Episode Transcript
[00:00:18] Speaker A: Another episode, bootstrap Web. Brian and I were just nonverbally arguing over who was doing do the intro.
[00:00:25] Speaker B: Yeah, a little inside baseball. The last thing we do right before I hit record on every one of these episodes is we decide who is going to do the intro, me or Jordan. We try to alternate, and I forgot to ask that question before I hit record. So that's why you hear both of us talking right off the bat.
[00:00:42] Speaker A: Welcome back.
It's Friday.
It's rainy in Chicago.
My house is still cracked open like an egg.
[00:00:52] Speaker B: Oh, yeah.
[00:00:53] Speaker A: Doing some work in there. A mess. But we're close. We're close. It's getting there.
[00:00:58] Speaker B: It's actually looking pretty sunny outside. It was freezing, and now it's getting super warm all of a sudden here in the middle of march. But it's going to get cold again.
I'm working a lot tonight. We're going to my kids talent show.
My one daughter is in it. My other daughter designed the poster for the show. So excited about that.
[00:01:23] Speaker A: What's the talent?
[00:01:25] Speaker B: She's in a dance group. Her and a bunch of other kids are doing a dance.
[00:01:29] Speaker A: Very cool.
[00:01:30] Speaker B: Yeah.
[00:01:32] Speaker A: Right before we started recording, I think the conclusion we came to was that you and I are both confused by the Internet right now, confused by opportunity.
[00:01:42] Speaker B: It's a confusing place.
[00:01:44] Speaker A: It's a bit unsettled.
It's tough to know who to envy. It's tough to know what dream to go after.
[00:01:56] Speaker B: Yeah, man.
[00:01:57] Speaker A: We're so lost. We're adding AI into our product. Okay, you are? Yes. Hell, yes.
We can talk about that.
[00:02:04] Speaker B: Yeah, I want to talk about that.
Yeah. No, but you're right.
This week, I publicized, again, I've been talking about this. But instrumental products is the name of my consultancy business that I'm essentially starting up right now. And I've been working with some clients on it over the last couple of months and just going through this process, multi week, multi month process of dialing in what this is and getting more and more focused on it.
And you're right. Hearing you say things are unsettled on the Internet.
[00:02:47] Speaker A: Where to aim.
[00:02:48] Speaker B: Yeah, where to aim. And I think where I'm starting to aim, my focus and my personal energy is, I came to the conclusion, and this is not new, on this podcast I've been talking about the last several episodes.
We're going super high level here. Career as a whole, I'm sort of done with going all in on a single product business, making the business's success depend on the success of a single product. Okay. And so I started to look like first principles.
What am I doing? When do I operate best? What's the best value that I have to offer? How do I work best as a professional, as a business owner and everything? And it is still building products. It's the building, the designing, the thinking about product and customers.
Whenever I'm doing that type of work, that's what gives me energy and I feel the most productive and the more that I share the work. And this goes back over a decade at this point of building and creating new products, taking new products from concept to launch is not only where I operate best, but also the thing that people tend to follow my story on and building in public, this podcast, Twitter, YouTube newsletter, all that kind of stuff. Anyway, I'm just rambling. But what that leads me to is this concept for instrumental products. And obviously it starts out super basic and very typical and common.
I'm getting back into the consulting game, right? I'm taking on consulting work. I'm helping companies and founders launch new products, designing, developing, building, taking it from concept to launched. Right?
But I never like to just do this is not just me consulting and just putting myself out there personally as someone to hire. Even though logistically, technically, that's mostly the case. I still like to think of this like, this is a business. This is a new brand that I'm calling instrumental products.
I already have a small team working with me and a pipeline of leads and projects that are coming through. And so I like to try to think strategically about what is it that we're building here? Where is this going?
What does this business look like? What's the growth strategy for this business?
What's the business model? How do we make money? How do we drive leads? I just like to really think through all that, and I did a lot of that this past week. I wrote a long blog post on it. I redesigned and rewrote a lot of the copy on instrumentalproducts.com.
[00:05:42] Speaker A: It isn't part of the appeal, the straightforward nature of the business model?
[00:05:50] Speaker B: Yeah, pretty much. I'm going back to basics.
Selling services, essentially.
[00:05:57] Speaker A: Right. Here's how much it costs. Here's what I'll do for you. Pay me.
[00:06:01] Speaker B: Exactly.
I'm not new to selling services, obviously. I had audience ops, and before that, for many years, I sold web design services.
This is a little bit new in that I'm sort of new to selling product development services.
[00:06:18] Speaker A: Okay.
[00:06:20] Speaker B: And I'm really trying to focus it in now on focusing on building new products.
People like to call them mvps. I don't really like that term so much. I like to think of them more like v one.
But the idea is like taking your idea or a concept for a new product, going from concept to getting the first version into the hands of your customers. And something that I want this service, this company to be known for is that this is a very, very efficient way of doing that.
Think of it like your shortcut. And I'm learning this as I'm talking to some first clients on this and starting to really understand their motivations when they're talking to me or accepting a proposal that I give them. I'm starting to key into what is it that makes this specific offer attractive, as opposed to the alternatives, which are building your own internal team of developments or finding a partner or outsourcing to a higher priced agency.
I'm trying to position this. It is a shortcut around all that. It's a faster way to go from zero to one.
In some cases, it could be like you are building out a team, but that's going to take months. So let's just get v one out in the meantime. In other cases, it's just like a smaller bootstrapped operation. Let's go from zero to one.
[00:07:54] Speaker A: I remember I had conversations like this. I can remember the specific conversation.
I was in the office of the house in Connecticut. Like the little house that was like, on stilts, right by the beach. So it was like, in the a frame. I was like, at the very little top of the a, and I was talking to Alan branch. Is that his name from the. Less accounting?
[00:08:18] Speaker B: Sure.
[00:08:19] Speaker A: And they were building mvps for people. And we talked through, this must be ten years ago.
But it was my potential shortcut of, like, okay, I could get people who understand product and development and design to build me v one. I ended up going a different way, but I remember that was what I was after. Can I write a check and be in the market?
[00:08:42] Speaker B: Yeah, I remember that they were doing that while they were running. Less annoying. Yes, less annoying. That's Tyler King's company.
What was their thing? Their thing was less accounting.
I remember they were bootstrapping that for years and doing gigs, like, while they were doing that, they were doing, like, MVP builds.
[00:09:03] Speaker A: I think that speaks to what you said earlier where, and I'm not 100% sure if you meant, like, not going in on SaaS in particular, with its ramp of death dynamic or just. I want to run a portfolio. I want multiple different things. I want income for services. I want a SaaS on the side. I just don't want to go all in on one individual bet.
[00:09:25] Speaker B: That is true what you're describing there for me.
And I am attracted to the idea of growing a portfolio of products, and that's part of the motivation in building this thing, instrumental products. The reality certainly here in year one, is that most of the products that me and my small crew here will build would be products for clients, right? In a few cases, yeah. Most of them are just like cash projects to build the product. In a few cases, there's an opportunity to do a piece of equity and cash, sure. But my thought, and I don't know if this will actually play out, but my thought is, like, in between these projects or as the team starts to scale up, myself and my team here can invest some of our time into building out our own products.
To answer your question, it is the portfolio mindset. But I think the key for me is that our business model doesn't depend on the individual success of any single product in our portfolio. Right.
[00:10:40] Speaker A: And SaaS in particular.
[00:10:42] Speaker B: And SaaS in particular.
[00:10:44] Speaker A: That's right.
When you said, going back to, what'd you say, fundamentals or first principles or whatever it was, it's funny because what I have in my notes for this episode are two incongruent ideas. Number one says, I miss Microconf.
So, like, your desire to kind of go back to first principles, I think my mind was wandering in that same direction. And what it made me miss was like a group of people who were very grounded, knew what they wanted to achieve.
Everything was practical, based on reality, what's doable.
It ignored all this fanciful thinking. I think I have this in mind because I just came back from LA. So earlier this week I was in Los Angeles for the Montgomery summit, which is March capital, our lead investor at rally. It's their annual shindig, and this thing is big, big production, big dollar amounts.
And it was an interesting experience because it makes you feel very motivated and very ambitious. Then it makes you feel very bad about how you're doing compared to the companies that are being highlighted. So it was like this very somewhat confusing, interesting experience. I always walk away from it, like pumped up, because it's good to get out there in the world and see what's going on.
But it did make me want to go back a little bit to fundamentals. And then the second idea that I have written down, which is incongruent, is like adding AI to our product.
The complete other side of the spectrum of, like, hype and yolo and seeking giant valuations and that sort of thing.
[00:12:34] Speaker B: Yeah, I do want to hear more about the AI thing, but going back to fundamentals, I always tend to return, and I'm very much returning to that right now.
The concept of like build a thing, sell it, offer a service, sell your service, offer a solution, sell the solution. Profitable, bootstrapped, self funded, simple.
In my experience, whenever I went into Runway thinking and operating unprofitably for an extended period of time, it just added extra pressure and urgency. That did not serve me or my business very well, to be frank about it.
[00:13:25] Speaker A: True.
[00:13:28] Speaker B: Nobody'S doing then my own and I think it was worth exploring that direction. But now I sort of course correct back to my default operating state in business, which is bootstrapped and self funded and profitable.
And that just begins with simply selling services and growing out from there, using that to self fund other things. And in my case, I would like to self fund a portfolio of products.
I know that there's a lot of stupid debate on Twitter about portfolios or just focus on one thing. I'm not even really talking about that here. I don't know, maybe I am. But my concept of it right now is we as a company. And by we, of course, I mostly mean myself.
We sell the building of products so we can benefit from having multiple products and bringing multiple products into our portfolio in other ways than just the revenue from those products. Like building them in public, sharing the process, just being very public about the creation and launch of products can attract leads in the pipeline for us to build more products. It could also attract partners. It could also grow audience that we can benefit from. Whether it's sponsorships, there are other revenue channels that a business like this can have to fund itself and to grow than just the revenues from our portfolio of products. Now that being said, of course, by investing in our own products, of course it would be nice if some of them actually do get some traction and get some customer revenue and become actual assets in our portfolio that can grow or that can have valuable as their own assets. But the success of this business, instrumental products like the product studio, does not depend on any one of these, quote unquote, bets paying off even the bets. Or the products that we build that are not successful or don't have a very long lifetime, they still benefit the studio by just as long as we are constantly doing what we do, which is building products.
That's what the business model depends on. For the most part, we're building products for clients or we're partnering with clients. Some of them are for ourselves. Some of them have the potential to be revenue generating products, but even if they're not, they're still products that we can use as case studies, as content material.
[00:16:14] Speaker A: As long as you get paid to build them.
[00:16:16] Speaker B: Right.
[00:16:16] Speaker A: It's like everything else is cool, but the central fact remains, like, bring money in the door every month and then use that.
That's first. And then from there, there might be other opportunities to build your own stuff. Take a piece of other stuff, but just keeping it simple.
[00:16:34] Speaker B: Yeah. And as much as I, in theory, I don't know if we can totally do this for real, but in theory, the more that I can have what we do, which is building products and how we grow, be the same thing.
That's the goal. Right. Okay.
[00:16:51] Speaker A: I like that.
[00:16:56] Speaker B: Our content strategy, if you will, should be us building products. It should be showing our work and showing our opinions on how we go about building products and how we do it fast and efficiently and ship quickly.
And product strategy choices, publicize all of that. And that should fill the pipeline and exposure and audience for our company. And that's the theory behind it, in.
[00:17:24] Speaker A: Reality, compounding effect for effort in the same direction.
[00:17:28] Speaker B: Yeah. I mean, right now I'm starting to have a pipeline of projects, which is great for driving revenue for this thing, but it's also like, all right, well, now it's like, how many hours in the day? How much energy do I have to actually execute on those content ideas when we're actually going to be spending most of the time building?
[00:17:45] Speaker A: Yeah, that's an interesting point you bring up. At some point over the last few years, I think somewhere around or soon after the transition from cartook to rally, I did question, like, how much more energy do I have?
I would look at founders that you read about and how they've been at the company for 25 years and they're still gung ho, going crazy, going strong. And I would kind of question myself on, like, do I have that in me still?
Maybe the last year or so, I have gotten more settled into like, oh, I actually feel great and work can be fun. And so I definitely feel like I have more longevity now than I did maybe two years ago. Two years ago I was like, how do I hit this thing out of the park and call it a day? Basically, like almost dreaming of retirement or what to do after software or something. And that has chilled.
[00:18:42] Speaker B: That's an interesting point that you bring up. Yeah, because I feel like I hit in the last couple of months, frankly, I never felt like I hit what most people might call burnout, but I think I maybe have come the closest to it in the last two or three months. Like, health wise, I had a bunch of energy outcomes. I had actual health issues in my body. I had shingles a couple of weeks back, which totally sucked.
And I do feel the energy stuff. I'm actually in pretty good shape, though, so I'm working out a lot and eating a lot better, so that helps. But I definitely feel the lack of energy. And that's also what led me to getting back to fundamentals, really thinking fundamentally about, like, all right, well, how did I get to that point?
A lot of it was I started to build less and less and focused, and I had a lot of energy over the past year or two on how do we spend to grow, how do we do this and that and try to hit these Runway targets with urgency. And that's honestly what led to a lot of stress and a lot of burnout. Now I'm kind of correcting back to, like, well, what are the hours in the day where I feel the most energy and I'm actually the most productive and actually have been the most successful, and that's building products. Okay, I know I keep coming back to this here, but that's the thing. But you're right, though. I also don't have the same energy that I had 1015 years ago throughout the day. I mean, there was a time when I can go hard on building products in the morning and then go hard on videos and content in the afternoon or some mix like that. And now I can't really do both of those things in the same day.
[00:20:33] Speaker A: So here's the thing that I don't like to admit that I'm only comfortable admitting for myself. I can't speak for you or anyone else. I have a lot more energy when I'm successful.
[00:20:44] Speaker B: I mean, that seems obvious to me. For myself.
[00:20:48] Speaker A: Yeah. And part of the challenge over the last year or so is it just hasn't been as successful as I want it to be. The growth and figuring things out. I mean, look, we just pivoted. You don't pivot because things are rocking and rolling and everything's working perfectly. So there's some frustration after putting effort in the same direction for a long time and not having it pan out the way you want it to.
Maintaining that energy and optimism through that is a challenge.
[00:21:21] Speaker B: Right.
[00:21:21] Speaker A: It's like the Churchill saying of victories going from one defeat to the next without loss of enthusiasm.
I think I used that in a microconf talk like eight years ago. I mean it. I use that as a guide.
And if I could talk about, I want us to transition to, like, the Internet sucks, but not yet.
[00:21:44] Speaker B: Yeah, I have a thought on what you're talking about, too, but keep going.
[00:21:50] Speaker A: Getting to the point of pivoting. If you go to rallyon.com right now, it's a different product.
So getting to that point with all that goes inside the team, inside the company, communication with the investors, and then admitting it to yourself and to your leadership. Right. The other people you manage in the company with, then making it public, then changing how we sell, new pricing, all this other stuff, I didn't have much of a negative emotional experience of that I just ignored. I just didn't care. It didn't bother me. I was like, I'm comfortable making this decision because it's not like we didn't try to make it work one way. We tried really hard, and then we said, okay, it's tough to know when to stop pushing the boulder up the hill, but every once in a while, just let it go and move on to a different boulder.
So that's what we're doing now. But what has done it is kind of cracked my mind open a little bit to opportunities, and I'm almost holding on more loosely to my assumptions and my ideas around what will work. So it's not like I want to pivot again. It's that I'm willing to pivot again.
And maybe I'm more willing to pivot now than I was during the first pivot. So I'm much more on the lookout for opportunities and ideas than I was six months ago.
Even now, from checkout to checkout offers, and that's a relatively small leap. It was very logical because it's the same code base and we really didn't have to build very much at all. So that makes sense. But it has cracked open the idea of, oh, my idea doesn't really matter what the market wants and what the market says is the thing to follow.
[00:23:46] Speaker B: That makes total sense. It takes a whole lot of energy and thought and planning and willpower to get you to do the first pivot, or even just to consider pivoting at all.
But once you overcome that and you do that first pivot now, it's not so much about making that first pivot work. It's like now you're just in the mode of pivoting. It might not be your only pivot. It might require a couple of pivots before you land on the thing.
[00:24:15] Speaker A: Yes, I'm much more open to that idea, to that concept of looking for product market fit in a different way. And yes, we have raised Series A, and normally that happens after you've proven out some product market fit. But when we raised Series A, that wasn't the case.
So here we are, right, sometimes when rock and I and Jess talk, it's a bit like, okay, we just raised the seed round and we have money in the bank and we have a team, and what should we.
And that. That loose version of our assumptions on, like, well, we think this makes sense, but we've already heard, right? It's only been a few weeks of selling this product in the market, and we have heard things that are adjacent to what we're doing but are not the same thing. And it's already leading into maybe that's actually the bigger opportunity.
We heard from a company that is not traditional ecommerce, very large national chain that makes almost all of its margin on selling products. After their main service, their main product gets rented. So you rent this thing, and then when you do that, they sell you things that are used in the reason why you rented the truck.
[00:25:40] Speaker B: Okay.
[00:25:41] Speaker A: And we were like, did not have anything like that on our roadmap or on our radar at all. And they were like, well, that's where we make all of our money.
I'm much more open to things that I did not think I was open to, like, 45 days ago, which is exciting.
[00:25:58] Speaker B: Yeah, it's super interesting, as I hear you talk about if there are more pivots down the line, they might even be more drastic than the first one in terms of target customer industry space.
[00:26:12] Speaker A: Yes.
[00:26:13] Speaker B: It might be a whole new company.
[00:26:17] Speaker A: It's a great segue into the Internet sucks right now, right?
We have changed our product. We have not changed our industry or segment in e commerce. And my general sense is that e commerce sucks right now, which is a weird thing to deal with when selling into e commerce. I think Shopify will continue to absolutely crush because they've won the war, it's tipped over, and they will inhale additional market share for the foreseeable future.
But being an entrepreneur inside of the ecommerce ecosystem right now, I mean, all the agencies. I know, no fun.
[00:26:55] Speaker B: Yeah.
[00:26:55] Speaker A: We were talking before this into the insane asylum. If you run your business on running ads on meta, you are losing your mind right now.
[00:27:04] Speaker B: Oh, my God.
Every time I try to run ads on meta, it's like I literally can't log into my account. What's happening right now? Yes, but we were just talking offline about this from where I sit, which is very much outside of the ecommerce land, I only basically know it from you and from just observing the SaaS circles that we run in. Okay. It does seem like all the energy in ecommerce was five, seven, eight years ago.
And today I'm just not seeing that same energy from SaaS companies serving ecommerce the way it was.
[00:27:41] Speaker A: It peaked at pandemic. That's when ecommerce really benefited from a frank event. And that's, I feel like there were.
[00:27:48] Speaker B: A lot of SaaS startups that started a few years before the pandemic and doing really well, and they were super well positioned when the pandemic hit.
[00:27:55] Speaker A: Yes, that's right. Now it is so crowded. Shopify is the most successful ecosystem, and being inside of that ecosystem is difficult. Even the companies that are doing well have difficulty. There are leaders who are entrenched. So Klavio at this point is launching like, agency services.
So now all the agencies that serve Klavio are like, what the fuck? We just built our business on top of yours. We built up your client base. We recommended your product for years, and now you're competing with us. And that's kind of how it feels to be in e commerce right now. Whether you're a Shopify, app developer, an agency, one of the other platforms, I mean, they're really struggling. Doesn't even seem like they care that much. So it's tough to be convinced that Adobe really cares about Adobe commerce. And it's pretty tough to convince yourself that Salesforce really cares about.
[00:28:54] Speaker B: Yeah, I mean, you're, there are just so many unknowns out there, which from where I sit, I'm just speaking for myself here as I always do.
That's where just going all in on anything just feels like more risk.
I am going all in in a way on this instrumental product stuff. And when I say all in, it's not real. I'm still running clarity flow. There are still things happening on that front, but in terms of the main thing that I'm starting up these days, it's that, but that's still pretty diversified and lean and flexible. The service can adapt itself in many different ways, but I'm really focused on this product building service. But I want to go back to something you said a little while back. You said you feel more energy when you're successful. Yes, and I definitely relate to that. I'd imagine most people relate to that. And one of the things that makes me think of is that and when I think back to the times when I felt like things are just clicking in my business, things are successful, it absolutely affects my mood. I hate the reality. But it's so true that my revenue graph is my mood graph.
[00:30:16] Speaker A: Yeah, frame that.
[00:30:19] Speaker B: But it also brings to mind that it's also like success when the business is working well, meaning we have a lot of customers or clients coming in, and there's a lot of activity happening. There's a lot of needs in the business, too. Not only does it make me happier, but you would think that it would be more difficult to run because things get more chaotic the more action that's happening. But the nice thing about being successful, of course, is that if it's profitable, then you can use that profit to hire people and grow the team. And that's where I always have gained satisfaction in growing profitable businesses, like self funded and profitable from day one, is that when it gets successful, instead of getting stressed, I get psyched about, okay, now we have margin to play with that I can hire someone and this thing that's kind of eating up a lot of my hours right now, and things are getting a little chaotic.
That's the trigger to go hire someone and figure out the process to make this thing run without me, at least this little department of the thing.
But you might operate differently on this. But even if the business has cash in the bank, I found that if it's not profitable, if we're not seeing success in the market with customers, then just deploying that cash to hire people does not solve the problem. And it doesn't solve the stress for me and the energy, like my personal energy.
[00:31:58] Speaker A: Yes.
[00:31:59] Speaker B: You know what I mean?
It's easier to deploy cash to hire people, to serve, to fill the needs that are just happening because we're successful. It's a lot more difficult to use whatever cash we have to hope that these investments pan out.
[00:32:16] Speaker A: Yeah, I'll take it a bit further.
When we are chasing money, I don't feel good. When money is coming to us, I feel good.
So it's not just being able to make a sale.
I just will not feel good until people are coming to us and saying, take my money because the other way is too hard. Everything's hard, but it shouldn't be that hard.
[00:32:50] Speaker B: Yes, we're not saying business is easy by any means, but it shouldn't be that hard at the end of the day, making the sale. And you're right, looking back on any businesses that really clicked for me, the sales were just so easy. They were coming to you, it was fun to sell.
[00:33:11] Speaker A: Yes. So I like to think back on Noah Kagan's conversation. I don't know if it was Tim Ferriss, but he was on a podcast years and years ago or a YouTube video, whatever.
But someone asked him why it looks like everything he turns touches to gold. And he was like, oh, that's just because I drop things so fast that you don't even notice them or hear about them. And the only things that you see me associated with are the ones that I stuck with. And if something isn't working immediately and people love it or coming to me and giving me money, then I just drop.
You know, what he says is he learned that from Facebook, from working there, on how it should feel when it's successful and it should not feel like this grinding, constant, trying the next thing, trying the next thing, trying the next thing. And I missed that.
At cartook, we dealt with too much demand and that was the right feeling.
And I don't like right now I have a significant amount of money in the bank account and it doesn't feel good. Who cares? Doesn't feel good. We're chasing people and trying to show them and convince them our product is good. And I'm sitting here like, no product isn't compelling enough. Need to do more, need to focus.
Not on optimizing the sales process. Sure, that's normal work to do, but where the thought and the ideas and the intellectual energy should be focused is. How do you make this compelling enough that people see it, tell their friends about it, and people come chasing you?
[00:34:39] Speaker B: Yeah, for sure, man. I totally relate to that. I totally experienced that having cash in the bank.
What frustrated me the most was like, I should be able to deploy this capital to grow the business.
And when I deployed the capital and it did not directly result in growth, it's just extremely frustrating and actually generates stress and then I don't operate well and all that.
And it's also weird and sort of frustrating to look back on some of the wins that I've had, like in clarity flow and think because I burned a lot of cash on clarity flow, just frankly, the amount of time spent, literally the amount of time, like my time spent on it, the developer time spent on it, but also I burned a ton of cash on marketing, like hiring marketing people and deploying marketing experiments and marketing spend on stuff. And looking back, still most of the customers came from word of mouth and it's still not enough customers to make it a hundred percent profitable. Sustaining business it is what it is it's still something that I run, but obviously it's not my full time thing anymore.
And just looking back on it, how come those dollars did not actually grow, but the things that did grow it were pivoting the product or word of mouth because the product fit with certain people.
And in the earliest days, frankly, it was my audience and my personal reach when it was called zip message that did bring in the early batch of customers, which did spur on a bit of viral and word of mouth growth to people who don't know me. And then that helped a little bit with growth. But eventually I learned, like, all right, that's not the right market. I need to pivot to coaches. And that seemed to help, but still I deployed so many dollars that did not pan out. Yeah. And it just goes to this thing that we're talking about. I really think that at the end of the day, the best marketing and growth is the product itself. And same thing with a service. Lately I'm talking to a lot of agency owners and consultancy owners because I'm sort of relearning this business model now. And still almost every consultancy and agency owner you talk to, yeah, some of them have like super dialed in funnels, but most of them, they get most of their clients from word of mouth because they do great work, they provide a great service and their clients talk and recommend them. Same thing with products. Same thing with SaaS products. The best SaaS products just get talked about everywhere because people love them, because the product is great and it fits.
[00:37:39] Speaker A: Yes, it's an interesting problem now that so much of the software market is mature.
So jumping in and launching a product management software right now, you can convince yourself that it's okay to spend a year developing it because you got to be feature complete and you got to be able to match what's on the market. You got to be able to compete.
[00:38:09] Speaker B: You can be feature parity, but you're not going to have the reputation that the established players.
[00:38:15] Speaker A: Right.
What are you supposed to do? You're supposed to look for a green field of a new problem, like good luck. That's not easy. You're supposed to take a unique angle on it.
[00:38:26] Speaker B: It's not impossible. Of course, we know so many startups and bootstrapped or not bootstrapped, who are still killing it right now, obviously.
But yeah, it does feel like harder than ever for whatever reason.
[00:38:40] Speaker A: Tricky, tricky. It's almost like you either get lucky, you go nice and slow, and pace your expenses out by funding it with a w two job or services or you find a hack of some type sometimes a long time ago. My younger brother runs crunch gym franchises and that's a pretty big business.
It's a national franchise and they have software issues. So I've talked to him about, he's come to me and say, hey, we have this software issue. Is this an opportunity? Should I build a software product around this? And at least that would be a hack. You have a relationship with Homebase, they can deploy it to their 500 locations and you are off and running and you make your first sale.
[00:39:32] Speaker B: Some type of a hack.
[00:39:33] Speaker A: I mean, that's what a lot of people trying to do.
[00:39:35] Speaker B: I literally have friends who've built multimillion dollar SaaS companies because their brother runs a business and they built some software for it.
[00:39:43] Speaker A: Okay, like that. That's what people try to do with the Shopify App Store. They say, hey, there's a pool of people and I can get them.
It has its own challenges, but it's like their head is in the right place.
I always warn them to what to expect in the maturity of that business, which is as soon as you find success, you get cloned. And as soon as you get cloned, you get undercut on price. And so it's still a very difficult competitive world. But at least, hey, you've got your head in the right direction. There's a pool of customers. I can see a problem. I'm reading reviews. They're not happy with the stuff. I'm going to launch something in that direction. Yeah, but I like the private hack better than the public hack. Right. If there's a public App Store with the full might and weight of the open Internet competing over it, that does not seem nearly as much fun as. Can you make me an introduction to the CEO of crunch and see if I could sell him on deploying my software to 500 locations?
[00:40:46] Speaker B: Yeah.
Having that private, unfair advantage in road, not only with someone who can inform you of like, look, there's a product opportunity here for a market that most people don't see, but you happen to know somebody who has insider information into this, but also access to 500 locations, that's sort of like instant distribution for at least the first wave of customers for a business. And then that can grow the hardest wave. But that is luck.
Of course, it takes skill to find that it's not pure luck. You're able to identify that sort of opportunity and capitalize on it.
[00:41:33] Speaker A: Yes, it's an arbitrage, but there's a.
[00:41:36] Speaker B: Lot of people who want to start product businesses that don't have that type of inroad readily available to them. So how do you just go knock on the door of random niche industries?
I know it's been done so many times before, but it does seem harder, especially as a lot of these offline industries a either get more and more tech savy themselves. So they are finding the notions and the asanas of the world, whereas maybe 510 years ago they wouldn't have heard of those things.
But it is still a huge uphill battle to get local businesses to actually adopt software. Yeah, absolutely.
[00:42:26] Speaker A: That's a dangerous game.
[00:42:28] Speaker B: I don't want to turn this into a rant, but this is an example of, like, software product market fit.
I've literally been just trying to book a primary care physician appointment.
[00:42:39] Speaker A: Oh, boy.
[00:42:40] Speaker B: Which is insane. Insanity, dude.
I'm just trying to even establish a primary care relationship, which here in the US, at least where I live, it takes months before I can even see someone, let alone know if they're a good fit for me or not. But I go to four different doctors websites and go on Google Maps, find a bunch of local doctors, or find some through my insurance. And half of them actually do have, like, a book online option, so they're using some software to offer online. Like, great, I can just, I can go through this thing. I'll pick a date. All right. It's several weeks out in advance. Fine, I'll just book it. At least I don't have to wait on hold and call someone and blah, blah, blah, right? So I book it online and then the day comes. So I wait like four weeks or six weeks or whatever it is to actually an hour before the thing, they call me up. They're like, oh, I don't even know how you ever booked this appointment, but this doctor is not accepting new patients at this time.
[00:43:40] Speaker A: Oh, my God.
[00:43:41] Speaker B: I'm like, what do you mean you don't know how? On your website it says book online and the people in the office don't even know how to operate this thing or that they even have that booking option. It's like, what's happening? And this has happened repeatedly. Multiple doctors.
[00:43:57] Speaker A: Of all the journeys to take that will certainly end in dehydration and starvation. It's trying to fix that.
[00:44:04] Speaker B: So it's like, you could build the slickest software solution for these doctors offices in the world. It's not going to work if they don't use it.
Thanks, dude. What are you building in AI? Tell me about it.
[00:44:18] Speaker A: Okay, so I said the word arbitrage before and I'm glad you brought up because this is how I think of it. Maybe not arbitrage or edge or whatever. So here's my very cynical take on AI. Don't judge me.
I think our buyer, our customer segment, mid market and enterprise ecommerce merchants are particularly susceptible to hype.
These people buy, it's not their money.
They have budgets that are set every year.
They want to look good with their employer, they want to bring in new things and their management is telling them to go out and find AI stuff.
Okay? So I think we are properly positioned to use AI to its maximum potential. And when I think of maximum potential, I think of actual potential and I think of marketing potential, like how much value is generated by people just being interested in it.
And you see it everywhere. So many websites are just like whatever we had before, plus AI.
[00:45:35] Speaker B: Plus AI, yes.
[00:45:36] Speaker A: Which is a rational response because people are after that side of the utility, just the marketing utility of it. And then there's the actual utility of does this make the problem?
[00:45:48] Speaker B: What problem is it solving?
[00:45:50] Speaker A: Right. Does it make the problem better? And right next to that, not only does it make the solution better, but are people more willing to use the solution and believe in the solution because it's inside of the product? So all that to me says it makes sense for us to do this because we have product recommendations. That's basically what we do right now. It's a manual logic engine that says when this product is bought, make this particular set of offers, and if we can remove the manual element of a particular strategy of when this product is bought, sell this thing. And instead it's when this product is bought.
You mlai engine, tell me what you think we should offer and then learn based on that.
So it sounds like it's a good fit for the product and for the market. And so what we're thinking through now is how to experiment with it. Which tools can we leverage?
[00:46:49] Speaker B: I guess I wonder how would incorporating AI going back to how does it solve the problem differently than how you're already doing it with machine learning or logic?
[00:47:03] Speaker A: Sure.
So where it can go, not where it will be next week, but where it can go is a piece of Javascript on the storefront that is also present on the checkout page. And then you are picking up multiple signals.
Which pages? The shopper looked at which product pages?
[00:47:27] Speaker B: Oh, I see.
[00:47:27] Speaker A: So the AI they spent on that product page, let's just say, is more.
[00:47:32] Speaker B: Informing the merchant on how they can optimize, not the customer like which products they should.
[00:47:37] Speaker A: It should be informing our service to then show the offer that is most likely to be accepted.
We are at the checkout and post checkout.
So it's the interaction, right at the point of checkout. I do like that if I am a shopper and I go to this pair of socks and I look at the product page for 90 seconds and then I go to this other pair of socks and I add that to the cart, maybe if I have spent a lot of time on another product page, that's the right product to offer.
So it has a few promises, ideal conversion rate, and also removing the work required by the merchant to do this stuff and just say, hey, our brain will handle it.
[00:48:19] Speaker B: Yeah. And so in sales conversations then it's not just that you're doing these order bumps and upsells, you're doing them in a smarter way than whatever other way you're doing it. And it results in x percent increased conversion because it's this much more optimized.
[00:48:36] Speaker A: Right. You don't have to do any work on your end as a customer because we're doing it for you. Our brain is doing it for you.
[00:48:45] Speaker B: I can even see that growing out to the front end funnel where it's like, get your free AI analysis of your store.
[00:48:54] Speaker A: Yes.
[00:48:55] Speaker B: Interesting.
[00:48:58] Speaker A: What we're going to do is test the marketing value, right? Literally put it on the website, put it into the demo, talk about it right now. We can do that for people manually. We have a recommendation engine that we've plugged into. We can take their order history and it can come up with these products are most likely to be purchased with these other products. And that's enough of a kernel to be able to genuinely and honestly say that there is an AI component without changing the entire product.
[00:49:27] Speaker B: Especially if you're hearing that customers asking for AI or the market is looking for AI solutions because it is sort of like the trendy thing in your market. If it helps with the initial marketing and traction for the product, that's great. And then it also doesn't necessarily have to be the long term.
The fact that AI might help seal the deal when they come in, but ultimately having checkout upsells is still a good thing. And once you're in, it's still serving its purpose long term because the original sort of red flag that I would hear is like, all right, well, if it's not actually solving a problem, then there's a big churn risk. But if the underlying core product is still valuable, whether they use the AI feature or not, doesn't really matter. But if they're still using the core feature, that's great. And if the AI helps get them in in the first place, that's great too.
[00:50:26] Speaker A: That's right. And the added thing that you basically convinced us to put effort in this direction was that we actually kept hearing it from prospects on demos. So we would show them this is how it works and they would say, are you going to add AI to that so that we don't have to build it ourselves? And that's when we said, okay, we want to do it, fine.
[00:50:48] Speaker B: It's super interesting how I'm seeing the almost exact polar opposite in the coaches market for clarity flow.
Ever since the AI craze has been firing up, there are plenty of super obvious features that we probably should build into clarity flow using AI. Like summarizing record, we already transcribed recordings. We should summarize those into bullet points. That would be pretty helpful for users, actually, I would like that we have message titles. We should automatically write those message titles using AI. We totally should. As a user, I think that would be useful.
And I've had those feature ideas for over a year. We have not built them and I haven't received one feature request for anything like that from any of our customers.
That just goes to show how different my market is than yours. I think that's why I like it.
Some of them are aware of AI, of course, but that's not what they're looking for in this type of product and the daily users are not asking for it. And so that has meant we just have not built any AI features in clarity flow.
[00:51:58] Speaker A: I think you're right.
[00:51:59] Speaker B: It hasn't raised to that level of priority. Like it's not important for us yet. Even though I might want to do it, it's not important enough to build.
[00:52:07] Speaker A: I agree. I want it to help generate demand, make the product more compelling on the front end of the funnel. These bigger companies, they feel pressured, like they have no choice. They have to add this stuff and so they're going to add it and make their product enhanced with it. I want it to generate more demand, more sign ups, more demos, more effective marketing.
[00:52:29] Speaker B: It's so funny how using AI is so interesting to me. I've been kind of observing my own behavior with it, and I have noticed that I'm just using AI in general a bit less and less.
I'm still using it on a semi regular basis.
But the SaaS tools that I use that integrate AI or that have an AI feature built into them, like notion has AI in it. I never use it. I literally never click the AI button in notion. A few months back I switched over to using vs code. I used to use sublime and I made that switch thinking that I'm going to use the built in GitHub copilot.
I should correct.
It does automatically write code for me that I do use from time to time. But vs code also has the chat interface with AI built into it where I thought that I would be using it to ask code questions right inside vs code. I almost never do that. Sometimes I do, but really not very often at all. Mostly I'm just building straight into maybe I should go back to sublime. It just goes to show when it's built into the tools, I'm not using it all that much. And when I am using AI, I still just kind of hop over to Chat GPT and throw it in there.
[00:53:54] Speaker A: Yeah, we'll see.
[00:53:55] Speaker B: And I still haven't cracked the code on using it for content. We did it for a while with blog posts on clarity flow and I sort of paused that effort and I've tried to have it edit my own personal writing and I'm never happy with the output and it ends up just being my own real words.
I know that there are a lot of tools and companies that do AI content as a service, and maybe there's some better workflows and tooling out there that I don't know yet, but I just haven't cracked that one yet.
[00:54:29] Speaker A: Same. I don't even think of it.
All right. I don't know. I feel like we've been going for a very long time. Yeah, man, it was fun.
[00:54:37] Speaker B: Good Friday. Good episode. Hell yeah.
[00:54:39] Speaker A: Taking the rest of the day off. Take it easy over there.
[00:54:41] Speaker B: Nice. All right, better folks.
