EP72: Nathan Barry – “The hardest thing I’ve ever done is SaaS”

Product People: EP72: Nathan Barry – “The hardest thing I’ve ever done is SaaS”
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Nathan: This is Transistor FM

Friday.

Here we go.

All right. Welcome to another episode of Product People. Episode of 2015,

Justin: Justin Jackson here. So glad you could make it today.

Justin: It's been a long time since we've had an episode here on the Old Product People podcast. If you've been wondering where I've been, I've been doing another podcast called Build and Launch.

You can check that out. Build and launch.net. The idea was to do an experiment where I'd be building a new product every seven days and recording my audio journal, recording what it's like every day to do that stuff. And, um, Just finished season two, and I'm hoping to do another season of that show, but if you haven't checked it out, the back catalog is worth listening to, I think.

Anyway, and the episodes are really short. They're like 10 to 15 minutes and there's usually some good takeaways and also just, you know, uh, commiserating with someone else who is trying to build and launch his own thing. So if you're a maker, it's uh, yeah, we're checking out build and launch.net. Now this episode of Product People came about because I was chatting with Nathan Berry on a Slack channel, and uh, he had just reached, I believe $5,000 a month in recurring revenue.

And this was significant for him in his, uh, he has a SAS app called ConvertKit. So I thought we'd talk. So let's do it right now.

All right, so I've got Nathan Berry here and I thought Nathan and I would jump on a call because he's kind of got this stream of consciousness going on right now in terms of, uh, announcing. Kind of where he is at with ConvertKit. Let's see if I can share just this tweet just so we can both look at it here.

So two weeks ago you announced that you had fit. You had hit 5K in Mr. R. Yep. And since then you've added 1200, which is awesome. And now you've also made your, um, your numbers completely public.

Nathan: Yeah. So you can go to convert kit.baremetrics.com and see everything, just to share a little bit more of the story.

Mm-hmm. I've been working on converting for. Uh, coming up on two years, cause I started January, 2013. Uh, yeah. And it had, if you can see the revenue numbers, if you go look at, at Baremetrics, but, um, basically it had dropped down to about $1,200 a month. And so it was. For the first time ever losing money. Um, cuz they'd always built it off of just revenue.

Yeah. And, and it was this pain to handle and, and that, so, and we lost one account that I thought should really stick with us. And, and then that's when I realized that our software wasn't as good as it should be because we weren't spending, you know, we weren't continuing to make it better because we didn't have the money to do that.

And so I decided okay, either. Put it on autopilot and move to profitable projects or double down on it and, and really focus on it. And so that's been the focus game,

Justin: that that's, that's a big cause when you know you've got something that is bringing in cash, like, like you were with books and courses.

Mm-hmm. And then you have this kind of thing that is completely undefined and you know, that a lot of people have failed at. There's good companies with a lot of funding that have failed at building a SaaS product. So what made you kind of tip over to, cuz this is a big risk for you, so what made you tip over and decide you were gonna double down?

Nathan: Um, I had a couple ideas that I hadn't. Really, it came down to two things. Um, I realized that I hadn't focused on a niche Yeah. And really given that a good try. And I had this niche of email marketing for authors that I wanted to try. Yeah. And, and the other thing was I felt like I'd never given ConvertKit my, my absolute best shot at making it happen.

It had always been a side project. So at MicroCon, um, last year in Vegas Heat, and Shaw asked me, he was like, so, He, he, he was really nice about it, but he was basically saying, so at what point are you going to decide like that convert had failed and shut it down? Yeah. Like, are you gonna be honest with yourself about all of that?

And, and put your efforts on something that, you know, basically he was just saying like, make up your mind. Yeah. And do something, don't hobble along for years with this thing that might not ever turn into anything. So I was thinking about that. Obviously it took me, what, six months later that I was really thinking about his advice.

Yeah. But, um, and so I was thinking, okay, I need to feel like I really gave it my best shot before I can decide it didn't work and, and shut it down. And it's a tool that I absolutely love. So shutting it down would involve, like, I'd still use it for everything and Yeah. You know, it basically put it on autopilot and all of that.

And so I decided, At least to give it a real shot, make it my full-time job, and mm-hmm. Give it a hundred percent of my focus and, and then see.

Justin: Can you give us a sense of, you know, when people are making decisions like that, it could be, you know, do I leave consulting full-time and double down on this thing?

Do I leave these. Books and products that are doing well and double down. Do I leave my job and double down? What, like what was that exact moment like for you? Were you scared? Were you feeling like this could ruin me? Or did you just feel like kind of a confidence that you should, this is what you should be doing?

Nathan: Uh, I was very nervous because, 2014 was a, a pretty rough year for a lot of things, and I've talked about it on a few other interviews and stuff. But, um, we basically were co coming, coming near to the end of all of our available cash. Um, you know, I still have healthy investments and, and things like that, but, um, so I guess there's more that, uh, that I could access.

But basically, you know, we bought a house and put a $65,000 down payment on that, and then spent $70,000 remodeling it and then. So really by the time October came around, even though I had amazingly successful year before that, selling books and courses and all this stuff, I, I basically had $50,000 left of all of our available money.

Um, and, and so I had a lot. And

Justin: that's what, that's what you invested in? Converted? Yeah. Wow. Okay. So

Nathan: this, so my bank account actually went down to about, I think I had about $6,000 total. Yeah. Which from the year, earlier, a year, basically January, well say, before I bought the house March, uh, 2014, I had like $180,000 in immediately available cash.

Like sitting in, you know, in Wells Fargo. Yeah. Uh, and so it was a huge change to go from that to all the way down. And so we. We trimmed down all of our expenses. Uh, you know, we've been paying extra on our mortgage and, and things like that, and I. Cut back all of that. And my wife and I went through and, you know, just we TriMed back everything and I was really lucky to have her totally on board.

Yeah.

Justin: Um, what was that like? Like she, when you describe things with your spouse, like do you just come to her and say, listen, we've got 50 grand left and I'd like to push it all into this thing. Like how does that conversation go?

Nathan: Um, it went. It went well. Um, but I actually, when we started the conversation, I didn't know if she would be okay with it, you know?

Yeah. And so I was really happy that, that she was, cause I felt like that's what I really wanted to do. But I think, I think in the conversation I conveyed to her just how nervous I was and because it's also this thing where it's like, Hey, you know, this, this product that I've been trying to get off the ground for almost two years now and has.

Not gotten much traction. Yeah. Um, now I want to take all our available money and give it to that. Yeah. Yeah. You know, and so it wasn't the most compelling pitch. Yeah. But we, you know, we talked through like what would be the worst case scenario. Mm-hmm. And it wasn't that bad. Like Yeah. You know, why was

Justin: it, why was it not that bad?

You felt like you could just, you could make that 50 grand back again if you needed to.

Nathan: Well, yeah, and actually it was something that Hillary said where I, she, her worst case scenario was far worse than mine. Yeah. Um, cuz she went to like, we have lots of family that's really close by and that we're, uh, really, really close with.

And so she was like, basically, you know, we can. If things really tank, we can move in with them and we'll rebuild. And, you know, and I'll, and I went, oh, it'll never get that bad. Like, you know, and so she went to this much worse case scenario of like, yeah. Running out of all money and having to sell her house and, and all of that.

And, and she was okay with that? Yeah. Wow. And that was, it was really cool when I went, oh, don't worry. It won't ever come to that like, Yeah, but she, we'll be able to,

Justin: she's really with you in the long haul here.

Nathan: Yeah. And I, I think it's that she, she gets the, how much all this stuff matters to me. Yeah. And, um, you know, we, why, why does it matter to you?

Um, uh, that's a good question. So there's a bunch of different things to it. One, The business is a challenge and I need that continual challenge to, um, uh, just, just to stay engaged in, I guess life in general, um, that, that push And, and then I guess SAS in particular. Um, well, I feel like books and courses are no longer a challenge.

I feel like I've got that kind, that kind of locked down and yeah. Um, And so looking for a new challenge. The other thing is I've seen people in the, so I guess if we establish that I want to continually grow mm-hmm. And take on new challenges and grow the business and all that, I looked at where the books and courses, the logical conclusion of that.

Um, and I know people that have gotten to, um, Half a million or a couple million dollars a year in revenue off of those. And I look at their business models and, and how they structure everything, and I don't like it. Hmm. Um, I feel like going from a quarter million a year up to say 1 million a year in book and course revenue, um, I don't know.

It, it's just like, I feel like you have to optimize just about everything to get to that number. Okay. And, and so it. It's diminishing returns. Um, yeah. And so if I wanted to build a substantial business, one that I could, uh, grow, I feel like I could grow for a long time, then it needed to be something different than books and courses.

Justin: Yeah. Which is always interesting, the, the perspective. Um, cuz you know, for a lot of people getting to 250 K in revenue in a year would be a great achievement. But now for you, that's not. You've done that and now you're thinking about the next thing and when you're kind of looking up and we don't always have the chance to look up, do we?

Cuz you know, I think again, if you asked someone who's kind of starting out, uh, you know, which would you rather 250 k in book sales or a million, they would probably say, well, a million. But you're saying when you looked up that path, It wasn't exciting to you?

Nathan: Yeah, it was this path of having to continually do launches in order to drive a lot of revenue.

All these people who are at the levels, you know, much higher than I am, they, they have to do launches and in order to run that process, they, they hire a team and then they have payroll. I know plenty of people that, um, run payroll of 50 grand a month. Um, And, and so it's like, yeah, you're making four times as much money, but your profit margin is way lower.

And, you know, yeah. I, I think if I were to ever stop, like say if ConvertKit were to not work out Yeah. Um, I think I probably would've scaled back my courses and expenses and, um, just everything that I was doing and instead of trying to hit, like, surpass my number every year. Yeah. And say Go to 400,000 instead of 250.

Yeah. Then I think what I would do is, I think I try to autopilot, you know, put as much of it on autopilot, figure as many systems as possible and kind of make that the challenge. Mm-hmm. Rather than having to hire the team and all this stuff in order to, I don't know, the phrase that comes to mind is like, you know, squeezing blood from a stone where you're like trying to get every last bit out of this info product business.

Yeah. Um, to get to that next

Justin: level. Was the info product business tiring you out, like doing all those launch, is that why you would scale back or just because, um, yeah. What, maybe describe that a little

Nathan: bit more. Well, I guess, um, I think it was tiring me out some though. It's still, it's still fun and exciting.

But yeah, it was definitely tiring me out some, um, But I guess from where I was at, there'd be two possible challenges to go down. Mm-hmm. One would be to keep growing revenue and the other challenge would be to put systems in place to maintain revenue or have a drop a little bit, but have the business run on autopilot.

Yeah. And those are both very difficult things to do. And so since we've already established that I need challenge in business, yeah. Um, You know, those are the two paths that I saw. Yeah. And I, I think if I were to choose one of those, I would choose the, um, create systems. Uh, Path.

Justin: Yeah, I we're gonna get to back to ConvertKit in a while, but this part is interesting to me.

Uh, I've been thinking a lot about, um, a lot of the people I look up to in business are, are kind of always thinking about doing stuff that scares them or is challenging to them. And it seems like that's kind of the path that you followed here. You, you felt like, okay, you know, I've done this, but now I really need to do something that's gonna challenge me.

And I wonder if that is. Is that just good general advice for people in business that if you're not doing something that you know, scares you or challenges you, you probably need to make a move?

Nathan: Yeah, I think so. Um, but I also think there's a time, I, I think you need to be careful to not challenge yourself too much.

Um, Rob Walling put out a post, I think yesterday or the day before, um, about the, you know, the stair steps, um, of different types of products. Mm-hmm. Uh, Amy Hoy always talks about stacking bricks, and it's something that's been, you know, this idea has been floating around our communities for a long time.

Mm-hmm. But, um, you know, it, you gotta be careful that you're not. You know, hearing, oh, okay. I need to always be challenged, so let me go pick the biggest possible challenge and go straight to that. Yeah. But yeah, I think that you should be doing something that challenges you. Um, you know what I, so I played a lot of, of indoor soccer.

Um, I just played a game last night and we lost unfortunately. But, um, we were talking, uh, my brother-in-law. Philip who I play with a lot. Um, we were driving to the game and we were going into, we were talking about different teams and who was playing and all this stuff. And one of us made a comment about how if you go into the game with such a good team and you're playing, cuz there's all these different divisions and all that, and you know, going into the game that you're gonna win.

You're doing it wrong. Yeah. And so I think if you go into whatever, whatever your challenge is, and you know a hundred percent you're gonna win, then, then you're not pushing yourself enough. You're not biting off a big enough challenge. And so I think, um, if I continued. Down the course route. Um, I knew 100%, you know, that I was going to whatever level of success that was, I was going to achieve it.

And, and so that, that tells me that I'm not, uh, not pushing myself enough. Whereas with ConvertKit, I, I still don't know. Yeah. But I know that I've got a great team and we're gonna, we have a, a solid game plan and, and we have a good chance at winning.

Justin: Yeah. So let's talk a bit about what turned things around.

Um, I know you've described this other places, but maybe just summarize like you were at 1200 bucks, um, and this is after you went down too, cuz uh, the, the initial kind of your initial. Push with ConvertKit. When you were doing the, the app challenge or whatever you called it, you know, initially that initial traction you got seemed like, man, he's getting, he actually is doing it.

Like, um, I felt you were, you were pretty close at that time and then you went down. Yeah. So how did it, how did it

Nathan: recover her? Um, so as far as the numbers, I think we. I had thought when I wrote those initial numbers that we had peaked at, um, 2,500, we'd actually peaked at more like 2000. I was calculating monthly recurring revenue incorrectly.

Gotcha. Um, which, because we had like pre-orders coming from some sources and it was kind of a mess. And looking back, I realized I had made a mistake on how I was calculating it. Yeah. Um, uh, actually, Thomas Fuchs point was the one who pointed it out. My math errors and anyway, um, that stuff

Justin: is very complicated to, to calculate actually.

Yeah. It's still like stuff like Baremetrics came out. It was, everyone said they knew their number, but when you actually dug down, a lot of people did not actually understand the numbers that were underneath. There's so many factors.

Nathan: Yeah, and that's exactly what. What I encountered. So revenue from about that 2000, it hung around there for a while, went up and down, and we tried a ton of different things.

It wasn't like we totally slacked off on, um, on building the product or, you know, all of that. We tried lots of things and, uh, again and again, I thought that I had hit something that was going to work, like with Convert Kid Academy and all these different ideas. But, um, and, uh, So we tried all of that. It went up and down.

But basically by October, 2014, we were at 1200 a month and that's when, um, another good friend Tim Grahl encouraged me. We were on a call and he was asking about, um, Ask me about ConvertKit cuz he had signed up for the product and really liked it. Okay. And

Justin: Tim is a, he's a book guy. He's a, yeah. He promotes books.

Good at marketing books.

Nathan: Yeah. Um, one of Tim's claims to fame is, well he, he has tons of authors as clients. Yeah. And so he, at one point he had five, uh, client books on the New York Times Bestseller list at the same time. Yeah. Um, so Tim's very good at what he does. Yeah. And he loved it. Yeah. And, and he said, you have a good thing here, but with your current marketing, it's not going to go anywhere.

And so he really encouraged me to pick a, a niche of some kind and, and he said designers because he knew that I was the designer and that was the thing that he, you know, that he most closely associated with me. Yeah. And I said, well, actually I think it's authors because Yeah. Um, It's best for the people, you know, like myself, like you, Justin, um, you know, we wanna write a technical book of some kind.

We, you know, we need to build an audience of say, two or 3000 people in order to do that. And then, you know that whole thing. And that's who, that's who I am. That's who I built the product for. Yeah. And so I picked this term of authors and that actually, that helped a lot. So we changed it instead of being like some.

I don't know what the, the homepage statement title was before. Yeah. But you know, it's something about quickly growing your list or blah, blah, blah. And we just said email marketing for authors. Yeah. And that let us have conversations with a lot of really remarkable people who are. Doing really well in the author space and um, we were able to do some webinars with different people and like nothing was a home run.

Yeah. But we started to get real traction. And if you look in, in our numbers, you can see October, November. December. Um, yeah, there's fairly significant growth.

Justin: This is actually, I'm following as you're talking, I'm following along on bare metrics. It's pretty, it's pretty awesome. Um, so you started to get some traction.

I can see that there's a, I mean, I could even share the screen, although anyone listening on audio wouldn't see it. But you know, you start to see, you know, right along here, there's a definitely an inflection point. And things start to go up. So, yeah. So,

Nathan: and oh man, look at that curve at the end. That's looking nice.

Yeah.

Justin: Yeah. This is looking really great. So, so that was authors and then you recently changed it again, right? Oh, and that was the result of the, the, uh, of the mastermind curve. Yeah. So what happened there? Why, why, why the change?

Nathan: Okay. So, um, Well, before we get to that, there's one other thing that I wanna, I wanna touch on and yeah.

Um, so we had really great through growth through, uh, through December and into the first half of January. And just fantastic growth in the first half of January. And then I went on, on, um, I went on vacation for two weeks to go visit my family. Or my extended family in Thailand. And the great thing was the business ran perfectly, like all kinds of bad things happened and my team handled it all wonderfully.

And so like every other day I would read through the Slack channel and be like, Ooh, that's terrible that Oh, oh yeah, they nicely handled the guys. And so that was fantastic. The downside was that all growth completely stopped. And we just leveled off. And so you, you can see that mid-January in the Mr. R chart.

Um, so then we, end of December, early January, we started noticing that there we were finding our perfect customer and they didn't identify with the term author. Hmm. I would consider some of them authors. Um, yeah, but that wasn't the term that they identified with. And so we started playing around with a bunch of different terms.

Um, like course creator, um, you know, there were these people, the people who said they were authors were writing fiction books and trying to sell them on, on Amazon for two bucks a piece. Yeah. And, and then the, the people that were really successful at it, maybe they had one book or they, maybe they were like a Chris Gilli where.

They had some really popular, traditionally published books. Yeah. But they made really a lot of money from the courses. Yeah. So then we were like, okay, just trying to figure out what term this person identifies from. Cuz we realized that we actually scared away a lot of potential customers where I reached out to them and, cause I was doing a ton of direct sales.

Yeah. That's the thing we haven't talked about, um, of how all this growth came. So lots of direct sales and I'd say, Hey cha, go ConvertKit. Um, And then I'd link them, you know, they'd go to the site. So we'd be having this conversation where they're like, oh, this sounds really good. And they'd go to the site and be like, Hm.

Authors, I'm not really an author. And I'm like, well, but you kind of are because of, you know, you're writing all this, you make your living from writing and teaching. Yeah.

Justin: Um, so you're trying to convince them, but they're saying, no, that doesn't really resonate with me. Right.

Nathan: And so, um, I was having a, a conversation with a friend, um, his name's Sean Ogle.

He writes a blog at, uh, location one eighty.com, something like that. Okay. Uh, uh, great guy. And he runs in the whole, he, he's one of the co-organizers of the World Domination Summit, uh, along with Chris Kibo and other people. Ok. Yeah. Um, and so that was the first time that I really realized, That we had this messaging problem because he was saying, the product sounds great, the marketing tells me it's not for me.

And I'm like, no, no, no. You fit our exact customer really well because we found that we needed people who would switch to ConvertKit. Mm-hmm. Right? Because someone who starts email marketing, they're gonna look at $29 a month. That's really expensive. Um, It's, they're gonna see if it works out. They're not gonna have a habit of writing or an audience or any of this stuff.

And so there's a good chance they'll churn out. Yeah. Um, you can still see all those people reflected in our churn numbers. Um, but the people that were great were the ones that would bring over, uh, 40,000 subscribers in one go. Yeah. And, and they just looked at it as like, is it a similar price to what I'm paying and is gonna deliver me something better?

Okay. Done. And they would switch over and they wouldn't ask for that much help. Um, or they, you know, and they just, they were a sophisticated business. Yeah. And so then we started going after those top people. And so we started getting accounts that were. Much bigger, like a hundred thousand subscribers.

And, you know, and we have, we have accounts that are growing by 500 to a thousand subscribers a day now. Wow. And, and so then we needed a term that defined them. Yeah. And so from the mastermind retreat Yeah. Um, that I did with, uh, who's there, so James Clear, uh, Barrett Brooks, Caleb Logic, um, And another guy that I, that I just met, uh, Matthew was there and, um, we talked through that messaging and that kind of problem for about an hour and came up with email marketing for professional bloggers.

And that's worked really well. And so now we're just going after getting these big accounts to switch and we do the full migration for them and everything. Yeah. Um, because if you get someone who's paying $500 a month to switch over, You look at the lifetime value over that, even over just a year, it's totally worth spending five or six hours in a day to migrate everything.

Justin: Yeah. Yeah. There's a couple things here. One is, uh, Amy Hoy has this great quote where she says, I think it's Amy where she says, uh, target people already in motion. And I, I think for something like this, I could totally see how that would play out because if you're brand new and you've never built anything or written anything and you try and you get burnt out or you don't have any content or you don't have a point of view, I could see, you know, being maybe being excited about a product, but.

When it comes time to pay, it's like, well, I, I'm never gonna, I, I don't, I don't have the momentum, but if someone already has momentum and they're already paying for something, um, that the, the challenge of course is getting 'em to switch. I think that's one of the hardest things to do in software. People are already entrenched.

They've got their process, they've got their habit. Uh, it's way easier to let something ride than to. You know, have to come up, do something else. So how do you get them to switch? How do you convince them? What's that sales call look

Nathan: like? So there, you're right, there's one whole process of getting them to understand and see the value in ConvertKit.

And then, but then there's that whole other obstacle of, they're like, okay, but let's be honest, I don't wanna do any work. Like, yeah. What I'm doing now functions, let's you know, yeah, it's making me money. Let's leave it at that.

Justin: So really what comes down to just, and not just work though, like that's one part, but I can, I could come up with a bunch of objections to convert Cat.

Like, MailChimp has more integrations than you guys do. MailChimp is, you know, been around forever. MailChimp has more features. You know, there's a, this big list. I'm actually con I'm surprised you're able to convince anyone to. To, to switch. So how do you do? What's the deal?

Nathan: So a big part of it comes down to we built ConvertKit for people exactly like myself and whoever I'm talking to in mind.

And so I point to a lot of things like, you know, we have dedicated analytics on every single form. And so one thing that I point to people is like, okay, your newsletter page. What conversion rate do you get on that? And people tend to go, I'd say 90% of people say, uh, I don't know. I think it converts decently.

And then there's about 10% that says, oh, well I set up goals in Google Analytics and I have this tracking and, and here's what it converts that. Yeah. And then when I say like, okay, that, that post that you got on Hacker News, how did that traffic compare to, in conversion rate? How did that compare to, uh, the rest of the traffic to that blog post for converting.

And they have no idea. And so when I say, oh, we have all of that built in, you don't have to do anything, um, then that really gets them, gets them excited. And so there's a bunch of things like that where, um, I can just demonstrate we don't have the level of features that MailChimp does. But everything we do have was built exactly for people like you and I.

Yeah. And everything we build in the future is going to be built Exactly. For people like you and I. Yeah. And that, that tends to be pretty compelling for people. And then people love, uh, the really clean, simple user experience. One thing that we get a lot, um, especially on like our course creation stuff like that, someone says, can't remember who said this.

But they said your your user interface is okay, but your user experience is really good. Hmm. And they said that the, the reverse of it, they felt like MailChimp was the reverse. Um, I wish this person would write the blog post. Um, yeah, I know they listen to the, to this show, uh, so maybe they will. But basically I was talking with a friend and he, and he, and he said, MailChimp has a really great ui, but their UX is terrible.

And, and that's something that I think is totally true because they have all the little polish there and they have so many fantastic details, but they're missing the core user experience for people like, like us. And so, yeah,

Justin: I almost thought that killer feature of ConvertKit was the, that you actually have a template.

Um, like your template for course courses actually has these suggested steps, and I always thought that was the, that was the killer feature because getting started is always the hardest part, and you kind of just, I can fit my content into these slots. Um, whereas, uh, MailChimp is very, it's a blank slate when you're creating, uh, any sort of automation.

So I, I always thought that was brilliant that this idea that you're, you're helping people out by giving them a template.

Nathan: Yeah, we, we, well, that one comes from Patrick McKenzie. Uh, that was his suggestion. And, uh, and it's his template of, of the dates that they're sent on. Yeah. Um, but yeah, we're trying to do as much of that as possible.

Soon we'll have a little selector. So when you go to create a new course, it'll ask you what kind of course you want. Oh, interesting. And then it'll, the templates will be even more advanced as far as. Um, what do you mean what kind of course? Uh, you might have like a three email course to just introduce people to your newsletter.

Okay. Right. And so that would have some preset dates in there, or you might just want a blank one where you want nothing in there cuz you're just gonna write something from scratch. Um, I have another one that I wrote, uh, with help from Tim Grahl of that's about, um, introducing people to your newsletter.

And so that one's actually like a full mad lib style. Like, almost all the content is there and so you just drop in, in like three places per email. You just edit it and um, you're good to go. So really helping people with that. Um, yeah, cause it's just like, introduce people to your best content, tell 'em a little more about who you are, um, tell them about your book, uh, more great content.

And then, uh, another little pitch for your book and with a testimonial in it. Hmm. And that's a, a decent, um, onboarding experience. It's way better than nothing. Yeah. And so you get them started with, with something and it's, and it really is this plug and play template. Um, and you can change as best you want about it.

Um, but it gets people started, uh, right away, I guess.

Justin: Yeah. Yeah. That is, that is key. So would you say, so right now, cuz the big announcement today is that since you announced. Since you wrote your last post where you said, you know, I finally met my goal of 5k m r since then you've added another $1,200 in mrr, which is amazing.

Um, what, so how, how did that happen? Can that keep going? Are you right? The money train now?

Nathan: Um, well, so I, I guess the first thing is I've seen. We have a little bit of, of pattern of growth. Yeah. And I've seen it stall out twice now, and you can see that on the MRI chart. Yeah. Um, and I've seen it start up again.

And so, and I can point to the reasons at each time. Um, yeah. But really what it comes down to is direct sales and having conversations with people. And so I just have this sales pipeline. And so if I talk to somebody on Twitter and it comes out that they want to sign up for or that they're interested in ConvertKit before, I would say, uh, great, we'd love to have you.

And that would be it. Now I add them to a Trello board. Um, and if you go to Nathan berry.com/5k, you can see that post and a screenshot of the Trello board. I was gonna say, I could screen share it, but I can't cuz it has everybody's names on it. Um, but the, the screenshot on the post has everybody's names.

Uh, gray out. Gray out. Yeah. Um, but so then I, like I use this crazy sales technique of, I actually follow up with people, um, which only took me a few years to learn. So are at MicroCon for Europe, um, whenever that was beginning of November. Yeah. So I just moved down this road. Or maybe it was in October, I can't remember.

And, uh, and I, of doing these direct sales and Trello's been great for it, especially cuz they have a really good iPhone app. Yeah. So, uh, Ryan Delk and I are talking to like two other people and, and we have this conversation. Someone's interested in ConvertKit. And, you know, we talk through it and then after the conversation ends, those two wander off.

And so it's just Ryan and I and I pull up my phone and I pull up my ConvertKit sales Trello board and I add them in and I, you know, I hit save and put my phone away and Ryan's just looking at me and he goes, I've been trying to get you to do that for two years. And it's just keep track of conversations and follow up with people.

Yeah. And so it took me forever to learn, but uh, it works really well. And so I have columns of people to contact, contacted, uh, and then whether they're interested and then very likely to sign up and then became a customer.

Justin: Yeah, and you're managing, that's your job. You're managing all that

Nathan: stuff. Yeah, that's my job.

Um, I have a bit of an advantage because, um, I have name recognition in the space. Yeah. So cold emails aren't exactly cold emails. Yeah. Like there's somebody who wrote a technical development book that did really well and it was on Hacker News and um, uh, and so I went to his site and I was like, oh, you know, I'll send him an email, reach out, and, um, But then on his contact page, he had a phone number and so I thought, yeah, I'll just call him.

And so, you know, I called him and he answered and I said, Hey, you know, this is Nathan Berry, and I started to say a little more, and he said, I know who you are. I'm like, you know, turns out he'd read authority and, um, some things like that. And so, yeah, that makes the sales process that much

Justin: easier. Yeah.

Yeah. That's, that's awesome. And a little bit surprising in some ways because we're, it feels like we're finally getting out of this stage where everyone thinks that SaaS has just, um, set it and forget it. Once you get the. Once you get your SEO right, once you get your landing page right, once you get your kind of, uh, digital funnel right, you can just, that's it.

You're done. And it seems like there's a lot more people talking about sales now, and you're saying for you, this growth

Nathan: is all sales. Yeah. And is it, I'd say 80% sales. Yeah. 80%.

Justin: 80%. So is it, and is it down to like, uh, you know, if you don't do as good next month, is it just because you have less people in the pipeline?

Can you attribute it that, that closely?

Nathan: Um, I don't know that I have enough. Um, I, I don't know that I've spent enough time to know that for sure. Yeah. You know, enough, uh, enough data. But I, well actually, yeah, because the two weeks that I spent in Thailand, You can see to, you know, January 18th to 30th, you go look at that on the MRI chart and yeah, you can see zero growth and a very slight decline.

Yeah. Uh, and so, and you have to keep in mind that MRI chart isn't exactly accurate cuz it's a rolling daily average. And so it's gonna fluctuate. Yeah. Like, I wouldn't be surprised, you know, today we're at 6,200. I would be surprised if tomorrow we're just below 6,000. You, you know, it's gonna Yeah. Um, but the trend is what matters.

Yeah. So, so yeah, if I, if I slack off on sales, I can immediately see, uh, I could see the results. Yeah. Or two weeks later I could see the results

Justin: and, and so what, what's your. When you look forward, what's your plan? Um, I know that you, like, we talk about that 50 grand that you and your wife invested in. Uh, you know, the, the, that money's running out obviously.

Yeah. We have

Nathan: 26,000 left.

Justin: You have 26,000 left. And what's, like, what's your burn rate? How much do you spending

Nathan: every month? Uh, so we're spending about 13,000 every month. And that goes up slightly every month. Um, because like our mail gun bills, you know, we're now sending millions of emails, whereas five months ago we were sending a hundred or 200,000, you know.

Yeah. Um,

Justin: so that leaves you about 26,000 left. Yeah. Left. And so, uh, do you like, are you, do you think you're gonna be able to. Are you gonna run outta money? Are you gonna, what's the, what's gonna happen here?

Nathan: I think we're gonna run out of money. Um, okay. Um, because I don't expect these growth percentages to keep up.

Yeah. But I kept saying that all the way along and they have Yeah. Um, you know, cause like early on I was like, whoa, 20 or 30% monthly growth. That, that's awesome. Yeah. Then I was thinking about it like, well that's really only, you know, $500 of mri or, and then later it's like, well that's only a thousand dollars of.

Yeah. And, and then it has kept up. So, um, so we'll see on that. But even if we get to the point where we're just adding the absolute numbers, you know, if we're just adding $1,200 a month, uh, to MRI instead of 30% monthly growth, that's still acceptable. Mm-hmm. Um, and, and that's gonna turn into a real business and, and not that long.

Um, what's your goal

Justin: for breakeven? What's your personal goal? When do you wanna see? It. Start to make money and by start to make money, you're still not paying yourself in this either. Right? So we're talking about, I don't, is there a term for that? What's the term for We're break even, but we're not paying the founder money

Nathan: A startup.

Justin: Okay. So when do you see it breaking even and you know, getting to the point where, You're paying all the bills and you're paying for everyone.

Nathan: Um, so I mean, based on our, our current I, our current growth, I'd say I had about 15,000. Um, but that still wouldn't pay me anything. Yeah. Um, and so probably 20,000 is when I start getting paid.

Yeah. But even at that point, you know, I see. I see all this potential of making the product better. Yeah. And so I wanna hire another developer. Um, Probably even before I, I pay myself. Um, yeah.

Justin: So you wanna invest, you wanna keep investing back in the business?

Nathan: Yeah, I do because I, I see that that paid off.

There's no way we could have had this growth if I hadn't hired a full-time developer to lead the team and, and really just build out these amazing integrations. And if you go look at, um, go look at our Gumroad integration, um, I think it's, It's just on the blog. It's like the second or most recent post.

Yeah. Um, and, uh, it's really, really slick. Like you can get your products from a sale from Gumroad into ConvertKit in, well, in the video I do it in 47 seconds. Yeah. Um, and so like that kind of thing, you just, you have to have a, a fantastic team. And so, like David, my lead developer, uh, He's, he and I have worked together in various things, um, over the last probably six or seven years.

Um, but he's a great hybrid designer and developer. Um, and so he just creates really fantastic experiences that I wasn't even involved in the design process on. Yeah. And he's just like, oh, yeah, there you go. And so, I really needed him on board to have this growth. It wasn't like I could have taken the product that we had in October and really focused on sales and gotten to the point I was at.

Yeah, it required that 50 grand investment, I think, to have the money to hire people to.

Justin: So if that's, if that's true, you know, why not go out and get, you've got name recognition right now. There's probably a lot of, you're probably on the radar of some angels and some VC firms. Why not go out and just get them to pump money in and you can pump some money out?

Nathan: Yeah. And that's something that's come up a lot in the last, really the last two weeks since I announced that we finally hit 5k. Yeah.

Justin: That got

Nathan: people's attention. It did. And I thought it wouldn't, to some extent, for me that was like closing the chapter on the whole web app challenge thing. Cause that was the original goal.

And, and so, you know, so I, I really needed to write that post, but it really got people's attention and I was surprised it got people's attention in the, the startup VC in that whole world. And I was like, really? We're at $5,000 a month? Yeah. Like, I mean, I'm, I'm thrilled with the, the progress. And, and then we finally, and it's a huge achievement for me.

But guys, you know that $5,000 is a tiny amount of money, right? Yes. Like, you know, but then somebody made a comment about, well, you should apply to Y Combinator. And someone else made a comment like, well, but they require crazy week over week growth. And so I looked it up and what Paul Graham said was, five to 7% week over week growth is what he wants to see.

And I was like, oh. That's what we've been doing. Yeah. Interesting. Yeah. Um, and so I've had a bunch of conversations. People from 500 startups reached out, um, uh, no one directly from Y Combinator. Reached out. But, um, a few people closely affiliated with them, you know, said like, Hey, have you considered, you know, they're like, I dunno if application's closed tonight or tomorrow, but they were basically like, Hey, it's still available.

Yeah. Um, and did you consider

Justin: it, like, is that something you would even consider or,

Nathan: yeah, I, I did, I did consider it. Um, and I had a long conversation, uh, with someone who's really. Well known and trusted in this space. And basically he outlined, um, just that it would put the company on a different trajectory.

And, and he pointed out that, you know, let's say you hit that 50 grand in monthly recurring revenue. If, if you're bootstrapped, that's fantastic. You know, then it's turned into something like, uh, Amy and Thomas's freckle, you know, they've got a substantial business. Um, they can work on it exactly on their own terms and all of that.

It said, but if you take funding and you get to 50 grand a month, your business is a failure, and investors will probably ask that you shut it down. Mm-hmm. So that they can write that off, count it as a loss, and move on to things that are actually gonna be worthwhile. Yeah. And, and he was saying even higher numbers, a hundred grand monthly recurring revenue.

Mm. Depending on how much capital you took. Probably still a failure. Yeah. Um, the other thing is, even though I am, uh, very, very cash poor at the moment, uh, I am losing money every month. Um, uh, I, I still have these, these books and courses that people absolutely love and I have this. This audience that's very kind to me.

Um, and so if I need to, I can go back and I can, you know, actually blog more, um, and, and really focus on all these other things. And I can, I can do a product launch or I can promote these other things or two partnerships and come up with say, another $25,000 pretty easily. Yeah. And so, uh, this is something.

That, uh, I asked Ryan Delks advice on quite a bit and, you know, comparing like these accelerators to what I could do on my own. Mm-hmm. And he was pointing out that, hey, the amount of capital they're going to give you is actually relatively small. Yeah. And, and you could get similar amounts of capital by taking say, a month off of focusing on ConvertKit and just, and then, and focusing on the, the books and courses and training side of things.

Um, Come up with 25 to $50,000 and then be able to go heads down and convert it again for a while without having to give up, give up any equity.

Justin: Yeah, that's a good point. All the, all the time you'd spend fundraising and, uh, signing those deals and figuring all that stuff out, you might as well have just done it yourself in your, in your situation anyway.

Nathan: Right. And I, I mean, I'm sure there are other substantial benefits that I'd be missing out on. Um, Also, there may be a time to raise money down the road. I'm not ruling it out. Mm-hmm. Um, I think Jason Cohen with WP Engine, um, did a good job of, of that kind of thing. I think he, I think he self-funded and bootstrapped for a long time.

Yeah. Uh, and then got some substantial traction and then raised money. Yeah. Um, and so once

Justin: they, especially once they figured out their, their marketing funnel, they found out something that worked and they wanted to double down on it. Right. So they brought in the money then, and

Nathan: I think that's something that.

I'm trying to think who I first heard this from. Maybe Dharmesh Shah of HubSpot. Yeah. Um, where he was saying once you come up with a predictable thing where you can put in $1 and, and get out two or $3 mm-hmm. Then he's like, then you take funding. Yeah. Uh, but, you know, companies that inspire me would be like, uh, Who have taken funding would be like campaign monitor.

Um mm-hmm. You know, they bootstrapped for so long and they're like, oh, by the way, we just raised a quarter million. Yeah, no, sorry, a quarter million 3,

Justin: 300, 350. I thought,

Nathan: uh, yeah. Yeah. I don't know. I don't remember the exact number, but somewhere in the 250 to $350 million range. Yeah. Because they finally wanted, the founders wanted liquidity and Oh, you're right.

Justin: 250 mil, which is an enormous amount of money.

Nathan: Right. And they, they raised it on amazing terms cuz they'd built an amazing business. Um, yeah. You know, so my goal is not to stop at like a, um, kind of a bootstrapped business level. My, my goal is not to get to 50 grand a month and stop my, my goal is to build something really substantial.

Um, well, while keep still keeping the team relatively small. Uh, I have no desire to manage like 70 people. Yeah. But 20 seems like, um, I don't know a good business. That's okay. Yeah. So yeah. So we'll see.

Justin: Yeah. Well, this is awesome. I love catching you at this stage. I'm glad we could have this chat at this stage because there's a lot of kind of dynamics here.

One, uh, this idea of having done really well and gotten comfortable. Two, this idea of being actually scared and like I'm putting all our money, all of our cash into this, and, um, You know, having to convince your wife and then, you know, kind of feeling like you're doing this and knowing you're gonna run outta money again.

And knowing that, you know, this is like, this is a really kinda long play. Um, especially if you look at some of those companies you talked about, they've been building these businesses for 10 years and you're in year two, but really you're kind of in year one. In a sense, cuz this is really where you're, you kind of figured it out and you're pushing on it.

Yeah. Though,

Nathan: and for a while I was really discouraged about that. Yeah. Of how long it took to come to this point. But then I was reading an article by, uh, Jason Lempkin, uh, he writes@saster.com, A s s A A S t r.com and he has an article that came out really recently about. How it takes two years to get, um, to get traction Yeah.

For, for a SaaS company to get traction. And I looked at that and went, I don't know if I just love this article because it describes me Exactly. Or if it's really good advice and totally true. But yeah. You know, um, and he pointed to a lot of good examples of companies that took, took them two years. Uh, yeah.

And so, I'm okay with that, you know? Yeah. And we did a lot in those two years. We built a really solid product. Um, it's just now that everything is moving so much faster.

Justin: Yeah. Yeah. Well, it'll be, it'll be cool to, um, oh, here, I've just found this post. It'll be cool to keep watching because I think there's, there's a bunch of things, reasons that I like this conversation.

One is it shows how hard SAS is.

Nathan: Everyone loves. That's the hardest thing I've ever done in my life by far. Well, there

Justin: we go. Yeah. It, it shows you how hard it is and you know, in some ways you were in a, a great position that a lot of people aren't in and that you did have 50 K even to put in. Uh, so I think it's just great to kind of watch you do this.

And right now, the, the, the growth and everything's exciting. Especially seeing that you're getting it from doing it the old fashioned way, calling people up. Yeah, it's great. So thanks for taking the

Nathan: time, man. Yeah, thanks for, thanks for doing it. And I could talk about this stuff all day long. It's

Justin: great.

Well now you gotta get back to making those sales calls, so. Yes,

Nathan: that's right. And actually I have a bunch of code to write as well, cause Cool.

Justin: Yep. Well thanks for taking the time. We'll catch up. Let's, let's do another one of these in a few months and just touch base, see where you're at.

Nathan: Sounds

Justin: good. I'd like All right.

Cool, man. See you later. See ya.

Nathan: Bye.

Justin: All right. That's it for this week. You can follow Nathan on Twitter @nathanbarry. Go check out ConvertKit. That's convertkit.com. You wanna follow me on Twitter? I'm. The letter M. The letter I, Justin, m I Justin on Twitter. And like I said, go check out the other show build and launch.net. And if you want, you can also rate and review this show on iTunes rating and reviewing the show helps other people find it.

So you can do that by going to iTunes and searching for product. People. Thanks so much for listening, folks. I've got a few more episodes in the pipe, so stay subscribed to this feed. And if you want the show notes for today's episode, product People tv. Thanks again folks. I'll talk to you soon. Bye.

Nathan: Almost

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Nathan: your first year.