Build Your SaaS

Josh Pigford sees a lot of SaaS revenue analytics; what's he seeing that we're not?

Show Notes

This week, Justin called up Josh Pigford, founder of Baremetrics:
  • Baremetrics does analytics for SaaS companies
  • I called him up just to get a sense of how this pandemic (and looming recession) has already started to affect different SaaS companies
  • He's already noticing some trends: "A lot of SaaS companies are seeing the biggest loss they've seen in the past 4 weeks. I've heard from some companies that are seeing a 10-20% decrease in MRR."
  • "Payroll is the biggest challenge over the next year. Payroll is our biggest expense."
  • How are you going to ride this out?
  • "We use Flight Path + Baremetrics to forecast revenue and expenses."
  • Justin's tweet: "here are the companies doing well right now."
  • A preview of a new feature that Baremetrics is building: automated email messaging for SaaS companies.
  • Josh's side-projects: Cedar + Sail, Lasertweets

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Creators & Guests

Host
Justin Jackson
Co-founder of Transistor.fm
Editor
Chris Enns
Owner of Lemon Productions
Guest
Josh Pigford
Founder of Baremetrics (acquired) and Maybe

What is Build Your SaaS?

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Jon:

Hey, everyone. Welcome to build your SaaS. This is the behind the scenes story of building a web app in 2020. I'm John Buddha, a software engineer.

Justin:

And I'm Justin Jackson. I do product and marketing. Follow along as we build transistor.fm. John, this week, we have another guest. We do.

Justin:

Yes. I I You

Jon:

cut you cut me out again. I see.

Justin:

Well, on Friday on Friday, you were like, I'm in the zone. So I was like, well

Jon:

Yeah. I was I was in the code.

Justin:

And I I wanted to talk to Josh at Barimetrics anyway. Folks will remember they do analytics revenue analytics for SaaS companies. And I wanted to come up and get a sense of how this pandemic and looming recession if that's already started to affect SaaS companies and how, you know, we can only see our data, but he has aggregate data for lots of companies. And his answers were interesting. Let let's listen to that now.

Jon:

Yeah. Awesome.

Justin:

I mean, upside, we're spending a lot more time as a family than we normally do.

Speaker 3:

Well, that's some days that's an upside, other days, it's like, I am joyous all being completely separate.

Justin:

Yeah. Yes. Yeah. Yeah. There's it's one thing at a time for sure.

Justin:

And, how are things going with your team and with the business?

Speaker 3:

Yeah. I feel like we're probably similar in the same boat as a lot of other SaaS companies. Like, we saw probably our biggest loss that we've had in a long, long time in the past 4 weeks, but probably not as bad as some SaaS companies. I mean, I've, you know, I've heard of a lot who have lost, like, you know, 10 to 20% of their entire, you know, monthly revenue in the past few weeks. So we're at, like, 2 or 3% down.

Justin:

So so that and that's actual MRR that you've lost?

Speaker 3:

That's right.

Justin:

Not not too bad overall.

Speaker 3:

Not too bad overall. I mean, it puts us in so, like, in January, I hired 3 new people. So, like, that and that was predicated on, like, even even, like, all our forecasting, we were hiring ahead of revenue, but not by a ton. And, you know, we've pretty consistently had some level of growth for every just about every month. So it's like, okay.

Speaker 3:

That that's fine. I'm comfortable with, like, spending that money that we've got in the bank a little early, and then we'll make up for it. And then, you know, whatever that is, 2 months later, like, everything's hitting the fan. So that puts us in a that's we're in a tight spot there. So, like, I've applied for the US, like, paycheck protection stuff.

Speaker 3:

But, I mean, half our team is not even in the US, so, like, they don't even qualify for that. But, like, you know, it'll help some.

Justin:

Like, Baremetrics has some aggregate anonymized data for your customers. Right? Are you seeing any trends like, and I don't even I'm not very good with data. I don't know how you analyze it. Do you analyze it by median or averages?

Justin:

But are you seeing anything right now that is, I don't know, noteworthy or not really? I don't know.

Speaker 3:

Like, probably nothing outside of what you would expect. I think it's, like, pretty much across the board, everybody's losing money or customers, some more than others. And a lot of that's, like, industry specific. You know, like, the closer you are to the consumer side or, like, the prosumer side, typically, there's always anomalies. You're gonna see a lot more MRR loss, just because a lot of those people are already, like, probably operating on pretty thin margins or, you know, don't have a lot of extra expenses that they can really absorb, or they're just more easily sort of freaked out about, you know, some sort of recession or anything like that.

Speaker 3:

So that's, I mean, that's probably, you know, a a little bit of something that's kind of, like, pretty consistent, but, I mean, at the same time, it's just, like, everybody's what we're seeing a lot of is, like, people is cancellations due to either their own business drying up or them just take it being, cautious in trying to, you know, tighten up cash flow.

Justin:

One of the things that that's so been so tricky about this, I think, for SaaS companies is well, first of all, so many of us are new. Like, we've never gone through a recession before.

Speaker 3:

Yeah.

Justin:

You know, even, I heard, you know, Nathan Barry was talking about how he was thinking through ConvertKit stuff. And he's pretty young. And and he he remembers the last recession in 2,008, I think he was saying. And but he he was an an operator then. And now we have this new crop of SaaS owners.

Justin:

You know, the other weird thing about SaaS is that it feels like there's, like, our crop of SaaS, which I am a latecomer to. So, like, you've been how long have you been doing bear

Speaker 3:

with me? This is we're in our 7th year.

Justin:

7th year. Okay. So I you know, we're we're recent. Right? And but before, like, this crop of SaaS owners, it's like it only feels like there's, like, 5 people.

Justin:

It's like and Jason Fried and Jason Cohen and Rob Walling and Pelti. Right. And Natalie. Natalie. Yeah.

Justin:

Like, there's but there's, like it just doesn't doesn't feel like that group's that big. You know? And I don't know how they're thinking about it. Maybe they're just so because some of your resiliency must come from like, at a certain point, the numbers matter. Like, if you're doing, whatever, $5,000,000 a month in MRR, and you've got whatever Basecamp has 30 people or whatever, you you must have a lot of more margin in there just because the numbers are bigger as long as you haven't you know, your your costs are relatively static.

Speaker 3:

Right.

Justin:

But I don't know. Maybe they're dying right now.

Speaker 3:

I mean, the problem is, like, it depends on so for us, it's like the the lion's share of our expenses is in payroll. So, you know, we don't have the overhead, but we're, like, a typical remote company that we don't have some, like, massive office rent. Like, our probably the biggest expense for us after payroll would be, like, infrastructure kind of like, you know, servers. I mean, that's that's not that stuff's, you know, tens of thousands a month, but, like, it's still not anywhere close to payroll. And so when you're talking about, like, needing to really move the needle on bridging the gap, You don't have a lot of wiggle room depending on how close you're operating to.

Speaker 3:

I mean, if you're if you're just pumping out tons of profit every month, well, great. You're you're fine, But it just depends on, like, where where your expenses are really tied up in. Like, I think the the nice part, there's some there's a lot of especially, like, in the ecommerce world, most of your expenses are typically tied up in either, like, marketing costs, where you're basically having to pay to acquire every single purchase and customer, which you can turn that down, but that, a lot of times, also dries up your ability to spend money to to to source products and produce stuff. So I don't know. That's, like, a weird chain of events.

Speaker 3:

But, like, on the SaaS side, you know, usually, the margins are really good, but it just depends on how, this is why, like, every SaaS company ultimately goes out of business. Or all the SaaS companies that go out of business, it's almost always because of payroll, like, their inability to you know, they can't just turn that off. Right? Like, you can't adjust that knob very easily.

Justin:

Yeah. And so how are you personally thinking about riding this out? Like, are are you pretty scared, or are you feeling how are you feeling right now?

Speaker 3:

So I we've forecasted out a few different scenarios. I mean, there are scenarios where, like, we run out of money unless something changes, but, like, that's, like, that's not, like, the a scenario where, like, that happens in, like, the next month or 2 months or 6 months even. Like, we we've got a decent amount of cash in the bank and some runway to, like, figure some things out. So where we're at now is, and not every scenario results in us running out of money. Like, that's some of, like, the really pessimistic stuff does, but, like, we've also got plenty of scenarios where we don't grow at all, and we're fine.

Speaker 3:

So I think that but what what that's led to is, like so I've talked to the team about that, and where where we're all sort of at is, like, feeling I think, like, we sort of rally the troops, and everybody feels like, okay. There's some things that we had wanted to focus on, but we can't like, now the the focus needs to be on retention and, you know, growth when that's possible, but, like, what we need to try to not do is lose a ton of customers. So

Justin:

Mhmm.

Speaker 3:

You know, it's like, well, that's the focus, and so we'll focus a lot on that instead of, you know, trying to go get a bunch of new customers. Because, like, the new customer stuff is always, like, a bit of a crapshoot, and you're just trying stuff and seeing what sticks. But right now, we've got a pretty big hole in the bucket that we need to to to plug up as much as as possible, you know, given the circumstances.

Justin:

Mhmm. Yeah. Are you using your your forecasting tool to forecast some of your cash flow stuff?

Speaker 3:

Yeah. So what sort of, like, we use so there's, I guess, app now. Now. I don't know. He was it was one guy when we started using him a few years ago.

Speaker 3:

But so they have a app called flight path that ties in the bear metrics. Like, it pulls in bear metrics data for it, but it also the big thing with it is it's pulling in, expense. Like, it ties into QuickBooks too. So it's much more on the accounting side of forecasting, and it's in like, just super detailed. And, so we do all the forecasting that a cash forecasting there.

Justin:

Gotcha.

Speaker 3:

That's that's weird.

Justin:

And has it actually been helpful? Like, do you think it's it's is it is it useful to to do all that stuff? Do you think the the forecasts will be reasonably accurate? Or how how do you think about

Speaker 3:

that stuff? So so we've been using him and various incarnations of this, app that he's got for 3 years, 4 years, something like that. So we've got we've got the entire history of the like, what the forecast has predicted along with how it actually performed, and it's been pretty spot on for, like, every month.

Justin:

Gotcha.

Speaker 3:

So I trust it a lot. Obviously, like, the forecast can't, the very there are no, like, global pandemic variables in the forecasting spreadsheet that, like, it knows about, but, like, the nice part is being able to, like, play out. Like, we'll graph multiple scenarios. Like, okay. If we're completely flat on growth for the next year, what does that look like?

Speaker 3:

If we hire 3 more people, what does that look and and the dates that we hire them, what does that look like? And all that kind of stuff.

Justin:

So it's helpful. As you're talking to customers, like, is one of the things that they're interested in like, I immediately thought of your forecasting tool and your benchmarks tool. To be honest, like, that's the first thing I went to once all this stuff happened. I was like, okay. I just need to kinda, like, get us I I know that it doesn't account for a pandemic, but I just wanted a sense of, like, okay.

Justin:

Based on historical and what we're seeing right now, what what what is this gonna look like and mean? Are folks mostly interested in that stuff or they are a lot of people just, like, still looking at these other metrics you provide, which is okay. How's MRR doing compared to last month? And, sorry. I'm adding a lot in here, but how are you telling people to look at all that data?

Speaker 3:

It it kinda depends on what what you traditionally, have the most luck with when it comes to growing. So there are some companies that are fantastic about, the churn side of things. So, like and they're and they're able to easily affect it, and or maybe there's a lot of low hanging fruit there. So if that's the case, then, like, focus on churn and getting that down. How if you're in the, like, low single digit monthly churn right now, chances are you're not gonna be able to make a big impact if you focus on that.

Speaker 3:

But if you're, like, 25% churn, like, there's probably something you can do. Yeah. So I would pay attention to that. You know? Otherwise, people have there's other companies who have, no problem, like, getting huge influxes of of customers, or generating these, like, you know, having some sort of one off sale or whatever and, like, getting a big influx of cash, then, like, okay.

Speaker 3:

Do that. But pay attention to those numbers that you've historically been able to impact, more stronger than others.

Justin:

Yeah. That's interesting. Like, the you're right. Like, for some folks and some industries and some business models, it just makes sense to shore up churn. But other companies, you know, ConvertKit and Buffer are probably some of them that have used OpenMetrics.

Justin:

They will always have some churn just in their business. Like, you know, you can get it down to a certain number, but then you're probably not going to be able to get it past, you know, a certain threshold. It's just gonna always be there. Beyond that so if you're kind of looking at let's say you have a metric that you're kind of always thinking about. Right?

Justin:

Like MRR or like, for me, so far, the the metric I really care about the most is MRR. And then I'll, you know, I'll check-in on churn every once in a while. But generally, I just wanna know how's MRR doing. Is there anything else you think people should be paying attention to if they've only been focused on, you know, two numbers, but not thinking about some other things? Like, is there leading indicators that are, like, like, be careful here?

Speaker 3:

So to me, I think trends are a thing that I I personally think are really important, and, you know, taking looking back as far as you can so, like, what I'll do a lot is look at our MRR graph from the beginning of time, and, and then, you know, have that set to this, like, monthly view. So, like, each dot on the graph is a month instead of, like, days, and you'll you'll be able to see, like, visually check out when you've had some some, you know, like, a different sort of angle in the graph, essentially. So, like, when does it look like it's pointing up more than just flatlining? And then try to pinpoint, okay. Well, like, what did we do in that month or those months, that had a big effect, and can we repeat that?

Speaker 3:

So, like, that's one way to sort of use that I mean, the the it's hard to I think, like, leading indicators are a little difficult. You know, you can look at churn and see if there's, like, seasonal stuff, which happens to be, you know, the case sometime. I to me, like, with, like, podcasting, I imagine there's a decent number of people who have thought, let's start a podcast because I'm stuck at home or whatever.

Justin:

Yeah. Yeah. And I should be transparent. Like, so far, our numbers are still looking pretty good. So we're still in the last 30 days, we're up 11 MRR is a lot up month over month, 11%.

Justin:

Net revenue is down, which I've noticed from a few other folks too. It's down 8%. But that chart goes if you look at that chart, it goes up and down forever. Like it's it's always kind of zigzaggy. And so, yeah, the way we've been thinking about it is, you know, growth is still happening.

Justin:

And in some ways, we're just kind of waiting for the other shoe to drop because there's this feeling that the, you know, eventually people like, were let's say the first wave hit restaurants and, you know, service biz local service businesses first. And then the 2nd wave came pretty quick, which is, like, you know, other companies, including tech companies that were just, you know, very, for whatever reason, were fragile. They closed up shop. And then I have heard, you know, from friends and stuff that there's some companies that are down, some companies that are up. But it feels like all like, Jordan Gall right now is saying cart hook, like this ecommerce add on he has is just had its best month last month.

Justin:

But all of us are kinda like, but the like, just like a tsunami, there's other waves that can come in here. And just because you're at higher ground right now, it doesn't mean forever. And I'm almost wondering, like, is there you just not notice until it's happening?

Speaker 3:

I think I I think it's very difficult to look at data and see it or, like, get a sense for it. I think it's like that's where you really have to look at qualitative stuff. So so this is, where, like so, like, in bare metrics, we have this cancellation insights tool where we'll collect feedback during a cancellation. And there was a noticeable time where, like, we could read that people were listing, like, coronavirus as, like, the reason. And so or, like, an increase in, like, people saying they're shutting their business down as the reason they're canceling.

Speaker 3:

And so, like, that that, from a leading indicator perspective, is where, like, you can start seeing, like, something like, there's some new things going on here that we don't historically see. And so that's where it's sort of, like like, listening to, like, the reasons that customers give for stuff, becomes a lot more useful than trying to, you know, something from, like, data points on a graph.

Justin:

Yeah. Yeah. Like, everybody wants this magical graph. But even if even if you had an impressive model that could predict what would happen. I mean, I mean, if you had that model, you would

Speaker 3:

I still don't know why.

Justin:

Yeah. And if you had that model, you'd be selling it to the government for, like, 1,000,000,000 of dollars.

Speaker 3:

That's right.

Justin:

Yeah. You still don't know why. Yeah. Exactly. The the you can kind of that qualitative part is interesting, actually.

Justin:

It it kind of shows that the the stuff that you see on the ground and that your customer support folks see on the ground is that's the most important stuff, right? Because they see it first. That's where you really get a sense of, okay, what's really happening. And then, you know, you might see it reflected in your graphs later. I always like, a dumb metric I have is just how many customer support tickets are we getting.

Justin:

And so far, that's been positively qual correlated with increases in revenue. So when we have more tickets, we're making more money. Yeah. That might not be true forever. But up until now, that's been true because it just means more people are starting podcasts and have pre sign up questions and then support questions.

Justin:

But yeah. It's it's and then, you know, when I check my bare metrics graphs later, it's like, oh, yeah. That that actually did make a difference. We had more people interested. And certainly, you know, the next thing that shows up is new trials, and the next thing that shows up is conversions and then MRR.

Speaker 3:

What What do you guys use for support?

Justin:

We use Kayako, which we you know, they're okay. I think we've been we've been thinking about switching. And this is another interesting thing I wonder if more SaaS companies need to to think about right now is, you know, if you're still going to the office every day or you're working from home and, like because we've had this thought of, maybe we should switch off Kayako. We've had this for months, and we've checked out Help Scout. We think that's what we're probably gonna go with.

Justin:

But the idea of switching that over and having the time to do that is like, nah. That's gonna take too long. But now all of a sudden, it feels like, well, that might be a good quarantine project. You know?

Speaker 3:

We'd literally did that this past week.

Justin:

Did you? Switch switch from who to who?

Speaker 3:

Intercom to Help Scout? Inter Intercom's charging us shy of $1,000 a month, and, and it's just insane. Yeah. I mean, like

Justin:

Yeah.

Speaker 3:

We've been using Intercom on some level since we started Vermetrics, but, like, it's ever like, we were I I think, like and I I love the people at Intercom, but, like, it's gotten out of hand on the cost stuff. Like, we were they had this new product. I forgot what they're called, but, like, basically, like, product tours, like, where you can, you know, basically set up, like, walking through customers through a tour of your product with little tool tips and stuff. And we were kicking the tires on it, and then we're like, okay. What would pricing be for this?

Speaker 3:

And it was gonna be $500 a month. And it was like, guys, no. You can't keep doing that. Like, that's out of hand on the pricing. It's just that's certifiably insane.

Speaker 3:

And so that was the last straw for us, and, like, it's keeping costs down in there is takes so much work of, like, purging old customer accounts, and then, like, that requires then that, like, removes some of the value because then we can't, you know, get access to, like, reaching out to these customers who have messaged us a couple years ago or something like that just because we're trying to our to keep our bill from being $1,000 a month for this thing.

Justin:

Yeah. I wonder if we're gonna see a lot more rethinking of okay. Let me set this in context. Because this is a little bit unfair because I've been on one side of this debate. The the charge more mantra of let's maximize how much should you charge?

Justin:

Well, as much as people will pay. Which is, you know, I've been digging into neoliberalism a lot lately. It's a very neoliberal concept. Right? Like, you you charge as much as the market will bear, and it's almost completely divorced from, any sort of human connection.

Justin:

Right? Like, if someone signs up for your $5,000 course but puts it on their credit card that they're paying 25% interest on, that's okay because that's what the market will bear. And, yeah, granted, I'm I'm cynical about some of this stuff. And, you know, for intercom, the it's it's not a huge, secret that they make a lot of their money from big companies and and Sure. Enterprise.

Justin:

And, you know, ratcheting up your pricing there not only makes sense, like you probably should, because that's just the way that, you know, those those it works there. But you can see that for, like, regular small businesses, this idea of just maximizing what people will pay without any other kind of consideration. Yeah. It's just it has an effect. And, and when you're making small businesses, you know, work a lot harder to keep using your products just to make it affordable.

Justin:

There's like that that that treadmill you get on even with Mailchimp or something. Where it's like, you have to remove contacts and then, you know, like, remove them, remove them. And now there's all sorts of add ons you can get so that they clean them out. It's like, this is ridiculous. And I wonder if we're going to see some rethinking on the way folks have done pricing.

Justin:

Because there's definitely some bills I have, like my annual card subscription, you know, carrd.co. It's like $19. I'm not even thinking about that right now. But I am thinking about our Ahrefs subscription because it's like a 100 and some bucks a month. Yeah.

Justin:

What do you think any of that will come true? Or do you think I

Speaker 3:

think the problem is, like, where where this where there's a disconnect are, like okay. So, like, Intercom is an enterprise focused company.

Justin:

Mhmm.

Speaker 3:

They may not say that. They certainly don't, like, really make that clear from a marketing perspective.

Justin:

Mhmm.

Speaker 3:

But their entire sales process at this point and then and pricing implies that they're an enterprise focused company. That's fine. But, like, where it gets really painful or when companies make or they're transitioning from helping, like, you know, small and medium sized businesses, and then they they want to go upmarket. Okay. Well, like, how can you do that without completely ruining your brand?

Speaker 3:

So, like, I have the same feeling about Clearbit. So, like, we were Baremetrics was the was the first Clearbit customer years years ago, and, and we they cut a sweet deal over the years to to to make it affordable for us, as because we were kind of using it in an atypical manner. Mhmm. But this past year, like, we had to renegotiate that, and, like, we are firmly in a sales process where, like, we have to pay by, like, wire transfer now, and, like, it's, we we pay quarterly. Like, they wanna pay annually, but I push back hard on that.

Speaker 3:

But, like, you know, our bill for that, was, like, quadrupled. And so now it's, like, tens of 1,000 of dollars a year, and, like, that whole process of them transitioning our account from working with the small, medium sized business to, like, treating us like an enterprise customer, which is, like, their entire process now is, like, hardcore sales enterprise stuff. Like, I I I hate that with all of my beak. And

Justin:

so Yeah.

Speaker 3:

So from so from a brand perspective, I don't I don't have warm fuzzies about Intercom or Clearbit anymore. Yeah. Because of my own personal experience, but that doesn't mean that, like, they're making bad decisions or that, like, from a business it depends on what you're going after. Right? Like, what game do you want to play in the business world?

Speaker 3:

And certainly on the intercom side and on some level on the Clearbit side, like, they have to keep going big. And so they're going to keep going big, and that's gonna that's gonna, like, screw a bunch of the little people along the way. But I don't know how you really avoid that.

Justin:

Yeah. This actually reminds me of something you told me early on when I was wrestling with some of this stuff, which was you you basically said the same thing. Like, what what kind of people do you wanna serve? Like, it's if you Justin, if you wanna just sell people podcast hosting for $19 a month, and those are the kinds of customers you wanna serve, you should do that because, you know, the work is gonna be so much more fulfilling. And I think what I was wrestling with at the time is we have, especially in bootstrapping circles, these kind of, you know, laws of of bootstrapping that have been passed down from from other folks.

Justin:

And I was like, oh, but if I'm not maximizing everything, if I'm not charging, you know, 2.99 a month, then I'm, I'm not doing it right. And, you know, it turns out for me, that's been true. Like, serving those $19 customers is way more enjoyable to me than, I've had to. I've I've dipped my toes in a little bit of enterprise sales stuff. And, oh my gosh.

Justin:

Like, I just I love those people at those companies that I interact with, but process is just not very fun. And it's way more fun helping a local chamber of commerce set up their first podcast. Or, there's another gal that called me, and she's in a government agency, but they they're just super locked down in terms of their budget. And she was just so excited to, you know, figure out how to get her microphone and how to record and and edit in Audacity. And I spent so much time with her because the work was fulfilling, and I was, you know, it was enjoyable.

Justin:

So, yeah, it seems that, and of course, I've like, I've got the decisions you make determines kind of what game you play. Like, if if all of a sudden the the prosumer market that we play in, really gets affected, then, you know, we gotta ride that train. Well, I guess we can always get off the train, but you know what I mean? Like, you kinda you're on the train. You you're riding, and, there's pros and cons to both.

Speaker 3:

But Putting myself in the shoes of, like, the CEOs of these other companies that have gone upmarket. Like, I can see I can certainly see the perspective of, well, let's see how big we can get this thing. But I I see the appeal of that, from almost like a, from a curiosity perspective. Yeah. You know?

Speaker 3:

But, I mean, I think you can define it's it's it's having different definitions of of what the word success means. And does making a a massive amount of revenue, is that success? I don't I mean, for some people, sure. That's exactly what that is. So, you know, if you wanna go that route, then great.

Speaker 3:

Or, like, maybe getting a a a customer who, like, 10,000 people at the company will be using your software is you know, that's a ton of new users, then great. Like, that's that's a certain measure of success. So, you know, I don't fault people for wanting to do that. I can see the the appeal, but, like, it's still that doesn't you're you're still gonna have, like, some, issues along the way with when you're when you're making that that kind of transition. But I but, also, it also, like, opens the opportunities up for other people to come in and serve those markets in different ways.

Speaker 3:

You know?

Justin:

Well and that's and that's kind of so this is something else I was wondering is, you know, there's a lot of companies that got started in the last recession. And the, you know, Mailchimp itself was started in a recession. Do you think those are the kinds of companies we're gonna see folks starting now or, you know, folks looking to take a bite out of intercom's business, things like that?

Speaker 3:

Sure. I mean, I yeah. Like, anytime I think anytime a company goes upmarket, somebody has to replace it on the downside of that. Right? Like, inevitably, someone will come in with something some sort of more cost effective way of handling this kind of stuff.

Speaker 3:

I mean, I think because I think there's a couple of different things here. So we've traditionally seen lots of, you know, people using lots of different products. So you've got a bit of, like, tool fatigue. Mhmm. But then that also gets really expensive to pay for all those tools Yeah.

Speaker 3:

Especially when some of those tools start going upmarket, And so it's it it it becomes, you get tired of using lots of different tools and paying for all of them.

Justin:

Mhmm.

Speaker 3:

So I think what you'll see is, like, there are more people or more companies creating a suite of tools that solves a larger sort of array of problems for companies. And even if they're not as full featured, it becomes like this it's it's one app to use instead of a dozen, and it usually is a lot cheaper. And it gets the job done while reducing, like, the tool fatigue and the, like, constant price sort of struggles that happen.

Justin:

Yeah. Yeah. They're ratcheting up. Yeah. I mean, looking from the outside, it seems like the companies that are doing well right now are all of the ecommerce platforms, include, like, digital ecommerce, like Gumroad and, Podia, but also traditional ecommerce like Shopify and Square.

Justin:

You know, they are seeing tons and tons of people sign up as they rush to try to, like, you know, sell something online, basically. And then you're seeing other platforms that enable that kind of work. So ConvertKit would be in that, you know, in that category as well. To a certain extent, Transistor is, you know, anything where people can create something online and have some sort of presence online and maybe have a new path to revenue. Yep.

Justin:

And who knows how long that's gonna last? But, you know, some of those companies like Podia offers everything. They offer, you know, we're gonna be your billing platform. We're gonna be your course, storage platform. We're gonna be your, email platform, your messaging.

Justin:

They have they have, messaging, like intercom style messaging. They have, like, everything. They're just trying to put it all in one spot and cut as many of those other bills as you have, which is attractive if you're, you know, you're you're trying to start something up and you just have to keep layering on new tools to get what you want. Yeah. That there is something about that that is, yeah, not not just gives you fatigue, but even I'm sure you experienced this too actually with all your ecommerce work.

Justin:

But I was trying to help this local coffee shop and my friend who runs the skateboard shop get online. And so we're we're going through the Square online process. And there are it's amazing. These companies with very low margins, you know, the restaurant business is 5 to 10%, and skateboard retail is 30 to 50% if you're lucky. How much money they pay for services?

Justin:

Like, there's it you know, the coffee shop owner was saying, oh, you know, there's a a company that will you know, they'll put my make my website into, an app. And I'm like, okay. Well, how much is that? And I'm like, you should probably shouldn't do that. It's not gonna be a good solution for you.

Justin:

But it was $200 a month. I was thinking, man, that's expensive for a a small brick and mortar store to be going with that. And there's a lot of things in ecommerce, especially, that are like that. Like, if you want, you know, this functionality, well, you've gotta pay an extra $50 a month. And it seems like there's an opportunity there for, especially, the existing platforms to say, well, let's reduce some of that.

Justin:

Let's let's just you know, if you're paying another example would be, you know, I pay Memberful to be the billing platform for my my discourse, forums. And you've actually told me in the past, like, Justin, just get rid of that. But it's just so convenient right now to have it. But if this if discourse automatically, you know, had a platform or if even to be frank, if DigitalOcean introduced payments and just made it easy for me to have it all on one bill, I'd probably do it just because it simplifies things and I don't have this other thing on top.

Speaker 3:

I mean, it so it's a bet that we're taking with BearMetrix. We're we're rolling out, like, a new product at the end by the end of the month Mhmm. That to tackle some of the messaging stuff. So I think for us, it's like, you know, we use, I don't even know at this point, dozens of different tools and just got tired of it. And a lot of it, we found ourselves, like, piping in bare metrics data into a lot of these things.

Justin:

Mhmm.

Speaker 3:

And so it was like, well, that's just we've got a ton of the data that people would need for this kind of stuff, so let's build it inside Baremetrics.

Justin:

Yeah. So you mean, like, in in app messaging?

Speaker 3:

Well, sort like, automated like, right now, we're not doing, like, any in app. I think I think that people, are burned out on, like, the little in app pop up thing.

Justin:

Mhmm.

Speaker 3:

I you know, most people just like from a marketing perspective, at least, I think it's different for support. Right? Like, people want yes. It's, like, live chat kind of stuff is great right there on the site.

Justin:

Yeah.

Speaker 3:

But using an in app pop up to, like, market some new feature, I don't think anybody pays attention to it. Like, you know yeah. Certainly, some people will respond, but, like, for the most part, you've got this, like, ad blindness kind of thing. Like, there's this, like, in app blindness thing going on where people just close that stuff instantly, or, like, they've got some browser add on that blocks it to begin with. So right now, we're all in on if, like, email side of things.

Speaker 3:

So but, like, being able to say, like, automatically emailing, new trials or when someone upgrades or when someone cancels or when someone hits a certain MRR point or LTV point where it's like

Gavin:

you

Speaker 3:

know, once they become a high value customer, whatever that definition is for you, send an email or a chain of emails, that kind of thing.

Justin:

Yeah. Yeah. That's an that's a really interesting space that has suffered from, like, in the old days, when I was working for SaaS companies. And by old days, I mean, I started in 2008. So not super old, but old enough.

Justin:

In the old days in 2008, we're like, why you know, we've got a bunch of information about people in our CRM. And then we have a bunch of information about people in our billing system. And then we have a bunch of information about people in our email newsletter platform. And then, you know, we started adding other things too. Like, oh, you know, maybe we should try mix panel.

Justin:

So then we got mix panel. And these things are all separate, and you can glue them together. And then on the messaging side, it feels like most SaaS companies have at least 3 regular ways they reach their customers. And this is true for Transistors. So some of our system emails get sent from the Ruby on Rails app through Mailgun or something.

Justin:

Some of our customer communication happens through Mailchimp, and some of our customer communication happens through these triggered emails in Mixpanel. Yep. And, Yeah. That's that's a that's a interesting space. And I think some of the trouble other folks have had when they've tried to tackle the messaging piece is that they don't have all of that customer data, like you do, I guess.

Justin:

Like, the knowing, okay, this is what you know, this is how much MRR they've done. This is if they've upgraded or not. The the one thing that it feels like you'd be missing is, some of these events. Like, we have an email that goes out when you publish your first episode. We'll

Speaker 3:

solve that too.

Justin:

Gotcha. So you're gonna you're gonna have event, event, triggers in there.

Speaker 3:

Tracking.

Justin:

Yeah. Interesting. Yeah. Because that that'll be, there is an opportunity there for sure. When we were building, you know, I I begged John to to build these, you know, to to help put these event, what do you call these?

Justin:

These event scripts into our our app for Mixpanel. And and all of the docs were from, like, 10 years ago. He was like, okay. Here here's the Ruby on Rails implementation. He's like, woah.

Justin:

These there's these are some pretty old, documents here.

Speaker 3:

Pretty old.

Justin:

Yeah. Interesting. So that that's gonna launch next month, you said?

Speaker 3:

I mean, you we're, like, we're beta testing it with people now, and we're getting you know, trying to figure out how this plays into the I mean, talking about pricing, like, you know, it's a it's also an add on, but, like, it the goal is not for this to be, like, some like, okay. If you're paying, you know, $1,000 with intercom, then we'll charge 800 for it. Like, it's not like Mhmm. We're trying to just, like, slightly undercut. Like Mhmm.

Speaker 3:

Those are, like, very full featured things, and we're our goal is not to, like, completely rebuild those kinds of tools, but instead, it's like we feel like most people don't need all that functionality, but they still end up paying for it.

Justin:

Yeah.

Speaker 3:

So we're saying, well, now that's like you can get less functionality. That's it seems weird to put it that way, but, like, you're getting a simplified solution to your problem Mhmm. And you're getting it all in one place, and you can see all the connected dots. Because then you'll be able to do things like graph, like, okay. People that I've sent x messages to, we see an increase in LTV from them.

Justin:

That was that was exactly what I was thinking. I was like, oh, this would be Compare that stuff. Right? Yeah. That would be interesting.

Justin:

And LTV would be it's a it's a long term metric. Like, you would wanna be tracking it over, you know, many, many months, to get it somewhat reasonable. Right? But that would be interesting to go, okay. Let's implement this test right now and see if it makes a difference.

Speaker 3:

Because you could also do things like tracking, emails to trials to people who are trialing and see, like, what the actual dollar value is of a given campaign because you'd be able to track conversions from it. So, it's it's not just, like, let's put this tool. Let's, like, shove this messaging tool inside this existing product. It's like, okay. There's actually an opportunity to to increase, like, the overall value where, you know, something like an existing messaging tool can't compete on that because they don't have all the the, like, high level business reporting stuff

Justin:

that we've got. Yeah. Yeah. Yeah. And the the having the the financial stuff is actually the because that's the stuff you have to bolt on in Mixpanel.

Justin:

Right? Or even in Google Analytics, you're always just guessing. You you assign it. The the Some

Speaker 3:

arbitrary value.

Justin:

Yeah. And you know what? This is what gets, like, folks who are starting out with marketing or whatever. It confuses them because in your mind, you think, oh, it must be so sophisticated. Like, folks must be like, really like but it turns out it's just like you just assign this value of, like, well, this action is probably worth about, you know, this amount.

Justin:

$20. Yeah. It's like, this is these are the most blunt the this is a a very blunt instrument to be using here where yeah. If you have a platform that has all that historical data, you can actually say, no. This made a difference for all these customers in this way.

Speaker 3:

Well but you can even track, like, the types of customers, like, okay. This this did a really good job for our high LTV customers, but performed terribly with the the low end customers. Mhmm. Or this email, you know, generated up tons of upgrades between plans a and b, but, like, didn't do anything for b to c. Mhmm.

Speaker 3:

So, you know, you can you can get a lot more fine grain with that that stuff when it's all in one place.

Justin:

Yeah. Yeah. That's great, man. That that's 6. So you you get, like, you you folks really crank stuff out.

Justin:

Like like, you've got a lot of these kinda all in one features. Is that kind of the idea? It's like you just wanna keep building this kind of suite all on under one banner so that you're building in some resilience there? Is that is that part of the plan?

Speaker 3:

That's part of the plan and also not like, we'll eventually like, second thing that we're sort of working on is the ability to be a lot more sort of a la carte. So maybe maybe you like the some sort of, like, free metrics that you're getting somewhere else for you know, even if it's, like, doesn't have as much data, but, like, you just wanna know some really top level numbers Mhmm. So you get those for free from somewhere else. Okay. But, like, you don't you really wanna use, like, the cancellation insights tool or, like, the revenue recovery stuff.

Speaker 3:

Mhmm.

Justin:

And then,

Speaker 3:

like, you could use just those items and not use the metric stuff.

Justin:

Yeah.

Speaker 3:

So letting you sort of, like, almost like, yes, you can use them altogether. There's a lot of value in using them altogether, but if you want to use these as stand alone products, you'll be able to do that too.

Justin:

Yeah. Yeah. I think that's a good move. There there is definitely a and you're in an interesting spot because I'm guessing a lot of your customers are small. Is are most of your customers small or small businesses?

Justin:

Are you are you in the enterprise tier as well?

Speaker 3:

No. Yeah. We're we're definitely, like, in the SMB space. We push to try I mean, the fact that you we don't really have, like, a free plan automatically segments out a lot of the really tiny, like brand new customers Mhmm. Or brand new businesses, but, you know, we're still, like, very much in the S and P space.

Justin:

Mhmm. Yeah. Which could I mean, this is the other thing for you is that if there's a who knows what's gonna happen? I'm just guessing. And some of this is just me, you know, projecting what I want to happen in the world.

Justin:

What I want to happen in the world is the recession creates all of these new small businesses that are, you know, people are starting things because they've got time and they've got nothing nothing to lose. Because I just love small businesses. I think small businesses are I think they're one of the most important pieces in the economy. In our day to day lives, these are the people we actually relate to and have relationships with. There could be a huge well, huge.

Justin:

There could be a big new crop of subscription businesses that get started right now. I wonder I wonder how that will work out. When, maybe to kind of close off here, because I know you you do some stuff on the side, and it seems like you encourage that with your team too. Like, you have team members that you're you're fine with side projects. I I wonder if we should talk a little bit about side projects as a form of resilience.

Justin:

And I don't wanna name any names, but there are some fairly well known remote first companies that don't allow their employees to have, paid side projects, like side projects where they make money. I always felt like that was just kind of cruel. Because for me personally, you know, like, Mega Maker is a good example. I started this this community back in 2013 when I was still, you know, working a full time job. And, you know, that 1st year, it made maybe $20,000 extra.

Justin:

But that $20,000 extra was a huge deal for my family and I. You know, it bought a lot of diapers. And now and over the years, I've wondered if I should, you know, maybe stop doing it because, you know, transistor is my full time thing. But I was looking at it in the past, 12 months, Mega Maker's done about $40,000 in revenue. And even though Transistor's doing okay right now, I just remember being so thankful for that that, like, okay.

Justin:

I've got something else. You know? They're they're I'm all my eggs aren't in just in one bucket. And I wonder if any of that resonates with you and and the way you've, you know, thought about it for bare metrics in your team.

Speaker 3:

So I don't look at side projects as so, like, the way that we do side projects is you can have them. You can certainly make money for them. That's all encouraged. I'm happy to sit and, like, give you feedback on all, like, how you can make more money from those. Like, what I don't want people to be in a position is to do is where they feel like they have to do something to supplement their salary because they're not getting paid enough.

Speaker 3:

I think that's where you end up with some sort of, like you end up with the conflict of interest. Yeah. So I think and, I mean, I look at that the same way with the my own personal side projects. I don't take any like, I don't use any of the money I make from that, for our salary. It all just stays in a business account for all those side projects.

Justin:

Is any of that resilience for you, or is it is it mostly just, like, for you to have a break from the computer world? Because you do Lot of physical product kind of stuff.

Speaker 3:

Yeah. It's it's more to give my brain, something else to to to chew on besides running a company. It's like it it lets me, like, flex the creative side. So that's that's what it is for me, but I think everybody's kinda got a different sort of motivation for why they have some sort of little side project or whatever. But, I mean, I I think it's the case.

Speaker 3:

So, like, at, like ConvertKit, for instance, they don't want you having a side project for things that are related to the work that you do with ConvertKit. So Mhmm. I think that's totally valid because, well, that's not the case here, but, I mean, certainly can see the perspective on that because part of the benefit of a side project is, like, letting you get experience the world outside of what it is that you do all day. So, you know, it's like for me, it's like making, like, concrete home decor, like, introduces me to this entire world of, you know, people who are making handmade stuff. It's like doing local farmers markets, introduces me to people that I would never ever meet in the SaaS world.

Speaker 3:

And, so it's, like, exposing me to all these different sort of, you know, world views and different types of businesses and, like, all that stuff ultimately makes people well rounded, and keeps them from being burned out. So that's not to say that, like, like, pre bear metrics, before I had anything that really took off, I had my hand in a lot of different baskets for resiliency purposes where it's like, okay. I've got 5 different products or 10 different whatevers so that I I'm not betting everything on one thing that just, you know, hopefully, doesn't hit the fan. You know? It's like Yeah.

Speaker 3:

Of just spreading things around, diversifying, and, so I certainly know that side of things.

Justin:

Yeah. I mean, that's a it is a hard conversation because I I think, again, cynically, I've just viewed any sort of restriction on what people do in their spare time as handicapping or potentially handicapping them. And that would be fine if you could you could convince folks with a 100% certainty that, you know, you're always gonna be there for them as their employer. And that what I wouldn't wanna do, although I've I I'm not in this position right now, so I I can't really like, we it's just John and I. We have no we have 2 contractors, but no employees.

Justin:

But I don't wanna do is restrict people from creating their own platform. You know, all those years, you know, I was kind of gradually, year after year, building my own platform. If at any point, you know, that that first company I worked for, they're gone. They they closed down. And Yeah.

Justin:

If if I had just stayed committed to, like, okay. No. I'm just gonna give these folks everything and I'm gonna, you know, just not start a podcast and not blog and not try to write a book and sell it and not, you know, whatever else. It would have been I would have missed out on it took a long time, but I would have missed out on this gradual building up of, you know, the connections and skills and everything else that, I have now. And, I mean, if I was an employee right now, I would definitely be thinking about, okay, now's the time to build in some resiliency in my life and have something else, even if it is just fun, like, like, if you if you were no longer doing barometrics, would you would you just go full tilt into, you know, seeder and sail?

Justin:

Or, you know, what do you think you would do?

Speaker 3:

Yeah. I'd yes. I would just make weird stuff forever. Mhmm. Uh-oh.

Justin:

Yeah. I

Speaker 3:

mean so I I I I played around with the real possibility of this last year when we almost sold the company. Like, I in my head, I had I was in that spot of, like, okay. What am I gonna do now? I'm just gonna, like, make stuff forever. So, I mean, like, that's that's what I would ultimately do, and, you know, it's just baremetrics, like, took off, and so, like, that's I'm also doing that now too.

Speaker 3:

So

Justin:

Dude, if you if you if you could go full tilt on the concrete stuff, you would be able to make way weirder stuff.

Speaker 3:

Right. Because because or, like, the laser tweet stuff. Like Yeah. All the things that I could put on a piece of wood. Yeah.

Justin:

Just give

Speaker 3:

me the time.

Justin:

Yeah. You can because then you you would also give yourself some license to just be more eccentric. Right? Right. Like, right now you're making all these interesting spaces, but they also have this, like, okay.

Justin:

It's gonna be a planter or or coaster or whatever. But, like, there's some crazy stuff you can build with, concrete.

Speaker 3:

Yep.

Justin:

It might not be all shippable, but laser tweets was definitely a shipping innovation, Josh, compared to cedar and sail. Well, it's good talking to you, man. I, good to hear your voice. Glad glad you're doing well.

Speaker 3:

Same dude. I'm glad we got to chat. We should do this more.

Justin:

Yeah. Folks that wanna check out Josh's stuff, cedarandsale.com, barometrics.com. Now is probably a good time if you don't have some good metrics for your your SaaS or your recurring revenue business to sign up and pull in that stuff. It it'll pull in historical data. Right?

Justin:

Yeah. So if you've been using Stripe this whole time, just sign up. It'll pull suck everything in and give you all these graphs you can look at. And then lay it's it's laser tweets laser tweets dotco?

Speaker 3:

That's right.

Justin:

And I'm I'm a happy customer. I got a I got a James Clear tweet, laser laser engraved, and, look at it every day. It's really nice. People and it's the it's the only, actually, the only piece in our house besides, Mark Johns is another artist, but it's the only art in our house that people comment on. They're like, oh, this is nice.

Speaker 3:

I mean, what you what what what you need is some Kanye West coasters

Justin:

Yes.

Speaker 3:

And then people really ask about that stuff.

Justin:

That's great. K. Thanks again, Josh.

Speaker 3:

Alright. Thanks, Justin. Have a good one, man.

Justin:

Alright. So that was Josh Pigford. If you like that, reach out to him on Twitter. He's atshpigford. And, definitely check out his other side projects, Cedar and Sail and the other things.

Justin:

John, why don't we thank our lovely Patreon supporters?

Jon:

As always, thanks to everyone. We have Sofia Quintero, Diogo, Chris Willow, Mason Hensley, Borja Solaire, Ward Sandler, Eric Lima, James Sours, Travis Fisher, Matt Buckley, Russell Brown, Evander Sassy, Praty Yumna Schimbecker, Noah Praill, Robert Simplicio, Colin Gray, Josh Smith, Ivan Kerkovic, Brian Ray, Shane Smith, Austin Lovelace, Simon Bennett, Michael Sitver, Paul Jarvis, and Jack Ellis, Dan Buddha, my brother, Darby Frey, Samori Augusto, Dave Young, Brad from Canada, Sammy Schubert, Mike Walker, Adam Devander, Dave Giunta.

Justin:

Giunta. Lot lot of good feedback about last episode.

Jon:

People enjoyed people enjoyed that.

Justin:

You know what they really liked, which surprised me, is Dave got went kind of into therapy mode at the end there and was asking us all of these probing questions.

Jon:

Yeah.

Justin:

And I

Jon:

think that's yeah. I think that's mentor Dave.

Justin:

Yeah. That was that was,

Jon:

That was good.

Justin:

Funny to have an intermediary like that who's

Jon:

Yeah.

Justin:

Kind of TikTok in between us. It's good.

Jon:

Absolutely. And, yeah. And finally, Kyle Fox from get reward for dot com.

Justin:

Thanks, everybody. We will see you next week.