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As the CEO of Kit, Nathan Barry has a front row seat to what’s working in the most successful creator businesses.
On The Nathan Barry Show, he interviews top creators and dives into the inner workings of their businesses in his live coaching sessions.
You get unique insight into how creator businesses work and what you can do to increase results in your own business.
One of the things Nathan is passionate about is helping you create leverage.
Creator Flywheels let you create many copies of yourself so you don’t get bogged down with the little things in your business. Flywheels will help you reach a place where you can focus on revenue instead of busywork.
Tune in weekly for new episodes with ideas and tips for growing your business. You’ll hear discussions around building an audience, earning a living as a creator, and Nathan’s insights on scaling a software company to $100M.
Learn how to get more results with less effort and:
Grow faster over time.
Work less hard over time.
Make more money over time.
Nathan: At every stage of the business, every time you double the business, the CEO has to cut what they do in half.
Tiago: Interesting.
Nathan: That one is the hardest for me personally.
Billion Dollar Creator is a show teaching creators how to capture attention and turn it into real wealth. We will deep dive into brands, celebrities, and entrepreneurs who have done it before and show you how you can apply it to your business as an everyday creator.
Tiago: Hey, everyone. Today, I've invited one of my favorite creators and entrepreneurs, Nathan Barry, the founder of ConvertKit, the email marketing platform that we use, into the studio to talk about a really big idea and powerful message that he's actually touring the country to talk about, which is the idea of the billion dollar creator. Welcome, Nathan. Thank you for coming in.
Nathan: Yeah, thanks for having me. It's fun to be here in the studio with you.
Tiago: Yeah, absolutely. So let's start off. For someone who has no idea what this means. What's your best kind of explanation of what the billion dollar creator idea is?
Nathan: Yeah, so creators are incredible at two things, one, getting attention, and two, make money from it. If we think about what happens in the world, if we're saying hey, do I want to be a doctor or a creator? Well, they both do a lot of public good. Maybe the doctor is more public service. But if you want to make more money, go be a creator. Which is kind of a ridiculous idea if you think about that. That at this level, you're going to make much more as a creator, the potential is right?
If we were talking and someone said, “Oh a friend of ours said I make a million dollars a year as a creator.” We’d be like okay. There would be no surprise on either of our faces. It would be entirely expected.
Tiago: Yeah.
Nathan: Now, if you think about it, what creators do is they have attention, right? Creators are the best in the world at capturing attention. You have options as to where you're going to direct that attention. So I actually have, I guess a point of view on this, that on one hand, creators are the best at gathering attention, but they're wildly under monetized.
So when we talk to that creator who's making a million dollars a year off of 100,000 subscriber email list and a quarter million subscriber YouTube channel or something like that, I'm like yeah, I'm super happy for you. Also, I bet there's a business in there where that attention is worth 10 or maybe even 100 times more what you're doing there. So the billion dollar creator is really asking that question of if I have this attention, where could I point it that has the highest return on investment?
Tiago: Yeah. I love that. It really reminds me, this is going to go down a rabbit hole. But did you ever read the book Who is Michael Ovitz? about the founding of CAA?
Nathan: I have not.
Tiago: So Creative Artists Agency, by far the biggest Hollywood agency, there was a line in that book. It was the 1980s, and he was starting CAA with a thesis. His thesis was all the power is going to go to the talent. That was the whole idea. Because at the time, actors were just employees. They were just the hired hands.
Exactly. Oh, you want to do it? Okay. They would dictate where you had to live, your schedule, how much you were paid. He just said no. Over the next few decades, all the power is going to go to the talent. He built CAA, a multibillion dollar agency on the back of that idea.
I feel like that's happening again now. Your thesis is almost like all the power, the influence, the money, the equity is going to go to the talent, except this time, it's not just within the confines of Hollywood. It's the creator economy and the internet.
Nathan: Yeah. It's really changing even further. Because not only has the power gone to the talent, but now the distribution has gone to the talent as well. So if you think about it's not, “Hey, will you cast me in this film because I'm going to be able to bring in this level of performance.” Then people are going to want to see Jennifer Aniston in a film. So they're more likely to watch it.
Instead, it's well, I don't need anyone to pick me. I'm going to choose myself. Not only do I have people following me, but I also own the distribution channel.
Tiago: Yeah.
Nathan: Right. We own the digital theaters where we’re saying I'm going to choose exactly what runs at the theater.
Tiago: Gosh, I almost think, I mean, we see actors who have now accumulated so much of that power and influence. But from what you're saying, it's almost like the potential for that. Currently, the Hollywood actors are sort of the biggest names, but maybe with the internet, there is no ceiling to that. Maybe eventually there will be even bigger names in the creator economy on the internet than we see in Hollywood.
Nathan: Yeah. I think there will be, and you're going to see a crossover between these two worlds, right? You've seen Will Smith creating YouTube content, writing a traditional book with Mark Manson, right?
Tiago: Yes.
Nathan: So you see these crossovers where we're like wait, Mark Manson is a friend of ours, right? He's a customer of ConvertKit.
Tiago: Is he?
Nathan: Yeah, he is.
Tiago: Oh cool.
Nathan: Will Smith is going to Mark and saying, “Hey, I loved your book. Like let’s collaborate.” So you're going to see these two worlds combine more and more and techniques be borrowed from each one. But I think what's interesting is actually that it's not that the creators should get on the level of the actors and the film professionals and all that. It's that both sides are realizing that the attention that they have is worth even more if they do something entirely different with it.
So if you think about the wealthiest people in Hollywood and the wealthiest people in music, very, very few of them, many have a level of wealth. 10s of millions, 100 million, that kind of thing from the thing that they are known for.
But if you get into the multiple hundreds of millions or billions of dollars, it's like 90% of the time it is not related to their core craft of being an actor or a musician. So if we take Dr. Dre, he is not at his level of wealth from his music. It's from Beats by Dre selling to Apple for 3 billion.
Tiago: Right. So his music career was just, that was just a publicity stunt for this.
Nathan: It’s realizing that once you have this attention, you can translate it into a business that's potentially way bigger. Another example of this in the Hollywood side is Ryan Reynolds where he's getting paid, who knows what, a million dollars to do TV commercial or something. He’s like, “Great. I show up for a day or two days, we shoot, I get paid a million dollars. This is fantastic.”
But it sort of begs the question where you're like well hold on. If this is worth a million dollars to you as a brand to pay me, what are you actually making from this?
Tiago: Right.
Nathan: We all know has to be more than a million dollars. Is it 1.1 million?
Tiago: Yeah.
Nathan: Is it five? Is it 10? Is it more? What is that attention that Ryan is able to direct to something actually worth? He went out, and he was like, “Let's find out in the free market.” So he went and bought into two companies, Aviation Gin and Mint Mobile.
He said, “All right, I'm going to. I think that I'm one of the best of the world at marketing.” He has his production company called Maximum Effort. “We're going to produce all our own commercials. We're going to go all in on this.” I mean, they built both of them into massive companies. Mint Mobile, so first, Aviation Gin exited for 600 or 700 million, right, and Ryan had a really meaningful stake. Then also, just last year, Mint Mobile exited for 1.3 billion.
Tiago: Incredible.
Nathan: I posted a story about it online explaining how it all worked. Someone replied was like, “Yeah, but Ryan only owned 30% of that.” I was like that poor guy. He only got 400 million or something out of it. If you look at all these examples, there are people who have taken that attention and directed it somewhere else.
So giving a really, like a traditional creator example. There's a blogger and content creator named Mark Sisson, and he wrote a blog called Mark's Daily Apple in the health and wellness and paleo space. So in 2013, 2014, I think he was about maybe 100,000 subscribers, which, at the time, was a giant email list.
What he did is I think he was making about one to $2 million a year off of that. Which 100,000 subscribers, again, now that is amazing but also a little commonplace, right? It's not so out of the ordinary. Then it was pretty remarkable. He was one of the biggest.
But if you look at that, the attention that he has. What's the highest ROI place he could direct? He started to realize that people were asking him about not just the recipes that he's putting out for avocado oil mayonnaise or some of these other things that, salad dressing, that match the paleo diet. People were saying, “Hey, will you actually, I just want to buy this.”
So what he ended up doing is starting a company called Primal Kitchen, which is selling these products. Using the audience, he's able to meet minimum order quantities. He knows he could sell enough that he can pursue this. He’s not trying to start from scratch. So he could launch that.
The other thing that it lets you do, I'm just imagining how these conversations played out. What the email list lets you do is get into traditional distribution methods, right? Because you're not going to sell that much salad dressing on the internet. You need to sell it in Whole Foods or other grocery stores.
So what a creator can do is talk to the buyer at one of these grocery stores and say, “Hey, will you carry this?” They're like, “I don’t know. Is it any good? Do people want to buy it?” You're like we think it's great. It's like well yeah, of course you do. So you convince them hey, do a test run in one store. They're like, “All right. We're going to run it in one store. We'll see how it goes.”
Then I like to imagine that Mark was like, “Cool, that sounds great. Just which store, by the way?” They're like, “Oh, we're going to do this one store in Austin.” He’s like, “Sweet.” Goes to his email list, says select everybody who is within 50 miles of Austin, send them an email, and say, “Hey, great news. Whole Foods is now carrying Primal Kitchen products. Do me a huge favor. Go buy it.”
Go back to the conversation with the buyer from Whole Foods later and be like, “Hey, how’d the test go?” They're like, “It sold out completely.” And Mark's like, “No, really?” They're like, “Yeah.” The buyers like, “So we're going to run some tests in more stores.” Mark’s like, “That's perfect. By the way, which stores?” You can repeat this process because you have attention to drive into these traditional markets.
So then what happens from there is, you're able to create almost a self-fulfilling prophecy. Because the more sales that this is getting, the more a store is like hey, let's take it from the middle of the shelf and put an end cap.
Tiago: Totally.
Nathan: Right? Let's put it in more stores which drives more sales. Which then they're saying hey, Whole Foods started this and rolled it out a bunch. So let's go to Kroger. Let's go to carry these lines.
Tiago: Becomes yeah, this snowball effect.
Nathan: Right. But it takes something to kickstart that. So what's interesting is Mark ended up building that company and selling it two years later to Kraft Foods for $200 million. So if you think he's making more than 2 million a year off of the audience, and then you're asking is that the highest ROI place to direct selling digital products, advertising, affiliates, very traditional things.
Well, turns out that was not the highest ROI place for that attention. Right? So he created 100 years’ worth of revenue in two years by going a different direction.
Tiago: Oh my gosh.
Nathan: The other thing for any tax nerds. The original business is ordinary income, long term capital gains. So he’s paying half the taxes on it.
Tiago: Oh my gosh.
Nathan: So that's the thing that I'm obsessed over is creators are the best in the world at capturing attention. So where should you direct it?
Tiago: So this is fascinating. I've been listening to your excellent podcast where you really dive into these ideas, the stories, the case studies. But to be perfectly honest, I really wanted to get some free coaching from Nathan. I am super open about all my numbers. It's something that's always been very important to me. I know it's important to you. It's where I do some of my best learning because people can see what's actually happening in my business.
It's funny because I love all these stories and examples. They're so inspiring, so motivating. But the contrast between that and my day to day life sometimes feels really extreme. We have two young kids, a one year old and a three year old. Often, I know you know what that's like. Often the house feels a battlefield. We're in that kind of post-pandemic slump that a lot of creators have experienced.
So just to make this very concrete. At the peak of the pandemic 2021, we did 3 million in revenue, which was, I mean, everything before that is negligible. It just exploded. 10, 20, 30x. I don't even know. Probably 30x. I was a solopreneur before.
But then we, like so many creators, thought that line would just keep going. Right? So I started hiring a lot. So as the pandemic ended, 2022, we did 2 million in revenue, which it still doesn't sound a catastrophic drop. But profit dropped over 90%. Just basically wiped out our profit because of the cost of labor essentially. Labor's 80 to 90% of our costs.
Nathan: Yeah.
Tiago: So 2022, we barely eked out a profit, maybe 100,000. This year, 2023, we're probably going to do more or less what we did last year. 2 million revenue, barely any, maybe a little bit of profit. So we basically flatlined, and we're working hard. I mean I'm not sitting back. I'm throwing everything I can at this just to stay even. I have no free time. I can't really work anymore. I don't feel I can hire anyone because there's no profit. So I feel I have no doorway, no next step, to start to build that leverage that you're talking about.
At the same time, one more data point. We have this amazing audience. We have 130,000 subscribers on ConvertKit, 50% open rate. So people love us. They're opening our content. They're getting huge value. I don't know how to square these different things. I feel, kind of you said, like 130,000 raving fans could support a much larger business, at least a more profitable one. What are some of the things you would look at, or the questions you would ask?
Nathan: So the first thing I'd say and that is that short term cash flow and long term enterprise value are often at odds with each other. So cash flow being how much money you're bringing in in a given month or year that you can actually use to spend on expenses or take home as profit. Then enterprise value being what is this business worth if it was sold? Not to say that you have to sell it, but there's a reason that investors value certain types of businesses in certain ways. So if you pay attention to that, it's important understand, even if you don't plan to sell.
So ConvertKit is actually my method of following this billion dollar creator playbook. Right? I started selling digital products. So I was making about 200 to 250,000 a year selling eBooks and courses back in 2012/2013. Then, when I tackled this problem of email, it ended up taking that same audience and using it to grow ConvertKit. Now, ConvertKit, at this point, is valued at 320 million.
Tiago: Amazing.
Nathan: That's 40 million a year in revenue. So I have a long but clear path to get it to a billion dollar valuation. I know that if I can get to 100, 120 million in revenue over the next, say, five years, that'll be a billion dollar business.
Tiago: Wow.
Nathan: But there's been a ton of time in there that we have not taken home any profits, right. There was a big dip in profits and take home pay to be able to do that.
Tiago: Okay.
Nathan: The other thing that I would say is, well, so going back, expect that dip. Right? I think you're experiencing some of that now. The other thing is that it will probably take an entirely different product in order to reach a different scale.
Tiago: Interesting, say more about that.
Nathan: So I don't think it's possible for me in a design and development education business to reach 100 million in revenue, 50 million in revenue. It has been done, right? If we think of lynda.com, teaching Excel workshops in person, and they actually went online. Someone the other day talked about the creator economy. How the creator economy really started in 2020. I was like what?
Tiago: No, that's when VCs started calling it that.
Nathan: But it was an interesting type of inflection point in that. I was talking to my friend, Todd Herman, about this. He was talking about some of these big inflection points. 2008 was a huge time for a bunch of creators coming on. 2020 was a huge time for a bunch of creators. But he was like, go back. 2001 was a huge time. Lynda.com came out of September 11th.
Tiago: Really?
Nathan: Yeah. Because what happened is she was teaching Excel workshops in person.
Tiago: I didn't know there was a person called Lynda.
Nathan: Yeah, no. Lynda is a billion dollar creator.
Tiago: Oh my gosh.
Nathan: So she was teaching Excel workshops. Then that business died. All public, all speaking, these giant business conferences that were brought, all that completely died when all travel ended after September 11 and the economy crashed and all of that.
Tiago: Wow.
Nathan: So she took her workshops online, and then she extended it from her workshops to other people's workshops and on from there. Then I should know the numbers but exited to LinkedIn for at least a billion, two billion, somewhere right in there.
Tiago: Did she build, because there's underlying technology. There's a platform there, right? Did she build that technology herself, or just sell it and then they built that technology?
Nathan: They built the technology. It was a full course and learning platform where they were hosting it. Udemy, I think, was a competitor and all that. So they ended up just reaching massive scale, especially in the corporate training world where there's a huge amount of money being spent. So often if you have this audience attention, often it’s going to require a pivot to a different type of product. Lynda is not going to reach that valuation.
Tiago: With Excel courses.
Nathan: With Excel courses. It's not going to happen.
Tiago: This is fascinating to me. Okay, so I want to dive into this because it's something I've thought about, but then this speaks to another one of your principles, which is you have to build more than a personal brand.
Nathan: Yeah.
Tiago: Which I understand, I believe, and I've kind of tried several times to go beyond my personal brand. But it's really tough because it's, like I'll give you an example. We've considered going into corporate training. We have quite a bit of evidence that Building a Second Brain, which is my book. You can see it back there somewhere. I probably should have a copy to hold. Is a new approach to productivity. Many, many, most people that use it are using it at work in their companies.
A lot of potential to go into corporate training, but I am not personally interested in corporate training. In fact, the corporate world, this is why I became a creator. The corporate world drains me of energy so fast that even talking about it, I'm tired. So, in theory, I could hire someone, but I can't yet afford. It's like the chicken and egg. I can't yet afford to hire someone to go after that without the cash flow.
So how do you, in fact, I'd to know for you too. You can't be personally interested in all the initiatives that the company takes on. How do you how or how would you, for someone like me that's much smaller, think about making a pivot to something that you're not personally passionate about.
Nathan: Yeah. So I would think about two things. One, you're talking about making that hire, which maybe that's a really expensive hire, maybe it's not. Maybe there's a way to do it on contingency or commission to test the theory.
Knowing will this work in corporate training is a hypothesis that we can test. So how are we going to do that? We're going to do pitches to these 25 organizations, or we're going to get in here and partner with someone who will sell into it.
So basically, our options are full time employee, an employee working on commission because that's going to cost you anything out of pocket initially, and then the other one would be licensing in some way. Who's an organization that already is very, very good at this, has that distribution channel, and you can sell into it in these ways. So I would look at it that.
But I to take these ideas that are in my head of okay, I can always do corporate training. Maybe I want to, maybe I don't. But I want to take those ideas and pin them down and say I actually have a hypothesis that this could work well in corporate training. How would I test that hypothesis?
Then try to find a way to do that, get that out there. Then you can forever be like yep, that would work. We'll see if I want that as a playbook now that I can run. Or you tested it, and you can be like cool, I can forever get that idea out of my head because I don't believe that my hypothesis was accurate.
Tiago: Interesting. So what I'm taking from that is to sort of instead of okay, we're going to marshal all these resources, create a three year timeline, all the stuff, you do a series of small experiments, test hypotheses, validate. It's interesting commission or contingency or something that is not full time employment and also not a contractor. I guess I just have no experience with. Would that be a commission salesperson or someone like that?
Nathan: Yeah, something that will work. Or if you're working with an organization that’s already selling. There are people who are selling this training. I don't know that industry, but there have to be people who have these many distribution points into corporations. So talk to them.
Tiago: Interesting.
Nathan: Now, I'll add a caveat to the test. There's a lot of people who are saying test this, look at the data, what's your hypothesis? On one hand, I love that. Then on the other, I believe that most things in business, it's not that they can't be tested. It's maybe almost that they shouldn't be tested.
What I mean by that is if you put something out, a test kind of implies that you should be hands off with it. Right? We put something in our little petri dish. We’re like okay, what happens, but we don't mess with it. But in business, everything is so difficult that I believe it requires a force of nature level of effort to will something into existence.
Tiago: Yes.
Nathan: So you can easily test corporate training, and then be okay yeah, that didn't work. Yeah, never mind.
Tiago: Yeah.
Nathan: Someone else might later come in and say I'm going to make this happen no matter what. I'm going to grind through this for years and years and years. ConvertKit took two years to get to $2,000 a month in revenue. Right? So if you were to test it, you'd be like nope. Not worth doing. Shut it down.
Tiago: Yeah.
Nathan: Now ConvertKit makes $3 million a month in revenue. So it requires that level of effort. So you have to find that balance between little tests and saying I'm going to will this into existence.
Tiago: I'm so glad you said that. Because that is my experience as a creator is everything that I've done that has worked is because I personally was that force of nature. I just believed in it, in the app, on faith basically. I mean my cohorts that, until very recently was the main business. The first nine cohorts weren't really profitable. Then the 10th, it was when the pandemic hit, it was like hitting a spark.
But then that's kind of the concern I have with corporate training is I know that if I dedicated myself to it, I could make it work. I would just find a way. I would just keep testing hypotheses, keep trying things, find a way in, that's what I do. But the only way I know how to do that is, like I said, throwing myself in it completely. But you're kind of talking about a balance between those, force of nature mode versus iteration and testing mode.
Nathan: Yeah. It really depends on what the goal is. So actually let's get clear on that for a second and put a framework around this so that people can think about the types of businesses. So you talked about build more than a personal brand. So there are three. Why don’t you write some of these down, and I'll talk over them if you want to write it down.
So the first principle is so you have to build more than a personal brand. The reason that this is important is that it has to be something that's sellable. It has to be able to scale beyond you. So even, I was studying tons of examples of billion dollar creator businesses. What stood out to me is all of them were more than a personal brand.
Even the one, let's use an example Kylie Cosmetics. So Kylie Jenner was on the cover of Forbes magazine. People were arguing over the first self-made billionaire.
Tiago: Oh yeah.
Nathan: The first self-made female billionaire. They're like back and forth is she actually a billionaire? Was she self-made. They're quibbling over all of these details. I'm like who cares she’s worth 950 million versus a billion. One thing that she did is she built a business that was in a totally different space. So more than a personal brand actually. Like her name is on it, Kylie Cosmetics, but it is investable, sellable, and all that.
The other thing that she did brings me to point number two, which is you need to sell products, not attention. So if you think about the Kardashians, they all have this attention. They're getting, I think I heard a story that Kim Kardashian would get paid a million dollars for an Instagram post. It sounds a pretty damn good business.
But in that, you can stack that up. You can make a ton of money off of that. But then why is Kylie, as one of the less famous members of the family, making the most money? The reason is because she went here. She’s like, “I'm not going to sell attention. I'm going to build this products business and scale.”
Now it's fascinating to think a million dollars for an Instagram post versus a billion dollar cosmetics brand. That is a wild difference. I don't think people realize the difference in scale between those two numbers.
Tiago: No, they don’t.
Nathan: The joke that I like is what's the difference between a million dollars and a billion dollars? About a billion. Right? If you think about it. I think that a million seconds, I'm going to get this wrong but.
Tiago: I have heard this, yeah.
Nathan: I think it's like 13 days.
Tiago: Yeah.
Nathan: A billion seconds is 33 years.
Tiago: Yeah, it's completely counterintuitive.
Nathan: It’s just absolutely wild.
Tiago: Yeah.
Nathan: So if you think about the scale that you're able to do, it's night and day. Actually, I think Kim Kardashian is fascinating in this world because now she's running a private equity fund where she's buying businesses and then pointing your attention at it and scaling. She understands these very, very well, but Kylie was the one that really did it first.
Tiago: So it's funny because I almost, this one I understand or at least I have a taste of because courses are more than 90% of our revenue.
Nathan: Yep.
Tiago: People can buy that, especially now that it's a self-paced course, people can buy it whenever they want. Also, it's funny in the world of creators, this is going to sound strange, but I don't have an Ali Abdaal audience. I'm not the best at creating the most massive audiences. My audience tends to grow kind of very linearly because it's kind of niche, kind of nerdy, kind of technical. So I've never been able to make money with that. I just never had scale for that. I've had to build products.
But then the reason I, so it's funny because we could just create a courses all year long. Courses and more courses. There's infinite amount of content. But I'm kind of like do I really want to just create courses upon courses and mountains of courses?
Which is another one of your principles. I don't know if it belongs here, but it's something like fully capitalize on what you've already done rather than a new thing, new thing, which is what I see so many creators doing. They don't even eke out 1% of the potential of something before they move on to something else. I don't want to do that.
Nathan: Yeah. So I talked about this in the forms of skyscrapers versus strip malls. So if you think about in a rural area, you have the strip mall of all these little stores and businesses, each one doing a small amount of revenue or has a small amount of value. A lot of people will say, especially someone who's like oh, I'm a serial entrepreneur. They're building all of these different businesses.
Tiago: Oh yeah, yeah.
Nathan: What I think is you either haven't found one that's worth doubling down on, or you are so distractible that you're not willing to stay focused. So instead, what if you got a hundred times more space in that one building by building a skyscraper on that same footprint?
Tiago: I like that.
Nathan: So I got rid of a bunch of other products that I had or was selling that made money because ConvertKit is the skyscraper that I'm building. So everything I do has to go back into growing that business.
Tiago: I love that. I love that. I mean, this is why I keep coming back to the thing that I've already done, Building a Second Brain. It's like the leverage, doing a little more on that, putting a little more effort into that, the leverage is so much vaster than anything else I could do. It's like its own little mini-empire. It's its own ecosystem.
Nathan: Yeah. So there's a few things in here. There's a third principle that I want to get to, and that is that all of these businesses have recurring or repeat purchases. They're a little bit different than that, right? I say recurring or repeat, right? A software subscription is truly recurring whereas a salad dressing is a repeat purchase.
I was thinking that, and I went through all these examples. Almost every single one had either recurring or repeat purchases. There was one that bothered me. It was Beats by Dre that did, it was a one-time purchase. Though I guess we lose and break headphones all the time. So you buy them more often.
But then another friend Dan Runcie, who runs Trapital, which is like a music business newsletter. I had him on the podcast. He talked about how the acquisition was really only half about the headphones and half about the Beats by Dre, the music streaming service they started, which became the precursor to Apple Music.
Tiago: Right.
Nathan: So when Apple bought them for 3 billion, they were going for a recurring purchase of the subscription. So this is something that I'm curious about in your business is so you have more than a personal brand. I'd say you're halfway to having more than a personal brand. You're definitely, you're all in on products rather than attention. But do you have recurring or repeat purchases?
Tiago: No. No, we don't. So we launched a membership, a subscription membership. It's 500 a year or something. It's basically for people who take our course or read our books or whatever and want to be part of a community that has one event per week all year long. So we support it. We invest in it.
The thing I've run into in that, it's like on podcasts and things, people are always just like, “Oh, just make it recurring. Whatever you do just make it recurring.” But it's like I've been studying community based subscription, membership based businesses, it's hard. The standard has gotten so high for the value that's provided, for how much engagement, for how passionate people are.
I don't know how to, basically what makes me hesitate from investing more in that is I don't know how to make it much better without people's time. Again, I run into the same problem of I don't really feel I can, we don't even have a full time community manager. That feels too much of an expense.
Nathan: Well, I mean, first, there's lots of things that you can do. There's nothing to say that that full time community manager has to be US based or something like that, right? A lot of these businesses find leverage in different ways of hiring someone in Latin America or the Philippines and expanding from there. So there's a lot of options in that world.
But community is one of, in these examples. If we're trying to go for something 10x or 100x what you're at now. So if we use the barometer of this business must get to 100 million in revenue, I don't think a community is going to do that.
Tiago: No.
Nathan: Because look out there. How many communities do you see that are at 100 million in revenue?
Tiago: I don't even, there's so few that are even a fraction. They tend to be run almost like hobbies. There's some person who is very extroverted that is just personally keeping it afloat.
Nathan: Yeah, I push back on that a little bit because I think that Rachel Rodgers, my cohost on The Billion Dollar Creator Podcast, her community, she was sharing last night. The community by itself is $3 million a year.
Tiago: Really?
Nathan: Yeah.
Tiago: Dang.
Nathan: Then she's got coaching and coaching certification. Right? There's all this stuff. So her business, which is a similar model or could be a similar model to yours, is about a $10 million dollar a year business off of about the same size audience.
Tiago: Really?
Nathan: Yeah. So now she's trying to figure out the 10 to 100 million leap, and there's some, she's got a lot of ideas in there. She's exploring and testing hypotheses on that. But her business is a core monthly membership, she calls it The Club. I think she's got maybe 2,500 members that are paying for that. I can't remember the price point.
Then inside of The Club, she has coaches. She needs coaches trained in her method. So she then also has a coaching certification that people go through. So she has a flywheel in that of she is finding members in her club who want to, they kind of rise above, and they want to be coaches. Then she's making money teaching them her methodology, exactly what works. She's very revenue and results driven.
So, I've met a lot of people in her community. The number of people I meet who are making a million dollars a year off their business is way higher than I've seen in any other community.
Tiago: Really?
Nathan: Yeah. So her methods are really, really good.
Tiago: So a community based on entrepreneurship.
Nathan: Entrepreneurship, yeah. Her business is called Hello Seven as in hello seven figures. So in that, as she's having the best people in her community who want to be coaches, they're paying to go through a certification which they could use outside in the business world or they can also be a coach in that community that she’s paying.
Then she also has a higher end mastermind where she's helping them scale their businesses at another level. So I think those are kind of the three main products that she has is the recurring community, the coaching certification, and then the higher end training mastermind and coaching practice.
Tiago: Interesting. That's something else.
Nathan: She does 10 million a year.
Tiago: So it is possible for this model that we have to scale to 10 million. There are examples.
Nathan: Yep.
Tiago: It's having almost these other product lines. Not just one thing to buy, but multiple entry points.
Nathan: Yeah. So in that, I think we're looking at what step functions do we want to reach? Right? If the goal is 10 million, that is the path that I would take. If the goal is 100 million, we've got to take a different path entirely. I think one thing that's helpful is maybe just drawing some examples on here is thinking about average revenue per user per year.
So I'm going to use an acronym here. So ARPU, average revenue per user. Then I think about this in terms of per year. So let's take James Clear as an example. He has 2.5 million subscribers. It's a massive business. The book has sold 15 million copies. He is absolutely printing money in his business.
But let's say he woke up tomorrow, and he absolutely had to, for whatever reason, he's like oh, I am making up numbers. I don't know exactly. “Instead of running a $10 million a year business, I must run $100 million a year business or greater.” So how do we want to tackle that? I think there's ways that we could do it, right.
So if we think of different options. So if we wanted a low ARPU business with a lot of customers, I would build Calm for habits. So Calm is a meditation app. We're going to have, we can sell this to a lot of people. 2.5 million people, a bunch of them can buy it. What is the app that is going to really drive people to adopt their habits?
Remember, it's a product. We're not selling attention. It’s more than a personal brand. It's going to be like the Clear method or something that. But it has to be recurring or repeat purchase.
The worst thing he could do is say, “Hey, I'm going to sell this as a $5 one time purchase or $20 one time purchase.” No, no, no. Total waste time. But $100 a year, right? That makes sense. We can do the math on this, but you'd have to sell a crazy number of these but it's doable. Now, if we wanted another business. Let's say we want a medium ARPU product.
Tiago: Say a little bit more about, this is actually a question I've had is so we're doing 2 million a year on 125,000 subscribers. That's something $20 to $25 per subscriber that we're generating. How do I benchmark that? How do you know if that's a low, medium, or high? Are there guidelines? Are there standards to know where that falls?
Nathan: Yeah, that’s a good point. There's probably actually a difference. So ARPU is a term that comes mostly from the software world. Right? So ConvertKit has, we charge anything from $9 a month at the very cheapest thing we charge for up to the James Clears of the world and all that are paying $5,000 a month. But we average out at $65 a month across 50,000 customers. Now, what you're pointing to is an average revenue per subscriber.
Tiago: Per subscriber, yes.
Nathan: Right? Because you have all of the free people. If we did that for ConvertKit, we'd be, I think there's like 500,000 free accounts.
Tiago: Wow.
Nathan: So it'd be driven much lower.
Tiago: Yeah.
Nathan: What I would be thinking about in this model, or for this example, is what's your average revenue per customer?
Tiago: Per customer, which I don't know off the top of my head.
Nathan: Yeah. Public math is hard. So $25 per subscriber per year is a pretty good subscriber value. There's nothing about that that jumps out at me like oh, we should be trying to get that up. That seems solid.
Tiago: Okay.
Nathan: But I think running through a couple of these examples, I'm going to throw a per year on here just because it's so, so important. This is the thing. This part of it is what we have to change in your business. So here's the problem. I know you're acutely aware of this, but I will emphasize it just for everyone watching. January 1, you have no revenue. Right.
Tiago: Yeah.
Nathan: So your revenue, let's see if I can draw boxes. Each year is looking this of whatever it is spiking to for each. Year one, year two, year three. Well, year four starts, and your own is there and you're building up throughout the year. In my business because of recurring revenue, I'm like here. In year four, I'm already up here, and I'm saying hey where can I go in year four because it's recurring.
Tiago: It’s so powerful.
Nathan: Now I have churn in that, right. So churn is whoever's canceling every month. It can be there's all kinds of things in the growth that are hard to overcome that, but you're not going to grow this business beyond the point that it is now without recurring revenue.
So now as we're chasing recurring revenue, we have to decide where we want to fit in the market. So if James, we’re building Calm for habits, $100 a year. That's one option. What if we did a, there's a product called My Body Tutor.
Tiago: Oh yeah, I've used it.
Nathan: Yeah, another one called Noom. Why don’t you explain to the group what My Body Tutor is.
Tiago: It’s basically a workout. It's a workout app. It gives you different options for workouts. You can filter, sort them, save favorites, stuff like that that.
Nathan: Yeah. So then they also, I believe, have a product where they do coaching.
Tiago: Oh, yeah. You can use it basically as a library of content, or you can add on a virtual personal trainer.
Nathan: Yeah. So I think the virtual personal trainer, I think they have two packages. It's something maybe $200 a month is the cheaper one, and maybe $400 or $500 a month is the more expensive one. So they'll do the virtual personal trainer, but then they'll also really get in on the diet side of things. So you'll be texting with your coach to say here's my food plan for the day. Right? Here's exactly. So it has an accountability built in.
But they're able to charge quite a bit more, right? So $200 a month is $2,400 a year. $500 is $6,000 a year. Right? So now say we're 2K to 5K. So that's significantly more. The number of customers that we need is a fraction as we've made this jump. You're already playing in this territory. Right? You're not selling a cheap mass market product.
But just for the sake of argument, what if we jumped into a different world, and we said all right, I want to get to 100 million a year, and I want to do it with the least number of customers. Okay. Maybe we're building a product . Again, I'm not sure. Speculate on what people might want to buy from James. But maybe we want to do a high end Performance Lab, and we're targeting 50 to $100,000 a year that people are paying. Well, now we really don't need that many. Right?
So, okay. So let's put some math to this, to the number of customers that we need in this sense. So I'm not going to try to do math off the top of my head. But we're doing 100 million in revenue, right? This one is simple math. But in that case, we're going to need a million customers. Here, grab another color and jump in. So a million customers right here.
Let's say that this one averages out, let’s do red. Red, that sounds good. Let's say that this one, what do we want to pick? Let's say $3,000, right. So, again, we're just very simple 100 million on the calculator divided by $3,000 that we're making per year. We need 33,000 customers right here. Then again, very simply, for round numbers 100 million divided by 50,000, 2,000 customers.
So you think in these terms, these are very, very different business. We have a million people continuing to pass, right. So we're going to have churn. Top of funnel needs to be huge. But if you think about this, there are completely different ways to monetize your audience. The other thing is they don't have to be mutually exclusive. Right? You could actually do both of these. This could potentially be the upsell in this.
Tiago: Right.
Nathan: What kinds of things is this sparking for you as you're thinking about your business?
Tiago: Yeah, it's interesting because part of the problem is having so many options. We could go in so many different directions. We're so flexible and have so many different skills. We've already talked about corporate training. We've talked about a certification is an option. We actually see significant interest in that.
Software, in some ways, software is kind of almost the obvious one because our courses are about software. What we're teaching is how to use software more effectively, but how to do that on other people's platforms.
Nathan: Yep.
Tiago: So maybe that's something worth considering too is creating an app, creating the ultimate notetaking app or something that.
Nathan: Okay, so I love to brainstorm these different ideas and go through a few of them. You said corporate training software certification.
Tiago: Yes.
Nathan: Any others?
Tiago: That we've mentioned? No. I mean, there's more courses.
Nathan: Yeah.
Tiago: There's also.
Nathan: I don’t think more courses is going to get us there.
Tiago: Okay, so let's just not even include that one. One thing we've considered is Notion templates has kind of taken off. So creating products in terms of templates or starter kits or something like that for Notion or even other platforms? Yep.
Nathan: I am going to put more courses on there because it depends on our goal. There are of course businesses that have gotten really massive, and it's important to study them. We hear about platforms Udemy or Lynda, but then even at the corporate training space, or in a specific niche. There's a business called Plural. Let’s see. There's a business called Pluralsight, and they are massive. I think they are even publicly traded, and that’s in the developer and tech world.
So often you’ve got to look for more in this niche space. Find some businesses that you're like really? That is that big. So I think these are all reasonable ideas. There's two different lenses that I want to put on it in a second. But what is the most ridiculous idea that you can think of that would never work? Or like you maybe you wouldn't want to do. Something that just sounds silly even to throw out there.
Tiago: I think it's this one.
Nathan: Software?
Tiago: I mean, yeah. Creating a notetaking app for any software feels impossible.
Nathan: Okay.
Tiago: It's just so far from my home base. I'm not technical in any way.
Nathan: Right.
Tiago: I mean, in fact, I hear about the inside stories of what it takes to build Notions and Obsidians and Evernotes. The code bases to manage the technical debt, the salaries you have to pay. All of it just feels totally daunting to me. Despite being, like I said, in some ways so many people tell us instead of teaching how to use Todoist and Things and Evernote and all these things, just make the app that we. It's kind of the Primal Kitchen example. Make the thing that you're saying is the best, and I swear, I'll just buy it from you.
Nathan: Yeah. So okay, this is interesting. This is where it comes back to the goals. Right? So if we are, today we're at 2 million. Let's say that we also have 10 million and then 100 million. Courses, Notion templates, those are $2 million offerings. Or say we're going to tweak, we optimize, we get a $4 million, right?
Corporate training, certification, maybe very different style of courses. But I think really corporate training and certification. That's a $10 million business. Right? I can see, if you copy Rachel Rodgers playbook, that's going to get you here. I think the only thing on here, actually, I think there's two on here that have the potential for $100 million business, corporate training and software. So the question is how much do you want? Are we just trying to make this leap?
Tiago: Yeah.
Nathan: This is a 5x.
Tiago: I can't really even fathom. This might as well be 100 trillion. My imagination can't expand that far currently. This, I can kind of I know people that are doing this. I've gotten closer, a little closer to this. I can kind of envision it.
Nathan: Yeah, we can list out a bunch of, we did a research project. Let's say okay, let's find 25 businesses that have made this leap. Right? We could do that.
Tiago: Yeah.
Nathan: You would ask, that's one of the things. You'd ask someone Rachel, okay, who did you follow to do that? And you go through it. That's different than something for me where he's going off of a much bigger audience, and in more, more generalist courses, that sort of thing. So I think someone Rachel is a better fit.
Tiago: Okay.
Nathan: So I would, this, that leap where we're trying to 5x the business and go here.
Tiago: Really?
Nathan: That certification. Yeah, certification community.
Tiago: So it's funny because I always just think of this as one path. You just have to go along the path to get there. But you think of it almost more where you're aiming is completely different trajectories.
Nathan: Yes. I'm just making sure we have community on there because we have to fix the recurring revenue problem. Just for stress levels, budgeting, and everything else. If you don't want to launch to go poorly, there's too many businesses that have gone there. I know a lot of businesses that scaled to 25, 50 employees or more and then found that a launch didn't go well, or they're really counting on that.
Even Ramit Sethi where he built a massive, massive business. Then he was like I don't want the high revenue, low margin that he’d gotten to. So he simplified. They stopped doing custom software. They stopped doing all this. They're going off the shelf tools. They have a small team compared to their revenue because it's much more comfortable business to run.
Tiago: Yeah.
Nathan: So in this, to your aiming question. If we map this out as obviously these tiers are not to scale. But a lot of people think I'm going to grow linearly into from 2 million to 100 million, and it's really important that it is step functions. This is a different business than this than this.
Tiago: Interesting.
Nathan: There are people who have scaled that, but it caps out. This never scales to this without changing the business model.
Tiago: Interesting.
Nathan: It just does not happen.
Tiago: Interesting.
Nathan: In my essay The Ladders of Wealth Creation.
Tiago: I loved it, yeah.
Nathan: Yeah, I have the shape of earnings section of you get linear, you get step, sorry. Stair step, linear, and then exponential.
Tiago: Right.
Nathan: This requires exponential growth curve. It all has to work in there. So what I would do if I were running your business is I would aim here and then have a clear path. A place in note taking in all of that where I'm writing down all of these ideas. Because the thing is because this is stressful right now, I don't think you have the brain space to tackle this.
Tiago: No.
Nathan: But if this is working really well and you have a lot more resources, audience will grow and then you can go onto this. So I would be writing out okay, if I were to build my dream tool, here's exactly what would be in it. I’d been logging all of those notes.
Tiago: Interesting.
Nathan: I just wouldn't execute on that right now. I would be focused entirely on the other sides of it. So the things that I would do is I would launch a community that is paid for on a recurring basis so that you have that cash flow and that stability. I would try to fund basically all of your operations off of this because it's going to be very predictable. You're going to have churn. Everyone's like oh, recurring revenue is amazing. It is, but churn is also a very frustrating thing, and it always gets downplayed. But run the business off of the revenue from the community.
I would launch a certification. Have those certified coaches helping in the community, but then also have a program. It's not a job board. It's basically where businesses, individuals, organizations can come in and say do this for me. Right? Set it all up and coach me through the process.
Tiago: That's almost a new idea. Almost a marketplace, like a services marketplace. Is that what you mean?
Nathan: Yeah, it is. I'm trying to not use the word marketplace. Let me think about why. A marketplace implies these are all, it’s not that they're independent contractors, but a marketplace implies that I'm trying to choose the best person, and you're just facilitating the transaction. What I want is someone who, an implementer in your method. Right? So it has more endorsement behind it.
Tiago: Right.
Nathan: Because you certified this person.
Tiago: Right. Credibility, authority.
Nathan: Yeah. So I'm going to say coaches. This might not be the term that you use, but this is where someone comes. Or implementers, right? That actually might be a better term. Though implementer, another problem with it, that it implies a one-time thing.
Tiago: Right?
Nathan: You actually want it where this is a recurring service as well. So now if you're coming into someone's business. So, we just did this where we paid someone to come in and clean up our whole Notion setup. Right? Happily paid $5,000 for someone to do that.
Tiago: Right, right.
Nathan: It’s like if it’s following a specific methodology then I'm going to make sure that I'm hiring a coach or an implementer from the list of people that you said.
Tiago: Right.
Nathan: You could do it, I guess the difference is the marketplace is that you're saying here's 50 people. You choose what to do. Let me give you a different example. I use an executive coaching firm called Reboot.
Tiago: Oh, yeah, I know them.
Nathan: Yeah. I think they're absolutely amazing. I've paid them for years. They charge something $2,800 per month per coach. Right? So I pay them $16,000 a month I think for coaches for all of my executive team.
Tiago: Oh, you have multiple coaches.
Nathan: Yeah. So I believe in them that much that all of my executives.
Tiago: 16K a month to this one company. Wow.
Nathan: Yes. Now, so their process, they're not here are the Reboot certified coaches. Go on there and choose the right person. I'm like well, okay, do I want Andy or Dan? Or what's the right fit? No, they have an onboarding process where you get on a call with them, and they understand about your business, and they get to know you. Personality, what the fit is, and all of that and then they make a recommendation. They say, “This is the coach that we think is the right fit for you.”
Tiago: So you have so much confidence in that recommendation.
Nathan: Yeah. So I'm saying okay, let's say, let's work through this. You've got the certification. You now have all these coaches or implementers, and they have different specialties. So now I come to you, and I'm like hey, I need the second brain implemented in ConvertKit.
You're like, “Okay, well, what's your experience level, right, with all of our principles? Okay. Either you have a lower experience level so this type of coach. What type of business? Oh, you're in software. Okay. So it's narrowing down. Now it's going to be one of these three people. Okay, what time zone are you in? All that.” Then you're saying, “Nathan, this is the implementer that is the best for your business. Here's the price point, all of that.” I'm not paying them separately. I'm paying you as the company, and you're paying them.
Tiago: Right.
Nathan: Right. Or they can be still an independent contractor rather than a full time employee. But that transaction happening, the trust is all through you and all of that.
Tiago: Fascinating.
Nathan: It’s a very, very, it's a high price transaction and a very high trust transaction. So the combination of that. If we were to go back to the previous page, we're all the way up here in price point. So that's a big business. Now I'm like I'm just getting excited thinking about it.
Because I can just say I'm getting someone who's the right fit. You're not going to put someone on my project in supporting ConvertKit who is like, “I work with creators to help them, creators who are early in their career to help them get organized.” You might have coaches who that is their specialty, but I have confidence that you just assigned some to me who was like, “Oh, I actually used to work in SaaS in a previous company. I became obsessed with this. I love coaching.”
Tiago: Right.
Nathan: Right.
Tiago: That makes so much sense. So it's not just that you're sort of building blocks on top of each other. It's that they reinforce each other is something else that I'm hearing.
Nathan: Yes, flywheel.
Tiago: Ah, flywheel. That's where that comes in.
Nathan: Yeah. So the things that we're doing, we're doing those three things, and we maintain the course. You need the training is key because you need to be able to take people through all of this.
Tiago: This is almost just the doorway, the entry gateway that everyone has to pass through on the way to those things.
Nathan: Yeah.
Tiago: Four Cs. It's a new framework that you just invented.
Nathan: So then we'll get corporate training in there.
Tiago: Oh, yeah, five Cs.
Nathan: But this is really interesting because it plays into itself because you're going to the course of the community. You'll have to figure out the balance between these two things. Because they could take away from each other. They could cross sell on. They could be complementary or competitive, since we're only using words with that start with C.
But that's an interesting balance. $2,500 for a course, $200 a month. You’ve got to figure out what the ongoing value deliver is and that kind of thing. But as you have that, you've got plenty of revenue coming in from there. The certification takes it up level. This should be expensive. I think Rachel's certification is $25,000.
Tiago: Wow.
Nathan: I might be getting that wrong, but it's up there.
Tiago: Wow.
Nathan: Because they're going through another level of training. She has events just for her certified coaches. They can either take their knowledge and go out into the world and do their own thing, or they can train and coach through her system where she's providing lead flow.
Tiago: Right.
Nathan: Right. So in that, then of course, you've got a new revenue stream.
Tiago: I see it. I see these. We're currently doing one of these things and starting to do this one. But I think that them reinforcing each other, actually making each other potentially easier and better is the key thing. Because otherwise, you're just doing we talked about before, spending more time, more effort, which just doesn't scale.
Nathan: Right. Another thing because this is the most important. Remember, if we go back to the three rules, we've got the one that we're not doing right now is the recurring or repeat purchases. Right? So we have to have that in each part of it.
So with that, so we've got more than a personal brand. We're selling products and attention, we have to do recurring or repeat. But we have to do recurring or repeat purchases. So in this, a very easy, let’s do one more. A very easy trap to fall into is that we'd say oh, the community is our recurring or repeat purchase and the rest is one time, or we will take a placement fee for matchmaking a coach to a business as a one-time thing. No, no. None of that. Right? We're taking, we want to do recurring in every area of the business.
Tiago: Really?
Nathan: Maybe with the exception of the course. Right? So take the certification. Let's say it's $25,000 to get certified. Well, that's naturally a one-time thing. But let's say that I get my stamp of certification, and then now I'm out in the world. I decide hey, I want to run my own practice entirely, but certified in the second brain methodology. So I paid that one time, and now I never have to pay it again. That's not good.
So instead, let's say that it's $25,000 one-time, and then it is $5,000 a year to maintain it. Right? Or if you're a coach, that's if you're independent. If you're coaching through us, you don't need to pay the $5,000 a year to maintain it.
Tiago: Ah, interesting.
Nathan: So then there's that balance. If someone is sort of competing with you out in the marketplace, if they want to maintain their seal of approval and the recurring training because you're approving the methodology and tool, right? If they want to stay current, then they're still participating in the current training. Or if they want to go directly through your organization.
Tiago: They're making money from it. So there's a justification for the recurring nature of it.
Nathan: Yeah. So then you're going to get to the point where maybe you have 10 coaches internally. That's all going to depend on your top of funnel. How popular is the second brain methodology? How much deal flow is coming through here?
Then you might have 25 or 50 or 100 that are actively marketing out here. Right? So even if we only had 10 recurring at that $5,000 a year, well, that’s $50,000. If we get to 100, that's $500,000 a year of people who are coming back in that way. But that's the thing that I need you to focus on is that everything you do, you better have a damn good reason to not make one of these things recurring going forward.
Tiago: I really like that. So it's recurring by default.
Nathan: Recurring by default, yes.
Tiago: Not as a special future thing that you're going to do.
Nathan: Yes.
Tiago: Interesting. What I about this, too, is it keeps me. When I think about what I spending my time doing, how I want to spend my days, which is a question I always ask is I just love being immersed in ideas. I'm a kid in a playground of ideas. That's what makes me come alive. That's something that has made me hesitant to do this or this.
But with this sort of flywheel you've designed, the value that is being offered is exactly the value I know how to create, which is the constant stream of ideas and insights and metaphors and new innovations that I'm always coming up with just naturally.
Nathan: That's a hard thing about this billion dollar creator idea is that often it requires something entirely different. For Mark Sisson, running a food business is entirely different than running an information business.
Tiago: Yeah.
Nathan: That was the best way to achieve that scale, but you have to be excited about that growth.
Tiago: Yeah.
Nathan: Whereas this is not a complete diversion. Now, it's also not going to get us here but let's play a game over time. Let's say three years from now, we’re at $10 million a year. This has blended really well. You understand what's needed on a different level. Maybe you built some software that helps facilitate the coaching experience. You're like okay, software is hard, but it's not that hard.
Now this starts to move into the thing you're like I have no idea how to do that. Using Mark as an example, you're going to manufacture food at scale and package and ship it. That is an insane leap.
Tiago: Yeah.
Nathan: Right? He did it, and there's plenty of people that have done it before. You can hire the right people and all that. But let's say you ease into it.
Tiago: I want to ask about that though. For that leap there, I just envisioned in my mind someone doing 10 million a year. They're relaxing at their freaking estate out in who knows where. They have the life. No constraints on their lifestyle, their consumption. What do you find is typically, what goes on in their brain that makes them think, “No, I want to risk changing things, risk trying something new to go there.”
Nathan: Yeah, there's a big motivation question in there. For me, personally, I absolutely love this. I love the mission of the company. For ConvertKit, it's we exist to help creators earn a living. So I believe in the product, and I believe in the mission. It's always my obligation to scale it as much as possible.
I also love just the game that we're playing. I also think that I'm looking for the personal growth. The CEO of ConvertKit at $5 million a year in revenue, you have the CEO of ConvertKit $100 million a year in revenue. They're going to have the same name, but they're going to be different people.
Tiago: Yeah.
Nathan: So same name, same values, all those things, very, very different skill set, resilience, operational style. I'm excited for that personal growth.
Tiago: Interesting.
Nathan: Then the other thing, and one that I'm working through myself right now, is we can run into this trap of okay, I have a bunch of problems and a bunch of work at 2 million or 10 million. Let’s say 10 million. You get to this stage, and it's very, very challenging. So you're like why would I want 10 times the work and 10 times the problems.
Tiago: Yes.
Nathan: So we end up in this limiting place where I'm not even going to go there. Subconsciously, it's like please don't grow the business because that will grow the stress.
Tiago: Yes. I find myself doing that, turning down opportunities because it would stress me out too much.
Nathan: Yeah. So the thing is, a CEO has a few different jobs. Hiring, making sure there's enough money, setting the vision. I think you could summarize a lot of that in that a CEO’s job, especially in hiring, is to work themselves out of a job. Right? So you're gradually doing less and less. My friend, Tim Grahl, was talking about how at every stage of the business, every time you double the business, the CEO has to cut but they do it half.
Tiago: Interesting.
Nathan: That one is the hardest for me personally because I'm taking on more things.
Tiago: Yeah.
Nathan: But if you're thinking in terms of flywheels, your job is to plan out a flywheel and maybe get started. Then you've got someone on your team who's making accountability that keeps spinning and runs it. But this business should take less of your time and be less effort than this business.
Tiago: That's just wild.
Nathan: Yeah.
Tiago: That is a wild idea.
Nathan: So Rachel is someone who's so good at this. We were hanging out. We were on a flight Wednesday this week. I was sending a message to the team, and she goes, “You have Slack on your phone?” I was like yeah, why wouldn’t I? She's like, “Oh, interesting.” I was like you don't?
She's like, “No, of course not. Why would I be involved in that day to day level in the business? I'm going to call the president of my company and talk through strategy or make sure they know about this idea. Or I'm going to write up a bunch of notes and send it to my assistant so that we can dive into an annual planning next week.” But she was like no.
Tiago: That's an intentional strategic choice.
Nathan: Yeah.
Tiago: She might enjoy or get some value out of being in there, the Slack messages. A feeling of everyone kind of working hard on something, but it would actually be against her goals to do that.
Nathan: Yeah, exactly.
Tiago: Wow,, Nathan, my head is already exploded. We could talk for another two hours. This has just been incredibly valuable. Thank you for creating this billion dollar creator framework, and then for coming here to kind of apply it to a business that is quite short of that level but in some ways kind of seems to have some of the same dynamics already at play.
Nathan: Oh, it absolutely does. I mean if you think about it, you've already got two out of the three factors. Then I love this method that we've come to of we're going to go through one step function. Then once that is established, then we're going to think about what could go on from there.
Tiago: Absolutely. We'll have you back once we get there. Hope you enjoyed this conversation and little impromptu coaching session with Nathan Barry. I highly recommend you follow him. You'll see the links to do that in the details below. Check out billiondollarcreator.com. And, of course, if you want to do some email sending, use what we use, which is the fantastic ConvertKit platform.
Rachel: Thank you for tuning in to this episode of Billion Dollar Creator. If you enjoyed this episode, please and subscribe, share it with your friends, and leave us a review. We read every single one. If there is a company you want us to profile on Billion Dollar Creator, send us a message on social media and we will consider it. Thank you and we will see you next time.