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Two founders talk about how to build software businesses that are meant to last. Each episode includes a deep dive into a different topic related to starting, growing, and sustaining a healthy business.
00:00.71
Rick
What's up this week, Taylor?
00:03.01
tylerking
Not a lot. Um, things are pretty normal for me. How about you?
00:07.89
Rick
Normal.
00:08.87
tylerking
Normal.
00:08.94
Rick
Oh, I guess normal the new normal is chaos.
00:10.87
tylerking
What's that like?
00:11.84
Rick
Yeah. I don't know. Like I thought I had a new normal and then it doesn't feel like a new normal anymore. I thought I was like, Oh yeah, I'm killing it. You know, do you ever go through those moments where like, Oh man, I got control over this thing. And then you get punched in the face.
00:24.20
tylerking
Yeah, is it is this like affecting? like Last time we talked about, we're almost at the halfway point for the year. We did a quarter check-in of like sleep and exercise and that kind of stuff. And you seem to be feeling pretty good then. Is is that stuff affected by the lack of normal?
00:41.17
Rick
Yeah. Like I think quality of sleep, like I've got a good routine. Um, I'm, I'm exercising every day directionally. I mean, I'm even starting to write a little bit more every day. Um, so like that stuff's going the right direction.
00:51.17
tylerking
Cool.
00:54.81
Rick
Quality of sleep's low. Like i' I'm doing a good job of going to sleep and like going to bed and setting myself up for quality sleep. But like this quality sleep is not happening. It's like stressful.
01:04.58
tylerking
Are you like thinking about like, sometimes if I work right up until I go to sleep, you know, my sleep sucks. Cause I'm thinking about work stuff is is that type of thing happening here.
01:13.13
Rick
Yeah. Oh yeah. It's like stress sleep. Like, and then my, like, I might be sleeping, but my dreams are like, not like, like I wake up at a panic. Um, so I got to figure out how to get quality sleep.
01:21.20
tylerking
Yeah.
01:25.62
tylerking
Yeah. What I hate is even when it's not stressful, like sometimes it's like you're working on a hard thing and then that affects your sleep, which sucks, but also makes sense. But I hate is I'm just like coding on something. It's going perfectly fine, but my brain isn't, it's still going when I go to sleep.
01:42.81
Rick
Mm hmm.
01:43.16
tylerking
I'm not even necessarily stressed, but, um, I have a,
01:43.66
Rick
Yep.
01:47.47
Rick
I'm actually doing a good job of like winding. Um, I just can't get to the point of like, Oh, I'm just going to sleep sound like a baby.
01:54.54
tylerking
Yeah, this is when naps are good.
01:57.55
Rick
Hmm. That'd be great.
01:59.23
tylerking
What's that like?
02:00.25
Rick
Yeah. What's that like?
02:00.72
tylerking
and I don't want to ah rub in the fact that I have free time. Um, but did you play, uh, you played a lot of video games as a kid, right?
02:08.69
Rick
Oh yeah. I played a lot of video games until I had a kid and then they just went away.
02:09.40
tylerking
I just, I kid, were you ever into the Zelda games?
02:16.10
Rick
I wasn't, um, uh, but, but I'm familiar.
02:16.95
tylerking
No. Okay.
02:19.99
tylerking
This is the big update in my life right now is I found out they remade links awakening, which was like the main Zelda game boy game. Uh, they remade it for Nintendo switch. So now Shelley and I are playing through that. So that's my life right now.
02:32.15
Rick
Is that, is that a good experience? Like ah like good, good graphics and stuff?
02:36.65
tylerking
Yes, it's good. it it It sucks a little bit because it's kind of childish. You know, a lot of stuff Nintendo makes is very like kid friendly and stuff, which is cool. It does suck to pay $60 for this remake of a Game Boy game. And also, I think it's 60 or $70 for like. the brand new cutting edge Zelda game. Um, what's it called? Tears of the kingdom, which is like this absolutely incredible open world, super 3d, like modern game. And it costs the same amount as this like kind of shitty cartoon remake of a game boy game. But having said that, I think video games are criminally under priced. Like I'm going to get a hundred hours of fun or whatever it is for the $60 hard to complain about that.
03:17.81
Rick
What are they not like trying to upsell you with like special ah skins and ah in in game in-game purchases?
03:22.31
tylerking
Yeah, none of that. I mean, I guess they, Nintendo does that amiibo thing. Are you familiar with those?
03:27.19
Rick
No. no
03:28.11
tylerking
Um, I've never actually bought one, but you're like, it's like a physical toy that you, I don't actually know how it works. You like put it on some controller you buy and then it like goes into the game and knows you bought the toy. I don't know how it works. Anyway, I have never done any upsells on any of these Nintendo things.
03:46.30
Rick
Yeah, I think like the average spend for like a teenager on like one of those, uh, what's, what's the Fortnite games? Like, I think they spend thousands of dollars on skins.
03:55.03
tylerking
Oh yeah.
03:57.77
tylerking
Yeah. Games with in-app purchases are crazy, but there's still so many games without that. Like I, I don't play a ton of video games, but I've probably played, I've probably purchased like five per year for the last few years. And I only play one or two of them. You know, I try them out, but still like that's.
04:13.63
Rick
The value to cost is like ridiculous.
04:15.70
tylerking
Yeah, it's incredible. Especially the ones that I can get Shelley to play because not only is that entertaining me, but it's like, it's so much, we both spend so much time just sitting there watching TV. Like I know when we were kids playing video games was like going to rot our brains or whatever. And now I look at them like this is super involved. We're both like alert. We're reading stuff. We're thinking through puzzles. We're talking to each other. It's a much better way to spend time than, than watching TV, I think.
04:40.53
Rick
Well, I mean, unless you're watching Naked and Afraid, which is like the best time, best way to spend afraid.
04:45.03
tylerking
Is that, is that your go-to show right now?
04:46.42
Rick
That's my new go-to show. Every Sunday.
04:48.99
tylerking
yeah I've never seen it, but I know, I know the reputation.
04:52.08
Rick
Yes, you need to watch it. It's addicting.
04:55.31
tylerking
Do you have live TV?
04:57.29
Rick
YouTube.
04:58.42
tylerking
YouTube. Okay.
04:59.29
Rick
Yeah, YouTube TV.
05:00.43
tylerking
Yeah. Um, anyway. Okay. Well, what's going on work-wise?
05:05.91
Rick
Well, I kind of want to stick with the fun conversation. This is great.
05:08.29
tylerking
Yeah. You want to talk video games?
05:09.29
Rick
Um, yeah, no, cause it's like, I miss them. Um, but, but, uh, uh, I, I, my friend of mine is the CEO of Cameo. I have shout out Steve Golanis. I know you don't listen to this podcast, so you'll never hear this.
05:21.90
tylerking
Wow.
05:23.79
Rick
Um, but he's a, fraternity he's a fraternity brother. Cameo is like this shout out app, um, where you can buy a celebrity shout outs. Um, And anyway, he posted on Instagram a picture of his beautiful new cyber truck by Tesla that is wrapped with like this advertising for Cameo. Like it's got like. ah you know, a call to action, like text, you you know, this you know truck to this number, here's a QR code. And I just was like, that is brilliant. Local marketing that that would work for like up health. Cause if you think about like a leasing, like a lease or a ah a payment on one of those, it's probably like 500 bucks a month ish that you could get it for after factoring in like, um, it's like 60 K yeah.
06:02.40
Rick
Um, and, and so, uh, anyway, uh, I thought that would be a great idea for leg up health. It only like in order to pay back, it only has to source one client a month.
06:14.75
tylerking
I am incredibly doubtful that it would do that, but okay.
06:18.21
Rick
You don't think I feel like just the conversation starting alone would lead to at least a client like, Oh, cool truck. What's like a pelt? Oh, well we do health insurance. Do you know anyone who needs health insurance right now? Or could you just introduce me to your, your brother?
06:29.39
tylerking
Why, why a cyber truck? Why not any other type of vehicle?
06:33.52
Rick
it's just like they' It's the most eye-catching car on the road right now.
06:39.81
tylerking
It is, it's kind of like eye catching. I mean, everyone has their own tastes. It's eye catching in a bad way for most people, I think.
06:47.30
Rick
Oh, really?
06:48.66
tylerking
I mean, I'm in a bubble of people who hate Elon Musk. but I mean, hell, I have friends with Teslas. Even my friends with Teslas are like, that is the ugliest fucking car I've ever seen in my life.
06:59.27
Rick
Hey, but they're talking about it.
06:59.73
tylerking
Do do you not feel that way? They're talking about it. Yeah. All right. So you, you're actually interested in this as a, as a marketing plan.
07:08.44
Rick
I put it, I put a deposit down on a new cyber truck. I might not hear back for a few years, but like I started the process.
07:14.10
tylerking
Oh my God. I hear they're having trouble selling.
07:15.68
Rick
I need to create the option. Yeah. I need to create the option. Do you think they're having trouble selling them?
07:19.70
tylerking
OK.
07:20.78
Rick
I've, I've heard that they're like on a wait list for a couple of years and the, uh, as a result, the used market is exploding.
07:23.82
tylerking
Well, let me let me rephrase.
07:26.38
Rick
Like they're like twice as much used as they are new.
07:30.15
tylerking
I hear there are not very many that have been sold. So either they're having trouble selling them or or they're having trouble making them. Because they just did another recall today that they have to announce him or I don't know if they have to.
07:37.14
Rick
Hmm.
07:41.86
tylerking
They do announce. I think there's only 11,000 on the street, like like they've actually been sold. um
07:46.55
Rick
It's crazy. It's crazy.
07:48.30
tylerking
But yeah, it's, it's, I guess it is a conversation starter. I, I've often thought this with listening serum before that I'm like, Oh, well surely if we do XYZ, like somebody's going to sign up for it. Or, uh, I don't, I don't think that's a given, but then again, you're right. Like up health is local and you're, you're more likely to actually have that conversation with someone than I am.
08:08.59
Rick
Yeah. And I just, anyway, I think it's a, I think that kind of marketing gimmicky local conversation, starting brand awareness, local brand awareness. I think that that has the potential to work for us. Um, and this was just like the, the closest to it that I felt like is on brand for us and could, put I could like stand pulling off personally. Plus I get to drive a cyber truck.
08:31.87
tylerking
Yeah, so if you want a Cybertruck anyway, I guess that's fine. um I just typed it into a calculator. A $60,000 car has an estimated $943 monthly payment right now.
08:45.16
Rick
So two clients a month.
08:46.48
tylerking
Two clients a month.
08:47.70
Rick
Yeah.
08:47.97
tylerking
If you actually want that vehicle, then I guess so. This this does not seem like a regret minimization move, in my opinion.
08:56.02
Rick
It's just an idea. Um, the deposit is optionality. Um, and I can get it refunded if we don't move forward. So, uh, it's, it's a no brainer to like create the option to do this. And hopefully the, you know, uh, it will, it will come to fruition and we'll get lots of leads and clients as a result.
09:14.44
tylerking
i I hope so, and I mean it's a win-win for me because either leg up health makes some money or I get to laugh at you for such a stupid idea. Either way, I win.
09:23.16
Rick
and And you get picked up from the airport in a Tesla Cybertruck the next time you come.
09:28.05
tylerking
Yeah, I care a little less about that, but okay.
09:32.00
Rick
Yeah, but there's all kinds of fun things you can do. Like, hey, if you set up for leg up health, you get an hour in the Cybertruck. All of our appointment onsite appointments, we come in the Cybertruck. And if you want to go for a ride, you can.
09:44.22
tylerking
Oh, I hate it, Rick. I mean, go for it. Have fun.
09:50.85
Rick
That's part of like why I like this is like, I think it has actually does have legs as something that would work, especially compounded with other local marketing efforts. Um, and I, I think, uh, that it's, it's fun. This would be really fun for me. Like if I had, if I had F U money, like this would like for leg up health, like I would totally do this in a heartbeat.
10:04.57
tylerking
Yeah, that's fair.
10:10.82
tylerking
So I don't know how seriously to take this idea, but if you are actually serious about it, I don't think you can wait three years for the wait list to end. like the whole The whole reason it works is because it's this ridiculous looking car that nobody has yet. As soon as it's just a car that anyone who wants one has it at that point, like it um immediately it wears off.
10:22.08
Rick
Mm-hmm.
10:28.08
tylerking
And you just have to go buy like a Pontiac Aztec or something. like You have to buy the ugliest car that there is.
10:31.21
Rick
Yeah, yeah like like my old BMW.
10:35.77
tylerking
Yeah, yeah, like and it has to be stupid for it to work and it won't be as stupid the longer you wait.
10:42.68
Rick
Yeah, and yeah, I know you're right. um yeah If you look up, use Cybertruck, like it's twice the retail ah starting price on on tesla dot.com.
10:52.91
tylerking
Wow. Well, okay, that's a whole can of worms.
10:56.78
Rick
So anyway, i am I have a call for look crazy local marketing ideas like that. if If I could come up with a bunch of these that are fun and on, like don't make me uncomfortable. Most of this gimmicky stuff that I hear about just makes me like cringe. This one I could totally do. And like you might cringe, but I wouldn't.
11:13.19
tylerking
Yeah, yeah. ah Go watch Better Call Saul and just do all the stuff he does in that show.
11:18.77
Rick
I've never seen that ah that. He's got a lot of good ideas.
11:22.13
tylerking
He's definitely got some like he puts up a billboard and then pays the guy putting it up to fall off with a like not not to fall all the way off, but like he's dangling by a rope and then he goes up and saves the guy and makes sure that a news cameras around so they don't film him saving somebody falling off the billboard. ah You know, that type of thing.
11:40.88
Rick
That's ridiculous.
11:41.85
tylerking
Get some local news, Rick.
11:44.90
tylerking
OK, so Cybertruck 2027, maybe. What else?
11:52.11
Rick
Well, what's got me my creative juices flowing is ah how we set this goal of trying to drive 5k and ah monthly revenue increase over 60 days starting June 1st.
12:04.07
tylerking
Yeah.
12:05.35
Rick
And so we're like almost a month into that. um And just to put that in perspective, 5,000 monthly recurring revenue increase is a 50% increase over our current monthly recurring revenue. So it would be a massive like acceleration of growth for us outside of our seasonal growth period. um and so The way we broke this down was we we we set the target of about 5K. We set a deadline of July 31st to get there. And then we broke down like, okay, how many lives do we need to get insured under our agency or ah you know paid for by ah an employer um to to get there? And it's 125 lives, net new like additional lives.
12:45.28
tylerking
Yeah, starting this was like early June, but not the beginning of June.
12:45.74
Rick
um
12:49.51
tylerking
So like a little less than two months getting 125 new insurance clients or people in group plans or whatever.
12:54.89
Rick
Yes, correct. Yep. Um, and so we're at 52 already, which is, which is basically a 50% increase.
12:59.62
tylerking
Wow. That's awesome.
13:04.28
Rick
Um, so we're going to like, we're probably going to, so you know, at least add 2k in revenue, which is what, 20% growth over two months, which is pretty good. Um, uh, but, but I think like we still haven't even really like juice this thing yet.
13:12.00
tylerking
Yeah.
13:17.38
tylerking
Yeah, so let me ask some questions here. So yeah you've done 52. How many of those do you think would have happened if not for this like new goal of like this two-month sprint that you're doing?
13:30.25
Rick
I don't know, um, is the answer. Uh, but both of the deals that like massively contributed this, we're already in pipeline as a result of this and we're part of our day to day. But I do think that the, that there's this extra sort of aggression of asking for the business that I think that not having that we were being passive on. So I can't actually say that we would have closed these two deals. I think one of them we would have and one of them, maybe, maybe we would, would have, um, probably, uh, but maybe not right away.
13:53.18
tylerking
Yeah.
13:59.15
tylerking
So it was like JD had this in pipe driver or whatever as like, I'll follow up at some point.
13:59.18
Rick
Um,
14:03.79
tylerking
And because you two set this really aggressive goal, he potentially went out and was like, I'm going to call them an extra time or something.
14:09.27
Rick
No, no, I, I, it was further along than that, but I do think that there was this element of like, Oh, it's okay if we don't get it. Um, we'll we'll get him an open enrollment. Uh, or I don't want to push too hard because what if they say no. And I think it like setting the goal made it like, we have to win this deal. And I don't know what the impact was on that.
14:27.33
tylerking
Mm-hmm.
14:28.59
Rick
It's impossible to say, but I think I don't want to say it was nothing.
14:32.65
tylerking
Yeah. The problem I have with it's so easy to like s flip-flop wildly back and forth between things when you're doing a startup. Because you know startups are such a roller coaster, which is well well understood. But like you could look at this and be like, OK, we need to be sprinting all the time. Or you could look at this and be like, oh, well, it sounds like there was this really good. like If you could just add 52 lives per month all the time,
14:54.89
Rick
oh yeah
14:56.43
tylerking
What are we talking about? You've already cracked growth. And it's like, well, maybe you were already doing everything you needed to be doing. I don't know.
15:02.33
Rick
It's possible. Um, I do. I, the, the main, the main thing that we weren't doing is just being focused on growing, uh, on a daily basis and making that number one versus like thinking about how to grow. Like I don't, by like, I think what we've created is a bias towards action and a bias towards moving things forward in time versus waiting.
15:17.87
tylerking
Yeah.
15:25.39
Rick
And I don't know, like, i think I think that's something we want to keep doing no matter you know matter way at the end of seven thirty like ah at the end of this experiment period. like that We want to continue continue to do that.
15:37.18
tylerking
It seems to me to be consistent with um kind of a different theme from a couple episodes ago where we we said like, it's not zero to one. It's one to 10. Like, leg up hell still feels very small and is very small. And it's not true. It's profitable in a sense, but not it's not profitable in the sense that like everyone's not getting paid what they would need to continue working on this forever. um but If I can editorialize on what I've observed, you said it's more of a bias towards action and like closing as opposed to like getting like preparing to close or whatever. That preparing to close to because I've sit in the meetings and listen to you and JD talk, it always felt like you guys were kind of taking the attitude of like we're pretty far from having this locked in.
16:20.56
tylerking
And this new attitude is like, well, there's a like there's enough deals we can close with with what we've got right now. We don't have to keep working on the script. We don't have to keep working on what's the cold email going to be. Whatever cold emails JD is already sending got these leads in the first place, right?
16:34.73
Rick
Yeah, and it was more actually a cold call. So this was that this was sourced from our our cold call effort.
16:36.82
tylerking
There's a cold call.
16:39.92
tylerking
OK. we So I like that a lot, the idea that rather than thinking we're still so far off that and we we have to like be preparing, we have to be perfecting everything, just saying like we're close enough. It's time to just you know yeah stop preparing and just just go for it for every single one.
16:57.27
Rick
go Go. Yeah.
16:58.01
tylerking
Yeah.
16:58.11
Rick
Go sell. Yeah.
16:58.92
tylerking
So does this keep?
16:59.31
Rick
And then, and then, and then push ourselves. Like, I think there was like an element of like, let's challenge ourselves and and make ourselves a little uncomfortable.
17:05.81
tylerking
Yeah.
17:05.91
Rick
Um, and not an unhealthy way, but like, uh, enough to like go just a little step further. Like, and then we've got other deals in the pipeline right now that are coming in that we would not have had other we otherwise, um, that are, that are meaningful.
17:20.29
tylerking
Yeah. So, so talk about that. I, not to like, like very awesome that basically a third of the goal has been hit already. And the goal is very ambitious. So even if the whole thing doesn't get hit, that still could be a win, but so I don't want to glaze over that and not celebrate that, but like what's next. You've got a month left, a little more than a month. How does it look?
17:37.82
Rick
Yeah, so JD and I need to get back on the on the phone together and talk through this. We've got a partner meeting on Monday, I believe. And that'll be a good time to do this, but um we've got a couple of like earlier stage deals that are very similar to these other ones that, so if we, if we move those forward, could double attainment here and get us closer to 60, 70% of the payment.
17:58.90
tylerking
Mm hmm.
17:59.62
Rick
There's a bunch of that will probably get 10 to 20 lives just from. business as usual word of mouth. um And then there are these like, there are two groups of customer of of prospects that we just need to figure out how to get aggressive. I don't want to say aggressive, but like get a no from, like aggressive about getting an a yes, no decision from.
18:16.74
tylerking
Right.
18:18.18
Rick
And that like, but we have hundreds of people that we know have individual policies that literally just, they could just, we could get 20 or to 40 of them to sign a piece of paper, it would close the gap. um And then there's like another, another I don't know, 20 or 30 businesses that we've identified that don't offer anything to their employees currently, and just like getting them to like invite, like set up leg up benefits for free um and invite their people.
18:39.94
tylerking
with me.
18:41.60
Rick
Those are the the the the three levers. So like kind of replicating the the large group, larger like group health insurance thing, um the the free leg up benefits route, and then converting AORs.
18:54.68
tylerking
Yeah. So maybe I'm getting ahead of myself here, but like, let's say, let's say you in July do another 50 ish. And so you've, you've the goal was 150. Let's say you do a hundred, which I think it's still better than any month outside of open enrollment.
19:06.07
Rick
125.
19:07.29
tylerking
125 is sorry, what the goal is.
19:09.21
Rick
The goal, the goals 125.
19:09.80
tylerking
Okay. Um, What would your takeaway from that be? Like, would it be actually the, the cold calling has been working. Let's just keep doing it. We just had a little dry spell or would it be no, this is a whole new approach and we need to keep doing this forever. What do you think?
19:25.58
Rick
yeah ah keep I would say keep good do it do do what we just did again, which is keep cold calling every week, keep doing outreach, and then I would like to layer in. I think the main thing that we're missing is this a remarketing aspect that's like we're creating this huge database of um customers. And so I'd like to keep doing that. But i I really do think we're, we're, we're creating some somewhat of like a missed future opportunity by not investing in a regular remarketing effort and social, like just like local marketing um to to make it easier to get some imbalance.
19:58.63
Rick
But that would be the only thing that I want to do that i'm we're not making progress on right now because it's not like immediate to revenue.
20:04.69
tylerking
Yeah, cool.
20:06.08
Rick
That becomes more important during open enrollment.
20:09.33
tylerking
Yeah, for sure. Yeah, it'll be really interesting to see. Like, like yeah, basically how. A thought that i we've talked about before is how many new like how much growth would you expect just from kind of word of mouth? And like eventually, you're the guy to go to, or JD is the guy to go to. And it's not you're not going to double revenue year over year from that. But you might increase it 10% or 20% just from that. And with the denominator being relatively small right now, that doesn't work. You have to get bigger. But there might come a point where it's like, OK,
20:43.68
tylerking
1,000 lives that we're covering. If we could get 150 during open enrollment, maybe that's all the growth you need for a year.
20:52.08
Rick
Exactly.
20:54.10
tylerking
ah Yeah, OK.
20:54.95
Rick
but But, but, but remember the, the, the thing that we would love to figure out and we're all motivated to figure out is how can we hire someone and have them ramp and that just hiring them and teaching them the way. Um, and then maybe supplementing with them, like with a fixed marketing spend per head is just like, Oh yeah. Oh yeah. This is how we grow. We hire people to go spread the gospel.
21:15.06
tylerking
Yeah.
21:15.95
Rick
Like that's the ideal scenario, um, that we're trying to build.
21:19.96
tylerking
The first version of that doesn't have to be quite that also. like ah the first person but A less knowing CRM, when we finally made enough money for either Bracken or I to go full time, we chose neither. And instead, we hired a customer service person so that we could focus more on the the product stuff we were doing. You could imagine the same thing happening with JD, where it's like the first hire isn't to scale it. The first hire is to take everything else off his plate so that you're actually hiring JD back to be able to do more of it.
21:46.75
Rick
Yep.
21:47.48
tylerking
so
21:47.77
Rick
Totally.
21:49.36
tylerking
Cool. Uh, well that's exciting. I mean, uh, maybe it would have happened anyway. Maybe it wouldn't have, but like 52 users and, or they're not users, whatever you call them clients lives in a little less than a month.
21:58.87
Rick
Liar lives. Yeah.
22:02.68
tylerking
That's that's fantastic.
22:03.04
Rick
Yeah. Yeah. and And if you put that in perspective, that is, um, 20 ish percent growth in a month.
22:09.53
tylerking
Yeah. In one month.
22:10.65
Rick
Yeah.
22:12.02
tylerking
during the slow period of the year.
22:13.73
Rick
Yes.
22:14.76
tylerking
That's the thing. I think a lot of people might, high growth SaaS companies regularly grow that much in a month, but they don't have the whole open enrollment dialogue. Well, even 20% is a lot for anyone, but I hear some people talk about 10% month over month growth. I'm like, what the fuck? like that's It's crazy.
22:29.80
Rick
Yeah.
22:31.09
tylerking
yeah um My company would collapse if we grew that fast.
22:31.65
Rick
i mean I mean, totally. Yeah. And I, I've talked to, um, I was talking to ah someone who's looking at investing in a, uh, company that was like my old company people keep. And so he called me, it was like asking, how do you look at this market? Blah, blah, blah. I, uh, basically told him the nicest way possible. Like I don't think you should invest. i would not say Um, but, uh, uh, The way um I explained it, I lost my thought. Dang it. Okay.
23:02.36
Rick
It'll come back to me.
23:03.17
tylerking
Okay. I was talking about really fast growth.
23:04.99
Rick
Oh yeah.
23:05.22
tylerking
tim
23:05.43
Rick
Um, he was just saying like the thing that like ah kills me about this business is this like the seasonality, like it's all or nothing. And it's like 90% of the growth comes in open enrollment. So if we can do 20% outside open enrollment and then maintain that 90% growth during open enrollment, this is like a really, really cool business.
23:21.30
tylerking
Yeah. Yeah. I mean, going after employers that don't offer insurance feels like the potentially the secret to that. I mean, that has not been, I've i've been saying that for a few months and so far I've been wrong, but.
23:33.38
Rick
Last thought here, and I would love to hear your updates. and We can spend the rest of time on on your on your stuff. the The other thing that we're learning is that there is this subs this there's this market that we really didn't serve at our last business people keep, but they're massively underserved. It's like 20 employee companies to like 49, 50 employee companies that do gusto payroll. And what they've done is when they were like 15 people, they, they signed up for gusto and then gusto became their agent. And then they're like, things get really complex from 15 to 35 people.
24:06.54
Rick
And then by the time they're 45, they're like, what is happening? Gusto is not that helpful. We still like the payroll service. And what we've discovered is that we can come in and leverage some of the gusto technology that they've built for a group health insurance, quoting and enrollment, and then become the agent.
24:20.90
tylerking
Hmm. Yeah.
24:23.41
Rick
And so basically gusto is our technology.
24:26.03
tylerking
Yeah, and yeah they have to pay what, six bucks per user per month or something to to use Gusto to administer so a health insurance policy that is not that they're not the agent on, is that correct?
24:29.79
Rick
Exactly.
24:35.99
Rick
correct correct
24:36.96
tylerking
um Yeah, I mean, like Less Knowing Serum, we're 19 people, I think, that are eligible for health benefits. ah Using Gusto, they're our agent. And it's yeah, love Gusto, no interest in leaving Gusto. The first time we set up insurance with them, I thought it was like, Kind of easy, but not as easy as it could have been.
24:55.01
Rick
Correct.
24:56.03
tylerking
And then every year when we have to renew, it's like, hello, is anybody going to answer our emails? um We would absolutely pay $6 per employee per month to get a real agent with our current setup.
25:06.60
Rick
Totally.
25:07.48
tylerking
Yeah.
25:07.45
Rick
So yeah, that, that is an unlock there. And I think we when we think about our ICP from a group health insurance perspective, um, that is the really interesting space there. It's like, yeah, 20 to 50 employees on gusto in Utah, um, offers group health insurance. Like if we can identify a hundred of those, like we should, we have a really, really strong pitch.
25:26.43
tylerking
Yeah.
25:27.98
Rick
Sorry, go, go tell me, tell me what's going on with you.
25:28.11
tylerking
Cool. Yeah. Well, since we're on the topic of growth, I'll start with this. i um This month has been such a roller coaster. So um just to like benchmark what's what's good and what's bad for us. And I'm thinking of it in terms of net number of users. like So our user count has been hovering around 26,000. If we add 30 to 40 users in a month, that's been like kind of our steady state for a couple of years, as as anyone who listens knows, we we've been in a growth slump. So 30 to 40 is not good, but it's it's normal. um you know For less than that, it's bad. I'd say if we're at 100, that's where we want to get, is 100 net new users per month. So we started the month the first week or so we were up 50. And it's like, OK, we are we we might hit 100 this month. And we hit 100 last month, or or close to it.
26:20.56
tylerking
Then one of our big accounts removes like 100 users. And so it's like, well, shit.
26:24.72
Rick
Hm.
26:26.35
tylerking
So this just became one of our worst months ever. Then we slowly cart clawed our way back to break even. And then this morning I wake up and a different account that wasn't very big prior to this just added 120 users. So now it's like one of our best months and years. So in the span of 25 days, we've gone from feeling very good to very bad to very good again. And two of the the very bad and the second very good were both like these one-off things that aren't repeatable. They don't mean anything, but it still affects your you know you're outlook on stuff.
26:59.45
Rick
Geez, man, that's I mean, I got anxious just you telling me about that.
27:05.09
tylerking
Yeah. Like when the users get removed, you're kind of like, well, I'm yeah i'm going to try not to let this affect my mood, but fuck.
27:14.45
Rick
And it's his exact opposite feeling when the opposite happens.
27:18.13
tylerking
Yeah. And, and you know, when the bad thing happens, you're like, Oh, it's just bad luck. It's got nothing to do with it. And then the good thing happens and you're like, wow, maybe this is a sign that we're onto something. you know Yeah.
27:27.25
Rick
How can I repeat this? I have to control it.
27:28.87
tylerking
Yeah. It's crazy. And one of the tough things about Listening Serum is you know lots of SaaS companies talk about expansion revenue, meaning you have the same number of customers, but they add revenue one way or another. We have retraction on average. um i don't I've never bothered to exactly figure this out because I don't think there's much point in figuring it out. But like on average, we lose slightly more users to our current accounts than we gain. And my guess is A lot of people view buying a CRM very aspirationally where they're like, it's kind of like spring cleaning or going on a diet or they're like, I'm yeah, let's get our whole company on it.
28:02.44
tylerking
We're going to add all these users. And even the ones who end up being pretty successful with us, you know, six months later, they're like, well, we added 50 people. Only like 20 of them are using it. Let's just remove the other 30. I suspect that's what's going on. So it's, it's actually pretty rare for us to have a good month because of expansion. So anyway, I'll take it.
28:19.86
Rick
and make Yeah, that makes sense. like yeah like why When you buy a CRM, you're like, this is going to make us grow so much. And then it's like, oh, ah we're we're spending a lot of money and we didn't grow as much as we thought. How can we cut costs? Oh, let's cut licenses. um And it's like, okay, shoot.
28:36.51
tylerking
Yeah. Yeah. It's, and it's pretty close to break even to be clear. It's not like retraction is not a big problem, but it's also not, when you hear SaaS companies that are crushing it, it's always, everyone talks about expansion and I've just never experienced that really.
28:50.65
Rick
You know?
28:50.86
tylerking
Except this month. I'll take it.
28:54.57
Rick
um Yeah. Well, I mean, how's growth going? Are you are you having any any ah controllable ones?
29:02.31
tylerking
I'd say overall, it's like right at a point where I don't know what to think. like It's not bad. it's It's slightly better than it has been. But it's not a lot better. But one of the confounding variables here is we have this price increase going into effect you know ah almost exactly a month from today, um where all of our users who signed up prior to 2020 will go from $10 to $15. They all know that. We've warned them about that. We're sending another reminder out in a couple of weeks. i think we've had some ah some cancellations because of people anticipating that.
29:37.65
tylerking
it's yeah it's Our revenue is going to go up a lot in July. It's going to go up like $800,000 or something. So no matter what, basically.
29:45.88
Rick
Woo hoo!
29:46.80
tylerking
But our user count has been basically flat the whole year. So it's hard to, yeah, I don't know.
29:51.09
Rick
What are you gonna do with that 100 grand?
29:53.87
tylerking
Well, we're already in the red. We've like, we knew this was coming. And so we've kind of been running in a, like we let ourselves get a little unprofitable knowing that this is coming back. And we actually just coincidentally, you know, we switched to paddle, which a is much more expensive than our old setup with Stripe and B they hold onto your money for a month. So we have like $300,000 less in the bank at any given time than we used to, which we did not. This is just me being naive about finance. It never occurred to me to ask with paddle, how often do you pay out? I just assumed like. You don't wait a month and a half, presumably, but yep, they do.
30:26.69
Rick
They must be killing it with his interest these interest rates.
30:28.70
tylerking
I know, right? Jeez. Yeah, the the amount we're losing on interest rates with them is another, I think, $10,000 or $15,000 a year that we're effectively paying them. um Yeah, I'm sorry. I'm frustrated. ah There's that. There's the Section 174 tax stuff where we had like, whereas a year where we were not profitable, we had to pay like $60,000 in corporate tax because of that Section 174 thing. Um, so we actually have, none of that is like permanent.
31:01.91
tylerking
I'm not like good at finance. We are like, is it cash flows at EBITDA? However you count that it's not like permanently bad. It's just like paddle hangs onto the money a little longer. The U S government charges taxes earlier, but we'll get it back five years from now. Um, but so anyway, that's a long way of saying this huge boost in revenue. We're about to have a big chunk of it is eaten up, just like trying to
31:22.77
Rick
It's already spent. You've already spent it.
31:24.23
tylerking
Yeah, exactly. um Just replenishing our savings. Our hope is to have it in the ballpark of a million dollars in the bank, ah given we're a, prior to the price increase, we're 3.8 million ARR, something like that. um So having you know two to three months in the bank seems reasonable, and and we don't have that right now. And then by the time we get that replenished, you know right now our expenses are growing faster than our our growth. So that 800,000 in new revenue, a lot of it's already spent. And then the part that's not is going to decrease unless we can get our growth up. So temporarily takes, gives us a ton of breathing room. We've talked a lot on this show about how important margin and buffer is. And we've got like a pretty long runway here, but it's also like, we can't get complacent here and just be like, all right, you know, we're good forever.
32:15.94
Rick
you're you're you're You're like ah you're a real CEO now. You're like making you're making bets and like but risking risking some money.
32:19.23
tylerking
Yeah. Yeah.
32:23.55
Rick
and Yeah.
32:24.12
tylerking
I feel like it's time to start doing crime, right? a little i don't I don't exactly know how white collar crime works, but I think it's time for it.
32:32.74
tylerking
If anyone knows about that, please email me.
32:37.96
Rick
Uh, uh, so what, what, what, like, if this doesn't work, what do you, I mean, I don't, like, have you thought about, like sometimes I think, I assume like when you are able to invest like this ahead of revenue, um, in the cash, like you've thought about worst case scenario.
32:38.20
tylerking
Oh God, I'm going to end up in jail.
32:51.37
tylerking
Yeah. Well, yeah, so this is um but good and bad. Anyone who like is more. ah you know cutthroat capitalist than I am would is going to think I'm an idiot for what I'm about to say. like the whole point The whole source of our money, I don't want to say problems because again, we're about to be very profitable for a little while, but the whole source of why our expenses are growing faster than revenue is that we have committed to like giving all our employees very significant raises. We have a lot of expenses that are like
33:23.35
tylerking
not required to run a business. like we don't have We don't have to pay customer service people 100,000 plus a year, you know but we do. um so things would have to get like not Worst case scenario is not like we have to lay people off. I don't think worst case scenario is just like, all right, the guaranteed raises go away. If we if we just stopped that, we'd stay profitable forever. you know
33:48.89
Rick
You have so much buffer built in that it's like, you can do so much before before it's like existential.
33:52.75
tylerking
yeah exactly and Yeah, and I hesitate to even say that because it's like, i you know, and I don't want employees to hear that and be like, Oh no, you know, is my financial fee. But the point is like, even if everything goes wrong, even if there's a big recession and we lose 20% of our revenue, it's not. We can't afford to pay anybody. It's just like, we can't afford to like be loose with money in a way that we we have been. So I think, I actually think it's a healthy pressure. Like for a long time, we had no pressure because we were growing fast or revenue is growing faster than our expenses. Now it's kind of like.
34:24.87
tylerking
We are comfortable, but don't get too comfortable. You know, I think it's a healthy type of pressure.
34:27.62
Rick
Yeah. Yeah.
34:28.93
tylerking
and
34:29.48
Rick
It's not too different than what we we're talking about. Like I've helped earlier in the episodes. There's like sometimes having a goal of some kind can be motivational and create some urgency that didn't exist. Um, you don't want to go too far.
34:39.15
tylerking
Yeah.
34:40.29
Rick
Um, but at the same time, like no urgency is, is, is not, not good either.
34:40.59
tylerking
Right.
34:44.37
tylerking
Yeah, i did have to I am having to play a bit more of the bad guy in in some company discussions. um Just being like, you know we're talking about what features to prioritize and stuff. And it's like, well, some of our customers are kind of annoyed by this or that or that. and i have more and more recently had to be like, that is not what's going to bring us revenue. like Adding dark mode, whatever you think about dark mode, that's not the reason our competitors are winning customers over us. like i have i've I've had to be a little more like, all right, let's act like a company that's not profitable because we're not.
35:21.16
Rick
but yeah That's not like a hard argument to make, though.
35:23.75
tylerking
ah It's not, but I mean, 15 years in business or almost 15, certain things do calcify. like To me, i still I think I still act like it's a startup and I was here during the entrepreneurship period, but I have to give my employees grace here. I have to look at them and say, you know more than half the company has only existed in a state of total security, total safety, and very little change. And so they haven't been through what it means to be a little bit more agile and nimble. And I can see how big companies stagnate because we're doing it at 20 people.
35:59.65
Rick
Oh man.
36:00.00
tylerking
Sorry, am i am i dropp am I dropping too much on you today?
36:02.23
Rick
ah yeah There's a lot going on.
36:05.88
tylerking
Well, there there isn't, there isn't. the the The nice thing is it's like, we know exactly what we need to do. It's just about every time a little shiny distraction comes up, like I'm going to use dark mode as the boogeyman here. That it's not like we're literally just sitting around arguing about dark mode all day, but like that type of thing comes up and it's easy to be like, Oh yeah, that probably wouldn't take that long and this and that. And a bunch of people do ask for it. That is true. um But it's just being like, no, at the beginning of the year, we decided what we had to build, we're just going to go build it. So it's not actually that hard. It's just like staying focused.
36:38.97
Rick
Which is really hard.
36:40.25
tylerking
Well, yeah, sure. And and it's been what we failed at this whole time. Like I've said many times on this podcast, I think we had about a decade. We're looking back at what we worked on. We did things that were good. We did things that helped the business, but they weren't the top thing. And like more and more, I'm thinking the whole job of an entrepreneur, it's not deciding what to do and what not to do. it's Well, it is it's deciding the one thing out of a thousand that you're actually going to do. That's the hard part. It's so easy to look at each idea standalone and be like, well, is dark mode a good idea? Yeah, in isolation, it's a good idea. And that's not the best idea. So we're not going to do that right now.
37:18.83
Rick
Yeah, that makes a total sense. I was just thinking about leg up health when you're saying that. Um, and what is our, like, where can we focus more? And I'm just realizing like, I told you at the beginning, like you're asking how, what's the pathway to 125 lives? And I said, I said three things.
37:34.47
tylerking
Mm hmm.
37:35.09
Rick
Um, but then at the at the end, like these, these big, big wins are coming from a very, very specific play, which is Utah company with all employees in Utah or most employees in Utah on gusto payroll, 20 to 50 employees, group health insurance.
37:35.67
tylerking
Interesting.
37:51.26
Rick
Like that is very specific.
37:54.47
tylerking
Yeah. How do you? Yeah. Okay. You want to talk about that a little more then?
37:58.37
Rick
well Well, I'm just wondering, like, can you buy a list of people who have gusto or like, I'm just curious, like, is there a way for us to narrow in on that, on that cohort a little bit more? I mean, it's interesting.
38:08.37
tylerking
Yeah.
38:08.99
Rick
Like our friend chase, um, our mutual friend chase Murdoch, who owns a Takata group, which is a holding company for small businesses. They're about that they're right in that spot too.
38:20.22
tylerking
huh
38:20.66
Rick
I think roughly the whole group.
38:21.42
tylerking
the the whole The whole businesses, or all of them combined are?
38:24.12
Rick
Yeah. Yeah. Yeah.
38:26.71
tylerking
um Yeah. yeah i you know There's some stuff where it's like, well, who uses Google Analytics? You can like scan their websites and see if they're using it. I can't think off the top of my head of a good way to tell if a company uses Gusto.
38:39.61
tylerking
um there probably are list you know i do I assume you get these emails all the time from like spammers, basically, that are like, do you want a list of all the HubSpot users? or did Do you get those types of emails?
38:49.17
Rick
Yeah.
38:50.12
tylerking
Yeah, I don't, I would never buy one, whether it's legit or not, but I assume that type of thing exists for gusto.
38:55.55
Rick
Oh, come on. You yeah he just like you.
38:59.69
tylerking
No, no, I'm saying less annoying CRM would never buy one.
39:00.03
Rick
ah Yeah. Listen, listen, I'm typing a list of gusto payroll companies. the You know who knows this? The banks know the banks know who is getting deposits from gusto.
39:15.17
tylerking
Yeah, but they can't tell you that, right?
39:17.04
Rick
Yeah, but they're probably they probably sell data like that.
39:19.80
tylerking
but yeah they probably do, that's so sketchy. um Yeah, ah certainly Gusto doesn't want you to know because all of Gusto's competitors would take that information and use it to poach po customers. But yeah, maybe there's a way to figure it out. Or it be you know maybe if nothing else, maybe this would just make for a really killer cold email, right? like If whatever the pitch is right now, if it's that plus are using gusto for your, do you have a group plan through gusto? Like we're specifically for you.
39:51.12
tylerking
That would, that would narrow down. Like if if I'm reading that, I ignore all cold email that I'd have to look at them and be like, I got it.
39:56.72
Rick
Uh, yeah, that's a, that's really interesting.
39:57.43
tylerking
I'm going to read this one. I think.
40:01.42
Rick
Like for that segment of ICP, like that is the lead pitch versus like sub 20, uh, or sub 10 might be, you know, uh, do you have gusto? Well, we have a benefits. We might, we might just lead with gusto. Um, and then just say like, you know, depending on your situation, we can totally up level your benefits for no cost at marginal cost to you.
40:22.88
tylerking
Yeah, you'll lose 90% of the leads immediately because they don't use gusto or 95. But like if all the ones you're getting use gusto anyway, you're not really losing anything.
40:31.90
Rick
Mm hmm.
40:32.88
tylerking
Yeah, that's interesting.
40:34.27
Rick
Thank you. That, that was, that was like the mind warp I had was we were talking, you're talking about Falfa hard focuses and I'm going, yeah, if we, so we keep doing what we're doing here on this thing that's working. We also figure out this thing and this thing, then we'll hit our number. It's like, well, what if we just go get two or three more of the ones that are working?
40:45.69
tylerking
Yeah, yeah.
40:50.17
tylerking
I think that, yeah, we've been in this situation at Lessening Serum before. It's very rare that we've had a marketing channel that's like put more time or money in and get more out, but when you do, the strategy has to be max max it out, right?
41:03.03
Rick
Mm
41:03.43
tylerking
Put as much, and most marketing channels max out. before you you want them to like, like AdWords is an example of this where throughout the years, every once in a while, something about the AdWords algorithm just like breaks and they give us cheap clicks for some reason. And we're like, all right, we're spending $30,000 on AdWords this month. And then 10 days later, it stops. But it's like, yeah, we, we spent every dollar we could on that in the meantime. Um, yeah, if you got something that's working, I feel like you have to max it out.
41:29.03
Rick
-hmm
41:31.65
tylerking
You have to try.
41:33.68
Rick
This is like the gold. Thank you.
41:35.88
tylerking
of um All right. I don't know how how much time do you have here?
41:41.67
Rick
I got five minutes.
41:42.84
tylerking
All right. This is not our normal recording time. I can hear the the kids screaming in the background there.
41:44.77
Rick
Yeah, I messed up today.
41:46.52
tylerking
You got it?
41:48.45
Rick
I was late.
41:49.67
tylerking
No, that's fine.
41:49.89
Rick
I'm sorry. um um But yeah, like what do you have anything that we could cover in that time?
41:54.78
tylerking
um Yeah, i've I've got various updates, but maybe I'll wait on some of them. So I'm just going to say like a random thought that I had, um which I also tweeted about. So we we have a sabbatical policy at Lessening Serum, which is every three years, an employee can take a sabbatical. And a sabbatical is defined as six weeks paid off work. And then you can extend it up to six weeks unpaid if you want to. So it can be up to 12 weeks. um Surprising, I am surprised how many people go with the 12-week option. like Maybe more than half, or if not like a ah bunch of people do. Similarly, we give people the option of working four days a week instead of five and making 80% as much money. I only bring this up to say, I know that most people in America are probably going to do whatever they can to maximize the amount of money they make from their employer. But there are a lot of people out there that wouldn't do that, that would make less money if it meant working less.
42:53.11
tylerking
I think it's sizable enough of a minority that this is probably just an important thing for us all to keep in mind when it comes to hiring. Like how do you compete with big tech? This is a thing that we can offer that they can't. And I wonder if it could be taken even further. I don't think lesson knowing serum should do this because we've got our own culture and stuff established. But if you're starting a new company, What if someone could work well, like leg up health, what if you're like literally just we'll we'll pay you $40,000 a year. You only have to work during the month before and the month after and during open enrollment.
43:20.32
Rick
Open enrollment.
43:25.64
Rick
Yeah. Interesting. Um, have you seen this anyone do this successfully?
43:32.80
tylerking
Oh, a bunch. but Oh, you mean other companies.
43:34.57
Rick
Yeah.
43:35.82
tylerking
I haven't, let me run through the concern I have, which is as a person works less. So a person can't like work one hour a week or sorry, let me, let me describe it this way. There's kind of a but like a curve of some sort where like, if you're working 90 hours a week and you go to a hundred, probably you're not getting much extra productivity. If you go down to 80, you're probably not losing much. like those mark Each marginal hour is really pretty worthless there. But it's kind of the opposite on the low end. If you're working one hour a week and you go to two, it's not just twice as much time. Because that one hour is like, you have to read emails. You have to like follow what's going on with the company. like in In the case of Listening Serum, everyone sits in an hour-long weekly meeting every week. So if you're working one hour a week, you're just in that meeting. And that's the only thing you do all week.
44:18.11
tylerking
um Benefits cost the same regardless of how many hours you work. I mean assuming you offer benefits to part-time people ah So I do think it's like you can't really offer 10 hours a week or 15 because probably too much of that gets eaten up and overhead Where's the sweet spot? I don't know
44:36.90
Rick
Hmm.
44:38.89
tylerking
Like our four day a week, people tend to be pretty productive. that It's absolute bullshit. All these headlines that are like, they get more work done than the five day week.
44:46.35
Rick
Okay.
44:46.43
tylerking
that That's completely fucking crazy.
44:46.87
Rick
Yeah. i but But they make, they make four fifths as much, right?
44:48.97
tylerking
Anyone who believes those headlines is an idiot. I'm sorry. I'm sorry if you're out there. Absolutely not, but yeah. that Yeah. So it works fine for us.
44:59.93
Rick
Yeah. Yeah.
45:01.00
tylerking
It doesn't make sense to pay people. ah You wouldn't say work four days a week instead of five. It's better for the business. But if you're like, Oh, you'll make 80% as much, you'll work 80% as much. I think there's an argument that that works.
45:15.96
tylerking
Sorry, I came off too strong there. Sorry to anyone who likes those headlines.
45:21.63
Rick
ah um but like What's but so yeah what's what's like the closing thought there? Is it like do try it try creative comp strategies to compete with big business?
45:32.85
tylerking
And specifically, I would be, if you're like, I can't compete with them on total top line compensation, if you give people the ability to work a lot less and make a lot less, but still make enough to live in certain parts of the world, I think there are a lot of people, still a minority, probably 10% of people, but like that's still hundreds of millions of people ah that would take that deal and that can't get it from anyone else. it's maybe like 10 years ago or pre-pandemic, this is what remote work was, right?
46:05.24
tylerking
It's like big companies aren't offering this. This is a way to set yourself apart. I wonder if this is maybe like the next thing like that, that, that bootstrapped companies could try.
46:14.25
Rick
No, it's interesting. I'll have to think about that.
46:16.31
tylerking
The sabbat we've had employees tell us that the sabbatical is like one of the main reasons they keep working here for what it's worth.
46:21.19
Rick
That's a mate. That's awesome.
46:22.83
tylerking
Yeah. All right. That's all I got.
46:25.94
Rick
Well, if you'd like to review past topics and show notes, visit starblast.com. See you next time.
46:30.26
tylerking
See ya.