfway between what they think and what I think you know and so we blend really well there but I would find myself doing like Paul Graham talks about do things to don't scale yeah and I am all about that and but I would take it too far mhm and so on customer support you know I would be like if we get behind on tickets I be pushing okay let's just put in a big heroic effort let's get mm-hmm you know that take care so bringing in someone who we had customer support and engineering with two biggest impact ones we're bringing leaders who put systems in place and bring stability and they're tweaking knobs and dials right to get it dialed in rather than like oh we're behind let's just you know put it yeah I feel like I'm I feel I'm not a hundred cember you seem cry more like a creative CEO and so like I'm a creative CEO is chaos and you have all you have to bring in people that are order and they almost like I'm constantly fighting with my CEO because I'm constantly just these messes that I create like yesterday literally I was like okay we're just gonna have like an excel sheet to pay our sales reps he's like and there's all this confusions between the sales reps and all these things and so I totally relate to that what what things did you own in particular ignore when you were scaring up the scaling up the company that turn in the big problems that you didn't think would be big problems what kind of onion what kind of cars came out of left field and t-boned you you know I mean and then you spend a bunch of time in the industry and you're like oh you know oh right email delivery oh and you're satu a milliner SendGrid and like the truth is that that only works at a certain scale like you still have to have your internal team payments fraud would be another one you know we don't even process payments like for people selling product we you know we just frosted their own payments and and we've had spammers and fraud mmm get on there actually we were hosting this was the second year of our conference so like me and my CLO Barrett we met at friends like so much of our networks comes from great comics so we always wonder about our own so we did and I remember the so the conference is a Friday Saturday Sunday and on the Friday like everything's kicking off all that and I'm getting a call from a friend who works at stripe who's like dude like why are you not responding to our emails and I'm like what emails constr I've been sending automated emails for different things never good when you get touched my emails from stripe never a good thing like you know itself had been like your export is available like all the stuff and I had just filtered all emails from strike out of it yeah and the emails that have been coming is like hey you're on visas like watchlist or whatever you're in escalators and they're like visa is going to shut you down like it does it's not even with stripe now but like visa ban stripe from processing the payment so I'm like ah at the conference in the lobby like taking this call and and basically what had happened is people have been using as favorites of me her name is spammers people have been using convertkit for credit card testing and then loading those credit cards those numbers and going and buying stolen goods with them and then that had resulted in a bunch of charge backs and it's so weird how those little weird things pop that ever happened to us but we had a similar problem and like how people use your credit card form there I actually that I think that happened to me now that I think about it about I'm not gonna give the exact day but a bunch of months ago I looked down like oh we had like 10,000 charges a day maybe were blowing up or something it was all just I bet they were testing the credit card form yeah credit cards yeah so those would be a couple of things I think what else definitely scaling it infrastructure and then I would say ran into another problem maybe even say last year like a year ago we kind of hit well I think you'll see this a lot and I wish I would know who to cite on this who I learned it from but basically growth is often is very rarely a linear thing or an exponential curve it's usually a bunch of stacked s curves mm-hm right so it's slow at first and then you hit this inflection point and then that whatever you were doing maybe you're still growing in absolute dollars more than you were before but like your percentage growth for their levels off mhm and then you're figuring out okay what's the next thing how do we stack another s-curve on top of that and so we basically got to the point and we're still at that now where instead of like growing a faster percentage every month or maintaining say like a four five percent monthly growth rate the percentage growth rate was declining and the fixed dollar amounts you know like 35 K net new member are 40 K maybe Lamar is where we just kept delivering that like clockwork yeah and so basically you know we're in that leveling off part of the S curve and so that was a big thing to try to figure out what's the best strategy there do we need to spend more on ads do we need a change we're doing that Phillie it's all of that and what we came to there is going and launching a free plan and so we basically decided that before the next recession we wanted to have a free plan up and running so that as people are losing their jobs trying something new they would start that new thing I'm converting on its morrow with them and so we sent that goal in February of last year and we launched that free plan January 1st mmm of this year and I was like yes we got it in for the next recession we're good we probably like six months to get a dial in maybe a year to get it out then and then like ten weeks later that economy isn't the tanking of it yeah quarantine and and everything so it ended up working out well it hasn't hit our revenue yet but we went from you know a few hundred signups a day so now with the free time we're running over 800 to 900 new accounts a day and awareness and everything I think would like just for my I think we're just over time compound on itself kind of like how you guys do with the word of mouth yeah yeah so we paid a lot of attention to MailChimp in their early days because basically when they launched their free plan is when they when they blow up and so that's like the next thing that we're trying we don't know yet how it'll pay off on the revenue side but we feel like we have enough scale and everything to be able to support a free plan well still am pretty strapped company okay cool that's that's super interesting the other thing I was wondering and so as a company grows you're bringing in all sorts of new people and the way you have to interact with your team works and then you also might find that and I'm just asking like five questions back-to-back here so we can take one at a time you might find the people you started with aren't the best people at the yeah after at the blitzscaling level further like example certain people work at the startup level and when you're you're scaling it goes there I think the first question would be how do you keep your your culture intact as your as your company's growing like that and so many people are coming in yeah so the culture the biggest thing why would question whether you should first thing okay that's really can you expand on that that's really interesting it's a lot of a lot of companies don't have a good culture and now we talked about wanting to preserve their culture and it's like well okay what do you want to preserve I don't know our culture it's just it's great okay what makes great I don't know like they don't actually know what parts of the culture they want to want to handle so forget or want to continue so the first thing is like defining what that means so for me I believe that culture is trust the culture that I want to build it is a culture of trust and that's the single most defining factor it's not the ping-pong table is it's not the free lunch it's not any of those things and we're about company so we don't have any of that anyway but yeah so what I want to build is an environment of trust where I trust you to execute on your job get it done you know make whatever but you trust me to stay out of your way give you clear feedback you know not micromanage that direct feedback is really important I trust that you care about me enough that if there's something that needs to be said you're going to say it that way I don't have to spend any time Mike speculum I wonder what Alex actually thanks yeah like he said this but did he mean that like he said this needs like to improve the design in these three ways but maybe he actually meant like that and I don't think you're a good designer you know like you can spend so much time in your head doing that it's even build a culture of trust you can accelerate so many things the next one for us would be transparency like the amount of time that people spend thinking should I have negotiated more when I got when I accepted that salary am I being paid the same as she is you know as we do the same work should I be asking for a raise right now should I be is the company healthy we're hitting a downturn are we are we gonna have layoffs all of that and so we run everything salaries we have a standardized system so that everybody's pay the same for the same work we have you know we run open books so all our financials are public within the company and in all of our revenue numbers are public outside the company as well so people can see exactly what the health of the company is how much cash we have on hand where the cash is going and then the last thing it would be a culture of ownership so we have everyone in the company has equity that's something that I didn't do early on and then in 2018 I did and I went back and gave equity to the team members and then we also have profit sharing so sixty percent of all the profit the company is distributed to the team in the form of profit share so 40 percent goes to owners sixty percent goes to the team and so when it comes to individual decisions like one of my favorite examples is one of our engineers left a was playing around with a new server on AWS lineup they tried some stuff out and they accidentally left it running and that ended up costing like two grand for the month now at the time our AWS food was like forty thousand dollars a month so it was not a huge percentage but still two grand is a lot of money yeah and when it was found the team on one hand was like not a big deal it's totally fine shutdown don't worry about it but also that's our money please don't do that again yeah that's that's super interesting and it was this right balance of like everything's fine and this culture of ownership and so those are the things like that we've defined about our culture that we want to that we want to maintain and as you alluded to there's a lot of people that are right for one phase of the company that are not right into the next phase and how do you handle that what is what is your strategy with that because I must lead to a lot of painful or weirdness yeah I'd assume with your or your culture of trust and being honest I assume that some of that might actually be counted out since everything's on the table but how did you deal with that almost emotionally as well as business-wise at the same time you know yeah so one simple strategy thing that I did is I didn't inflate anyone's title coming in mmm oh I've always gotten with director director of whatever instead of CMO CTO that kind of thing and what that enables me to do is later on if I need if I have a director of engineering and we scale to a certain point and now I need someone who's led a team from 10 to 50 people rather than zero to ten I can hire a VP of engineering it's still gonna feel like a demotion right but I don't have to take away that title or I can hire a CTO as an example okay we're just very recently and making the shift as I'm promoting some of my directors I just promoted the first one from director impressive success to VP of festival success because he's operating on that level he's proven it and I know that you know he's the right person to scale the team okay cool no that makes that something's been on my mind a lot so as the times kind of wind down I just had three questions and the last ones kind of out of the third-to-last one if I have my numbers right so obviously your company's blown up you guys have had a lot of financial success and a lot of times with companies are especially the founder what's financial success comes a lot of slippery slopes with ego a lot of distractions in your life and so one thing I've noticed with convertkit you guys have stayed about the customer you guys really stayed true to your your roots you personally seem like you've just kept a cool head kept it about the team how have you ever have you had any problems with that or how do you kind of stop yourself from being distracted or getting a big head both are very subtle things that will slip into a person's life how do have you attack that honestly because you do have a lot to be proud of they could also transfer into all those things yeah well I think first so to in particular be actually using direct operations she's been with us for four years now she was one of the early team members like she actually took the chaotic mess we didn't LLC set up when she came on and she liked it all then but she's also one of my really good friends and she's one of those people who's like no matter how successful like convertkit could be a hundred million dollars a year and she still wouldn't let me get a big head you know and then also my wife Hillary just doesn't doesn't even care about any of this yeah just like not even you know it's one of those things she appreciates that we don't have to you know worry about what's in the cost when we go to the grocery store or go out to eat or anything like that she's just otherwise doesn't care and so that's really good and then I think also a lot of the like so I guess I would say that's who you surround yourself with right and then there's the lifestyle thanks right I live on a four and a half acre farm in Boise Idaho mm-hmm you know and so we do like hobbies outside of work isn't like I don't know driving incredible cars and whatever else it's like I'm building a tiny house right now I have my woodshop I have like playing soccer with the kids and all that so I think that's probably the biggest thing I have run into some things of like where things get a bit weird with money when you people realize like just how valuable convertkit is or just how much cash that's putting off to that kind of thing but probably the biggest thing that helps is I just put some actual numbers to it so convertkit hey that's personal because we reinvest most of it mm-hmm but pays us personally just under a million dollars a year but we live on more like a hundred and seventy-five thousand mm-hmm and the right let's just goes into investments blah blah and like in Boise a hundred seventy-five thousand years there is a ton of money and so we don't have anything showy or flashing and that I think that gives you just because I think it's really just confusing to a lot of entrepreneurs in general because usually the entrepreneurs who everybody talks about it looks about are the the talkers and the showers and that they in my point of view and what I learned is a hard lesson to myself I've made all these mistakes I talked about is that actually takes away your power to be a good CEO and run a good company because then you you can't be reckless with your company kind of like when you were starting in or where you're at right now because the money goes back into it the powers just kept in the company and so you can really be brave and do a lot of things where as a person that's doing all the things I just mentioned I'd like me in the past it takes away your power to be a strong CEO so the more you try and seem like a strong successful person actually the weaker it is so it's just a weird thing I just had two other I would read if you're at the point where you're starting to generate more profits because I definitely found like wait what should I keep this much money in a bank account you know yeah where should I invest it what why should I do it should I spend it on you know I don't know an airplane who knows and I would read a Warren Buffett's the snowball because he's just that person who's just constantly taking that money reinvesting into the next thing and you know he obviously at one point became the richest man in the world because of that strategy so when he had an extra hundred grand he didn't go out and buy some fancy car he was bought sharing another company and led that compound over time and you know there will be a time like I don't want to pretend that I live like a popper his life or something that as I have my Tesla Model S you know as showy as I'm gonna get you know and and I've just taken that approach of reinvesting the money and putting it to work rather than spending it on consumption type things that I have to maintain awesome I had I would have like 50 more questions on that but I wanted to get the last two so obviously it took a lot of bravery and jumping into it expecially when you're starting from Berkeley's that's what I found so impressive about when you started the company because it was that 2k m RR and you really went L and like I waited until my my company was doing other numbers I was I was a real weenie about it if I could subscribe it right so when you're what would you tell a beginner entrepreneur who's worried about taking that leap of faith you know I think you could almost recap what you said the beginning what would you tell a beginner entrepreneur right now yeah I mean the first thing I would say is to show up consistently like I think we often show up in a way like we show up in Sprint's you know we're gonna start a new a new business I'm gonna work on it every day for like a week or a month I'm gonna work on every Saturday for a couple months why didn't this take off and so we have a value it's that compared to the create every day and then my friend sean mccabe phrase this in a way that I really like of show up every day for at least two years mm-hmm that's how long it's gonna take to get any kind of meaningful traction yeah and there's a project that you're starting about two years that's way too on it's like okay well then that's probably the wrong project for you to start like stick stick to your day job and the other thing is I would say these days it doesn't have to take huge risks you know I think you can keep your day job and build something on the side and then once it gets to that thousand dollars a month or the first thousand subscribers are the first 10,000 subscribers like then you can decide to go on it oh and on it I think where I ran it in trouble and other people can is like trying to have three or four main things yeah pretending that they're all equal but if you're like putting in your work at your day job and then you have that creative energy that you're channeling into one side project that you plan to for it to become the main thing that's what I would do and I wouldn't take the approach of like you know burn the ships and and go on until you're certain cool so the other final question kind of more of me is you're sneaking and learn for myself what would you tell a a SAS founder who's in a position where they're about to start scaling because obvious that sab igg shift from the startup mode to the scale mode what warnings would you give I would say really focus on culture I would say those people who were good for the initial phase you already know who they are that aren't going to make it at the next phase of the company and now's the time to have those frank conversations and then you can give them time to either level up or you can manage them out and let them go you know in a in a kind but direct way mm-hm with that burn a brown who I really love you know all of her work she has this phrase of clear is kind and so you know I'd say like really emphasized that clear feedback I would say still talk to customers like toxic customers even more there's a CEO who ever liked Jason Lumpkin who runs faster and he he's great on Twitter you know dropping these little one-liner things and all that but he's always saying basically providing good reminder to me of like talk to customers key phrases like get on the plane go meet them in person and so I would say you know when was the last time you sat down with your last like your top 20 customers really implies them ask them okay who else should I be talking to who else should I recruit go from there and then maybe the last one that's probably unconventional is I would say go to there get a counselor have somebody that you work with once a month like being an entrepreneur is it incredibly any tips on finding that counselor or that person to talk to you ever would you have any I would say pick someone at random pick someone around okay cool like go so whatever cuz I'll tell you what I did and I was trying to think okay I'll do it who could you possibly find right I'm like I don't know how you picked the handbag that's really hard and find lists of right you if you go on the Yelp equivalents there's plenty of Google reviews for people and all that you just search for a counsellor in your local area and I would say pick somebody and then just switch after three months man a basically if you pick somebody go to them once if you kind of hit it off like keep going to them mm-hmm and then switch and try somebody else and then and you can try that out because the reason I say that is we put too much stock into that decision if I don't have to find the right person I think the answer is that you actually have to find someone the other thing that I would say to ask friends I think you'd be surprised at how many people actually use counseling as a tool and don't talk about it mm-hmm and so that's what I did is I asked a couple friends and they recommend it made some recommendations and that's where I started but I would say if you don't end up getting a recommendation like just pick somebody and then feel free to rotate through because it's more about you that it is about counseling okay cool awesome I mean we're right up to limit and I'm that last one's actually really good have been thinking about that for a bit so wrapping it I just wanted to thank you so much for your time man I've watched convertkit for years I've watched all your interviews on YouTube like a hawk and so I just from this conversation for me I'm just so thankful it I've learned fun and I really wanted to get you on here because in the loudness of entrepreneurship that's going on I feel that you've grown a company so healthily and with just the right way and I think it I think it almost gets it's just never put in the spotlight you know the door wrong steps when the spotlight so I really wanted to get my audience introduced to you especially because a lot of them are beginners and just starting the the figure things out in one ways that I made all my my first successful business is all based around email some huge proponent of email so one thing I want to do is I just want below this video or in the first comment I wanted to link just a free trial a non affiliate link to convert cakes I highly recommend it it's it's just a great email platform and then what I also want to try and do is I have a pretty large full-fledged email course and I'm gonna I'm gonna describe how to do it if you're watching this video how to get that but if you go and pick up convertkit through the link I'll describe how that that'll work I don't have it upside my head but we'll give you that email course as well no affiliate link just a good referral I just want also give you some some business for your time as well yeah I'll get with you after and it's and we'll figure out how that will get together I'm sure will be pretty simple since I'm just doing that and that's it is there anything you want to leave it out I know you got to go like hard at nine so I know I think that's I think that'll cover it you know I just say all my writing is public very calm convertkit has that free plan now so if you go to landing page new it'll write into building and landing page for the free plan it's free for up to 500 subscribers yeah follow me on Twitter Instagram just add Nathan Barry everywhere on the Internet alright cool man I appreciate your time so much I'll let you go for that interview and then I'll leave some closing thoughts for the viewers in second or second but I'll let you go thank you so much for your time so based on that special that I just offered at the end of the interview and at the beginning this video what you need to do is go to this URL right here in convertkit you can sign up for a free trial you can sign for whatever you want right there I think every single person starting a business should have an autoresponder convertkit is incredible and then what you want to do is your sign up email send it to this email address right here take your convertkit sign up email this e-mail address right here this email address right here will confirm your account and send you the $500 email marketing course it really basically breaks down how I built my first multi-million dollar business that's it now guys if you like videos like this be sure to give Nathan first off a big thanks below and then also be sure to like subscribe and hit the notification bell because I run ads two people that meet that demographic I can target that in Google ads and I hand out a bunch more free courses that cost literally over thousands of dollars you bought them in the past I don't sell beginner courses anymore but they are laying around and I'll give them to you if you see those ads so again guys what you do go to this landing page here on convert kits website sign up this is not an affiliate linked is just me giving a general suggestion to you and then send your signup email to this email address right here and it will deliver the course to you that's it guys I'll see you next time I see you [Music]

Channel: Alex Becker's Channel

Views: 85,924

Rating: 4.9452486 out of 5

Keywords: convert kit, alex becker, nathan berry, ceo interview, saas, start a business, marketing

Id: Q4W0kVGWnQs

Length: 65min 34sec (3934 seconds)

Published: Thu Apr 09 2020