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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.
00:02.43
Rick
What's up this week Tyler
00:04.52
tylerking
What up Rick ah not a lot. We ah just kind of business as usual, but we did just start to the paddle migration I know we talked about that a while back that we're switching off stripe and it's happening.
00:15.69
Rick
Ah, do you are you glad this is happening. Are you regretful. This is happening. Do you do you feel like you have no choice.
00:19.35
tylerking
Yeah I I don't want to I want to be clear I think we made the right decision and I would encourage other people to consider using Paddle and I have nice things to say about them and also there's no benefit to us at all like I Just don't want to work on billing Stuff. A lot of stuff's changing that is not helping the business in any meaningful way. It's just like if you want to be in if you want to pay Sales taxes is the only way I know how so like it's mostly annoying but it's not anyone's fault that it's Annoying. It's just like taxes must be Paid. You know.
00:50.39
Rick
Yeah, got to do it.
00:53.78
tylerking
Yeah, but it has been kind of fun in the sense that you've got a new dashboard where everything starts at 0 and then you see like the first person pay and it it has kind of given me that feeling of the early days like oh we got a customer because we were like we're like is this even going to work. You know everything might break and the first person pays and actually they got double billed so it didn't work. But anyway.
01:11.96
Rick
Um, ah wait. So um, are any any interesting updates or learnings.
01:13.81
tylerking
We're working on it.
01:18.89
tylerking
Um, one thing is I probably should have been more careful before switching I want to be clear I would still go with paddle and all that but like I just keep running into things that I didn't realize and then I'm like oh shit like if I were a good Ceo I would have thought about that and what. Today I found out paddle only pays you money once a month like they only they hold it for they hold it for a month but like real realistically from if you charge that they pay you on the first month and my impression is it might take up to two weeks to get paid. So you might get a six six week delay between.
01:39.77
Rick
Um, they hope they hold that long.
01:52.86
tylerking
Earning a dollar revenue and getting it in your bank account. No not as far as I understand it and like at the end of the day again. It's like well we still have to do it. It doesn't change anything. It wouldn't have changed my decision but I'm kind of like wow I didn't even think that like with stripe you know do they pay you in three days or do they pay you in 5
01:52.92
Rick
Yeah, are they paying you interest on that.
02:11.37
tylerking
Ah I didn't it didn't occur to me. It might be six weeks before we get paid. Um, another thing I've been surprised by. Ah we so previously. We didn't have an annual option if people wanted to they could like we could build them manually and kind of charge them manually. But it was just monthly. And my logic was like I don't want to offer a discount for annual. Um, so we just never built it. Ah we with paddle it's a lot easier to just like have that type of option. We still don't offer a discount It's just the monthly payment times 12 and so far 20% of the people. So I should say. We haven't switched any of our current customers over to paddle. It's all just new people who are signing up that are on paddle and we're going to test it out that way but 3 out of 15 people so far chose the annual plan despite no discount at all kind of surprising to me.
03:00.50
Rick
Are you going to have to deal with accounting issues as a result of taking that money early I do run Gap Compliant books or I.
03:07.48
tylerking
Ah, in what sense who fuck knows Rick I don't know we just.
03:14.72
Rick
We need you but you take money in advance of delivering services. You generally have to track what's called deferred revenue on the balance sheet and then recognize so you get $1000 for what's do. Let's do something easier. Let's say you get prepaid? Yeah, but.
03:25.50
tylerking
Is is the alternative to Gap Cash flow or something like that. Yeah, we we do that then I think.
03:32.20
Rick
But you still you'd still like I think so you would recognize the 1000 like let's say you get paid $12000 or 1200 $1200 today for the next year of service so $100 a month you would typically recognize the revenue one hundred ah one hundred dollars a month over time.
03:43.66
tylerking
Ah.
03:49.33
Rick
But you have a cash increase of 1200 so that's a balance sheet change and so the first month you go $100 of revenue $1100 of deferred revenue the next month it would be you know when you recognize the revenue it would affect.
03:56.68
tylerking
What what is this effect though. Just like whether you pay taxes on it. But but like what um I don't I dont okay.
04:06.89
Rick
It would affect. Um I don't know how it affects taxes actually because I don't ever like I don't make money yet. So I don't have ah tax taxes.
04:11.98
tylerking
I I guess like is there some bad guy that's going to come knocking on my door and be mad at me for recognizing the revenue at the wrong timer is just like companies. Do this for their own internal reasons.
04:24.82
Rick
I have no idea man that's a great question I bet that I bet like your tax accountant will just handle this. Um, but it be yeah I would I mean yeah, you're not doing anything more than an annual payment right? like it's not like 10 years in advance.
04:29.13
tylerking
Yeah.
04:37.31
tylerking
Correct although I mean in the past. So our old system I said we could build people manually the way it actually worked is we just let we had a page where anyone could enter any dollar amount they wanted and just generate their own invoice for that amount and we would give them a credit for that so they could. Like I want to pay 50000? No one actually pays $50000 in advance but they could have um so in theory anyone could have prepaid as much as they wanted in the past Ah now it's really just monthly or annual.
05:03.35
Rick
Yeah, but yeah, yeah, I'm interested but I don't know the answer.
05:06.93
tylerking
Okay, dear listeners If any of you know why? or if I should care about this. Let me know.
05:16.86
Rick
Historically like when someone pays in advance have you been recognizing that as revenue in that like that that month or like.
05:24.15
tylerking
I've literally never recognized revenue before money goes into my bank account and I do whatever I want with it I mean I guess I don't I don't pay attention I know we do we have book. We use a bench for bookkeeping and we have an account and I'm sure they're doing whatever they're doing but like.
05:26.94
Rick
Would don't you fail tax if I you have like a profit and loss for tax purposes right? Oh boy Oh my god.
05:41.71
tylerking
If it's just a tax thing presumably you'd want to defer it so you don't pay taxes in the current current calendar I don't care about that. So like it seems like if anything I'm hurting my like I'm not like breaking any rules by just taking the money and counting it as revenue I wouldn't think you know it's funny is like my dad isn't an accounting professor and he listened. He's just going to tell me all the answers to this I'm acting like what random listener out there is going to? Yeah, ah might but I will say his general feedback to me because I like this is not the first time I've criticized my own knowledge about finances and accounting and stuff.
06:05.33
Rick
Ah, your dad's calling you for sure.
06:18.88
tylerking
And his general feedback is he's like you know exactly as much as you need to know all the complicated stuff like don't don't worry about it. It's for much bigger companies. So for anyone out there. That's feeling imposter syndrome. That's normally what he says to me.
06:28.12
Rick
I agree with that by the way is your dad averse to phone calls like you. So do you guys just like text or does he call you? Okay, that's interesting cool. That's a unique tyler thing. Not a family thing.
06:35.16
tylerking
He calls me. Yeah yeah I think it's a millennial thing I think you're the weirdo for liking phone calls I don't know I don't know anyone who talk. Yeah, you know we get, We give job off. Do you ever give I know you do recruiting. Do you ever give job offers at windfall do call people has anyone ever picked up what? okay.
06:53.90
Rick
Um, yes, yeah, of course every time why I guess it's more of a scheduled call. It's like a are you available. It's like coordinated usually via an email or a text and then you you call them.
07:07.69
tylerking
Got you every time we we used to have a policy of like not leaving a voicemail if we were calling to give someone a job offer because like it's just it's like a special moment and we wanted to do it live and then we realized like we're never going to be able to give another job offer no one. No one picks up the phone. So.
07:09.97
Rick
But yeah, every time I Never I've never not delivered a job offer secretously.
07:22.13
Rick
Um.
07:26.73
Rick
Um, yeah, that's awesome.
07:27.12
tylerking
We started leaving voicemails. Ah, um there yeah paddle migration happening there. There's still probably another month or 2 before like all of our current customers move over. But yeah I'm I'm moving on to other stuff.
07:41.10
Rick
What less last episode you talked a little bit about um metric changes starting to track customers again I Know that's not necessarily related to paddle but like any any updates since since those revelations.
07:46.89
tylerking
Um, yeah.
07:56.43
tylerking
Ah, not really just that I I'm enjoying it but also like I kind of teased in that one like our user count is basically not growing or like like it's growing but very slowly. Um so I will be.. It'll be a lot more fun Once that number is going up. But um. The team has like we've got it written on the wall and the team's excited about it just like like we said I'm just rehashing what we said last episode but it feels so much more genuinely like connecting us to the value we provide to pay attention to users instead of revenue should have never made that switch.
08:28.50
Rick
Live and learn man.
08:31.20
tylerking
Live and learn I I love the fact fourteen years in I still just keep making mistakes and and learning from it. Life would be pretty boring if I had everything figured out. Um, yeah, what's going on with you.
08:39.61
Rick
Ah, it's true. Well we um I you know this? but um, we we have our first our first actual ah leg up benefits customer transitioning to the app and so. Um, it's ah it's our it was our first ever like a benefits customer and um, it's also going to be our first app customer which is which is great. Um, in addition, they're doubling their employee account. So not only are they transitioning to the app which is cool because you built it but they are doubling the amount of money that they pay us which is.
08:59.63
tylerking
Yeah.
09:13.15
Rick
Awesome. Okay.
09:14.26
tylerking
Can we do some kind of like linear aggression and map out what our revenue will be if we double um Mrr every month like this. But.
09:22.43
Rick
Ah, oh man I just want to get 200 customer clients and 20 employer customers like if that if we do that in the next three months I'll be so happy.
09:28.73
tylerking
Yeah, um, that's great though. Why are they doubling the number of ah like did they already have so so for context for people. You've got a company They've got their employees and they can put their employees on this platform to help them get their own health insurance. They're going from 5 to 10 as I understand it. Were those 5 people just sitting around not using the old system.
09:47.14
Rick
Ah, we the old system is ah is a spreadsheet and what happened was the person who was our contact at the company left the company and a new person replaced them and the spreadsheet stopped getting updated for two months and so they're you know.
10:02.17
tylerking
Ah.
10:04.40
Rick
Basically like people left and new people came on and um, we didn't get notified of that and so which wasn't good and so it's actually like the perfect trigger point was like hey you know your new person. Let's get you on the new system. Um, and ah, you know, let us show you value. Ah.
10:10.43
tylerking
Gotcha.
10:20.77
Rick
Even more so than we've done in the past right before open enrollment.
10:24.80
tylerking
Cool I'm a little nervous because you know I I wrote the code for this a few months ago and basically no one's used it. Um, now it's like well I sure hope it works. Yep.
10:33.50
Rick
Pull the bandaid off. Yeah, it'll it'll be fine and then ah one of the challenges we've had with leg up benefits of particulars is just like getting deals done because our service is so generous. Um. in in general um and so ah, when we go like oh and we're going to pay for it. People are like wait but I've been getting it for free. Um, so we're we're dealing with like this pricing and sort of product positioning challenge. But ah Jd is authorized to like do deals to get deals done for temporary amounts of time. So. Um, our goal is 10 leg up benefits customers 10 ah 20 employer customers 10 leg up benefits customers ten group health insurance customers group health insurance in the us is just basically like 1 plan for a bunch of employees through the business and then legup benefits is like an alternative to that which is. Getting people money through our platform or just offering them service through our platform as a benefit.
11:26.25
tylerking
Um, so for the 10 leg up benefits ones if if that goal is achieved. There won't be a ton of revenue coming from that because Jd will probably be be giving discounts to to close the deals but the the hope is a we learn from it and b ah. That when the renewal date comes I assume this is like an annual contract or something when it renews that then they would start paying full price.
11:48.54
Rick
Yeah, my general. Ah my our. My general hypothesis is that we don't our pricing structure is probably wrong. Um, it's too. It's too complex and probably too variable based on the number of employees. Um, and then the second thing is that I do believe that once we're embedded. Ah. I think it's very difficult to get rid of us. Um, because we're going to be very much part of the an extension of the business owner often in terms of like caring for employees and so if we if we execute on our value proposition. The the marginal cost of going from what like 50 bucks a month to two hundred bucks a month.
12:18.13
tylerking
Gonna.
12:26.49
Rick
Ah, versus like not having us at all I think is is somewhat like irrelevant. Um, but but it'll work itself out it'll for.
12:29.33
tylerking
Yeah, would you be open to like like let's say long term you find out I've let me back up I've never heard a business say they do this. But it seems like it would make sense that there might be products that are just hard to sell and you basically have to give it away for free or very very cheap and you like it's not a temporary thing. It's like that's always how you get the customer in the door and then the second year it comes it would you be open to that or is it like this has to be temporary.
12:57.40
Rick
Ah, what was so so I the the way I I think about this and and in other businesses too is this is a proof of concept and and and you can have like standard dies proof of concept proposals where hey you know. Recognize this is new and it's hard to sell so we have a standard 4 month poc proof of concept where we offer our service set of discount and but but at four months um you know you're going to agree that it steps up to this amount. Um, you can opt out if you want to before that date. But once once it steps up, you're committed for some period of time.
13:29.48
tylerking
Um, to her.
13:33.86
Rick
Using us. Um, and ah, you know, but that's that's one way of of doing it I think you're saying something different though. Yeah.
13:37.63
tylerking
Well no, okay, but that that's a common thing and like Enterprise Sales world proof of concept I Guess I've heard of like a pilot program before so you're not I guess then my next question is like if J D comes back to you and is like let's just keep doing this. Proof of concept thing as is our way of selling people. You're open to that.
14:00.89
Rick
Oh yeah yeah I think like I think um I think what's ah the challenge that we're trying to overcome right now is just getting some deals done. Um one. It's out. It's hard to get deals done outside of the season right? like so. We were trying to get deals done between July and September and that's just it's just hard in our business exactly yeah and especially companies that don't have health insurance like their employees can't do anything with health insurance right now like it's outside of open enrollment. So we're entering this like period.
14:17.34
tylerking
Just no, one's buying Health insurance in those months.
14:28.98
tylerking
Um, right.
14:31.99
Rick
And so we just I just I'm trying to make sure that we don't exit this open enrollment period without some number of customers and and if we do it shouldn't be because of price. Um, and so so I don't I don't really if we did you know 20 of these deals instead of 10 or. 5 of these deals instead of 10 I really don't care. It's just about like let's get some of them and not have price be the.
14:49.96
tylerking
Yeah, you don't want to leave. Yeah, you don't want to leave open enrollment with with nobody because then you have to wait another year to have another shot at it. It's an interesting model to think like get as many customers as you can during this month and a half even if you're.
14:58.19
Rick
Yep yep.
15:06.82
tylerking
Significantly discounting and then the work for the rest of the year is how do we get these people to pay us basically like now now you can convert a low paying customer to a high paying customer which they can do offseason but they can't become a customer that's interesting. Cool.
15:11.95
Rick
Yep.
15:19.00
Rick
Correct correct. Yeah, but yeah I I think like is I think um, if this product is hard to sell because it's hard to explain then I absolutely am good with with some form of of get in the door. You know. Give it away for some period of time. But I think yeah I don't think it's indefinite give it away I think there's a step a step up after so after we've demonstrated value.
15:45.17
tylerking
Yeah, if they're not seeing if it's not worth some amount to the employer then we we don't have we will never have product market fit if we can't get people willing to pay is that fair to say cool, um all right? Ah next up on my list is.
15:48.10
Rick
We should both part ways. Yep yeah exactly yep.
16:01.97
tylerking
I guess maybe just talking about growth and how it relates to product a little bit. This is kind of a recurring topic for me. But first of all I don't have a point to make here. The pipeline is good. We have a lot of free trial users right now if we just look at free trial like kind of top of funnel-ish type stuff. You'd say we are getting out of our growth slump. It is not translating into paying customers and I don't know what to make of that I shouldn't say that I mean the the number of paying customers are exactly so stable. It's not like we're not getting new customers. But the pipeline. Yeah I always want to think of the free trial pipeline as a leading indicator of people paying us and they just seem completely unrelated and I don't like what is that.
16:39.75
Rick
Wait You're saying that when your pretrial pipeline increases. You don't see a lacking increase in growth that sucks.
16:47.49
tylerking
Yeah, pretty much. Um I mean I I assume the explanation of that has to be that like new customers are coming in from lower value channels. Um, and we we have had it sometimes it's like. We sponsor a conference and we immediately get 100 signups and those people convert because it's like a good fit or whatever. So I'm not saying that they never correlate with each other but generally speaking. They're not nearly as correlated as I would expect. Yeah I still it's a weird like psychic boost.
17:14.93
Rick
Um.
17:21.27
tylerking
To see the like as an entrepreneur you just want to see numbers. Go up you know, um it is fun seeing the free trial numbers go up.
17:28.78
Rick
So do you have I know that I feel like we've done this st before but I have to ask so when you look at your free trial pipeline. Do you look at it all just like oh there's a bunch of free trials in like 1 segment or do you segment them into like different buckets where you're like ooh that ah that segment like converts at this percent.
17:32.21
tylerking
Um, yeah.
17:44.00
tylerking
Yeah, we do but the segments are like you know so there's the sources we can track that they click on a Google adwords link or from cap tera or whatever but the problem is the vast majority of signups are just they googled less annoying serum and signed up or something along those lines. So.
17:45.65
Rick
And that and that segment's up which is a good sign.
18:03.86
tylerking
If you look at it 2 thirds of all of the signups or more are this like organic ah attribution and that's that's where all the fluctuation happens and I realize I probably could break it out more than that. But I have not.
18:16.54
Rick
Yeah, yeah, and so I'm going to keep digging on this. So. There's like horizontal segmentation. But then there's also vertical segmentation which is like and this is probably the wrong language but like. Ah, every trial who signed up today is not the same and and did nothing is not the same as a free trial who signed up a week ago and has like invited users. Um, do you have like ah stages of free trial. Ah that that like maybe maybe aren't necessarily converting to payment but like are are are.
18:36.66
tylerking
Um, right.
18:45.58
Rick
Are more likely to convert which they take in certain action.
18:46.83
tylerking
Short answer. No um, long answer long ago when we had like a full time data scientist which we never should have had but we did and so we gave him data science work to do ah he built like a lead scoring algorithm I think kind of similar to what you're talking about where it's like.
18:54.17
Rick
And.
19:05.13
tylerking
Yeah, are they basically what you find is if anyone does anything after the first session if well if anyone does anything at all in the first session. They're all immediately much more likely to pay and if they do anything if they come back. A second time they're paying. Ah, it's not that hard to detect. The the reason we threw it all away. He quit. He had all this complicated shit going on and I was like we're not doing anything with that information. Um, what would I do with that if I had that answer.
19:27.37
Rick
We might? yeah yeah I guess like I forget that lead scoring complicated I think part of the the challenge was the complication but like let's say you came up with a simple rule of like 2 plus sessions equals 80% or some like predictable percentage conversion.
19:44.52
tylerking
Um, yeah.
19:46.73
Rick
Regardless of source like or maybe it's 3 sessions I don't know like some number of sessions is like yeah yeah, well what? what? I'm trying to get to is like the what? what? what? the feedback loop you want is you don't want to what like what do you have a thirty day free trial. So.
19:49.30
tylerking
Yeah, and and we have done something simpler like that since then but I still don't know what to do with that and for me like they're going to pay or they're not.
20:02.41
tylerking
Um, yeah.
20:05.76
Rick
Free trials go up today. You have to wait 30 days to see if that was good or not.
20:09.41
tylerking
Yeah, but what actions I agree with and and this is this is how business works Everyone wants to know this answer but when the data scientist left. This was not the only thing there were a lot of reports. He had that I looked at every day I was looking at him I was thinking I was learning things and then he left and all the reports stopped working and I was just like. My actions don't change at all I was taking 0 actions based on what I was learning in those reports like let's say I do know the pipeline's good versus it's bad.
20:36.77
Rick
I See your point like at the end of the day like you don't know what led to the increase of free trials. So it's not like you would go do it again or more of something if you knew that they were but it was good that they were going up is that your point.
20:50.27
tylerking
Yeah, and right we and we do have very good ah roi tracking on our different sources that we pay for so it's like we can tell is Google Adwords working is our retargeting working but I'm just not sure it helps much to be able to predict thirty days in advance. How many new paying users we're going to get.
21:04.37
Rick
I Mean if I were if I were working for you with you and I were focused on growing Net New accounts. Um, what I would want is to decrease the feedback loop of increasing free trials to know whether I like.
21:13.82
tylerking
Ah.
21:21.18
Rick
The the the the free trials I was adding were actually like good like going to lead to actual convert conversions and so I'm waiting thirty days would be really painful.
21:26.60
tylerking
Yeah, got you? Yeah I think the thing that's missing for us right now versus what you just said is there's not a lot that we're doing that I think directly controls that amount of organic signups coming in I mean. Indirectly yes, but it's not like oh we wrote this blog post and that's generating some of these signups like we we didn't do anything to cause it in the first place.
21:49.97
Rick
The yeah yeah, that's fine, but like you still would like like you just said, um pipeline good growth bad like and you hope that pipeline good equals good growth better growth in thirty days or whatever the thing is but like it would be you would feel better if you knew like.
22:07.69
Rick
I think you would feel better if you knew that like the free trial pipeline that you have actually is better than the free pipe pipeline trial pipeline that you had last month or worse because then you would have to wait 30 days to find out if it was actually worse or better.
22:19.53
tylerking
I would feel better that this is maybe like 1 of my learnings from back then the the data scientist days was like data looking at reports makes you feel a certain way. But if it if if it doesn't cause you to act better. It's a distraction. If you worked here and you were like I'm going to go run a bunch of experiments and see if they work then that feedback loop would matter I don't think we're doing anything where that would matter we we are doing a lot of marketing experiments. But they're all ones we can track um, pretty well they're all paid or various partnerships where we can use an affiliate link or that type of thing. Anyway I I hear what you're saying um yeah I hear what you're saying I don't think we would actually make much yet enough use of it if I could snap my fingers and have what you're talking about I'd take it I don't think it's worth investing time into like getting that.
23:11.69
Rick
I agree with you because if it's not gonna change your behavior. It's just a waste of time.
23:17.11
tylerking
Yeah, but I also would love to know how it should change my behavior that that's maybe a whole different discussion. Um leading that though into like so okay, just to recap last week and we already hinted at that this week ah price increase for $10 users going to like all of our our normal price is $15 per month where we have a bunch of legacy users on $10 we're raising them to $15 a month that means a growth mechanism. We've had this whole time is increasing ourpu gradually our average revenue per user is going from $10 to 15 that's going to happen all at once we're going to realize it all at once and we lose that growth and now that we're looking at that we're realizing our growth is actually worse than we thought it was because our users aren't growing that fast. It's just that our arpu was growing which is causing us to refocus on. How do we get our user growth up. At the same time. Our runway is extended because of this price change. We have more time to figure this out. Um, let me pitch you on what I'm thinking here and I'm embarrassed in advance because like if you asked a third grader to run lessening crm this is what they would come up with.
24:24.21
tylerking
Ah, but basically I'm going to take a circuitous path towards getting to the conclusion here. Um for the last year we've been working on product led growth ish you know this but just to recap for anyone who hasn't been following. There's 3 big things. We did one was a redesign which. I would say is a prerequisite for other growth things just like we had a very bad first impression because our product was ugly I didn't expect this necessarily directly lead to growth. Let's ignore that we did that it's done I didn't think that would create a new growth channel per site then there are two things that I thought would create a new growth channel or I shouldn't say that I thought would they were bets that we placed hoping they would. 1 was we added zapier integration as a reminder the argument for why that would be create growth potentially number one a lot of people just ask for it when they're signing up number 2 the the bigger one is like they have their own marketplace and marketing and stuff we're like getting on a marketplace getting backlinks. Ah, maybe people will go on Zapi you're looking for a crm and find us that type of thing. It's a bet I wasn't like confident it would work but it was worth a shot didn't pan out at all. Um, we we have zapier which is great I'm glad we have zapier but it did not create a new growth channel with me so far.
25:39.36
Rick
Um.
25:40.27
tylerking
The second one was the Api and these two are related to to build the zapier integration we needed a better api but we launched this new Api and then went out and tried to find people to partner with us to build integrations with us the hope being a it makes our product better, but that's not the growth part. B if they have customers like yes, we're bigger. The people who are integrating with us. We tend to be bigger than them. That's that's how integrations work right? The smaller company builds the integration normally so we'll send them leads. But maybe they'll send us some too and if we go out and get 20 different integrations each one of those might be a little trickle of leads coming in and that. Could add up to something also did not pan out. Um, we got the integrations we got ah actually a pretty good number of third party integrations and some of them are actually really good. The product got better. We have seen I can't I have never heard an example of someone from one of these other companies coming to us because they saw us there.
26:34.30
tylerking
So we placed 2 growth bets neither worked out that's fine. That's how bet works that's work I'm not being myself up but that that's where we are today any questions about the context I just said so yeah, well do you have thoughts for me before I go on on what I'm thinking.
26:43.93
Rick
Nope What? What's next.
26:59.46
Rick
I Feel like um, these are all okay I feel like everything we talk about are like base hits ah like they're optimizing something that is already sort of working versus like high leverage.
27:08.91
tylerking
Ah.
27:15.45
Rick
Um, home run swings and so like if you really were to look at each of these before you built them the the probability that they were. They're they're incremental if you're being honest versus exponential opportunities and so I I wonder like.
27:18.52
tylerking
Funny.
27:30.30
tylerking
Fair.
27:35.13
Rick
I wish there was like 2 of these and 1 exp. But I wish we had some exponential bets that failed you're scheduling your scheduling like scheduling links like we've talked about a lot of them. Um, but they're complex and they're they they are um.
27:40.46
tylerking
What's what do you have an example I Really you're not going to be able to come up with an exponential example for my business but okay.
27:53.34
tylerking
So.
27:54.62
Rick
But like ah they require lots of new product innovation. Um, and they're less like they're they're they're ah they could waste a lot of energy and time.
28:03.86
tylerking
Is the difference for you between the ones we because like a year ago when we talked I think the api one was more of a stretch I did think Zapier was the best bet Um, in terms of like like why is scheduling links is the reason you're more excited about that because of the viral component.
28:06.85
Rick
The 1
28:20.24
Rick
Um, yeah, it's just something like it's it's it's ah these are like more table stakes. Ah Crm features that also could provide some increased brand awareness and word of mouth. Um, extensions.
28:20.67
tylerking
Okay.
28:36.67
Rick
Ah, whereas like scheduling links is a leap forward. Although it's it's you know it's becoming more of a feature expectation of crms. Ah in your space. Um, so but but like it it at least like. But so maybe it's in the same you know category and I'm not thinking big enough. Still um.
28:42.95
tylerking
Um, yeah.
28:51.86
tylerking
Well or I don't know if it's big. It's you're saying it's a base hit I think it's an out I think we struck out with these which again I don't regret doing it. They could have been.
29:04.80
Rick
No I'm not saying I'm not saying that they were base hits I'm saying that they never had the chance to be home runs and so um I wish that we had failed at I Wish we had struck out on a on a a home run here.
29:09.63
tylerking
Okay.
29:19.30
tylerking
Gotcha fair enough. Um I Still like so one of the next features coming up is it's not appointment scheduling but forms has that viral component to it. Um, and like the hope is that the reason it's forms.
29:19.39
Rick
And like and I don't see I don't think we tried.
29:33.78
tylerking
Rather than of ah appointment scheduling is it's much easier to build and the hope is we can I think it could be another you know, strike out potentially or it could be a home run but like I want to see does this viral thing actually work at all before investing major major in it.
29:48.64
Rick
And I just want to just remind everyone. We're talking about product led growth opportunities. This is not like the other side of the of the business which is like let's actually just go focus on increasing ah like top of funnel um without products help just like good old-fashioned demandion.
30:02.60
tylerking
Um, right? Yeah, would well yeah, eunice is doing that and Alex is doing that but it is intentional that I think like the Dna of the company is long long term we have to have ah.
30:06.72
Rick
Um, which is is is intentional on your part like that is not something.
30:20.30
tylerking
The core pillar here needs to be product and the other types of growth are an important part of it but they're supplementing the core engine which is based on product. That's that's my hypothesis here. Um, which I think is probably mostly true for like self serve low cost sass. Um.
30:31.10
Rick
Yep.
30:38.11
tylerking
That it's normally going to be more product focused and then as you get more enter Enterprisey You can have more of a like no this is a sales driven or a marketing driven type approach I think sun right? Okay so I totally agree with the the viral thing I Still definitely want to experiment with that. Um.
30:46.90
Rick
Um.
30:56.14
tylerking
It's funny. You said that the things we did are incremental though because a part of me wants to go to an even more incremental thing and let me explain what I mean by that when I look so I had a very sobering moment the other like last week ah the developer who built zapier was like logged into their tools and they have like a number of how many people are using zapier. Um, and it's not just how many people have it. We know how many people haven't enabled on our ends. How many people have an active zap that runs over I don't know a week or a month or whatever 50.
31:26.34
Rick
Um, that's good. Yeah, but that's I means it's valuable. That means you have like some level of value like what if it was zero I'd be a lot more concerned than fifty fifty means like it's just not marketed. Well.
31:27.26
tylerking
No, that's not good. We have 26000 users
31:32.96
tylerking
What What do you mean.
31:42.62
tylerking
We've added thousands of users since we built it and it's like a part of the onboarding and stuff I I think the realities are customers don't need it. Um, or it's too complicated like so 150 people started setting it up 50 people.
31:47.77
Rick
Are you? no I see your point. Okay.
31:59.72
tylerking
Have an active zap um pretty high attrition rate there I don't know I don't know what's normal. Maybe maybe that is good but that the thing what's so funny. Ah, the serum coaches and Alex who does sales for us Alex set ah estimates nine out of 10 of his conversations. They talk about zapier.
32:02.13
Rick
That seems pretty good.
32:14.59
Rick
Yeah, but but but he's talking but he's also talking So so this is another segmentation question of the people who implemented zapier like how many of them are in like multi-user accounts like what's the breakdown. Yeah.
32:16.66
tylerking
Then nobody goes on and uses it.
32:27.27
tylerking
I don't know the answer to that. But I mean 50 is such a pathetically small number like it's so so it's it's it's barely drop in the bucket.
32:32.44
Rick
Yeah I can tell you why I would ask during the sales process. It's not necessarily about my ability to use it today. It's about my ability to use it in the future when I need it and I may never use its insurance if I I can't I can't get locked into a crm and not be able to to scale because.
32:44.60
tylerking
Um, yeah, that's fair.
32:52.36
Rick
Here My graions are pan the ass. So I asked that question during the sales process. So whether they're using it is not actually and indicative of whether it's helping your sales.
33:00.23
tylerking
Ah, that's fair and my point here isn't necessarily that it's not helping our sales. Um and we actually just exactly what you just said we had that conversation today where we were like all these people have this checklist of things that they don't need right now but they want in the future and they'll probably never use it but they still so I totally agree with you there. But.
33:05.15
Rick
Are.
33:15.74
tylerking
Ah, part of my point here. So there. There's zapier and then there's the api I mean practically nobody like the Api is not even really meant to be used by our typical customer I would guess across our 26000 users fewer than 1% are even potentially using zapier or the api combined so we just had some swinging for base hits. But the thing is the strike out is. Note nothing like the strikeouts are real out because the fallback should be well at least we made the product better but we made the product better in ways that barely impact any of our real customers. Um I don't exactly regret it. Both of those are features that are just like we we need to have zapier integration I don't act like I regret it. But I've been looking at it. Recently through a lens of are there any could we take any swings here where if it even if it doesn't pan out as much as we want or let me phrase this differently. What's a feature that 70% of our customers would use instead of 0.0 1% and what occurred to me is we haven't built features like that in a long ass time and I'm kind of embarrassed by that.
34:20.60
Rick
Do you I mean that's a really hard thing to do is is take 70 very different small business 70% of your customers and try to find 1 thing that you haven't built already like is that possible.
34:33.21
tylerking
Well if you if you're thinking it has to like solve a new business problem for them probably not but like let me give you an example? Well let let me give an example when we're not going to build for reasons I've hashed hashed out in previous episodes for a long time. We're going to do appointment ah event invites where if you create an event on the calendar.
34:46.52
Rick
And.
34:49.96
tylerking
Right now we don't actually send an email to anyone inviting them to it. Everyone who uses the calendar would see that like they'd create the event and it would pop up and be like do you want to send the invite. Maybe they would choose not to but they would at least be like wow less knowing serum added something I don't think any of our customers even know whatsapppier is or care. So so let me give another example we have not touched our notes feature which is like the core feature of any serum, especially ours like you create a contact and then you enter a note about them. We've not touched this experience in 10 years There's no formatting. You can't do bullet list. You can't do bold or italics. There's there's a million things that could be better about it. It's literally just a plain text field and you hit a button and submit it would it solve any new problems for our customers to make that text box better. No, but every single one of our customers like 90% of our customers would notice it and be impacted by it and I'm trying to ask myself like. Is there something there or is that just another you build it people smile and then move on.
35:49.76
Rick
I mean I would build that I would I didn't realize that I mean that seems like do it.
35:56.85
tylerking
Well yeah, but I mean it's priorities right? Like if you'd said that a year ago I'd say okay we won't build zapier and we'll do that instead. Um I'm starting to think back to the what a third grader would do. They'd be like what do all your customers want go build that.
36:10.86
Rick
Yeah, but what do they want? Do they want for better formatting in notes.
36:15.60
tylerking
Ah, we yeah people ask for that all the time they they want task improvements we we have like a task feature but it's anyone listening to this if you actually tried it out. You would be like you should be ashamed of calling that tasks. You can't reorder them. You can barely categorize them There's no recurring tasks. There's like I have a list of 20 things that gets asked every single day about improving tasks. We've we've got a list of a hundred things that get asked once a week um some some more than others I could prioritize within that hundred. But yeah, we have no shortage of ideas there.
36:44.63
Rick
Um, what would like I don't know how what would be interesting to test if he took like some period of time like ninety days and you said we're only going to work on things that people ask for and you just see what it does to your growth.
36:57.20
tylerking
So I like this basic idea I think realistically it doesn't have a an impact in ninety days probably though this I don't think this is the type of thing that just immediately turns the ship around.
37:12.40
Rick
I Don't know I feel like ah this is a type of stuff that leads to like people talking.
37:15.49
tylerking
Yeah, potentially. But even I mean it's such a slow burn like people don't even pick c rms in ninety days right even if they start talking about it. That's there's still probably lot. So the reason I'm I'm kind of making a lot of excuses here and and sorry if I'm signing defensive or whatever.
37:25.71
Rick
Now.
37:33.67
tylerking
I think what I want to do is place a bigger bet than ninety days and just be like yeah something like that this goes against all marketing advice in the indie hacker world right? Everyone I think I've been overly influenced by all the advice that's like.
37:35.27
Rick
Oh let's do this for the next the rest of the the next year
37:51.67
tylerking
It should be directly growth related. It should create a new Channel Yada yada.
37:57.20
Rick
I mean I I would love I mean I think this is I think you should do this I would love to just like talk more about like top of funnel um activities and like like yeah.
38:06.43
tylerking
Um, okay I let's do that? um.
38:11.55
Rick
I Know that you don't well like I think yes, you should do This should be This should be your product strategy for some period time and then you should also like double down on some growth initiatives that like leverage the equity that you have with your customers. Um and leverage the ah this type of approach as reinforcement of why they should move forward with you. Um, okay.
38:30.69
tylerking
I Love that I have that topic on my list here. How can we market to our current customers. Um, because you you mentioned that a couple episodes ago but let me just put a pin in this real quick if this works or whether this works or not I think the bet that we're placing is.
38:35.39
Rick
Are.
38:47.50
tylerking
You've probably heard I know you don't follow like indie hacker type Twitter and indie hackers.com and stuff like that as much as I do but you've probably heard a lot of people say build it and they will come doesn't work because there's a million indie hackers out there who are software engineers that are like I'm going to build this thing I'm going to add every feature and then they sit there and nobody uses it. You familiar with this kind of narrative in this world.
39:06.26
Rick
Yeah, and it's right, most of the time especially when you're you're going from 0 to 1
39:10.96
tylerking
Exactly I think this is what the bet I'm placing here if we end up doing this is build it and they will come maybe works if you have 10000 customers already.
39:22.30
Rick
Improve it and they will talk and other people will come.
39:25.30
tylerking
Sure? But like yeah I I think maybe the world is simpler than I was giving it credit for and when people buy crms. They actually look at features and they actually look at product quality and they buy the best crm they can find and five years ago we were. Compare it to our competitors quite a bit better than we are now because we spent the last five years honestly not shipping a lot of stuff that actual customers are asking for.
39:53.36
Rick
Yeah, that that's logical to me it yes and I do think that there is a word of mouth thing that happens when you provide ah when someone types in and says I want this feature and it gets delivered to them.
39:55.31
tylerking
Okay.
40:07.26
Rick
Within some period of time where they remember that they asked for it and they believe that their ask contributed to it being done. They go out of their way to talk about it and that's that exceptional remarkable experience type thing. Um, and I think your customer service provides that. But for the people who aren't interacting with customer service. Um, how are you affecting them with remarkable experience. Um, that is very powerful and that's that is the big bet with leg uphelt too like that I just had to be okay with like the worst as long as someone asked me like what would if you what happens if you miss your growth numbers this year for leg up health and I and I told him I said it. It would hitting our growth numbers makes it really easy to keep going because it it transitions the business into a growth business versus the survival business. Um, but the truth of the matter is if we if if j d and I just show up for 10 years we have a three four million dollars business simply because what we do creates remarkable experiences that naturally leads to people talking about us which seems to have some like larger multiplying effect than just like us like um, replacing our lost customers and so eventually we we start like growing faster than we can like. Imagine um, anyway, um, my point here is that like if if you feel like you've taken your pedal off the gas on that effect getting that pedal pressed again is probably your number one priority. Um, and it sounds like you feel that way.
41:34.50
tylerking
I Do I want to argue against myself so that a year from now when it turns out it didn't work I can be like see I saw it coming. Um I know I do and I what I especially like about it is remember I said earlier with with zapier and the api The strikeout was a real strikeout with with all of this other stuff.
41:40.29
Rick
Yeah.
41:52.92
tylerking
Even if it has no impact on growth. It's like well the product got a lot better I I mean it did with zapier too. But like if if all of our customers are getting the things they're asking for that's got a that's better than nothing.
42:03.54
Rick
The alternative way of saying it is like a significant number of customers are not getting what they're asking for I Yeah yeah.
42:08.99
tylerking
So Here's and that leads to the counter argument though and sorry to belabor this if I'm if if I'm in your shoes and I want to tell myself I'm an idiot right Now. What I'd say is less knowing serum is already has the highest user satisfaction customer satisfaction of any cm on G Two we get almost all 5 star 5 out of 5 reviews. Our customers. Love Us. That's not the problem and I don't really know how to argue against that.
42:37.95
Rick
I Believe that your reviews I haven't looked through them. But my guess is if you read through the reviews especially recent reviews and compared them to past reviews. There's probably a difference between them. Um, my guess is it's mostly reviewing customer service versus software and there's probably I don't I'm just making assumptions here I don't know. But there's probably some information in the reviews. The frequency of the reviews. The recency of the reviews that would tell you that something may have changed if you have this gut feeling that you've changed your behavior on how you are building and developing the service product. It's probably reflected in the reviews.
43:06.11
tylerking
Um, ah.
43:14.93
Rick
Ah, if you if you were to analyze it I don't know if that's true or not um, but but it's possible.
43:19.99
tylerking
It's possible I read every single forget g two reviews we do like Mps surveys and stuff I read every single one of them I haven't noticed a pattern. But yeah, we haven't like gone too deep into it like the scores are not going down. Um, but maybe the the qualitative feedback. Um.
43:37.69
tylerking
But yeah I mean the reality. It's not even that we change our priorities. We just I spent so long trying to figure out how to build a dev team and run a company where I'm not the only developer between the years 2014 and 2019 we basically didn't ship anything and since then we've been building our team up anyway. Yeah I just think like we can actually ship stuff in a way that we never could before. I want to go see what it's like to go back to the old days of let's just try and make the product. Good.
44:01.29
Rick
I feel like you're just going through this getting back to basics transition. Um, and I don't think you can overcorrect on that Tyler and I think that's what you're trying to avoid like if you overcorrect on it. It will become apparent and you will like take off the gas so I would just slam on the gas here. Yeah like.
44:04.65
tylerking
Um, yeah.
44:15.14
tylerking
Just go for it. Okay I love it I Think that's and you know what the final thought. Great news here forms The thing that I want to build for virality and that's also what excites you.
44:18.88
Rick
Ah, the faster you get get back to basics the the the quicker you can get back to like not basics.
44:30.68
tylerking
1 of our most requested features so I can have my cake and eat it two here I don't have to do one or the other cool all right I took up a lot of time. Ah.
44:32.24
Rick
There you go there, you go? Yeah I love that I That's fun. It actually made me like I The the I spent a lot of time thinking about this because like I'm in a different phase but I'm thinking about the same thing. It's like ah like.
44:50.58
Rick
Are we are we? But when we spend an hour on the phone with like the 1% of customers who are having the worst possible experience like their kid just had a emergency. Ah you know, ah like a room visit out of the country at a sporting event. Um, and they're wondering if their health insurance is going to cover it. Like it's not making us money right? but it is the thing that defines us, um, and and if if we die doing that thing like I have to be okay with it because if that is the thing that if we do consistently for 10 years is going to be the reason ultimately that we become a very profitable business. It's not going to be because.
45:09.84
tylerking
Yeah, yeah.
45:28.47
Rick
we we were we rushed off the call and we ah tried to make you 10 extra cold calls that day.
45:35.93
tylerking
I love that it goes against everything that the zeitgeist is talking about but I think and it's again, it's what a third grader would say and ah, there's some truth in that simplicity I think or I hope we'll find out.
45:47.53
Rick
Yep yeah I mean but like I think you have to be willing I think part of this is like back to basic principles like I'm going to live by my principles and I'm going to die by my principles and that's okay.
45:54.41
tylerking
Yeah.
46:01.77
tylerking
I like the yeah that this is the bigger. A company gets um, it's when when we were 3 people I was very comfortable being like yeah if someone goes wrong and we go out of business who cares, you know it's it's a lot harder to talk about if we die doing this thing. It's okay, but.
46:18.53
tylerking
That has to be the attitude I think you're right I need that.
46:19.93
Rick
That that that's the theme about all the things you're talking about is like hey like we we we got big and and we tried to do it a different way and it's not and it it doesn't feel right and it doesn't look like it's working. So why are we doing it this way.
46:27.14
tylerking
Um, yeah.
46:33.20
tylerking
Yeah, and it it feels like it can't be as simple as what I'm saying that that's I think that's the guilt that's causing me to second guess this at all is just like really like.
46:43.24
Rick
Um, me.
46:45.50
tylerking
Do the thing I want to do that I've been wanting to do for the last decade that's it That's what I'm supposed to be doing here.
46:51.18
Rick
I mean I don't know. Ah I I think like um, yeah, have you ever read that book. Um, what's the guy he had a a company called Cd baby where he like basically yeah sivers strick sivers. Um, he wrote he wrote who wrote a book about this basically and.
47:00.64
tylerking
Oh yeah, Darren Sivers cyers dereks are yeah.
47:09.85
Rick
His advice like you know, granted he is basically a writer these days and like had a a big business hit but you know hit where he made like an a minute ton of money. Um, yeah, but but like most of the the things he talks about like.
47:17.81
tylerking
Yeah, even though the business failed like I don't want to learn too many lessons from him because it was a disaster but.
47:26.93
Rick
Are this type of thing which is like it's just it is simple actually.
47:28.46
tylerking
Yeah, yeah, I like it I'm ah the thing that I'm most that the the price increase is going to be the correct thing to do and the number 1 reason why I'm so confident about that is we can spend the next year or more than a year. Just going all in on this and not even questioning it and ah we have that kind of runway to place that bet which before the price change I was said well I don't have the pay I can't be patient enough to do it that way and now we can so thanks for talking through that with me that was helpful. Um. I don't know if you've got to get going here but anything else on your list. You want to discuss.
48:06.94
Rick
I just have 1 more thing and that I like your advice on. Um, so like this is one of those things where it's like if I didn't have a podcast I I probably would slack you and then like it would take us. Um, um, ah a couple days to get like to a point on this. So um, one thing we're going to do is.
48:19.40
tylerking
With.
48:23.97
Rick
Actually haven't sent an update to the people who care about Legup Health and have helped us and over a year um and so there's like I don't know 500 people that I think have interacted with us either as a client or they become a former client or they considered us and we weren't the right fit or they're ah a former investor or. Advisor or or just friend local friend like clockworkt cafe ben is an example of this I hope that's okay that I'm mentioning him. Um, and if you're in park city. Go check out clockworkt cafe shout out Ben the best ask? Yes, it is but um.
48:46.85
tylerking
Here or 50 best breakfast brio on earth made on a George Foreing grill
49:02.70
Rick
You know there's all these people who I think would be interested in hearing how we are doing and not be annoyed by like an update and then also I want to ask people to help us. Um and and and and and help other people by helping us. Um and so I've crafted. We've crafted an email. Um and I wanted to ask you like. I'm going to a jden are Goingnna send it from us to a large group of people. It'll be personalized like high certain certain person. We'll make sure it's like not spammy. Um I'll send them 1 by one if I have to um, but I we wanted to know if you wanted to sign your name 2 to that. Um, after you reviewed it it of course.
49:21.18
tylerking
Um, you have.
49:36.33
tylerking
Yeah, um, yeah I mean I'm I obviously less annoying is my main thing but I'm on the team. So yeah, put my name on there. Well yeah yeah I mean maybe I'll read it.
49:43.68
Rick
Okay, are you sure you better, you better read the copy. Ah, it's in slack if you want to take a look at it.
49:49.72
tylerking
Yeah, yeah I mean I feel comfortable having my name. Ah as when when we're speaking as we I'm one of the we. Um.
49:55.91
Rick
Cool that would be great. Um and like in it we will not send it to anyone who's like not connected ah first degree to 1 of us. Um, but this is just like it's basically like hey big announcement. We've actually hit our goal our first goal so this is the big thing I want to end on.
50:09.82
tylerking
Her.
50:11.79
Rick
The big milestone we've we've already hit this year I didn't even realize it is. We've served over 400 you dones that was our initial milestone goal and we we always get starting in the company that was my initial like milestone goal and we've hit it and I and I didn't even realize it um but because we track clients and customers now.
50:17.93
tylerking
Initial as of like starting the company or this year okay wow
50:30.93
Rick
And we've had turnover we've we've surpassed the 400 utons through families because their average like we have over hundred customers now our average household size is greater than two it's between 2 and 3 and then you add in customers employers as well. Um, it is pretty amazing. So.
50:35.60
tylerking
Um.
50:48.76
tylerking
That's awesome Congrats man.
50:50.17
Rick
Yeah, um, so ah, basically what we've said is we're we're announcing that we've hit that and that we've expanded our services so that we can serve any Utah small business owner regardless of their health insurance approach which is a unique offering um and you know basically we've hit our goal and um, we would love to.
51:01.46
tylerking
Um, yeah.
51:06.85
Rick
You know this is the 1 time a year where people are actually interested in talking about health insurance except not really um, but you know now's the time if you have someone in your network that we can help to to tell them about this? Yeah yeah, go for it I got to go in 2 minutes
51:17.66
tylerking
Ah, do you have time to riff on this a little bit or are you um, a thing that's okay, a thing that some founders do that I really like and I'm on one of these email lists is they basically write like kind of like a board of directors. Update email every month or however, often. But they it's a bootstrap company. They don't have a board of directors but they send it out and like I get this for 1 other company and like I'm just like a thousand times more likely to do what I can to help that company because a it feels cool to kind of be in the inner. Circle and you know it has like questions can you help with this and that and I know you've already talked a lot about how do we? How do we get our network to refer more and all that kind of stuff it sounds like what you're saying is almost the same thing but have you thought about making it more of like an inside circle type of a recurring thing.
52:05.95
Rick
Yes, I just don't have the time to put the the ah the thoughtfulness into it and I I just I don't know that ah our stage of business has ah in the pace at which we're moving um is interesting enough to do it more than once a year currently um, and so I think once a year would be our cadence um, ah for something like that. But it's not that's probably not as frequent enough to be like oh I'm really inside this thing.
52:28.73
tylerking
Yeah, okay, yeah, the one I get there are a lot of asks like hey we need a marketing consultant who's good at this anyone know anyone or you know like a bunch of stuff beyond just can you refer me to a Utah small business and hopefully you know there comes a point where legup health is doing enough different things that that. Becomes more necessary. Yeah okay cool I like it. That's awesome.
52:51.60
Rick
Cool. Well thank you? Um, anything else you want chat about before I jump all right if you'd like to review past topics and show notes visit startup to last dot com see you next week
52:56.60
tylerking
I've got more topics but I'll save him for next time.
53:02.80
tylerking
See ya.