Saas Companies that Anyone Can Start with Rob Walling
Real Estate, Theranos, SaaS, and Family Goals - January 12, 2022 (about 3 years ago) • 01:18:14
Transcript:
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Rob Walling |
A lot of online communities can be started by anyone. You get a few hundred people together. However, there are so few people who not only run in-person events but who do them well. If you can do that, it is an incredible competitive advantage.
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Sam Parr | okay sean's not here what are we gonna talk about | |
Ben Wilson | few things | |
Sam Parr | Oh, let me tell you something. Sorry, I asked you a question and then I interrupted you, but let me tell you something.
So, I'm doing something cool in 10 days. On the podcast and on Twitter, I talked about how I'm buying a piece of property and turning it into a kind of hotel, Airbnb, fitness thing.
I have this guy—I'm not going to say who it is yet because I haven't asked his permission—but basically, he bought like 5,000 acres in the South, in a state in the South, let's say Georgia. He is turning it into an airline neighborhood soon with hotels.
So, basically, they're putting an airstrip in the middle of this piece of property and then they're lining up houses along it. You could buy a house, and then soon it's going to be a hotel. They're going to have an airplane hangar there, so for all airplane enthusiasts, you can keep your plane there and take off and land right outside your home.
It's basically like having a house on a golf course, except instead of a golf course, it's an airplane runway and hangar.
But here's the kicker: he asked me if I wanted to come check it out, and I said, "Yeah, sure." He goes, "Alright, meet me at the Teterboro Airport, just outside of New York, on January 25th, and we'll fly my jet down."
So, I'm flying private down. I'm going up to New York just to fly back down. It's an experience, but nice, isn't that sick?
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Ben Wilson | So, is this super rural, or is it kind of just outside of a major metropolitan area?
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Sam Parr | it's an hour and a half outside of a major area | |
Ben Wilson | Got it. So, most of these people, most of these houses, is this going to be these people's full-time residence, you think?
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Sam Parr | No, no, probably not. It's a lot of older people. You don't have to be rich to do this. I think you have to be able to afford a $200,000 plane or something like that. That could be your hobby. So, you have to have some money, but it's not necessarily going to be incredibly wealthy people.
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Ben Wilson | Yeah, so enough to afford like a Cessna or something like that. You just fly in, and it's just somewhere to fly. Then you stay by your airport and just hang out and chill. | |
Sam Parr | yeah that's kinda neat right | |
Ben Wilson | yeah it is kind of cool how much do you think he's in on this project | |
Sam Parr | I'll say it, and then if he says, "I can't," but nearly 8 figures is the money that he's had to use his own money to do that. Then he'll raise some more money.
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Ben Wilson | and then how many houses | |
Sam Parr | and he was like he was like oh it's just like a side project and I was like | |
Ben Wilson | what that is huge | |
Rob Walling | that is | |
Ben Wilson | and how rich is your friend what what does this represent for him | |
Sam Parr | I don't know, I just met him. I'm not wealthy enough to be able to afford that, but I'm also not wealthy enough to... like, if he loses that, it will be really bad.
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Ben Wilson | do you own any like vacation homes or secondary homes or anything like that | |
Sam Parr | I own the house that I live in. I also own some rental properties and a vacant lot that I'm building a house on to sell. | |
Ben Wilson | but nothing like this no plain vacation home | |
Sam Parr | No, no, I don't. I don't think that vacation homes only make sense for me personally. They only make sense to me if I buy them and rent them out.
So, if I could find a place in New York or California that I like, and I could rent it out and make a profit, then I would do it.
I met this guy the other day who is a billionaire, or close to a billionaire. This person has an apartment; they don't live in New York, but they have an apartment there, and it's really fancy. Then they have a place in Park City, and they rent it out when they're not there. It pays for itself, and they're still like... it's like a wealthy person. I think that's the way to go, but not everyone is comfortable doing that.
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Ben Wilson | It's interesting to me because this idea that you're describing sounds like the inverse of what I would want. I want to be able to fly places so that I can stay there. Like, I want to fly to New York so I can go to New York. But this is the opposite; they're setting up somewhere to stay so that they can fly.
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Sam Parr | Does that make sense? Well, it's not just that. Just imagine you're like 65 years old and you want to spend the weekend in this area. You want to fly there, stay there, and hang out. Then, you can go on trips throughout the day and just hang out with a bunch of other airplane nerds that are like you.
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Ben Wilson | yeah sure | |
Sam Parr | So, it's like if you're 65 and this is your passion, I think that people who are into this are so into it. They just want to be around other people who are into it.
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Ben Wilson | Yeah, I think there are a lot of opportunities like this. As more and more people—because it sounds like this is mostly retirees—I think you could also target remote workers.
Just like people have lived in places for no particular reason in the past, I think as people can now choose where they want to live, they're going to start congregating more in groups.
For example, groups around their hobbies or like vegans and how they want to eat. I don't know, just random niches.
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Sam Parr | I agree. I think that will happen too. The day that New York allows short-term rentals...
So, in New York, you're not allowed to rent for under 30 days, or you have to jump through crazy hoops. But the day that that's allowed, I'll be buying a place there. But not until that's allowed.
Oh, okay. You want to talk about this Elizabeth Holmes thing?
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Ben Wilson | yes I do so you you sent this to me well you wanna give the backstory | |
Sam Parr | well let's say what happened yesterday | |
Ben Wilson | So, yesterday you sent a post to me and Sean that you were on the front page of Hacker News.
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Sam Parr | yes and it was because they had go ahead I meant like what happened to holmes yesterday | |
Ben Wilson | Oh, so Elizabeth Holmes was convicted of like 3 or 4 crimes. I don't know if she's been sentenced yet, but she could serve years of hard time.
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Sam Parr | potentially up to 20 years | |
Ben Wilson | Yes, well, there are 20 counts and 33 counts that carry sentences of up to 20 years, and one that carries up to 5. So, I don't know if those are additive or if it's only up to 20. I don't know how that works, but...
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Sam Parr | Yeah, so, what happened yesterday? It actually happened on Sunday night. I got a text from a friend who said, "Hey, you're on the front page of Hacker News."
If you don't go to Hacker News, it's basically like Reddit, but if I said Reddit is for nerds, you would be shocked because Reddit is for nerds. But this is like really for nerds... like nerd nerds. It's all computer nerds, and I am one of them.
I got a text saying that my article, which I wrote in 2015, was on the front page of Hacker News and it was getting a lot of attention, which means you'll get millions of visitors. The headline of my article was, "The Coverage of Theranos is Utter Bullshit."
I wrote this article defending Theranos and defending Elizabeth Holmes, and it did not age well. But let me explain what the article was about. Do you have the article in front of you? I wrote this...
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Ben Wilson | I just want to talk about my favorite subheadline, which you called "a minor PR hiccup."
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Sam Parr | Yeah, so I call this a minor PR hiccup. I wrote this when I was about 24 or 25, so whatever, you know, I've grown. I read my writing and I was like, "Oh my God, I wasn't bad then, but I'm way better now." I was a little embarrassed.
The article was basically written after people accused Holmes of, at first, doing something wrong, and they were hating on her. But previously, in the previous month and the previous few years, she was on the cover of all these same magazines.
The essence of my article was that, on the surface, it looked like I was defending her—and I was defending her—but what I was also doing, and I say this in the article, is that I was defending this idea that it's nonsense and crazy that we build these people up and say that they're like the next, you know, the next Steve Jobs or whatever it is.
We want small businesses to win. Someone starts a business, and we want them to win. But then, once they get really successful or potentially considered a winner, we turn on them and just hate them. It seems really weird. They talk funny or they look funny, and I thought that's bullshit.
So I stand by that second half because now the whole anti-tech thing is even bigger. But yeah, I was wrong. I was so wrong about her. | |
Ben Wilson | Yeah, it's just you see so many cases of a lot of these hit pieces that are totally not fair to founders. Your guard was up enough that you didn't see that this was the time that they were actually right. | |
Sam Parr | she fooled me man she fooled me she | |
Ben Wilson | she sent you in with her deep voice and those big eyes | |
Sam Parr | Dude, she got me! I was so on board. The reason I was on board with it is really... I can't decide if it's a good reason or a bad reason. You tell me.
Their biggest backer was Tim Draper. I don't know Tim, but I used to be friends with his son. His friend's son, Billy, is an awesome dude. From what I've read about Tim, he seems amazing. I know that he's like this high-integrity, very honest person. He seems like a great guy. He doesn't party or drink, and he's known for being one of the first investors in SpaceX, I believe, and the first investor in Hotmail.
So, a bunch of these really amazing companies that helped found the internet and create everything. He was super on board with Theranos for a long time. I was thinking, "Well, there's no way that Tim Draper would do something or would be tricked by this." He obviously didn't know, but I thought, "There's no way that Tim would be tricked by this," and that's why I was on board.
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Ben Wilson | Yeah, and just to back you up, I'm reading from the article. It's expected that a young company attempting to change a massive and archaic industry will mess up. It appears that Theranos made a bunch of mistakes. I'm not defending their actions, and I'm also not saying that the media shouldn't point out the truths about Theranos' mistakes.
You know, you just go on to talk about how the cycle kind of flipped on them. So, yeah, I mean, it is true what you're saying, but it is still funny to have...
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Sam Parr | An article up with that headline, and I didn't delete it on purpose. So, around 3 years ago, someone made fun of me for that article, and I was like, "I'm not deleting that." I'll keep it up; it's alright. I got it wrong. If I'm going to take swings, I gotta let people see the misses too.
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Ben Wilson | yeah absolutely | |
Sam Parr | alright wanna go one more topic | |
Ben Wilson | yeah we got 4 minutes so | |
Sam Parr | alright so you tweeted out something that was pretty cool what was it | |
Ben Wilson | Okay, so it was essentially that we started a new family tradition in my family this year. It was just my wife and I doing it because we started it. We're going to try and roll it out to my siblings and my parents. | |
Sam Parr | but didn't she make a presentation | |
Ben Wilson | Yes, so what it is, is that I decided—kind of my idea—that at the end of the year, we're going to make presentations about how the past year went. Essentially, we'll discuss our goals for the coming year and our resolutions, that type of stuff.
We're going to present it at a family board meeting. It could be a slide deck or it could be like a memo, but it's essentially called the "Board Meeting." The family board is sitting there, and you have to present on your year.
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Sam Parr | it looked like she was presenting to a bunch of people | |
Ben Wilson | Yeah, it was just you. Yeah, it was just me. Oh my god! But, okay, so I should say we're not totally crazy. Like, we did it kind of funny. Alright, I dressed up as Steve Jobs. I turned the black modeling gold glasses.
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Sam Parr | I'm not criticizing you I think it's cool no I just thought you gave | |
Ben Wilson | The wrong idea is that we were like getting hardcore, going over our numbers. A lot of it was kind of funny; it was played for chuckles. But it was a good opportunity to just reflect on what we've done and what we hope to do this year, and go over it.
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Sam Parr | so what was the did is that effective | |
Ben Wilson | Yeah, I mean some of the stuff... So let me read some of this stuff. Actually, me and Sarah.
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Sam Parr | I do the same I do the same thing | |
Ben Wilson | so my wife actually collects the stats | |
Sam Parr | and your wife's pretty alpha right | |
Ben Wilson | She graduated from a top law school in the country and then worked for Georgetown.
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Sam Parr | pretty fancy | |
Ben Wilson | Yeah, it's good. It's good. Law school, and then she works for a big law firm now.
So she took stats; she tracks all her mother stuff because we had a baby last November. I couldn't believe some of this stuff.
Like, gallons of milk that her body produced in 2021: **350**. Gross! Isn't that crazy? How does the body do that? That is crazy! I know, that blew my mind. **350**!
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Sam Parr | my god | |
Ben Wilson | So much... it's so much! That's hilarious. You track how much milk your wife made?
Yeah, she also kept track of how many nights she slept on the floor in our daughter's room. Sometimes she wouldn't sleep, and so it was **104 nights**—almost a third of the year.
Yeah, she slept on the floor in Claire's room. Now, the number of hours she spent nursing her was **1,800**, and then we tracked...
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Sam Parr | Her: "1800 in 1 year? Yeah, wow man, being a woman is so much harder."
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Ben Wilson | I know that helped me realize, like, wow, that's just another job in addition to your job. Like, holy moly, that's crazy! What else?
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Sam Parr | any other sense one of this | |
Ben Wilson | Yeah, she counted the number of times my daughter was obsessed with this book, *Monsters Come Out Tonight*, which is a Halloween book. She read it 62 times.
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Sam Parr | why does she do all this your wife just because she wants to show your kids | |
Ben Wilson | I don't know. She's just compulsive, actually. That's great! She's the type of person where in the morning she'll say, "Do you know what today is?" I never know because she always knows weird anniversaries in her head. She's like, "Oh, it's 10 months since this happened," and I'm like, "How do you know that?" But she compulsively tracks little numbers in her head. Apparently, she tracks them on her phone too.
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Sam Parr | Dude, your wife's Rain Man! That's sick. She's like a lactating Rain Man. That's lovely. Well, I...
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Ben Wilson | I might have to delete that. I don't know. I'll have to think hard before I decide whether to publish an episode in which we call her a "lactating Rain Man."
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Sam Parr | that's cool so what are your thoughts | |
Ben Wilson | on that compliment though right you mean as a compliment | |
Sam Parr | Yeah, well, it's neither a compliment. The "Rain Man" is... the lactating thing is just fact.
Yeah, the "Rain Man" thing is definitely a compliment.
Do you... is she caring? Is she earning more than you as you start your business?
Yes, that's pretty sick, right?
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Ben Wilson | it's nice I don't mind it | |
Sam Parr | you is she paying for everything | |
Ben Wilson | No, so she's actually still net negative because she just graduated in the summer and didn't start school until October.
My goal is for us to never have a year where she earns more than me. Not for any sexist reasons, I just... you know, that's a goal of mine. So I gotta make more money than her this year. But yeah, in the last quarter of last year, she made more money than me.
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Sam Parr |
So, alright, and that's actually... I think there's a lot of guys who are self-conscious about that. I feel the opposite. I'm like, "I want you..." Like, I wanna be the lazier one. I want her to earn more and just maybe... like, not have to work.
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Ben Wilson | I am self-conscious about it. I do like, I'm happy for her to have a career, but it's not so much about being self-conscious about her making money. It is a little bit of like, "Step it up! You gotta get your business into a place where you're out-earning it." Like, look what I'm out here doing, you know?
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Sam Parr | That's sick, though. It's pretty sick. I think, you know how there are articles that talk about your best financial decision? In my opinion, the best financial decision you can make—of course, this is a good decision for a lot of other reasons—is marrying the right woman. Amen. Or picking the right spouse, rather.
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Rob Walling | or just staying married right had did you have you read their millionaire next door where they're like | |
Ben Wilson | no | |
Sam Parr | what did they say | |
Rob Walling |
They look at all these factors that most millionaires have, and this is not Silicon Valley millionaires. It's like auctioneers and construction company owners. They say, "Here are all these factors":
- Most have never purchased a suit for more than $800 (I think)
- Most have never paid more than $200 for a watch
- The vast, vast majority of them never got divorced
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Sam Parr | Don't get divorced. Then that's great. Crazy.
I think even if you get a prenup, I don't think that... like, it doesn't... does a prenup only work for the earnings that you made before you got married?
Yes, so then who cares in most cases?
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Rob Walling | Exactly. Because you get married. I got married at 25. I was worth jack shit, right? It's like all the money that I've made in my life has been since I got married. I've been married for 21 years. | |
Sam Parr | So, does a prenup cover if you start a business and it's worth nothing, and then you get married, and 10 years later it's worth a lot? Does that count as... which one does that count as?
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Rob Walling |
That, I do not know. What I do know is a friend of mine got married, got a prenup, and he had crypto. He specified like, "These 100 Bitcoin are excluded," and they've gone up in value since, and they're still excluded. But I don't know if company shares act the same way. I would guess they would, but you know, we'd have to get a lawyer on here.
Are you streaming? Why are we covering this? It's like the worst, saddest topic.
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Sam Parr | No, here's why we're covering it. Ben quit his job to start a podcast—a popular podcast that's going pretty well. He works for us part-time as our producer, and his wife is a very successful lawyer.
I asked him, "You know, a lot of men might be self-conscious about that, about your wife earning significantly more than you. How does it make you feel?" I was just curious.
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Ben Wilson | has your wife ever earned more than you rob | |
Rob Walling | oh that's a good question | |
Sam Parr | well your businesses are like family businesses kinda right | |
Rob Walling |
Yeah, I mean, she runs her own thing, dude. I actually think... I mean, yeah, so when I left Drip 2 years ago, I sold a company and then I left it in 2018. I didn't work for 6 months, but it's like... so I was under anything. But then even after that, like starting TinySeed, I didn't take a paycheck for a year, and she was making several hundred grand at her business.
So yes, she has [been supporting us], but it's also like... yeah, but I sold a company. I think I'm excused at this point, you know?
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Sam Parr | my wife became a millionaire a a liquid millionaire before I did | |
Rob Walling | that's awesome | |
Sam Parr | because of did by 2 months | |
Rob Walling | was it like stock or what what do you have | |
Sam Parr | She worked at Airbnb for a long time. Then it went public in December, and I sold my company in February. So she beat me by two months.
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Rob Walling | you didn't feel you didn't feel bad about that at all did you | |
Sam Parr | Dude, I was pumped for her! I was so... I mean, the way that everything is ours, it was like, frankly, when she got paid, I was like, "Oh, I just got paid too!" I thought it was awesome.
We're live now, by the way, Rob. Oh great! Are you okay with that?
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Rob Walling | absolutely sir I'm always I'm always I was born ready yeah | |
Sam Parr | So, this is Rob Walling. Rob, I was just on your podcast like 2 weeks ago. Did it go well?
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Rob Walling |
Yeah, well, I got a lot of positive feedback actually. What was interesting is someone said - a couple people said, "You guys have real great rapport." Which is funny because we've never met. It's not like we're best friends, but they said we sounded like we were friends.
"You're naturals," you know? And I said, I think it's easy to have a podcaster on a show because they're just entertaining naturally.
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Sam Parr | And I've been reading your work for like **10 years**. Yeah, and I forget how long, but basically, Ben—he works with us—he's filling in for Sean today.
I sent Rob an email, like, in **2000**. I forget the exact year, but he pulled it up. I sent my first email to him years ago, saying how much I loved his content. Then, I was finally on his podcast, like, **8 years** later. So, it worked out.
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Rob Walling |
Yeah, and that familiarity certainly helps. I know that people who listen to my podcast and then appear on it know what to expect, and they're able to roll with it. Which is why before coming on here... I've listened to your show on and off over the years, but I listened to like the last 4 episodes just so I would have some familiarity.
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Sam Parr | what did you think | |
Rob Walling | I think they're great. You’ve got a big show here. I think you should change the name of the show. That's what I think. I think the name's off. | |
Sam Parr | the name is horrible | |
Rob Walling |
I know it's tough, and man, I have... You know, my podcast is "Startups for the Rest of Us," which I still like, but it feels long now. I've debated whether to change it. Have you guys actually considered it? Because I'm curious, what would need to go into a name change?
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Sam Parr | The problem is, we considered it about a year ago when we were smaller. Back then, we thought, "Oh, we're too big." At that time, we had around 300,000 or 400,000 unique visitors or listeners a month. We felt that we were already stuck.
Now, in December, we crossed 2,000,000 listens a month, and we're thinking, "Now we're definitely too big." Dharmesh, who is the founder of HubSpot and now owns a podcast, said, "You gotta change the name." I told him, "Dharmesh, it's way too late." He insisted, "No, it's not." He thinks we should do it, but I believe it's too late in the game.
Frankly, I think a bad name can sometimes be a good thing, but the name is quite horrible. I feel embarrassed to tell my barber and others about it. When they ask, "What's it about?" I'm like, "I'm not sure, but not much." It's definitely not about making your first million, that's for sure. | |
Rob Walling | Yeah, it's not "get rich quick." It's like a real business podcast.
And that's the thing: since you have subscribers, I've thought about changing the name of "Startups for the Rest of Us." I think I just change it in the RSS feed, and then I change it with Apple and Spotify, and it just propagates.
I think people would be confused for a few weeks. I guess all the incoming links would say "Sort of the Rest of Us" or "My First Million." But aside from that, I just don't know the backlash.
It's less about changing the name of a company, which is really hard because of the brand you've built. But changing the name of a podcast, I think, is... I'd like to think it's simpler, but I've never done it.
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Sam Parr | Our friend Nathan started this company called **ConvertKit**, which is amazing and I'm an investor in. It was crushing, and he changed the name to something... I forget what he changed the name to.
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Rob Walling | seva s e e a | |
Sam Parr | yeah which apparently does that mean something offensive in hindi | |
Rob Walling | It wasn't offensive, but it had a spiritual meaning. So, there was backlash, right? It was about cultural appropriation, which was the kind of phrase that was used.
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Sam Parr | Yeah, it's like a word in a different language, and people were like, "You can't name your company that." At the time, it was probably a 50-person company. They probably did some research, but they mostly just read the definition in the dictionary and thought it sounded cool. Then, like a week later, they changed it back to ConvertKit, which I think is a great idea. ConvertKit's a good name. | |
Rob Walling | Yeah, that's the other thing with the name change. Okay, so you're going to change "My First Million." What are you going to change it to? Because naming is really hard, right? Are you...? | |
Sam Parr | very hard | |
Rob Walling | I know some people who are really good at it. Most people are not, including myself. I struggle with naming; I always go too literal.
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Sam Parr | We would hire... I would hire one of those naming firms. I actually think that a naming firm is a great idea.
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Rob Walling |
Yeah, at this level and at the reach that you have, and the stakes and the resources you have, it would be a no-brainer. Yeah, there's someone really good... I don't know, do you listen to the Tropical MBA podcast by chance?
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Sam Parr | yeah I like those guys | |
Rob Walling |
Yeah, they had a really good kind of lower-budget naming person. I say lower budget, let's say $5,000-$10,000 versus, you know, you can pay $100,000 or more. She was super sharp. It was such a good episode, and she had like an ebook on how she does it.
I was intrigued by that just because... look, you and I are gonna be putting out new [products or content] - whether we rename things or put out new stuff - for the rest of our lives. So how do we get better at this, right? That's something I wanna do.
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Sam Parr | do you mind ben yeah what were you saying ben | |
Ben Wilson | I... you actually answered the question I was going to ask, which is, "How much is a naming service?" But there you go.
I mean, you know, I think like the thing about *My First Million*, like you said, sometimes a bad name is a good name. Because the thing is, it forces someone to react. Someone has to have an opinion about *My First Million*. They might not like it, but they're not going to just forget about it. They're going to think, "Oh, what's that?"
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Sam Parr | But dude, my companies are called **The Hustle**—horrible name. **HustleCon**—horrible name. Once, I was at a conference on content, and I called it **ConCon**. No, no. I have a meetup series called **Pizza in Forties** and our subscription service called **Trends**. Like, I'm not good at naming. I mean, **Trends** is good, but **The Hustle** is pretty bad. The... | |
Rob Walling |
The rest of them are tough because "hustle" now has this negative... or it has for several years. This "hustle culture," right, has a negative connotation. So I guess if you're leaning into that, at least it gets attention, but it's a tough one to do.
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Sam Parr | So, Rob, how do you describe who you are in a professional sense? I was going to introduce you, but you're pretty eclectic, and I don't even know the proper way to do it.
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Rob Walling | Yeah, I mean, bottom line, man. I used to be a software developer, and then I didn't want to work for other people, so I started startups.
First, it was, I mean, in 2006, it was downloadable software. There really wasn't SaaS, and then it became SaaS, right? That's what you do now if you're in software. So, I became a founder, a serial entrepreneur. I launched a few, acquired a few, and along the way, started blogging about it.
As you know, I've written three books about bootstrapping startups. I bootstrapped everything; I never raised funding. I'm not anti-funding. I think funding has a time and a place, but I am anti the narrative that in order to start a startup, you have to raise funding. That is just not the case. I think 1% of companies, 1% of tech companies need funding, and the other 99% really shouldn't do it.
So, around 2011, I then started a podcast. No, that was 2010. And then in 2011, I started my events called MicroConf. Just a couple of years ago, I launched an accelerator for SaaS bootstrappers.
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Sam Parr | So, I wanted to go to MicroConf years ago. I remember that, and I didn't have enough money to go. I'm going to have to go soon.
But what were the names of some of your software companies? I know Drip... Can you reveal how big some of these grew to?
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Rob Walling |
Yeah, Drip grew into... Well, I mean Drip is tens of millions now, but I sold it in... what year was that? 2016. I grew it to a few million dollars before I sold it.
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Sam Parr | You grew to $333,000,000 a year in revenue, and now it does tens of millions of dollars.
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Rob Walling |
Oh yeah, absolutely. I mean, this is email... email service providers are really any type of SaaS [Software as a Service]. If you double down on it and you stick around for a long time, this stuff just... it compiles. It goes up every month if you're doing it right, you know?
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Sam Parr | regret selling it | |
Rob Walling |
No, never. Not a day have I woken up and thought, "I really wish I was still working on that." I learned what I needed to learn, and we were a team of 10 when we sold it. It was enough money that I never had to work again, and that had been a lifelong goal. I was maybe 41 when I sold it, and that was a lifelong goal, you know?
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Sam Parr | to to have enough money to not work again | |
Rob Walling | yep and I knew I would I knew I would work | |
Sam Parr | well what was your number | |
Rob Walling | well I don't wanna tell you how much it's worth for but | |
Sam Parr | You don't have to tell me what you sold it for, but when you said, "My goal is to earn this much," what was the threshold for not having to work?
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Rob Walling | Oh, that's interesting. You know, when I was 25, I just thought it was $1,000,000. I never actually calculated it. Then, as I got into my thirties, I started saying, "Well, what's this 4% rule thing that you hear about in personal finance?"
Right, and I actually think the 4% rule is **bullshit**. I think you need to be a little more cautious, so it's about 3% to 3.5%.
So then the rule is, if you want $150,000 a year to live on and you have $5,000,000 in the bank, then the idea is that if you do the 4% rule, you can take out $200,000 a year and never touch the principal because stocks, bonds, and other investments, along with inflation, are working there.
So a 3% rule would give you about $150,000. I'm not using my numbers, but you get the idea. It quickly became apparent to me when I was in my thirties that I think somewhere between $5,000,000 and $10,000,000 is most people's number. It depends on where you live and how you live, but I think anything north of $10,000,000 is like... it is excess.
I'll say that I'm north of $10,000,000, and I feel like my life didn't change. There was some...
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Rob Walling |
Between 5 and 10 [million dollars], where it was like, "Yeah, that's enough." You know, I still like having the money and I do things with it, but definitely it's not like I would have had to work again, even with a major stock market downturn or something.
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Sam Parr | that's pretty cool 3,000,000 with 10 employees is is a pretty sick business when it's software | |
Rob Walling |
It was very efficient. We were also really... I mean, I was bootstrapped. I should have raised a round. I should have raised a seed round because it was way stressful and I burned out pretty hard on it. That was part of... there were several factors into selling for me.
I'm curious if you have talked about why you sold as well, but for me it was like:
1. If I can have enough money that I control my own destiny for the rest of my life, that was a big win. That was the only way I would sell.
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Sam Parr | that was the only reason why I sold | |
Rob Walling | Is this like taking the cash off and now you can do anything? I mean, I started a damn startup accelerator, right? We fund bootstrap SaaS founders. I'm not going to make money from that, and that's a 5 to 10 year play to make real money, right? To actually get the carry back.
Yeah, I take a salary, but it's like a token to what I could be making somewhere else. So I can now play the long game with it because I'm not thinking, "Oh, how am I going to do my big score?" I never wanted to be worth... my goal was never, "I need $100 million" or "I need $1 billion." I would be fine with that, but that wasn't the goal. It was to have that freedom.
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Sam Parr | I sold to have that, but I wish... the thing about my company is that I loved it. I mean, I still... I'm still here and I love it.
Like, I hate it and I hated those days where I'm like, "This sucks! I hate media! I hate dealing with people." Of course, I had those normal things.
But the thing is that I started my company because I was just blogging for fun when it didn't make money. I didn't actually think it was going to make money.
Now that I have something, I still do this because I am just compulsive and I love it. So, I love my company. I just wish... I wish I was wealthy so that I didn't have to sell it. Do you know what I mean?
Yep. And so, because now I know I'm going to have to go and start it again one day.
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Rob Walling | You're going to have to start something, and that one you won't have to sell, right? You'll be in a position where you can decide to do it or not. You can make bigger bets because if it goes to zero, it's not like you're sitting where I was in 2015.
At that time, I was literally worth $1,000,000 on paper, but I had actual liquid net worth of about $400 in retirement savings between my wife and me. I had about $50,000 in the bank, and our house had no equity because it had gone down or whatever. So that was it. I felt way overexposed to something tragic happening.
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Sam Parr | When you are doing $3,000,000 in recurring revenue, I'm not sure how you do it. Do people pay upfront or whatnot? But I've seen ConvertKit's numbers, all the public stuff that they reveal, and they didn't have a significant amount of cash in the bank. Was your situation the same way?
Absolutely, we... because like, you think 10 employees making $3,000,000, like, "Oh, you should have plenty of money." But what was the truth?
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Rob Walling | The truth is that growth just destroys cash. No matter how much cash we made, I was spending it on AWS bills. I was spending it with SendGrid. I would hire another contractor; I would hire another employee. The moment we grew by $10 in a month, let's say of monthly recurring revenue, I was like, "Great! Now I can hire another junior because, oh my god, we are understaffed."
At 10 people, we were way understaffed. I'm trying to think, and that's where my decision came in. I was either going to raise an angel round, like a seed round, or we should sell it. That was the decision: do we double down on this business for another 2 to 4 years, or am I ready to make that choice of letting it go?
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Sam Parr | and that so that was I I was a drip user who owns it | |
Rob Walling | Well, what's interesting is that Leadpages bought it. Leadpages had raised $38,000,000 in venture capital. It's actually a parent company called Avenue 81 Incorporated that owned Leadpages and then acquired Drip. So, there are two products under one umbrella.
Pretty soon, the Avenue 81 CEO realized the opportunity here is Drip. Drip is a multibillion-dollar opportunity, whereas landing pages, you know, the whole market at the time was $80,000,000, maybe $100,000,000. That sounds like a lot to us, but they're venture-backed, so they need to get to $1,000,000,000 in valuation.
They actually sold off Leadpages, and the company is now Drip. So, Drip owns Drip now, you know what I mean? It was a turnaround. I don't know if you've ever heard that this happened with Best Buy, where they acquired Geek Squad. Now, like, Best Buy would not exist without Geek Squad because that was essentially all their net profit over the last 15 years.
That essentially happened with Drip. They've just refocused the whole team, which has 170 employees, and I got to start handpicking people from the Leadpages team and pulling them over to help grow the team. So, when I left, there were over 100 people working on Drip. | |
Sam Parr | Do you feel like... remember when you're a kid and you see someone with another guy? You feel that anger and jealousy, and you're sad. Do you still have that emotion when you see "drip"?
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Rob Walling | I don't... but I will say that there have been some things that have happened that I haven't been happy with.
They raised prices, and they didn't do it very well. It was right after I left, just a few months later, and I thought, "You guys are better than this." I would have done that so differently. If I was in the room, I would have said, "Don't do that." They just did it really fast; they didn't grandfather anyone in. They made kind of all the 101 mistakes, and that sucked.
Then there was a huge backlash against Drip, which is part of my legacy. Drip is... you know what it's like. The hustle will always be associated with me as the founder, and I will always be the co-founder of Drip. They've messed with the UI; they've reshaped it and stuff. So when I go in now, I'm a little bit like, "I liked it the old way."
But it's not the ex-girlfriend thing. It's more of a "I did have to let it go," you know? I just had to let it go. I still use it. I mean, I'm in it every day. It's such a good tool.
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Sam Parr | Do you think that's a good sign? And then MicroConf, was that a big business?
When I started HustleCon, I researched you guys to steal ideas, but also to make sure it was a good business. I thought, "Well, Rob's pretty savvy and he's doing it," so I figured I could probably make a profit off this.
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Rob Walling | Yeah, it was definitely a side project, like a hobby, all this time.
Until about two years ago, when I left Drip, I had this big decision to make. I had this podcast—at the time, I had a co-host, but I'm solo now. I also had MicroConf.
Do I sell all of that? I literally thought of just leaving the whole entrepreneur, blogging, podcasting thing and going in a different direction. I was going to acquire a tabletop gaming website—the second biggest tabletop gaming website, right?
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Sam Parr | which is what's a tabletop yeah | |
Rob Walling | You know, like *Settlers of Catan* or *Dungeons and Dragons*. So it's not like a board game such as Monopoly, right? But then there are levels above that in terms of complexity and stuff.
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Sam Parr | which are booming right now | |
Rob Walling | Huge. Well, COVID helped, but also they're just super popular. So I was like, "That's a hobby of mine," and I really wanted to do it. Then I started talking to the owner of the site, who's a great dude. I asked him, "What are your numbers?" He started giving me the numbers, and I was like, "This makes no money."
He said, "Yeah dude, tabletop games make no money. You know, there's a few like Catan and D&D. There's like 10 or 20. Everything else kind of is..." I mean, I'm overgeneralizing here because certainly there are others, but it's not like startups. We are so spoiled with startups where we don't manufacture physical things. You don't have returns, you don't have excess inventory, and you don't have warehousing and all that stuff. The profit margins are thin, etcetera, etcetera.
So that's when I doubled down on all of that. And yes, your initial question was, "Is MicroConf a good business?" Yes. Will we sell... let's see... we'll sell low seven figures, like $1 million to $1.5 million, I think, in top line this year. Maybe somewhere in that range. I need to look at the budget. You can tell that I have someone running it because I should know that. I would know that number if I was actually into it. | |
Sam Parr | Will you be able to? And could... I mean, if you do a 1.5, I would hope that you probably do like $300 or $400 in profit.
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Rob Walling | I think so. Although here's what we do see: we are not running it as a profit machine. We are running it almost like a service to the community.
We run a bunch of the events at breakeven or at a loss. Our local events, where we go to San Jose, Atlanta, or Austin, Texas, tend to break even or lose money. We're doing it to try to just expand. The mission is to increase the number of independent startups in the world. That's what we want to do.
"Bootstrap startups" used to be the term, but it's not solely bootstrap. Some people raise small amounts of money. To do that, we have to get the word out.
So, we run it at a 10 to 20% net profit margin. We could make more money; we used to make more money five years ago or whatever, but there's just no need to at this point.
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Sam Parr | That that's a pretty sick side like a good hobby | |
Rob Walling | It was good. It wasn't when I still had Drip. We weren't doing a million because we were going to do 15 events this year. When I was running Drip, we were doing 3, but they were big. They were big events.
I'm trying to think of what our top-line revenue was even, and it was half... you know what, let's say half a million, $600,000 across 3 events. So it was good, but it's a brand, right?
Man, it's like the first year, in 2011, we went to sell tickets and we were like, "We're going to sell 200 tickets at $800 a piece or $500 a piece." And we sold like 70 at like $500. That's a... | |
Sam Parr | Shock... terrible. In the second year, it was that. By the third year, everyone was saying, "You're gonna make money off sponsors." And yes, you will, but it's going to take you 2 or 3 years for them to trust you.
What I didn't realize with events was that they buy like a year in advance. So, our first sponsorships were like $2,000 a piece. Then we started getting the $50,000 and $100,000 deals, but they booked a year in advance. I was like, "What?" It's a crazy business. | |
Rob Walling |
Yeah, I personally wouldn't... I kept saying to my... I had a cofounder with that, and then our event producer, and I kept saying, "I don't want to be in the events business." We had one event, and then we expanded it to two because we wanted to do one in Europe. Then we expanded it to three because we wanted an earlier stage event.
I kept saying, "I don't want to be in the events business," and they kept telling me, "That's the business. This is an events business. You started one, you know?" But I did it more as a... I wanted... I always thought of it as a community because that's like MicroConf has an online community and YouTube channel and all that stuff.
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Sam Parr | well it looks ben you look like you're about to say something | |
Ben Wilson | no no no I was oh you're laughing yeah I was just laughing | |
Sam Parr | do you | |
Ben Wilson | I I who who who starts a a business an event business and doesn't know it's an event business | |
Sam Parr | But dude, that was the same way I started. When I started Hosk, I was like, "This is stupid. This is just a means to an end. We're getting out of this immediately."
Then, it's like when you see all your friends starting software companies, you're like, "Dude, events are embarrassing. Why would I want this? This is stupid. It doesn't... it's too hard."
But then, once you get a little more confident in yourself, you're like, "Well, if I accept it for what it is, it's actually pretty neat."
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Rob Walling | Yeah, and there's nothing like it. Even let's say pre-COVID, from 2011 until this year, over the last 10 to 11 years, there have been a lot of online communities. Anyone can start one; you get a few hundred people together.
However, there are so few people who not only run in-person events but who do them well. If you can do that, it is an incredible competitive advantage.
And not even that we have that much competition, but it's not just like, "I'm going to run a business and make money." It's like the community of MicroConf is so tightly knit, and it's because we meet in person.
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Sam Parr | yeah you know | |
Rob Walling |
What I mean is... you have experienced this where you go to an event, you meet someone in person, and we... the retention rate was 60 or 70%. So you come back the next year and everybody kind of knows each other, and then you get new blood. You know, so there was... it built a way better community than if we did not have in-person events.
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Sam Parr | So, because of your job, besides your career, you see a lot of crazy software companies. Some of which may not necessarily be huge, but they could be surprising. You're like, "I cannot believe someone's making this work."
You probably are able to spot lots of opportunities. We asked you ahead of time if you knew of any software companies, and I'm curious if you were to think of any. Are there any software companies where you see and you're shocked that this is a problem that needed to be solved?
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Rob Walling | Yeah, I see a bunch. So, I have some ideas that I haven't seen implemented. Maybe we can dig into that later.
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Sam Parr | let's do yeah we'll do both of those | |
Rob Walling |
Yep, but there... so I'll talk about a couple. **TinySeed** is a startup accelerator I run, and as a result, you know, we've had across... what, 4 batches? Is that right? Four batches. We've had 2 or 3,000 applicants, so I've seen a lot of SaaS companies come through.
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Sam Parr | wow | |
Rob Walling | And what I've been surprised by is a ton of them. Let me just look at one right here.
So, CRM, or kind of customer interactions, applied to any niche. Take the smallest niche you can imagine, like home improvement contractors. The founder of Build a Prime is the size of SaaS. We funded it with Tiny Seed.
He had a home improvement project and he said the experience dealing with the contractor was fine, but the communication was like text and then email. Anytime there's a bunch of text and email, that can be a product.
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Sam Parr | what was the name build a what | |
Rob Walling | builder prime | |
Sam Parr | builder prime | |
Rob Walling |
Builder Prime, yep. And so, in essence, I think he might call it CRM for... Yeah, he calls it "best CRM," but really it's not only the sales process but then it's the communication during a home improvement project.
And so, like, shouldn't you... I would say, "Well, shouldn't you... couldn't you use Basecamp? Isn't it like project management? Or could I use Microsoft Project online?" Right? Because you could, but it's like, no, this is a strongly typed version of that that is completely built for their needs.
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Sam Parr | how's this going it's going really well | |
Rob Walling |
I can't disclose revenue, but I'll say anyone who's in batch 2... any of those companies are going to be, you know, mid 6 figures into 7 figures, right?
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Sam Parr | The founder of HubSpot, Brian Halligan, came on the podcast and told us that when they first started HubSpot, they were at a fork in the road and not sure which way to go.
For a minute, I think they even created it and had some sales, but they were like, "Well, let's make HubSpot a CRM, but then let's create a 'LawSpot'—so it's like HubSpot just for lawyers." Instead of making it one for everyone, they decided to create individual versions for different industries.
So, they thought, "Let's create LawSpot and just get lawyers to use it." That's kind of basically what this company, Builder Prime, is. You might ask, "Why can't you just use HubSpot? Why can't you just use Asana or whatever you wanted?" I understand that.
So, alright, this is a cool company. How big is the team on this? What about Ben?
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Ben Wilson | My other question is, do you have any companies, Rob, that you work with that are building apps on top of Salesforce or HubSpot? Are they building in those ecosystems, or do you think they should always go in the direction of Builder Prime and just build their entire own ecosystem?
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Sam Parr | we | |
Rob Walling | We have one that is built on Heroku. I'm trying to find one that's kind of built on WordPress. They actually do really well; it's Castos, a podcast hosting service. They're into seven figures.
But there's a platform risk with building on HubSpot or Salesforce. I had an angel investment that was doing really well; it was built on Shopify as a Shopify app. They started killing it, and then Shopify came knocking and said, "Well, you have to start paying us a big chunk of your revenue, or we shut you down." I mean, really, I would say it's shady, but it is what it is. It's platform risk.
So that's where we have to be aware. If you go to sell a SaaS company and you're solely built on top of a platform, you sell for a lower multiple than if you were on your own. As a result, when folks come in and apply and say, "Hey, I'm only on Heroku," or if we see Shopify apps come through, we have seen Salesforce apps come through. I don't remember a HubSpot one, to be honest.
What we say is, "Cool, it's not a nonstarter, but how are you thinking about this? Are you building for other platforms? How do you escape that?" Because, you know, when you're making $500 a year, no one cares. But when you're making $5,000,000 a year on a platform, they notice, and there's a danger there.
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Sam Parr | That's pretty cool. That's interesting. I mean, I knew that was true, but I didn't know that Shopify could change the prices that they charge.
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Rob Walling | seen it seen it happen firsthand yeah | |
Sam Parr | what else is just go ahead yeah | |
Rob Walling | There's another one. This one's interesting. It's called Scraping B, and the cool part about them is they are public with...
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Ben Wilson | their revenue so I can actually at least give you | |
Rob Walling | An idea: they crossed $1,000,000 in annual recurring revenue just 2 to 3 months ago. If you look at what it is, they allow you to scrape the web. For example, if you want to get all the products off of a particular e-commerce site, you can go in.
It's not a GUI; you need to write a little bit of code. However, they have all the servers that allow you to get around being blocked by APIs or whatever. When you think about this idea, it sounds like a nice little $5,000 to $10,000 a month idea, right?
They're doing north of probably $100,000 a month right now. I haven't looked at their revenue recently, but...
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Sam Parr | it says they're getting 2 employees | |
Rob Walling |
Yeah, it's 2 employees. It's the 2 founders. Why they're doing it... it's crazy. We're encouraging them to hire actually, because here's the problem: Let's say they wanted to sell - I'm not saying they do, but if they wanted to - that's a problem. They would be worth more if they were a team of 5 or 10 than if they're only 2. Because they're making a bunch of profit, but there's risk there, right?
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Sam Parr | Do they... is this like one of those public revenue things on like the bare metrics or whatever?
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Rob Walling | You know, I think they just disclosed it on Twitter. It's Peter DeWolf. Every couple of months, he'll say when they hit a milestone. He'll be like, "We hit this!"
The co-founders, Pierre and Kevin, are really cool and transparent. They talk a lot about content and SEO, and they have grown at a crazy fast rate.
If my memory serves me correctly, when they joined TinySeed, they were at $4,000 a month. This was about 18 months to 2 years ago. So, to go from $4,000 to ostensibly what, $90,000 to $100,000? They're in that range a month. Pretty cool, these guys.
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Sam Parr | these guys should raise money maybe | |
Rob Walling | yeah they should they could if they wanted to it's up to them right | |
Sam Parr | But the valuations right now for a company that's growing quickly and has $1,000,000 in revenue are like $50 million to $100 million.
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Rob Walling | yeah it's nuts I know | |
Sam Parr | So, like, if you could raise $5,000,000 and just do 5... I mean, that's kind of intro. That'd be easy to justify.
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Rob Walling |
Right, but it depends on the founder. That's one of the things that a lot of bootstrappers... they don't want to get on that [venture capital track]. Once you raise that money, now you're on the venture track, right? And it's like, "I gotta raise every 2 months, I'm supposed to burn money."
From a supplier, yeah, but we're different. TinySeed's for bootstrappers, and so with TinySeed, folks can run their business and take profits out. We actually fund LLCs, and they can take profits out if they want or... do they?
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Sam Parr | get paid | |
Rob Walling |
We get paid if they take profits out because we buy a percentage of their equity. So basically, if they take dividends out, we receive our pro rata share. Or if they were to sell the company, again, we own stock (or units in LLCs), so we get that percentage when they sell.
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Sam Parr | But is that actually going to be profitable for you? Do you think it will be more so than trying to do the traditional model, where you throw stuff at the wall and maybe 10% works?
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Rob Walling | Right, well, we are still in the traditional model. We've funded 59 to 60 companies to date, and we will fund another 100. We have enough money right now to fund another 120 to 150 in the next three years.
So, we are still in that model of making a lot of bets. What we see is that our bets... I don't think we will have a $1,000,000,000 outcome. I just don't see that being reasonable. I think we have a lot of $10 to $50 million, or $10 to $100 million outcomes.
We've run a bunch of models, and in fact, if you go to tinyc.com/thesis, you will see my co-founder, who was a data scientist with a PhD in computer science. We ran a bunch of backtesting on anonymous SaaS data. I think it was several thousand companies, and we looked at our funding approach versus what it would return. It will return venture-like returns with, I believe, lower downside risk because we invested in the early stage at low valuations, in essence.
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Sam Parr | wow what else is interesting to you | |
Rob Walling | yeah you want another another company | |
Sam Parr | no tell me what ideas do you think there's opportunities then | |
Rob Walling | Yes, alright. So here's the thing: I always start with ideas. I'm such a B2B SaaS founder, right? I start with the problem.
Anytime I see someone doing something in Excel or a Google Sheet, I think to myself, "That could be an idea." If there's a bunch of emails or texts back and forth, those are because it's communication or just storage.
There are a couple of things that I'm pretty fascinated by. One is that podcast apps are doing quite well. Like, we're in Riverside now. I've funded and I'm invested in Squadcast, which is a competitor of Riverside.
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Sam Parr | we use both of them we're using riverside now we use squadcast we use zencast we use zencast | |
Rob Walling | I was with them before, yeah, with Squadcast. And then, of course, podcast hosting. There’s Castos, Libsyn, and others.
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Sam Parr | we use that I think | |
Rob Walling | Even podcast editing, like Alitu—I use Audacity, and then my editor uses Adobe something or other. But like Alitu (A-L-I-T-U) is podcast editing in the browser.
So, the stack is starting to get there. We have disparate tools to do things. But when HubSpot launched... So, I know Dharmesh. Right? Dharmesh and I were bloggers and speakers. We met at a BOS in 2008 or something.
I remember when HubSpot launched, and I remember thinking, "But all of these things exist." In the early days, HubSpot was like a blog, I think, plus a marketing website, plus Google Analytics. I don't remember what it...
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Sam Parr | email capture form or something | |
Rob Walling |
Something like that. It was very simple, but I remember saying, "Dharmesh, I could build that, you know, with Mailchimp + WordPress." You know? And he's like, "Yeah, but business owners don't want to do that. They want to bundle."
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Sam Parr | and he was right | |
Rob Walling |
I think he was right. I said, "They're public and you guys are an amazing company." I think of the same thing with podcast production. Right now, I mean, I've been running a podcast for 11 years, and I have people helping with it. I literally am in Notion dragging this thing over here and then sending an email to my producer to do something that we then log in to Castos to upload. You know what I mean? It's like, where's the HubSpot for that? Where's the bundling of the podcast stack?
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Sam Parr | I have a strong opinion. I have two strong opinions.
The first is, I'm almost certain—no, I'm partially certain—that for the most part, podcasting software and podcasting tools are a horrible business. This is for a few reasons: very few podcasts are successful, and most of them are broke.
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Rob Walling | here's here's the counterpoint to this | |
Sam Parr | because I I'd like to be committed | |
Rob Walling | To that investor, I see the numbers. Alright, Squadcast is doing several million a year in revenue, and they're not doing it on the fly fishing podcast.
Think of the three avatars for a podcast. There's the hobbyist—my Dungeons and Dragons podcast, my fly fishing podcast—and they're broke. They're going to pay $9 a month, right? And they're going to churn like crazy because they're going to start and realize it's too much work.
Then there's the next tier up, which is startups. For the rest of us, I'd say my first million is in that category. It's like a single show, but if I go to pay $100 a month for Squadcast, $100 a month for hosting, it's not a big deal to me.
I don't think it is to you either. So it's not $9, but for you, it's like $100. I think if I were to say, "Oh, my first one should pay $500 a month for each of these," you might start to feel like, "I'm not sure that's worth it." But there's a number there.
And we don't churn. I mean, I've been doing it for 12 years, and you guys have been doing it for several...
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Sam Parr | it's like the the the s and b of of podcasts | |
Rob Walling |
It's the SMB that actually sticks around. There's:
1. Hobbyists
2. SMB (Small and Medium-sized Businesses)
3. One level up
Then there's:
- iHeartRadio
- ESPN's podcasts
- Kevin Smith's podcasts (SModcast)
- Kara Swisher has a whole network
- Gimlet Media
- NPR
Like, once they especially went remote, that's the enterprise level.
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Sam Parr | But how many of those are there? For example, I think Vox was trying to sell their services. All media companies are like, "Oh, we built this proprietary technology to get our articles shared better," and things like that.
That's cool; I would love that technology. But they want to go out, like the Washington Post is doing, and sell their software. I'm like, how many media companies could actually pay $100 a year for software? Most media companies are broke.
So that's my same thing to podcasters. Alright, I agree those exist, but I need to be convinced that there are enough of them. | |
Rob Walling | ben was gonna say something we should let him talk | |
Ben Wilson | I was blown away. We got a pitch from one of these recording companies, one of the ones that Rob mentioned. I won't say which, but I assumed that the pro tier Rob was talking about would be like 10 times what a normal plan was. It was actually like 100 times. It was like... [the cost was] + a month for...
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Sam Parr | a month a month a month for for some of these pro features | |
Ben Wilson | Yeah, and the squats... I was blown away. I could not believe it! I was blown away. But anyway, you know, it's worth it for a lot of people.
So anyway, for that type of company, you don't need that many customers. I think that's maybe the... really.
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Sam Parr | do you get crazy amounts of features with dollars a month | |
Ben Wilson | I mean they're cool they are cool features they're cool features | |
Sam Parr | wow that is crazy | |
Rob Walling | that does sound high I will admit that's crazy where you don't need that you don't need that many | |
Sam Parr | Okay, so podcasting is... you're saying it's a good business because there's actually enough customers to make it work, right?
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Rob Walling | Yeah, and podcasting has this other thing that I think is undervalued or just not talked about enough. It's this concept of a **dual funnel** or a **split funnel**.
You have, you know, who else has this? **Electronic signature** (e-signature) has this as well. You have this super wide funnel with either free users or very inexpensive users on the low end. A lot of people use it, thus you build a brand. You just have 5,000, 10,000 customers—whatever. Some are just users, some are customers.
Also, if you have any type of **viral loop**, that's amazing, right? You send the link to **Squadcast** or **Riverside**, or you send a link to get a document signed. Oh, a little bit of virality!
But then on the top end with the signature, similarly, you have realty mortgage brokers who need 8,000 documents a month signed. Suddenly, that's at $10,000, $20,000, $30,000 a month.
That dual funnel is incredible because if you're just enterprise, then you're enterprise, right? It's like **Oracle** in the old days. It's like, "Alright, so we need to close 500 deals this whole year, but each deal is $1,000,000 or $2,000,000." I mean, that's like these massive deals, and it's just this grind of enterprise sales.
But when you have the low-end funnel and the high-end funnel, it feeds on itself and helps you have a more stable business.
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Sam Parr | The companies that are able to charge six figures a year for software, do you think that a lot of times their software is actually better than the $5 a month tools that are in the same category but for different people? Is it, you know, if it's $5 a month versus $500,000 a year, is it actually a thousand times better?
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Rob Walling | no it's not and I would it's not $5 a month I would say | |
Sam Parr | or whatever | |
Rob Walling | A more accurate comparison is, you know, if I'm paying $250 a month versus $25,000 a month, that's a 100x difference. Those are probably relatively similar.
In fact, a lot of the pricing advice we give to our founders, or that I give on the podcast as well, is that the moment someone approaches you—a potential customer—and says, "Cool, we like your software. We need to redline your terms of service," or "We need to invoice with POS," or "We need single sign-on," or "We need a Salesforce integration," there's this whole list of things that should instantly trigger a price increase.
You should pay about 100 times more because the sheer headache of dealing with procurement and going through that process, along with the maintenance and all the interactions, is significant. It's not that the software is better; it's that the time, headache, and pain of making that sale and maintaining that customer is where the money is spent.
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Sam Parr | But is it that hard to do the single sign-on? Or is there not like an 80/20 rule that you can apply, where it works for most high-end customers?
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Rob Walling | Well, there are two things, right? It's: are we pricing on value? Because I price on value.
You can price on cost, you can price on value... what's the third? I forgot what the other one is.
Anyways, I'm certainly not pricing my SaaS on cost because I would have no margin. So, I'm going to try to price based on the value.
I could build single sign-on. It's like, "Hey, let's let everyone have it," but it's a trigger that that company has the ability to pay. Frankly, they're going to get a lot more value out of it than a one-person team using it.
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Sam Parr | right | |
Rob Walling |
You know, it's like Gimlet Media versus Rob Walling comes to sign up for your podcast recording. It's like Gimlet Media should pay a lot more than me, not because they need that many more features, but they just should. Their whole business is built on it, and they're making millions of dollars.
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Sam Parr | more than them yeah well any other ideas that interest you at the moment | |
Rob Walling | Oh yeah, so I gotta be honest, man. I mean, this is not even a SaaS idea. I'm just gonna throw it out there. You know the website Examine.com?
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Sam Parr | My favorite website out there? Yep, I would put it in the top 10. I'm a paying member. There's a new one that I'm looking at called Consumer, which is like Examine.com but for vitamin brands. Yep, anyway...
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Rob Walling | So, yeah, I love it. It is nutrition information you can trust. I interviewed the founder on my...
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Sam Parr | I love sol sol's he's great | |
Rob Walling | I interviewed him on the podcast. Sherry, my wife, has been friends with him for several years since I met him at an event. I had him on the show, and I was fascinated by it because I'm like, "It's nutrition information you can trust," right?
And you know that when I'm saying it for the audience. Where is the Examine.com for crypto and NFT, like for Web 3 stuff? Because I feel like there's so much crazy information out there. There are so many opinions and religious, you know, not true believers—just religious fervor.
And the Bitcoin maximalists and stuff... it's like someone can do this right in the business.
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Sam Parr | The business... so let's talk about that.
I've talked about Examine on the podcast a ton because I think it's one of those sites that I see. I don't think I know how big they are. I mean, I would imagine not big, like $2 or $3 million a year in revenue, but I have no idea. That's just a guess.
But I know it's not big because they don't hire a ton of people. I was like, "This is one of the most under-monetized sites I've ever known." Well, I actually think that Examine could be significantly more profitable. I think it could be a $100 million a year business.
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Rob Walling | how how how do you think | |
Sam Parr | So, there's a bunch of... I think that they, for one, don't do any affiliates. Something like Wirecutter, you know, Wirecutter.
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Rob Walling | mhmm yep | |
Sam Parr | So, in the New York Times, you know they're a publicly traded company. Their Wirecutter revenue got classified now as "other revenue." I've been trying to decipher it and figure it out. They do something like close to **$100 million** in sales from affiliates.
Examine doesn't want to do that, but I think they could. I think they could do it in a tasteful way, and it could work wonderfully. Because what Examine doesn't do is they don't tell you which brands to buy, but I think they should. That's what I want, and that's what a lot of people want.
Additionally, I think you could sell to doctors. There's actually another company out there that does like **$400 million to $500 million** a year in sales, and they sell to doctors. When you go to the doctor and you have a rash, they just look it up—it's like Wikipedia for doctors. The latest studies are there on that.
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Rob Walling | Interesting to examine. You know, I didn't talk to Sol about that, but they don't want to do it because they don't want it to taint the... yeah, they want to become a review site. I mean, that's why we don't trust review sites, right?
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Sam Parr | It's the... but I trust some. I trust Wirecutter.
Yeah, I mean, I think there's a way to solve for that. Like, mhmm... like, dude, if Casey Neistat, who is a YouTuber I like, tells me about a cool product and then there's an affiliate link, I don't care that it's an affiliate link.
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Rob Walling | right | |
Sam Parr | But anyway, what exam? I also think Examine.com could work for injuries.
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Rob Walling | Oh, like medical... like, "Hey, my knee..." because, like, to get the definitive answer, yeah, this is that. Or just illnesses in general, right? You Google symptoms.
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Sam Parr | and rehab yeah | |
Ben Wilson | would are you sick or injured enough to make that a thing that you | |
Sam Parr | would pay monthly subscription for | |
Rob Walling | not me well | |
Sam Parr | I don't know if you could make money through subscriptions with that, but I do think that when you have an Achilles injury and you're desperate, you'll do anything. You just need to learn.
I remember when I was researching for my leg pain. I went to all the studies and read everything. I thought, "I'm just going to figure this out." I'm not going to read like an eHow article on how to do this; I'm just going to go to the source.
So, how does Rob operate? Do you know how Examine.com works? Because all they do is pour through all the studies and find the ones that have a good sample size and definitive proof. They make a list of things that work for sure, and then they have another list that says, "These seem like they might be able to work, but we can't say for certain." Finally, they have a list of things that are not trustworthy. | |
Rob Walling | Pretty much, yep. Their big hit early on, he said all this on the podcast, was all about SEO, right? It was organic. Then they took a Google dive at some point—I don't know when it was—but they had already implemented their subscription revenue. I don't even think that they had ads at one point. I don't know if they do anymore.
I'm actually on the site looking around, but yeah, that's it. That's how they write the topic. And their value? It's the brand; it's the trust. You know what I mean? That's why everyone goes to it. They have built that brand that you trusted, and I trust it.
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Sam Parr | But how do they do that, though? They literally just have one. They go, "Alright, editorial team, this week, Steve, your writing topic is building muscles. So go and research everything that helps you. Go research creatine, protein..." | |
Rob Walling |
So if I were them, I would be looking... They've been around for a decade now, all the topics have been covered. I'm only looking for new information, right? I'd be monitoring all the journals, all the whatevers, and have subscriptions to all that. I don't know exactly how they do it, but that would be it, right? It's having... essentially Google Alerts for all the new medical stuff. You just want to keep it updated.
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Sam Parr | that's crazy | |
Rob Walling | I can't imagine there's a ta a new topic they haven't already covered in their thousands of pages | |
Sam Parr | and this would actually make way more money in crypto | |
Rob Walling |
Totally. I mean, there are several niches where this would be interesting. The hardest part is there's a bunch of crypto news sites, and when I go to them, I just don't know... I don't trust them.
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Sam Parr | Yeah, you don't know. Are these guys like hardcore libertarians who think the world's going to "hand-fuck" money, like "fuck cash" because it's just stupid? Or are they... you know, like a great way to explain it is basically, do you remember the Mac versus PC ads?
There was a cool-looking Mac guy versus a nerdy PC guy, and do you remember the animosity that created between Mac and PC users? Now imagine if each person who owned a Mac or a PC had $1,000,000 of Apple stock. That's like... that's like the... | |
Rob Walling | the hate | |
Sam Parr | that's like the vibe that you're gonna get | |
Rob Walling | that's right and so they just fervor with money behind it now | |
Sam Parr | And so, it's very hard for me to hear a crypto guy. Even Sean, who's one of my best friends, I know he's got a lot of crypto. So I'm like, "But is this because you are telling me what you want to happen or what you think will happen?"
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Rob Walling | right | |
Sam Parr | so it's actually really interesting how what would you do to build that | |
Rob Walling | I would start by saying the first thing you have to do is build credibility. You have to start there.
So, I'd probably start a podcast so that people could hear my thinking week to week. I would definitely attend all of the crypto events anywhere to get into the network and build trust. Because if people don't know you, if you're anonymous, then no one's going to believe it.
So, I would get into the network and then follow the model. I would look at what it examined. Do we know anyone who has done this model? What did they do in terms of content?
Then, obviously, I would just hire writers, look at the white papers, and give our opinions.
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Sam Parr | And this is actually a cool business because this business could last 100 years.
If you look at Consumer Reports, it has been around for decades. They still do well, generating revenue in the 9 figures. Consumer Reports is a review site that people pay money for. They are a nonprofit, so all of their expenses and revenue are public, and they are still growing.
If you do a good job of building a brand on this topic and start reviewing products effectively, you could review many other things and last for a very long time. It's kind of a cool company.
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Rob Walling | yeah yeah they are still kicking | |
Sam Parr | anything else interest you | |
Rob Walling | I am interested in... I mean, you know, normally boring businesses are my favorite, right? Because it's like B2B SaaS is the way to go. I think anytime you can take a concept, like we've said with Builder Prime, you know, where it was just like CRM for customers.
We have another company we funded called Client Hub, which is basically project management CRM for accountants. Then we have another one that's called Gymdesk, which is basically to run your gym business on it. It's like a kind of CRM and communication tool.
So, it's like, how many niches are there where that works? Some of these are going to be 7 or 8 figure businesses. Some of the niches are going to be very, very small. But that's where you just have to pick. It's like, "Hey, am I a lifestyle bootstrapper because I want a $10,000 to $20,000 a month business?"
But I like these ideas of... you know, it depends on your ambition. If you want to stay small and just build an incredibly profitable business with 2 people working on, you know, $100,000 a month, I mean, you can enter a less competitive space.
If you want to grow big and grow faster, then you enter a space like electronic signatures or calendar scheduling links. We've funded companies in both, like a Calendly competitor and a HelloSign competitor or whatever. There's a lot of competition, and you have to move faster, but the market opportunity there is just tremendous.
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Sam Parr | Do you... what do you... how do you decide if it's going to be an 8-figure idea or much smaller? Is there a metric that you look for?
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Rob Walling | Yeah, that's an interesting question.
I usually say, with tiny seed companies when they apply, if your ambition is to build a **seven-figure** and/or recurring revenue company, then you're in the right place. We get some people who say, "I really want just a half-million-dollar business." It's like, great, that's going to be a great business for you, but that's not really fundable for us. It just doesn't make sense.
I think a big piece of whether it can get into the market is that we'd love to see mid-seven figures and up. Right? But a big question of whether it can get there is less about market size because most markets are big enough. There are few markets that are too small. Most of it is the metrics of the business.
This is where we look at the churn and we look at the pricing. If everybody's too price-sensitive... Earlier, if everyone's a fly fisherman podcast and everyone's paying, you know, $10 to $20 a month, and that's kind of where most people are, and then your churn is 10%, like, you just can't... it's almost impossible to build a $1,000,000 or $2,000,000 business. But when you get to the...
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Rob Walling |
Where, hey, my average revenue per user is $100 or $500 a month and your churn is 2 or 3%, you would have to own the whole market. Like, there's almost any market... is big enough that that can be a $5,000,000 business.
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Sam Parr | Alright, my last question: How many of these folks building software companies, that you see yourself included, are non-technical?
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Rob Walling | well that's a great question and it's | |
Sam Parr | not they are nontechnical what do they do | |
Rob Walling | Yep, so I'm a developer... or I was. I haven't written code in years.
But we actually conduct a state of independent SaaS survey and we put out a report—it's like an industry report. We asked the question, "Do you have at least one technical founder?" The options were yes or no.
The number of SaaS companies, kind of bootstrap SaaS companies, with zero technical founders is, I believe, around 20% to 25%.
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Sam Parr | wow it's very possible | |
Rob Walling |
It is, and usually the expertise they have is either:
1. They're the subject matter expert
- "We're gonna build software for accountants. I was an accountant for 20 years."
- "We're gonna build software for UX designers. I was a designer for 10 years."
2. They're sales or marketing experts
That's what they should have. Now, we've seen where there's a developer and then there's like the business person - the "business guy" or...
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Sam Parr | how means like anything this is | |
Rob Walling |
But yeah, it usually winds up meaning you're not actually that helpful and probably shouldn't be a cofounder, you know? If you can't sell or market, or like have input on the product, or develop it... those are really the four roles. You probably shouldn't be [a cofounder] if you can't do one of those.
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Sam Parr | So, if I'm not technical, but I can tie stuff together and use Zapier, and I'm super creative, how do I start a software company without hiring? Or maybe hiring is an option, but without having a co-founder?
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Rob Walling | Right, so for you, since you have money, you would either acquire something because there's always stuff for sale that you may want to acquire and then just grow. If you have market content marketing expertise, you would hire a developer or an agency to build it.
If you don't have the money, a lot of non-technical people will work a day job and actually funnel money to the side to pay for a developer to do it.
The other two approaches I've seen are exactly what you said, which is, "I'm going to build my minimum viable product using Zapier and Notion and chewing gum." I'm just going to cobble it together to the point where, hey, if I get a few grand a month in revenue, this proves it, and I'm going to use that to get it built. It's a harder way to go, but it's possible.
The last one I've seen, which is genius, is what the founder of Castos did. He's a single founder, not a developer. He worked a day job and started a productized service for podcast editing. He got it up to, I forgot what the number was, $30 or $40 a month in productized podcast services. He was one of the earlier ones; it was called Podcast Motor. He was working a day job the whole time.
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Sam Parr | He was in that job actually doing the editing. Or he would... no, he did it at first and then got someone overseas. Exactly.
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Rob Walling | yep | |
Sam Parr | yep | |
Rob Walling | Yep, or even as folks in the U.S. and Canada are doing it. There was enough profit margin that he then started reinvesting. You know, he said, "I will now... I want to build."
Now that I'm doing podcast hosting, he actually was in the podcast space. Someone said, "I have this WordPress podcast plugin for podcast hosting on WordPress, and I want someone to kind of adopt it." Since he was doing something in public, they approached him. He bought it for not very much money, and then he built the entire... you know, what again is a 7-figure business.
He's raised, you know, aside from us, he's raised three-quarters of a million dollars, and it's grown fast. So that's the other way to do it. I even... I was a developer, and I had to do it nights and weekends too. You know, I was pulling money away from the day job.
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Sam Parr | For the agency and hiring a developer, what's the best way to do that? A lot of these folks, like when I was starting, everyone said, "Oh, just go on Odesk and hire someone in India to do it." I'm like, "I don't know, man. That doesn't sound like I can..." Like, you can't really... yeah, so what are... | |
Rob Walling | you tough | |
Sam Parr | What are there any agencies that you like for hiring developers? Are you hiring someone by the hour in America? What do you typically see?
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Rob Walling | Yeah, I typically see a lot of people going through referrals. You get into a community like MicroConf, Connect, Indie Hackers, or whatever, and you ask, "Who has used someone whom you trust?" Right? So you try to get that referral. It's not just a flat look because going to Upwork, which used to be Odesk, is kind of a shit show these days.
The other thing is there are now these referral services or aggregators. There's one called Trustshoring, which is run by a guy who attends MicroConf. He basically knows a bunch of Eastern European dev agencies. If you come to him and say, "I want to build an iOS app," he'll say, "Cool, I have these three agencies that I refer to." He's almost like a broker. | |
Sam Parr | in a way yeah | |
Rob Walling |
But he's a good dude and he knows them, you know? And he's vetted them. Then there's one called CloudDevs.com, and they do a similar thing for Latin America. So, the next one...
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Sam Parr | do you like do you like top towel or anything like that | |
Rob Walling |
Toptal's good. It's expensive, right? Because I think it's under 15 hours... So it depends on budget and all that. If you're scraping by, I haven't used Toptal, but I've had friends use it and I heard quality was really good in the early days. And of course, like anything, it gets, you know, less and less [effective over time], but that's certainly something you could try too.
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Sam Parr | how much would you budget to create an mvp | |
Rob Walling | It depends on what it is you're talking about. Like a SaaS app.
Here's the other thing, man. If you are non-technical and you've never started a startup before, I would say **don't build a SaaS app**. It's too hard.
I have this thing called the **stair step approach to bootstrapping**, which is like starting small with something like a WordPress plugin, a HubSpot add-on, a Salesforce add-on, or a Heroku add-on. Go build that.
Cut your teeth at it. It's way less expensive and way easier to maintain. You get the experience, you generate some revenue, and then you can grow it enough to buy out your day job.
Maybe $8 to $10 a month. Then, now you have experience, and you can double down and do it.
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Sam Parr | it is awesome | |
Rob Walling | To your question of building an MVP of a SaaS app, it costs between $10 to $30. It's hard to throw that out.
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Sam Parr | but and you think a nontechnical person could actually maintain that and understand what's going | |
Rob Walling |
Well, no, then you'd need to have that agency stick around. That's what I'm saying. If you're non-technical, you either need some money... I mean, this is why, folks, you build it and you pre-sell it. You get to the point where there's enough revenue that you can then justify raising funding. Right? If you're not technical, or you have a side job that's putting money into it...
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Sam Parr | Well, thanks for coming and talking about this. You have a good view of what's going on in this space. I think it's badass. Ben, what do you think?
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Ben Wilson | yeah that's great thanks so much for coming on rob appreciate it | |
Rob Walling | absolutely thank you guys I really appreciate it | |
Sam Parr | good this is awesome do you wanna give a pitch where where do where do you people follow you most | |
Rob Walling |
So, I'm on Twitter at **@robwalling**. Frankly, if they listen to this podcast, they would probably like "Startups for the Rest of Us." It's more focused on, you know, SaaS and startups. [It's] 35 minutes every week for 590 episodes.
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Sam Parr | That's badass! I'm a fan. I've been listening to you for a long time—almost 10 years, it feels like. Thank you! This is awesome. Thanks for coming.
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Rob Walling | thanks so much sam | |
Sam Parr | boom that's it |