Why is SaaS hard?

[00:00:17] Speaker A: Welcome back, everybody. Another episode of Bootstrap. Web. Brian, it's Friday, and today. Today we head to Ann Arbor. [00:00:26] Speaker B: Oh, you do? [00:00:27] Speaker A: We go to the big house. We're gonna be insufferable national champs. Everyone's gonna be walking around with a chip on their shoulder. [00:00:34] Speaker B: Oh, boy. [00:00:35] Speaker A: It's gonna be beautiful. [00:00:36] Speaker B: It's gonna be fun. [00:00:37] Speaker A: Beautiful. [00:00:38] Speaker B: The whole fam. [00:00:39] Speaker A: Whole fam. I expect to spend the same amount on swag and, like, lululemon, like, Michigan collab swag as I did for the entire weekend. But I'm prepared and I'm excited. [00:00:51] Speaker B: That's awesome. Yeah. Just a couple days ago, I went with. I went with my dad to the US Open. The tennis us open at the day out there. It's great. And, you know, we went to the first round, which I love doing at the US Open, because you get to walk around, it's like a festival. It's like there's so many people. So, you know, we had tickets in the main stadium. Arthur Ashe. Okay. Saw some good matches in there. And then in the first round, you get to walk around to all these courts and sit wherever you want. Like, we literally sat front row watching, like, number twelve in the world play number 20. And it's just the most incredible thing to see that close. These guys are so crazy good. [00:01:31] Speaker A: Yeah, it's fun. What I recall from the US Open, I think I was. Same situation. Correct me if I'm wrong, but you have tickets to an event in the main, in the Arthur Ashe Stadium at a certain time, but then you just. You can just walk around. [00:01:46] Speaker B: That's right. There's like a day ticket and a night ticket. So we have the day, we get there at, like 11:00 a.m. we're there to, like, 05:00 p.m. and. And you get. You get seats in the stadium, and you. And so there were, like two matches during the day that we popped in for, like, a set of seats for. [00:02:02] Speaker A: During the day. In the stadium? [00:02:04] Speaker B: In the stadium. Okay. Outside the stadium, there's like 20 more courts, which is wherever you want to. [00:02:09] Speaker A: What I remember is how small the courts are. [00:02:11] Speaker B: Well, they're that close. [00:02:13] Speaker A: Yeah. You're just hanging out. [00:02:15] Speaker B: It's so weird, you know, because, like, you know, I've played tennis. I'm not. I'm terrible at it. But when I. When I play, like, a tennis court, feels like a tennis court, it's kind of big, right? Yeah. But when you're up close watching these pros and the court is surrounded by fans, it makes it feel so small. [00:02:32] Speaker A: Yeah. Because it's like. [00:02:33] Speaker B: And these guys are sitting at, like, 120 miles an hour on what feels like a ping pongous table. When you're that close, it's such a weird experience. [00:02:42] Speaker A: And they make the court look small because they're gigantic athletes. [00:02:45] Speaker B: They're gigantic athletes. They're hitting the ball like you can't see it. It's unbelievable. [00:02:50] Speaker A: Awesome. That's a great, like, New York event, too. It feels very New York. You're not in Manhattan, but it has a very New York vibe. [00:02:57] Speaker B: Yeah. Everything is extremely overpriced and crowded. [00:03:01] Speaker A: Yep. Hell, yeah. Yeah. And then there's, like, a. There's a hierarchy. Like, that's where the rich people sit. That's where the celebrities sit. This is where we sit. [00:03:10] Speaker B: There's the food court, and then there's the restaurants. And then there's, like, we only allow the vip's over here. [00:03:17] Speaker A: Yes. But they have good drinks. I remember. Yeah. That's beautiful. That's awesome. Go with you, dad. It's great. [00:03:21] Speaker B: Yeah, it's good time. Good time. [00:03:22] Speaker A: Nice. Well, yeah, we're gonna go to Ann Arbor and then come back and have a nice Labor Day weekend. To me, this weekend feels like business. New Year's. Like, I get to restart the year next week, like, with all my resolutions and my energy and focus, and the kids are back at school. That's what it feels like to me. [00:03:42] Speaker B: Yeah. This week, my. This is my kids first week back at school. Oh, man, it's. It's so great to have, like, my. [00:03:48] Speaker A: House back from your damn kids. [00:03:52] Speaker B: Yeah. Like, just, you know. And also, like, you know, my wife works in the school, so she's okay. It's. It's so nice to, like, have the flexibility to work at home and be close to my family and see them off to school, see them come back to school. But, man, I forgot how much I missed having this, like. Like a six hour period every day where this place is just mine. Right. Just hanging alone, working, doing my thing, you know? [00:04:18] Speaker A: More like an office. Less like I'm enmeshed in home life. [00:04:23] Speaker B: Yes, exactly. [00:04:25] Speaker A: All right, well, look, I gotta start off by just talking about something. Okay. I gotta be honest, it kind of caught me by surprise, which makes me feel stupid. But the important thing is Rosie has paying customers. [00:04:39] Speaker B: Yes. [00:04:40] Speaker A: We got. We. Mmm. Stripe. Hit it. The bell rang somewhere out on the Internet. [00:04:45] Speaker B: This week was, like, the first, like, conversion from trial to paid. [00:04:48] Speaker A: No, it was last week. I just didn't know. [00:04:50] Speaker B: Okay. [00:04:51] Speaker A: Okay. So that's the. That's the shameful part. But besides that, in my mind, I mean, first of all, we got a bunch of sign ups. [00:04:58] Speaker B: Hell, yeah. [00:04:58] Speaker A: I didn't realize. But when we look back at the month of August, there's a lot more sign ups than I expected. [00:05:04] Speaker B: Hell, yeah. [00:05:04] Speaker A: And then some of them, you know, we have a seven day trial. So a bunch converted, and we have paying customers. Now, here's the thing. [00:05:13] Speaker B: Are you okay? Like, we historically don't, like, share too many numbers and stuff, but, like, what can you share? Maybe this is an off air conversation, but, like, in terms of, like, revenue and number of customers and all that. [00:05:25] Speaker A: Revenue, I actually don't know. But we got about 100 signups for the month. [00:05:33] Speaker B: And what is the price points that you're offering? [00:05:37] Speaker A: We're only offering one price point right now, $49 a month. [00:05:40] Speaker B: So then some number of those are paying 49 now. [00:05:43] Speaker A: Yeah, that's right. And so I think the bulk of the conversation, business wise, in this podcast will be about, like, the different phases of the funnel for us. [00:05:55] Speaker B: Of course. Yeah. [00:05:56] Speaker A: And I think, and that's why I have actually been pretty strict about it. Anything that falls outside of my current focus on the current phase of the funnel, I kind of don't think much about. And conversion to paid is a few steps down the funnel. And I honestly have not given it much thought. And that's why it kind of caught me by surprise that I was like, oh, I guess some of these might have converted. And I look, and I'm like, oh, my God, we've paying customers. I missed it. [00:06:21] Speaker B: Yeah. [00:06:21] Speaker A: Now, we're professionals. We can be honest about this stuff. Just because they're paying does not mean they're using it successfully and have adopted it. Like, two different things. [00:06:31] Speaker B: Yeah. [00:06:31] Speaker A: Yes. So I would say thumbs up. We have paying customers TBD on usage and churn, like, again later down the funnel. [00:06:42] Speaker B: And what this proves, I think, at this point, is that, yeah, like you said, like, it's not like it still remains to be seen, like, how much they're actively using it, how long they're gonna stay, and retention and all that. But, like, it does prove, at the very least, I think, more than this, but at the very least, that Rosie is offering a solution to a problem that definitely exists that people will click ads and go to and sign up and then actually pay for because they're the. They're actively seeking to something. Yes. They want something. [00:07:17] Speaker A: Yeah. I think nail on the head. That's the most important thing out of this month. [00:07:21] Speaker B: And it's more than that. They liked what they saw at the free level, and they still continued down the funnel with Rosie before moving on to something else. [00:07:31] Speaker A: Yeah. Yeah. And I don't think we should over index the importance of them converting to paid a. The most important thing is actually that we got about 100 signups, and people, I mean, they went through the signup process, and then they got set up, and that's kind of where we should stop in terms of, like, patting ourselves on the back. But the more important thing for the next phase of the funnel, the activation and conversion part of the funnel, is that we feel like we have a pretty clear picture of what people need in order to solve the problem that they're coming in with. Yes. So we've been doing the. We've been doing the early stage dance of basically anyone we talk to. We're like, we're gonna extend your trial because this feature that you're asking about is coming out next week. So let's make sure you have at least a week with the feature to make sure that it's right for you. [00:08:27] Speaker B: Yeah. [00:08:27] Speaker A: Yep. [00:08:28] Speaker B: Interesting. Sort of like a quick update. I wasn't going to talk about this today, but actually with clarity flow. I talked about last week how I'm doing that pricing experiment here in the month of August, and what you were just saying about, like, oh, I didn't even realize, like, people were converting. A little sort of a version of that happened for me with, you know, because I think we talked a week ago and I was three weeks into the experiment of where we have no more free trial and we're just charging up for front. And three weeks ago, it was in that gray area where, like, all right, we have a handful of conversions on this new offer. What does that mean? Like, is it. It seems like it's less than what we would have gotten before with a trial. But now that we're a week later and we're about four weeks into this, like, there have been a few more conversions. And now I'm looking at the numbers for the month, and, like, this was an upenness month. Like, it definitely was an up month in terms of MRR increase, and we had lower churn this month. And so. But the experiment is not complete yet. But I think now I'm. What's different from last week is, like, now I think I'm willing to give it another month before I make any changes. [00:09:51] Speaker A: You took a step back and have a. A slightly different perspective or a perspective that takes into account a bit more than just how many signups have come in? How many have, I think, last week? [00:10:03] Speaker B: And it was hard to think about it last week because I was like, man, it's not a complete failure. It's not like we have zero conversions here, but it doesn't seem like a whole lot. So I was leaning toward, like, all right, this was like a one month experiment that I'm probably gonna cut around September 1, now, a week later, just looking at the numbers, August looks like a generally positive month compared to previous months. Like, if we were fully plateaued, this could be the start. If this repeats, if August were to repeat for a number of months, then this could be the start of a nice growth. But it could just be something. I don't know. That's been the story. So now I'm leaning more towards like, okay, let's not do the experiment just yet. Let's give it at least another month. And so, because the other thing about this, there's a few factors. One is that we are getting more traffic now that we weren't getting before. So I am curious to know, like, how this traffic would convert if we were offering the free trial, which we're not right now. But the other thing is that in August, some of those convert, some of the earlier from, like, the first two weeks were hangovers from the previous month. Like, they had. They did trial back in July, and they just happened to convert in August. But everything from mid August on, like, we are still getting new conversions who did not go through a trial. So that tells me, like, let's just give it another month and see, that's tricky. [00:11:40] Speaker A: There's so many factors. You can't tell which factors are the most important. What did it? What didn't do it. [00:11:45] Speaker B: Because in September, if we just continue and change nothing, then we will have, like, a pure 30 days of, like, there have been no trials. Let's just see how many customers we get. [00:11:56] Speaker A: Now, one of the things I think we used to talk about, people used to talk about more often a few years ago, is a b testing. Yeah, right. Like, you're running an experiment, but you have a lot more traffic. So you have a lot more going on top of the funnel. It could be an opportunity to say, well, let's send half the people through this and half the people through that. I find it rarely makes sense to actually set that up. [00:12:21] Speaker B: Yeah. And it's so complicated to do that for this type of, like, pricing because you'd have to have, like, two different technical, like, literally build two different funnels. And we did build it in a way that it's easy enough for me to flip the trial back on whenever I want to, but it's not easy to have like two parallel funnels. [00:12:40] Speaker A: Yes, yes. We're about to have an opportunity for something like that because we're about to start sending all of the traffic from ads to a landing page that's totally separate from the homepage. And that, so that the most important part of the experiment, we're actually, we're going to be consistent on both. And that is the signup process more than anything else. Yeah, but it's been fun to build a landing page. It's funny when you build a landing page and then you like things in the landing page more than your homepage and you're like, I think I'm just going to change the homepage. Yep. [00:13:16] Speaker B: I mean, I feel like that's sort of natural because I think that landing pages, by their nature, they're supposed to be very targeted and you're speaking to one customer, so they are going to have very effective copy for that one customer. Whereas the homepage is sort of by design, a little bit more general. Like this is the product, this is the company. [00:13:36] Speaker A: Yes. Like very wide open. [00:13:38] Speaker B: Yeah. [00:13:38] Speaker A: Yes. Yeah. I've had fun with the landing page part and it feels much easier to experiment. Like one of the experiments we will do, because it's so reasonable to do is just cut the landing page off at the hero. So there's a hero section and there's a whole bunch of stuff below it. One of the experiments I want to run very quickly is just cut it off the hero and just have nothing below. [00:14:01] Speaker B: See if they just take action based on what they see there. [00:14:03] Speaker A: Yes. Headline, sub headline, graphic promise, you know, done. [00:14:09] Speaker B: That's been like a marketing design approach that I've always been in awe of, but for whatever stupid reason, I can't, like, I always want to give people more information and like, but you see these high converting newsletter landing pages and sites where it's like they give you almost no information. Just sort of like a promise, a headline and a button or an email field. And it's like to really learn more. [00:14:37] Speaker A: Like you go further in. I think that has a lot to do with where the traffic is coming from and how warm the traffic is, how much work is being done before that page. But we just do not know. And our ads are kind of very, they just generate, they just point out the pain very clearly. And so if you have that pain and then you get to the page and it promises to take that pain away. [00:14:59] Speaker B: Yeah. [00:15:00] Speaker A: The most important thing in the last week that we've been working on is a new signup flow. So we're almost done. I think it looks great. I have some concerns. [00:15:11] Speaker B: Oh, yeah, you showed me some of that looks good. [00:15:12] Speaker A: Yeah. It goes from what we have now, which is a button, and you click on the button, you go to a page, and that page is a registration page with an account, you know, email and password or Google sign up. And now it is being flipped where it is a field with a button. And a field is your website URL. And you click the button and the next screen you see is we are building your agent. And then, you know, the little circles get filled in and takes about a minute. And that's where my worry is. It's awesome to get people further into the funnel. So it creates the agent and the next page it automatically sends you to is preview your agent. And then you can listen to a few recordings of Rosie talking about your business. And then if you like what you hear, then you hit claim my agent. And that's when you create an account. So we're letting people go further in, adding more value. But I'm worried about that second page. If it takes 60 seconds to create your agent, I'm worried people are going to drop off. Maybe they'll be really excited and think it's very cool. Maybe they'll close the window. I don't know. [00:16:16] Speaker B: Yeah, it's funny, I'm one of my MVP products that I'm working on for a client right now is what you just described. It's got a very similar, like, homepage flow where they, the first step is they put their website into it and then we hit some AI queries and it comes. It's actually a pretty cool product. I'll probably talk about it once they're okay with me talking about it live. But yeah, I'm not going to share what it is in case they don't want me to. But it's pretty cool because it, it does that. And there is a step two where we have to wait for a result to come back and then a step three where we do some analysis and run some stuff. Okay. But part of it is we're showing a little animated spinner to say, hey, our robots are working. Sit tight. And. Yeah, here we go. [00:17:12] Speaker A: Yeah, that's similar, but I've already gotten paranoid about it and ask rock. Okay. See what you can do to get that down. Basically every second it takes, you know, beyond the first 5 seconds is a problem. So if you get it to 10 seconds instead of 30, whatever it is, like, we show progress nicely. But I don't know, it's a little. It feels a little dangerous. [00:17:34] Speaker B: Yeah. Yeah. [00:17:37] Speaker A: What else, man? [00:17:38] Speaker B: All right. I've got some high level thinking that I've been doing a lot lately, and I'm starting to get, I think, a little bit more focused. All right. I I'll try to make sense of this without rambling on too much, but. All right, so whoever's been listening to this podcast this year and for many years, you know that this year 2024 for me has been a year of exploration, to say the least. I talked about the clarity flow stuff that's still running. I've got a team running that. We're doing those experiments. We're shipping some features, but clarity flow is, you know, it's four years in, and so I'm now moved on to thinking, like, what's the next thing that I'm building here, you know? And. And I've been jumping around. I've been exploring and hacking on ideas. I did the ripple idea. I talked about sunrise dashboard or something. I've been playing around with programmatic SEO. I've been, you know, earlier in the year, I was playing around with YouTube a lot and doing some video content, just exploring and just trying to be active, trying to get my wheels turning and trying to see what I can learn, but. Okay. And I think I've learned a lot, also learned a lot through the consulting stuff, just in terms of what it means to offer this type of consulting and then generating a lot of byproducts in terms of development tools and components and Ui stuff. All right. So a lot of stuff, a lot of activity, a lot of analysis, a lot of thinking. But I think that the thing that I'm now, the frustration that I'm trying to work through now is like, okay, I think it's time for me to pick a direction, pick something to commit to longer term than just a month here, a month there. Right. I. Something that I want to build. Like, I'm trying to figure out, like, what is it that I truly want to commit to building for years in terms of, like, the next business, the next, like. Like, big asset that I want to grow. Right. [00:19:46] Speaker A: Okay. Not. Not a small thing to just make money in short term, but, like, yeah, focus. [00:19:52] Speaker B: There's probably going to have to be small steps that make money in the short term, but, like, even whatever those little stair step, you know, stepping stone things are gonna be. I don't want them to just be, like, random things, like, hey, here's a thing, go buy it. Maybe I can make a buck real quick. Like, it's gotta be part of a larger strategy toward building a. Like, I really want to commit to a mission of some kind that I'm fired up about, that I can show up every day for years to build something. Like, that's. That's what any great business asset is going to require, right? [00:20:28] Speaker A: Yes. Years. [00:20:30] Speaker B: And as frustrating as this year has been with being so unfocused, I think I needed. Hold on, let me close the window. Landscape in time. I think I needed this year, and I'm happy that I've been able to take the time to explore and try to learn a lot about what I truly want to sink my time into. I think, all right, one idea that I want to talk about here that's really on my mind lately is just the concept of SaaS. Right. You know, for years that I like you and, like, probably a lot of listeners of this podcast have been on the quest to make a SaaS business work. And for me personally, I know this is not the case for most of us here, but for me, I think I'm finally just fully letting go of that dream a little bit and just really understanding, for me, why I don't think it's wise or ideal or optimal for me to just pick a SaaS business idea and commit to that. [00:21:45] Speaker A: That's smart. Let's get into that. [00:21:47] Speaker B: And I have a specific you got there thing on that. When I consider all these different business ideas, why is it that I've had a hard time choosing a SaaS idea and saying, yes, I am so fired up about this idea and this opportunity and this evidence that I see around this opportunity that I'm willing to put in many months to see this through. Right. Like, I have not been able to get myself to that point about any single SaaS idea. I have plenty of SaaS ideas that I see opportunity with that I think would work fantastically well for someone who wants to do them. But every time I start to think and game out each of these ideas, it's like, even if it's successful, even if it gets first customers, it's still such a long road to make it work. And it also requires a lot of just, like, almost like, magical thinking to think that, like, you're gonna be able to get out of the desert on this and you're not gonna waste a year or more on this idea. Yeah. I just can't be convinced of that for any SaaS idea. And I think part of the reason for that, of course, it comes down to product market fit. Why is product market fit so hard right now in SaaS? I don't care who you are, if you are starting a new SaaS in 2024 and you have not reached product market fit, you know what I'm talking about. This is the hardest thing to nail. [00:23:31] Speaker A: So many people that nail it. There's so much luck involved. It really doesn't feel like this reasonable, repeatable thing to, like, bet your years of your career on, dude. [00:23:42] Speaker B: Exactly. And this week I'm thinking a lot about, like, why is that so particularly hard in SAS specifically? [00:23:49] Speaker A: Did you get any answers? [00:23:51] Speaker B: Here's an answer. I think that it's not just about. It's true that SaaS is so much more competitive than it has ever been. Right? We know that. We know that every category is hyper competitive now. Every single one. We also know that competition is coming even faster. I talked about last week that, like, it's so much faster and easier for anyone to spin up a new competitor. [00:24:16] Speaker A: In any space, discover something relatively not competitive that works and gets product market Fitzhen, it will be competitive faster than in the past. [00:24:26] Speaker B: Here's the new idea that I'm thinking about, or the new reason why I think it's hard. You do need to dominate your, you have to really win your market for every single customer. It's great that you have competitors. It's great. I think that's a good thing because it proves that there's activity, there's a market there. You're going to have competitors. That's fine. That the existence of competitors shouldn't scare you off from any business. But in SaaS in particular, for you to win each individual one customer, you have to completely obliterate every single one of your competitors. Because your customer is not going to choose any of your competitors. They're only going to buy from one, and they're choosing you. [00:25:14] Speaker A: And the switching costs aren't that high. [00:25:17] Speaker B: You're selling them on your solution, but I would say these days, even more. You're selling them on like, hey, don't buy those 50 other SaaS competitors to mine. [00:25:26] Speaker A: Yeah. Even though you heard about them from someone and you saw their advertising and they had a better name and a better domain. Yeah, I hear that. [00:25:35] Speaker B: That's unique to SaaS. Right. Because think of every SaaS tool that you pay for. You only buy one of them. Like I for clarity flow. We we pay for customer I o. That's our email service provider, we don't pay for any other ones. Like we pay for one hosting provider, we pay for one this one that, like, we're not going to pay for the other ones. But that's not true in other business models like training course businesses, educational businesses, coaching businesses, even consulting. Like people buy multiple, you know, community businesses. People buy and belong to multiple communities. People buy many courses, people hire many coaches over time, sometimes simultaneously, they hire many consultants. You don't have to completely. That's why those businesses are easier to sell to customers. Every business is hard in some way, but you don't have to dominate. [00:26:33] Speaker A: It's easier to be unique, it's easier to differentiate. It's not as competitive in that same way where it's a business expense that happens every month and therefore you, you choose one and use it. [00:26:44] Speaker B: Yeah. And it's like the buying proposition on a SaaS business for any customer. It's always, you always have to get over. The main objections are like, well, why don't I just do this or why don't I just use that? You don't have to get over that objection with other business models. You only have to do that in SaaS, it seems. [00:27:03] Speaker A: Yeah. Okay, so here's the counter to that. The normal argument against that is in categories where it's a regular. Take email for example. If you assume a very large number of businesses and a large portion of businesses online are going to use an email solution, you can battle your way into a niche and do things slightly differently and therefore stake out a position. And because the market's so big, that position can still be worth pursuing. [00:27:33] Speaker B: Yeah, 100%. [00:27:34] Speaker A: Yes. Right. I logic of it, in practice, the, the distribution of customer focus is extreme. I mean, when I talk to rvcs, the only interesting thing is either winning the market or becoming number two at worst. Because everything, everything congregates toward the very, very, very few at the top. So if you want a bigger business, you have to win the market or be number two at worst. [00:28:09] Speaker B: But even all that is like in the aggregate, at the high level, like. [00:28:13] Speaker A: When you have it, makes sense logically in practice. [00:28:16] Speaker B: Look, you can still have a great business being the 10th most popular email service provider or any SaaS I challenge. [00:28:26] Speaker A: What you mean by great business? [00:28:28] Speaker B: Well, like any, any bootstrapped business or low, like you could, like clarity, flow is not set setting out to be the biggest platform for coaches, but like we, we could have, you know, a solid business hopefully someday if it, if it were to get through these growth plateaus. Right? Sure. Like, but part of the reason why there are growth plateaus in is because there are competitors and there are, there are always alternatives, and it's easy enough for customers to switch to another one or just choose another one. And look, what I'm saying here is, look, obviously there are incredible SaaS businesses to be had. There still are. It's still to me, like, probably like the holy grail business model. It's fantastic. We see it every day. People build and grow and sell SaaS businesses, and it's incredible. Yeah. What I'm saying is this is mostly speaking for me where I am at in my career and life and everything. It's like what it takes to start and bootstrap and kind of put all my eggs in that basket of, like, I've got to find a SaaS idea to make work. It's just to me, like, I'm, the more I think about this, like, there are other business models in the world where people with my skillset and my strengths and weaknesses and I could build a fantastic business another way. It doesn't have to be a SaaS. [00:30:01] Speaker A: Okay. I like you opening up in this way on the mindset and, like, the type of business to pursue. What? I don't think it happens that often. Great SaaS businesses are actually not that common. There are a lot of them. Does not mean they're that common. Think about the web of people that, you know, how many great businesses are there? Not that many. And my real problem, my real problem is our definition of a great business is bullshit. A million, $2 million a year is not a great business. [00:30:36] Speaker B: Right. [00:30:37] Speaker A: It's a million bucks. And this economy is. I hate that the cap or what is considered by us to be a great business is really not. It's really hard. You have to keep running forever. You have to sprint. You can't just like, go on vacation and rest on your laurels and have your business keep growing because other people run it for you. [00:31:02] Speaker B: I do think that a million, a 2 million a year is still a pretty life changing business for most people. [00:31:08] Speaker A: People agree a very hard to get there. [00:31:11] Speaker B: Yes. You're still in the top, what, like 1% once you. [00:31:16] Speaker A: Right. And when you get there, how much are you actually taking home out of a $2 million a year business that's growing and needs to be fed with customer support and success in marketing, most people, the margin, sure. Gross margin after cost of goods sold looks amazing because it's just hosting, but how much is actually being brought home? [00:31:36] Speaker B: Right. [00:31:37] Speaker A: This is that conversation I had with Rob walling a while back, remember? I just want to finish this because it stuck with me. I remember being at like ten or twenty k a month with card hook, and Rob was at like 100 month with drip. And I was like, dude, how much profit are you taking? And he was like, are you kidding me? You can't. If you want to take profit, you are consciously putting weight on your business and slowing it down, and you have to make the trade off. And I was like, in my back, my head, I was like, that's crazy. When I'm at 100k, I'm going to be banking. And he was like, you let me know when you get there and tell me how it really looks. And he was 100% right. [00:32:17] Speaker B: Okay. [00:32:19] Speaker A: I don't like it. I don't like selling ourselves short. I don't like seeing all this other stuff out in the economy. [00:32:26] Speaker B: I hear you. [00:32:27] Speaker A: Such better potential. If I were about to. If I were to start a new business tomorrow, I don't think it would be. It definitely wouldn't be sass. [00:32:35] Speaker B: Yeah. [00:32:35] Speaker A: I don't even know if it would be online. I think I'd rather go to the SBA and put 10% down and acquire a local business for $3 million and try to make it better with my digital skills and outsourcing to the Philippines and doing all this stuff that we know that's more modern than the person running the $3 million painting business knows. [00:32:53] Speaker B: Totally. [00:32:54] Speaker A: And I think there's more money to be made there. [00:32:56] Speaker B: I think I mostly agree with everything that you're saying about a, call it a million to $2 million business, especially in the world of SaaS. And I don't think that this is for every SaaS, but, yeah, probably for most of them, you're not very profitable. You're going to be growing the team at that point. You're going to have server costs, you have customer support costs, sales and marketing costs to remain competitive because it is hyper competitive and you do need. And so, like, yeah, I could easily see how most SaaS businesses who cross a million or 2 million like I do, well, okay, they might not be, like, crazy, like, beyond belief profitable, but the people working in those businesses, the founding team, like, they're making a good income, like, you're not. You're getting paid a full market salary at that point, number one. [00:33:48] Speaker A: Yes. Which none of us are actually after is the goal. [00:33:52] Speaker B: Exactly. But the other point that I'll make is that, because, look, my SaaS business is not in that range right now. And I feel like, I'm not even going to come close to the idea of having a sellable asset that I could have a life changing exit from until I get to that one to 2 million or above level. So once you do get to that one to 2 million above, then you're talk, then you're talk, then. Then you know that what you are working on every day is something that in all likelihood, you will have a life changing exit from in the coming years. [00:34:30] Speaker A: Right. If you own the company, unless you really from anywhere between. Right. Anywhere between two and $10 million is a lot of money. [00:34:38] Speaker B: Yeah, a lot of money. So, so. [00:34:40] Speaker A: But it's a lot of money. [00:34:41] Speaker B: So once you've grown that to over a million, you are now working on a fantastic asset that's going to be great unless you really screw it up. Yeah. [00:34:52] Speaker A: That's the dream everyone's chasing. I don't see nearly as many people reaching that goal as I would like. [00:35:02] Speaker B: But I would also say, and what I'm focused on right now, like, this week, thinking about where am I going to focus my effort, my business going. Like, if I'm going to start my next business that I'm going to dump years of my life into, I think that there are other businesses that could, like, get to one to 2 million and above and be very profitable. I'm thinking a lot about training businesses, community businesses, and. And, like, you know, templates and components, you know, building for building for builders, you know. [00:35:41] Speaker A: Right. That kind of business, $500,000 a year, you're probably taking home 400, which, again, that's a lot of money. You can't sell that business for $5 million. [00:35:52] Speaker B: Well, okay. So here's another thing that I'm getting very interested in right now, and I'm starting to, like, talk to a lot of people about this to try to learn. Okay. What I'm really interested, what I'm starting to set my sights on in terms of where I'm. I think I'm gonna be really focusing for a long period of time going forward, is, I think it's gonna be some kind of training business, educational business. But I'm not interested in it being, like, a solo creator who sells a course business. [00:36:26] Speaker A: Okay. I mean, those can be beautiful businesses. [00:36:28] Speaker B: Those can be beautiful. You know, the creators who do amazingly well, like, it's a fantastic business. Yeah. [00:36:33] Speaker A: I think Aaron Francis is gonna end up making a million dollars a year. [00:36:36] Speaker B: Oh, hell, yeah. If he doesn't already. You know, I'm so inspired by those kinds of businesses. Right? Like the creator business. Right. But I'm thinking more about like, well, okay, shorter term, it's probably going to look like templates. Taking my UI stuff and selling it as a template library, that's probably the next thing that I'm looking at and that's more of a short term thing. But I think it's a stepping stone to expanding out into a bigger company here. That can be a training thing. I remember I'm thinking more about a training company with multiple instructors and, and whether that's a team of instructors or we bring in like guest instructors and guest coaches to feature them and they teach a course here and there and having a whole library of courses and community. And so if I think back, here's a little pattern that I think back to back when I started audience ops years ago when I had the, it was the day I was sitting at Microconf in Vegas, and it was like the day where I realized like, oh, there could be a business in selling blog content as a productized service to clients. And I was like, I think there's an opportunity here. I see a lot of people who have a need for this, but my personal rule for this is like, if this business is going to work for me as a business that I want to start, I cannot be the one writing the articles. Like, I'm not going to write articles for clients like me. Brian. [00:38:14] Speaker A: Yes, yes. [00:38:16] Speaker B: If that's a requirement, then I don't want to do that business. [00:38:19] Speaker A: Agree? Any business, actually. [00:38:21] Speaker B: Yeah. And so I never wrote a single article for a client, right. But I built and sold that, that business. It was super profitable for years. And then I sold it and it was great. And I did it through building a team and systems and processes. And I sort of have that same mindset here. If I'm going to build some form of a training company, I want to get really good at the system for researching, designing, building, deploying courses with other instructors, bringing in outside instructors, or building a core team of instructors, something like that. I don't know all the details and how that would work, maybe what the financial model might be or the licensing deals or royalties or whatever that might be, but that's sort of interesting to me. And then you sort of pair that with templates, UI components, tools. So I'm talking about like four builders, fellow builders, and I think that's something that I could get fired up about. And I could also see a path to making this work as a profitable business without too much magical thinking, without desert, without hope of making it out of the desert. A year from now, the way that I would with any SaaS idea, this seems more attainable. And at the same time I can see a path to building multi million dollar business that can actually be sold in the future, which is, you know, like, let's not lie. Like that's, that's definitely a goal of mine. That's the goal. [00:40:06] Speaker A: Hell yeah. Yeah. The, the only thing I think the, the key thing that was wrong with the business model of, I mean, of services in general is that there's marginal cost for every unit and that's the enemy. So anything having to do with training or courses or you know, curriculum, that type of a thing, as long as you make it once and then there's no additional marginal cost for each sale, then, then you have the right business model. [00:40:36] Speaker B: Yep. Yeah. I think that they're, I think with like real. Real is the wrong word. But what I mean is like these like scalable training companies that I'm trying to study right now. I'm trying to learn a lot about them. [00:40:48] Speaker A: There are a few out there that are good examples. [00:40:50] Speaker B: Oh, there's a, there's a ton of them. It's a huge market. There's like just in the tech space alone. You've got like boot camps everywhere. You've got. [00:40:58] Speaker A: There's a bunch of WordPress. WordPress a few years ago. [00:41:03] Speaker B: Yeah. [00:41:04] Speaker A: What's the one based in Portland? Egg. [00:41:07] Speaker B: Egghead. I'm Joel Hooks. [00:41:09] Speaker A: That's it. [00:41:10] Speaker B: I literally just emailed him this morning. I'm going to be interviewing him on the open Threads podcast next week. [00:41:14] Speaker A: Cool. [00:41:14] Speaker B: I can't wait to learn from him. [00:41:15] Speaker A: This is what I remember from Joel. I go to a lunch in Portland with the microcon crew, one of the first lunches of after moving there. We're sitting down, we're hanging out, having like I'm in our normal lunch spot. So I think I'm feeling myself at this point because cardo's at like fifty k a month. Okay. Joel comes, sits down, tatted up, loose, happy, no ego, no nothing. Just this casual dude, sits down, starts talking about his numbers. I'm like, oh, okay. Because that's a better business. So he's been doing great for a long time. They just put out amazing quality. [00:41:58] Speaker B: Incredible, amazing quality. I can't wait to meet him. I'm going to talk to him next week and really pick his brain on air on the open Threads podcast. So that should be pretty cool. I'm talking to a few other course. I'm also talking to Chris Oliver from go rails he's built an incredible business over there. And so what I'm interested in, like I said, short term, I'm probably going to be selling templates and components and ui stuff because that's like a byproduct. I already have that. It's like a byproduct of the work that I've been doing. But I see that pairing with like training on how that stuff is built longer term and like, sort of like the, sort of like the mission, if you will, that I'm starting and I don't have like the exact elevator pitch for this yet, but what I'm getting kind of excited about, I sort of see a wave coming and non developers. [00:42:55] Speaker A: Trying to become developers. [00:42:57] Speaker B: In a way, yes. It's AI driven. Okay. We're already in like an AI wave right now in terms of like, tooling with AI, right? Like you're building an AI tool. Like there's. That wave exists and it's real. Right. I think that we're also on the cusp of a people wave of, look, people like me and you and most of the people listening to this podcast, we know how to leverage AI to build a software solutions in businesses, right? And AI makes it incredibly easy to build software solutions. That viral tweet of an eight year old building a software thing with cursor this week, that was incredible. Right? But the rest of the world is not there yet. Big gap. [00:43:51] Speaker A: Big gap. [00:43:52] Speaker B: Huge, huge gap. And they might see that this stuff is possible, but you don't know how to, you can't use AI to build a software solution if you don't know the right questions and the prompts and how software gets architected and what's actually possible and how the big pieces fit together. People like me, I can direct an AI or I can build myself to put it all, to put the pieces together. I think that there's already a ton of training out there for developers, teaching fellow developers how to build this or that stack. But I think that there's a larger wave of. Because businesses everywhere are going to be hiring builders at a much, much higher rate in the coming years. I really believe this. I think that small businesses everywhere, businesses who wouldn't normally hire developers, hiring a developer is going to become the norm for every business, like every single business. [00:44:56] Speaker A: To just solve their, their, I don't. [00:44:59] Speaker B: Know, streamline your business with technology and AI. [00:45:03] Speaker A: Yeah, I'm seeing a lot of agencies that are starting to specialize in that, and they're coming to us. They're almost kind of non technical themselves. They're just selling to people who are completely not technical, and they're like, I will improve your business. Yeah, basically, don't worry. How. [00:45:18] Speaker B: There's a lot of, like, I think the past couple of decades, it's. It's been like most businesses don't even really know what's possible with technology, and so they just stick with their spreadsheets and their paper and their person to person interactions. But now we're in a time where businesses are becoming a lot more savvy about what's actually possible. You're literally seeing it with your customers on Rosie. Small businesses are starting to get tech technology, and they need to. Yes, they need. They're going to be hiring tools for that. They're going to be hiring consultants for that. They're going to be hiring employees for that. The founders themselves are becoming more technological. So I think that there's a workforce wave that's coming where people need to be skilled up in order to be hired to be the builders in these companies. They need to be skilled up to offer their consulting services to companies, and maybe they're running a business themselves and they want to skill up to streamline something in their own business. [00:46:21] Speaker A: I like that, identifying that. To me, what stands out is the potential to either improve your hireability or build a business around these skills that make learning it very, very valuable beyond just like, hey, I want to accomplish a task, so I want to learn how. [00:46:42] Speaker B: Yeah, I think that, like, that's why the training space, especially in tech, has already blown up for the past ten years. Like, there's, there's a massive industry of, of these, like, tech boot camp, like, course, educational companies. [00:46:56] Speaker A: If you're motivated, you can get yourself into a six figure salary. It doesn't matter where you were born. [00:47:01] Speaker B: Exactly. What are those? And those are, those have done really well on the. What they're selling is like, hey, you're in some other industry and you want to break into the tech industry, right? Hireability. And that's just to get a tech job. And I think that's going to continue to play, but it's going to get multiplied now with AI because, like, every single business is going to have a wave of demand for more of these builders. It's not just like, get hired at a tech company. It's going to be like, get hired at, like, literally any business because they're all hiring technical builders. [00:47:36] Speaker A: Yeah, very interesting. I saw something. [00:47:38] Speaker B: I mean, that's just like my hunch, but, like, that's sort of what I'm seeing, like, even, like, in some of the clients that I'm working with on the MVP service. Right. Like, I'm finding, like, people are in these, like, regular non tech industries and they are technical. Like, small business owners are using zapiers and no codes and to wire up chat GPT to streamline things in their own little small business. Yeah. You know, and like, that's, like, wait, normies are starting to do that kind of thing. Like, that's a, that's a little lagging indicator for, like, there's a wave here. [00:48:15] Speaker A: Like, yeah, you know, I like that. I don't know exactly where it leads. I don't. It doesn't really. You don't need to know where it leads right now. [00:48:23] Speaker B: Yeah. [00:48:23] Speaker A: Just kind of head in that direction. I saw something the other day that stuck with me where this video is showing how to sell websites with AI. And what he was doing was, take a website, your prospects website, put into these tools. [00:48:43] Speaker B: Yeah. [00:48:44] Speaker A: Take all the data, have it build a beautiful, modern website with all the existing data. You have done no work and it has cost you nothing. And then. Right. Imagine approaching a business with, I rebuilt your website. Do you want to buy it? And imagine competing with someone who said, you know, let's have a conversation. I'll give you a quote, then maybe I'll start working on your website. So even that's just a little unfair thing to take advantage of that. If you know how to do it. [00:49:13] Speaker B: You'Re at an advantage 100%. A lot of that stuff is like, if you start to think about it now, in the age of AI, all that kind of stuff, my whole early part of my career was selling people and redesigning their websites. Right. And, like, that stuff is going away. Like, yes, there are, there's always gonna be consultants who can help with that, but I think that we're just a few years away from, like, mainstream small businesses being able to do that themselves. Like, you know, like, we're really entering a phase now where it's gonna. Everything is gonna become so much faster and easier and maybe whatever. The older business owners are not going to be able to tool it up themselves, but they're going to be hiring younger folks to get into their businesses and get set up. [00:50:11] Speaker A: Yeah, that's fine. Well, I like this detour that we took. I'm going to jump off to my mastermind because I got those on Friday. Now. [00:50:21] Speaker B: There you go. [00:50:22] Speaker A: We're gonna keep working our way down the funnel. We're gonna go celebrate Michigan not losing their opener to Fresno State. [00:50:28] Speaker B: All right. [00:50:29] Speaker A: And everyone has a great labor day. [00:50:33] Speaker B: All right, later, folks.