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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.
00:00.41
Rick
What's up this week, Tyler?
00:02.90
tylerking
Hello, hello, hello. I'm coming to you from a Mac. I was scrambling to get all my, I forgot we were recording this today and I'm at, uh, you know, Thursday's and in office day. So I have my whole workstation at home set up, but I had to get a whole new docking station and all that. And I like right before our podcast, I was like scrambling to plug everything in, make sure my webcam and my micro working, and but I think it's all, I think it's all working.
00:25.69
Rick
That's awesome. Yeah.
00:26.70
tylerking
Yeah.
00:27.02
Rick
Um, well, I, you know, I, I don't, I think I, I may have mentioned this, but I was on X, uh, which that's what I'm calling it now, not Twitter. Um, I was on X and, um, I was, uh, I clicked like the thing that like is for you training stories. And I had no expectation of this, but I saw this like article summary by, I think they call it grok of, um, you know, this like people hating on Mac. Uh, and it was, I clicked on it and I was like, Tyler, I got to send this to Tyler and it was Tyler. but You went viral.
00:57.39
tylerking
this This is by far my highest engagement tweet ever.
01:02.29
Rick
but Tell it, walk us through that experience.
01:04.71
tylerking
Yeah. So I have, okay. I want to say like, I think I'm at a point right now with my Mac where it's net as good as my windows computer. And I, it will get better, right? I'm still getting used to it and getting it configured. There are a million things that annoy me about it. And also I wouldn't have switched to it if I didn't think it was going to be better. And I'm not some kind of weird windows fan boy. Like I wouldn't have bought a Mac if that were the case. Um, but. There's one thing in particular that I think is just absolutely crazy about a Mac, which is when you, so you like, if you want to install something, not from the app store, you like download it. You double click on the file to open it. And each one is slightly different, but it like pops open a little window that shows the icon. So in the, the, the tweet I did was Figma. And then it shows a picture of the application folder and you have to drag it.
01:49.66
tylerking
drag the icon into the folder, which is just such a bizarre user. There's no instructions. Once you drag it in, there's no confirmation that anything happened. You're just supposed to know this. um I'm not saying that.
02:02.26
Rick
what What does that mean that it like when you drag it in?
02:03.19
tylerking
Yeah, sorry.
02:05.89
Rick
Does that just mean it's installed?
02:07.64
tylerking
So people who know how Macs work understand this, but it's not intuitive at all. So the way installing something on a Mac is works is there's an applications folder and every program is just like a bunch of files in a folder and you put it in the applications folder and it's installed. Which actually is great. This is much, much better than like the Windows Registry and stuff like that. I love the way installation works, but the flow for saying you downloaded this file, how like there could just be a button. There could be a button. Why are you making me drag this thing into this folder? Why aren't you saying at the end of that?
02:38.93
tylerking
It worked. Or like do you want to open the program? like Of course, I want to open the program I just installed. Why is that not offered to me? um So overall, I like the way application the application folder works. But just the UI for installing it, it's fucking crazy to me. And so I just tweeted a throwaway like, this is not how this should work. And this upset people. People did not like this.
03:03.53
Rick
Did you get DMs?
03:03.87
tylerking
um I didn't get any DMs, thankfully, but I got a lot of, I should say, a couple people who listened to this, like there were some thoughtful disagreement with me and I actually learned a little bit more about how applications and stuff work, which, so I'm not like saying every single person who disagreed with me is an asshole, but like Every i've I've only had like three or four tweets ever that made it outside like the bootstrapper circle. um Every time that happens, what a terrible experience like these people who don't know who I am and think I'm an idiot and like they come in and they're they're just really nasty like, oh, you've been brainwashed by windows, you idiot. And it's like,
03:42.15
tylerking
ah shut up. So anyway, I had to mute it immediately. I got over 2000 comment like replies to it and 1000 retweets. And um I understand what, for me, Twitter is still a relatively pleasant place. But people who are like, have 50,000 followers, always talk about how toxic it is. And like, you see that toxicity if you ever break outside your little bubble.
04:01.71
Rick
Interesting.
04:03.24
tylerking
Yeah.
04:03.31
Rick
well so Do you want to go viral again? or do you like
04:05.78
tylerking
No, oh abs I actually had, because I'm you know i'm a hater. like Literally, the first line of my Twitter bio is professional hater. I love like criticizing things. I love that negative energy. And so I was like, I have a note document with 50 things that I think are stupid about a Mac. um And I was just like, and I actually think it's like user interface stuff. I think it's quasi-related to product design. And so I was like, maybe I'll just share this stuff. There is absolutely no way I'm sharing anything else about this.
04:32.49
Rick
You should absolutely share why how 50 ways max could get less annoying. That's totally on brand.
04:39.67
tylerking
Yeah, but i I get how this is terrible for your mental health if you actually have strangers engaging with it. Even the people who liked it, then a bunch of people came in and supported me and they were idiots too. like They're just weird Windows fanboys. like Nobody was actually trying to have a conversation about how user interface design should work.
05:00.33
tylerking
Anyway, it was fun. It was fun for 30 minutes and then I muted it and we were like, someone else replied to mine and then he got like 50 replies to his and he DM'd me and was like, what the fuck, dude?
05:13.67
tylerking
ah and and And this is like nothing compared to actual, like, viral, right? few When people get 100,000 replies or whatever.
05:18.08
Rick
Yeah, yeah. Oh my God.
05:20.99
tylerking
Anyway, that's fun. But I am liking my Mac. i Again, 50 things that are so stupid, it's unbelievable to me. Because all this stuff they that's bad about it to me is easy. Windows is bad at hard stuff. Like, it's just slow. Like, that seems like a hard problem to solve. All this stuff with Mac, it's like, just, this is a solved problem. You just haven't bothered. Come on. But I am liking it.
05:45.03
Rick
That's awesome. i was so I was surprised. like i've I've tried to do the Mac a couple times, um and it's never worked out for me. I've always switched back.
05:52.63
tylerking
what What part of it didn did did you not like?
05:55.50
Rick
um Gaming was one. um Always it was really important to me.
05:58.15
tylerking
Oh, sure. I think that's still the... I don't game on my computer, but that's still a thing.
06:00.42
Rick
Yeah. Yeah. um So like that was an historical roadblock that I didn't anticipate. and then um Uh, I really ah struggled at the time, um, with not being, not, not the keyboard shortcuts and ah using the thumb versus the pinky. And I think they've solved that sense with keyboard remapping. Um, and maybe they could at that.
06:22.66
tylerking
Well, I don't think they solved it. but they They kind of did. But like one of the all my friends who use Max were like, oh, yeah, you have to install this utility. I have like a folder of like 10 utilities I installed to like change how window management works, change how key mapping works.
06:34.20
Rick
Um,
06:37.54
tylerking
The mouse scroll, I think, is kind of bad. um So it is funny, like. for this thing that's supposed to be like, oh, it just works. With Windows, you install, it just, it really does, I mean, it it works poorly, but it does, you don't have to like install add-ons to it. Everyone I know who's a heavy Mac user is like, oh, it you would never use a Mac without, ah like, rectangle is the window management thing everyone uses. There's like five or 10 of these, anyway.
06:59.58
Rick
Yeah. Yeah. ah Well, do you, um, I guess the question for you that I have, that's probably the most important question is, are you finding that like the snappiness and the, and the performance for how you want to use a computer in terms of like but beginning of task to end of task is faster in any way, or is it at least the same as windows?
07:18.80
tylerking
I think the like the literal like hardware and software performance is way better. Now, it's a brand new computer, so maybe that'll get worse over time. And I don't even have my dev environment set up, which is like the most demanding thing I do. But just little things like, do you ever use the, so on on Windows, like the swipe, four finger swipe left or right to switch between desktops?
07:30.07
Rick
Yep.
07:37.77
tylerking
It's the exact same thing on a Mac. It just is so much smoother on a Mac. like And and you I kind of went into this thinking it wouldn't matter.
07:42.02
Rick
Yeah.
07:45.20
tylerking
It really matters. like It feels faster, even if it's not really.
07:49.64
Rick
Yeah.
07:50.00
tylerking
In terms of am I more productive like getting the hot keys and like all that? No, i'm i'm not I'm definitely not there yet. it's It takes me longer to do stuff, but not not like meaningfully.
07:58.36
Rick
the have you Have you made it far enough where you don't think you'll turn back?
08:03.39
tylerking
Yeah, I'm pretty good.
08:06.29
tylerking
again The only thing I haven't really done is get my dev environment set up. And that's like the main thing that Macs are supposedly way, way better for. So I would be shocked if that's some kind of deal breaker. um So I think I'm pretty much ah committed. I am still figuring out what my workflow is going to be. like i'm One of the things I find frustrating about it, there's like three different modes you can be in. And I'm using stage manager, which I ah bet a bunch of our listeners are going to roll their eyes because I think this is like the like boomer version of using a Mac. but Like I have stage manager enabled instead of screen, if a full screen instead of their default mode.
08:39.99
tylerking
I'm still trying to figure out like what mode I want to work in, but yes, I'm committed.
08:43.37
Rick
It's funny. Yup. Yup. You're, you're there. Shoot. Now, like you were my only friend to the only person I know who uses a PC still. So I'm um yo yeah.
08:53.18
tylerking
Oh, really? I work with a bunch of people who do.
08:55.99
Rick
Yeah. Well, you probably have influenced that.
08:59.47
tylerking
I think I kind of have, but I mean, a bunch of people came in. i'm i'm I wonder if there's, we hire a certain type of person. I've been surprised by how many people use windows at the office. It's not the majority, but it's like 40% or something.
09:14.28
tylerking
But.
09:14.26
Rick
um Well, I don't and i like like this is an incentive for me to switch just because you're the only person I talk to about this stuff. And most of the like advancements I've made technologically in my adult life has been have have been influenced by you in some way.
09:31.56
tylerking
But you play games. Even even my my biggest Mac friends have a PC.
09:32.94
Rick
Yeah, but I've got multiple computers now.
09:35.49
tylerking
Oh, you do. Okay.
09:36.24
Rick
Yeah, I've got like the Alienware for that now.
09:36.77
tylerking
You got to have a gaming PC. Gotcha.
09:40.37
Rick
But um I don't mean to say I play anymore with kids anymore.
09:40.81
tylerking
What a poser.
09:43.79
Rick
The last time I played a...
09:44.37
tylerking
I've been a console person forever.
09:46.41
Rick
Well, I love console too, but there's only so much you can do. like the The mouse and keyboard is advantageous, first person cheaters.
09:55.61
tylerking
Yeah, if you if you're competitive, I just may ah this, I think a big difference between you and me. I go into these games and I'm just like, I'm not expecting to win. I'm i'm just I'm going to survive as long as I can before someone, you know, in South Korea kills me and.
10:03.44
Rick
ah yeah
10:10.78
tylerking
Do you remember always playing Call of Duty back in the day? and we you were you So to the listener out there, Rick is amazing at Call of Duty by American standards. But if you play late enough, the South Koreans wake up and they absolutely fucking destroy Rick. It's hilarious.
10:27.05
Rick
I've also, you know, at at the time I might have been a little bit less more inebriated at that point too. So there's two, there are two factors working against me.
10:32.09
tylerking
That's true. You get worse and they get better.
10:34.43
Rick
yeah
10:35.91
tylerking
ah All right. Anyway, what's going on with you?
10:40.36
Rick
Um, well, we you know, I, I, I had said a sort of ah context is two months ago, I had a, um, a meeting with my mastermind group. Um, I took, made a commitment to the group that for two months at leg up health, I would just try to grow. the business faster. And I'm like, this is the first day after the two months have ended. And I can honestly say that my mental health is worse as a result of this.
11:03.97
tylerking
Mm hmm.
11:07.86
Rick
Um, I don't, it did not like actually helped me feel good about leg up health. We grew a lot, but I think we would have grown anyway. Um, and it's one of those things that's like, I, I don't think I want to do it again. Um,
11:21.60
tylerking
So what what is it just that you were working harder and didn't have as much time to decompress? Like, why is your mental health worse, do you think?
11:27.68
Rick
i actually was I actually think I worked to less. I think I worried more.
11:32.01
tylerking
Hmm.
11:32.48
Rick
um And given the so significantly less small amount of time I have to invest in leg up help with all the other things going on ah right now at this point in my life, it it actually reduced the impact I had on the business for the second half of the of the period. um i think and I believe that if I had just continued down the path that ah that I was going, my impact on the business would have been been greater.
11:57.75
tylerking
What do you think?
11:57.80
Rick
lot for longer term impact?
12:00.15
tylerking
Because you would have done different stuff or just because you would have been able to stay more engaged due to being mentally healthier?
12:07.01
Rick
I both. um i think I think I would have stayed focused on like building the machine um instead of trying to get some quick winners. um And then I would have ah worried a lot less about whether I was being successful or not.
12:21.75
tylerking
Yeah.
12:22.23
Rick
And I can't explain it other than I've tried to do things that I don't really enjoy doing.
12:27.18
tylerking
Yeah, there I mean, there's this difficult trade off anytime you're starting a business, right, which is. Worrying is generally not a constructive thing to do. And also, you do need something to create urgency. and You're maybe in a slightly different situation where there is a full-time person working on the business that's not you. So maybe maybe you don't need the urgency or whatever. But like when I think back to 2009, and it's just me and Bracken trying to start listening to CRM, it's like you you don't want to not worry, but you want to worry constructively.
12:51.92
Rick
Mm
12:57.87
tylerking
right it's It's a difficult balance.
12:58.12
Rick
hmm. Yep, yep. And I think ah the the short term, I think that the goal made me too short term focused for minimal like sort of return on that short term focus and like ah for ah for the business and very negative return from an emotional perspective.
13:15.59
tylerking
Mhm.
13:15.56
Rick
um And so and I'm not going to do it again.
13:18.66
tylerking
Okay.
13:19.51
Rick
That's my takeaway and feel free to challenge me on this.
13:20.60
tylerking
Lesson un learned.
13:21.81
Rick
um But i I definitely like am more committed to just like, letting JD work on things that he likes to work on, letting, and then me letting myself work on the things that I want to work on and have that, you know, even if it's not like immediate impact, I know that the things that I want to work on are long-term impact impactful, um, even even medium term.
13:42.21
tylerking
Uh-huh.
13:42.70
Rick
And so I'm just going to work on those things.
13:45.14
tylerking
Have you reflected at all on like when that conversation was starting of should should should we do this like sprint thing? One of the discussions was like if we try it and it doesn't go very well, like option one option is just to go back to how things were. But the default steady state still has a pretty good sense of urgency.
14:00.14
Rick
Hehe.
14:03.45
tylerking
right It's still like this isn't quite default alive right now in the sense that JD is not getting paid enough that he would stay forever. But a different move is pull back a lot more and say, you know what? Most of our sales are going to come during open enrollment. Let's just like do less work during the rest of the year. The whole business will move slower, but we'll all have way more time. Well, at least you two would have way more time to like just chill out. Have you put any thought into that?
14:29.35
Rick
Yeah, so um what's interesting is one of the anxieties I had when when I was ah committed making this commitment to two months of of growth um was, um are we doing everything we can to grow outside of open enrollment? We know we can grow in open enrollment. We know we can basically double the business every year in open enrollment. But like that just feels so hit or miss. And ah is that really the business that we have? And are we okay with that? um And the the funny thing is, is we actually grew a ton during this two month period. It just wasn't because of me.
15:02.02
tylerking
Oh, like it would have happened anyway, you think?
15:02.51
Rick
ah it It would have happened anyway because of what we were doing before ah we we made the push.
15:07.49
tylerking
Hmm.
15:08.57
Rick
um and so we actually ended up growing like We probably will grow the business. um August will be an interesting month, but I think most of the revenue from this growth period will hit in September. ah But I think we're probably going to grow the business somewhere between 30% and 50% of revenue um outside of open enrollment, which is incredible.
15:25.61
tylerking
Wow.
15:28.55
Rick
um But like if I had just like slept, like every like not done a single thing to help JD during this two-month period, we would have done the same thing. um
15:37.24
tylerking
Well, you weren't the only one sprinting. He was too. Did did his change in behavior have any impact, do do you think?
15:42.51
Rick
I've talked to him about it, he does not think so. he he he He has done the exact same thing as he was already, he already had the urgency. So this was, um and i talked I've talked to him a couple of times about it.
15:49.74
tylerking
Yeah.
15:51.85
Rick
He's like, no, this is like the most of the deal, like the big revenue contributors contributors were sourced and were in play prior to us making this growth impact. Sure. You could say maybe we, they they they wouldn't have closed as fast or maybe not at all if we hadn't made urgency, but I think that's BS and me just trying to spin a story.
16:10.64
tylerking
Yeah, I mean, that's kind of the ideal scenario. Like, i sorry, like sucks. You had a ah rough two months, but like pretty incredible learning. if if If the takeaway is like everything we've been doing is but that's a good play playbook and let's just keep doing it. I mean, that that's not a bad outcome here, I don't think.
16:29.75
Rick
No, it's a great, it is a good outcome. i the The two months of, I feel like I lost two months on what was working, but I have convictioned more conviction about the path forward. um And it's actually a very happy path forward for me, like a very satisfying path forward.
16:38.53
tylerking
Yeah.
16:42.37
Rick
I think JD would say the same thing. um so
16:44.70
tylerking
So what is that? Can you just outline what what is j doing JD doing? What are you doing in this like path forward?
16:50.64
Rick
Yeah, good question. so um JD has a like kind of a ah ah month ah monthly cadence that sort of shifts ah across like service and sales. um and he He basically has you know lots of different jobs that he has to do, but like first and foremost, he shows up and he serves our customers. um right and Right now, he's in a implementation sort of ah heavy heavy implementation weight. We just signed up two very large ah employers on group health insurance that require significant onboarding support.
17:26.09
Rick
um That's going to pass in the next couple of ah of weeks as those get fully implemented. And then he's going to shift more to sales, which is the other end of the spectrum. um And he yeah, we we like what we built earlier in the year is a cold call outbound model where if he's doing, you know, five to 10 new prospects a day and getting, a ah you know, one or two calls out per account added, um he's gonna book meetings. um And those meetings are ah yeah you know those those meetings are are what turned into revenue this these last two months.
17:53.75
tylerking
Mm hmm. Hmm.
18:01.02
Rick
So both of the big deals were sourced right via his outbound, one a year ago and one 60 days ago.
18:08.16
tylerking
It's probably worth saying just for the listener out there who might go through this themselves. like Two months ago, the reason for the sprint, as I remember, is it didn't look like any of those meetings he was having were going to turn into revenue.
18:18.93
Rick
you
18:19.96
tylerking
It felt like he was doing this prospecting. He was getting a first call with people, and it wasn't going anywhere. um And this is a dangerous lesson because it could mean someone could hear that and think, oh, even if it looks like it's not working, you just have to keep going. which well If it actually isn't working, that's the worst thing you can do. But in this case, it just took longer than we thought, but the plan was actually working.
18:42.33
Rick
Yeah. and And stepping back for a second to to what we're talking about earlier, it's like what one takeaway for me that is actually very positive from this experience is I have developed some empathy for what, how hard it is to to grow the business ah and in a short sprint. And so I have more empathy for JD on some of the stuff that
18:57.15
tylerking
Mm hmm.
19:02.25
Rick
I mean, how hard it is, um outside outside of open enrollment.
19:04.83
tylerking
Yeah.
19:06.35
Rick
During open enrollment, everyone's talking about health insurance. Right now, like it's very difficult to get someone to want to spend time about health insurance and make a decision when they don't have any urgency. um And so what does that mean? Well, it means, one, um yeah when when you're talking us when when we do have conversations with people who are our ideal customers, right now and they don't want to have a conversation, a win is setting up a conversation when they do want to talk about it. And and that is a future opportunity and we have to track those.
19:32.60
tylerking
yeah
19:33.35
Rick
um So that's a big change. And then the second big change is we got a bit more focused on who we're reaching out to and whether or not there's a triggering event. trying to find people that are having these, whether it's a, you know, a funding event, which is, which is something that causes people to look for health insurance. A renewal ah date is approaching outside of open enrollment. Cause there's people who have fiscal years that are non calendar and they, they buy their health insurance on that fiscal year. There's, there's ah like other reasons people want to talk about health insurance now versus open enrollment and making sure that we're aware of those events, monitoring them and triggering outreach at the right time. That's a big thing.
20:10.79
tylerking
Yeah. If I can just leave one closing thought here before we move on to the next topic, um, you said like it might end up having been 30 to 50% growth during this, you know, three or four month period or kind of summer, early fall. Is that what you said?
20:26.10
Rick
Yeah.
20:26.78
tylerking
I just want to caution against thinking of it as 30 to 50% versus thinking of it as X dollars in new revenue, because without more employees, it's not good like if If we have ah twice as big of a base next year, that's not going to make JD's cold calling or emails or whatever twice as effective. So my lesson that I've learned from Lessening CRM is like a lot of times you think you want to think of growth as a percentage, and it's actually more like a fixed number.
20:52.37
Rick
Oh yeah, totally. Yeah. I mean, the, the, the most simple way to think about it is ah for us is not even revenue. It's, uh, you could, you could do lives added or you could do employers added. And it was two employers added is the fundamental like growth lever, um, which is not significant.
21:05.11
tylerking
Yeah, OK.
21:07.78
Rick
Um, you know, in terms of repeatability or, uh, you know, um, uh, scale.
21:14.49
tylerking
Yeah, but like hopeful hopefully JD can add another two next year during this time. But it's on ah it's on a larger denominator, so it's going to feel like slower growth, even though it's the exact same thing if that happens.
21:26.33
Rick
Yeah. And I'm a hundred percent, but again, like I'm hoping like what we're learning right now, like we were nowhere nowhere near the sophisticated this time last year in terms of, um, our, uh, like we didn't have our, like really offer group health insurance at this point last year.
21:29.61
tylerking
Yeah.
21:40.42
Rick
So like there it's a totally different world.
21:41.04
tylerking
Yeah.
21:43.54
Rick
Um, I mean, isn't this the time period where you came out last year and built the software for the employer?
21:49.73
tylerking
I came out in like April, I think.
21:51.33
Rick
July. I was at April. Oh, I thought it was.
21:53.32
tylerking
i the Sorry. Oh, no, no. Sorry. I came out to build the the consumer version. The employer version got built, yeah, in July or August. Yeah.
22:00.60
Rick
Yeah. So like we're, we're basically a year into offering employers. And that's another thing I have to remind myself is like, we're actually doing pretty well. And we're, we're like, i I still believe there's just so much low hanging fruit that we're just still not quite reaching and grabbing.
22:13.97
tylerking
Yeah. So let me, sorry to beat a dead horse here, but I said a second ago, it's maybe better to think about it as like an absolute number rather than a percentage. You're saying, well, yes, but there's room for improvement. And I think the the the mistake I made ah early in my career was I thought, okay, we grew 200% last year, I just hired a marketer. The marketer is going to be better than I was at it. So that means next year, we're not growing 200, we're growing 300 or whatever. And I just hired a developer who's better than me. yeah And I did all this justification that our percentage growth rate will actually increase. I think the reality is it's somewhere in between the two. it's if If you do nothing new, you should expect to get something like the same fixed dollar amount, like two two employers or however you want to think about it.
23:01.32
tylerking
it's not going to be the same percentage, but if you improve stuff, it'll split the difference. So if it was $100,000 growth, which is 200% growth last year, next year it might be like 150, which is like, I'm not gonna do the public math, but 125 or you know you know whatever it comes out to.
23:16.23
Rick
yeah Come on, do it, do it, do it.
23:20.70
tylerking
That's been my experience of what's realistic to expect is better fixed rate, worse ah relative rate.
23:26.85
Rick
Yeah, agreed. and um and you're You're absolutely right. like It's very difficult to like have any sort of confidence and in what... like Our growth level is going to be people. It's not going to be... like it's ah One core difference between ah but a self-service software offering and what leg up we're building at leg up health is um people are what drive hires, future hires are what's going to drive our growth and our ability to you know ah hire someone for a certain amount of money or ramp them to what JD, a percentage of what JD can produce in a fixed amount of time.
24:01.70
tylerking
Yeah.
24:02.62
Rick
And like that's a I mean, that's a big question still. Like we we might get JD to his target comp this year, but then there's this whole question of like, can we reproduce a fraction of what JD can produce with a higher at a fraction of the cost?
24:17.40
tylerking
Yeah.
24:18.14
Rick
I don't know if we can do that.
24:18.46
tylerking
It's one of the, uh, one of the guys on my first million, uh, his previous, his first business was like a sushi chain, like Chipotle, I guess. So you'd like pick what fish and whatever toppings.
24:28.18
Rick
Yeah.
24:30.78
tylerking
And I guess he met, I'm retelling his story and might get it wrong, but he like met the CEO of Chipotle and was like, Oh, I run a similar business. And he wanted to talk shop that the. ah the My First Million guy wanted to talk shop, and was like, you know it's about and good ingredients and good recipes. And the guy was like, no, no, no, no. It's about who can get the most output from minimum wage employees.
24:50.50
Rick
Thank
24:51.39
tylerking
um it's It's sometimes a different game than you think you're getting into. And yeah, one of the reasons I'm pretty bullish on leg up health is like I think you, Rick, will be very effective if if it's a very hard problem.
24:55.70
Rick
you.
25:04.42
tylerking
Every business has to do something hard. ah or else like in a competitive landscape, you don't have any margin if there's nothing hard about it. um Getting people to provide JD's level of service while still being affordable and leaving profit for the business is a hard challenge. And I think that's where your like operations background and stuff like that becomes really interesting. It's almost like your superpower can't get used until it's time to start doing that, I feel like.
25:29.21
Rick
It's a very good point. Yeah, I it's funny. I'm doing this at Windfall right now. um We're building out like we have an office in Utah um ah that is dedicated to our outbound sales ah effort. It's all recent college grads and we just ah start, we just opened up ah an experimental internship, which is a feeding program for our college grad program for rising seniors. And it's exactly within this.
25:56.07
tylerking
Mhm.
25:57.07
Rick
It's like, how do you hire interest level talent? How do you pick the right people who are likely to Uh, be high performers and learn quickly. And then how do you, um, you know, step them up over time as they become more valuable to the company. And so far we've got, we've only lost, um, we've been doing this a year and a half. Um, and we've got very high, so we've only ah turned over one person out of, uh, I think eight people.
26:17.83
tylerking
Wow. That's incredible for my impression. I have never really hired a sales team, but my impression of salespeople bounce around all the time, especially in Utah, where there are tons of sales jobs.
26:25.24
Rick
Yeah. And recent and especially recent grads who aren't sure if they want to be in sales.
26:31.65
tylerking
Yeah. Well, that's impressive.
26:32.78
Rick
so So yeah, I agree with you. like there is a there There is some element that I really enjoy doing, and I think I'm decent at it. I don't know how good I am at it, because it's still early, but i really it is something that doesn't get unlocked until ah you know there is an ability to hire people.
26:50.60
tylerking
Yeah, yeah. um All right, maybe I can take over for a second here. ah The big news for me is we our price increase went into effect. um It is big news and it's not.
27:01.23
Rick
Ooh.
27:03.81
tylerking
Do you ever have these things where you're like this thing that's ultimately going to end up being like really important to the business happen, but like you you almost want there to be fireworks or something and really nothing changes in the short term. You know what I'm talking about?
27:16.68
Rick
Yeah, but but but I mean, in this case you should like receive more cash flow immediately, right?
27:21.44
tylerking
yeah Well sort of even that there's a little lag I mentioned before with paddle they pay We don't get paid until like the 15th of next month and that's only for a partial higher month So like we haven't even seen any additional money yet um and like I also
27:26.87
Rick
Oh yeah.
27:37.26
tylerking
One of the weird ways in which my brain is broken, but that's good for entrepreneurship is I sort of like crisis. um It just creates like a weird adrenaline or something. And so I also was kind of over the last few months, I was getting ready for like, when we raise prices, like customers are going to be mad and all this stuff's going to happen. Obviously, I don't want that, but a part of me is like, all right, let's get ready for war kind of. um But I forgot about those. like We sent an email out last September about this. We did a pop-up in the app earlier this year. We sent another email reminder in july early July before the price increase. By the time the actual price increase happened, because everyone got an email from Paddle saying, like your subscriptions changed, everyone already knew about it. So like it was just crickets. like Three people responded, or some probably more than that. But like it was just not there it was a complete non-event the day that the price increase actually happened.
28:25.31
Rick
Well,
28:25.61
tylerking
So anticlimactic, but I mean, it's huge. We we added over $800,000 in ARR from that.
28:32.27
Rick
and uh, so what are you going to do with that? Cause you're already, uh, I think you had started to spend a little bit of it, um, ahead of it ahead of this coming in, but that's certainly you've got a, you've got excess profit to start playing with. If you wanted to spend it, pay yourself more, do something.
28:48.45
tylerking
Yeah. Uh, the answer is going to be kind of boring, but I am interested in your thoughts here. So, um, first of all, just to kind of re summarize where things stand every year, our expenses go up because our model with our employees is we have guaranteed raises. We could stop that at any point. If we were, if we were in danger of going out of business or something, we could just stop giving people raises. But like, I, you know, we're not at that we're in a position where we can keep giving them. But because of that, yes, we'd spent ahead a little bit. So we were like, maybe not quite half, but almost half of that 800 is going towards like getting us back to break even. And so we're really going to be like 400,000, 500,000 in like and the black um after this. And then the initial plan for that is basically just to rebuild our treasury, like our our savings. um Because we'd been spending it down a little bit over the last year or two. And I mentioned, because Paddle pays us so much slower, there's about $300,000 at any given time sitting in Paddle
29:44.01
tylerking
Paddle's bank account instead of ours, which I can't fucking believe. um i got i'm I'm such a rube. ah but So that is our money, but it like I want the money in my bank account so that I can access it. So we want to build the treasury up higher because of that, but also Section 174 meant our tax bill was way higher. um Anyway, so like part like our our savings are lower than I'd like them to be. So for the next year or two, it's just like build our savings back up. But here's the here is the dilemma we're facing.
30:16.21
tylerking
As you know, so our growth is it's not quite flat, but it's close to flat. It's not where it needs to be to keep up with just just giving raises to our current employees, not talking about making new investments. just every year Every month, we should add 100 users per month to be able to afford the increases in costs in a given year. Does that make sense, how I phrased that?
30:35.91
Rick
Mhm. Yep.
30:37.82
tylerking
we're adding like 50 users instead of 100, which means every year, however profitable we are, we're a little less profitable the next year and a little less the next year. And if we wait long enough, eventually we'll be in the red and we'll start losing money. So we need to get our user growth in this 100 plus range before our profit goes into the red. The question is, is there is it better to take all this extra profit and put it in savings to give us more runway so our current team can do the job? Or is it better to take that money and invest it, shortening our runway, but giving us more resources to actually address the growth issue? And I realize, generically, you can't answer that. There's a lot of, well, it depends. But like that's the fundamental question we're asking ourselves.
31:21.69
Rick
And and ah there's also like, these are not binary choices. There's middle paths all through this.
31:27.43
tylerking
Yeah, absolutely. It's like you could hire a senior engineer for a hundred and something thousand dollars, or you could like hire a freelancer to do a project for twenty thousand dollars. Yeah, there's lots of different gradients here for sure. um I'm very, very torn about this.
31:42.32
Rick
Yeah, I mean, that's, yeah, oh I mean, I i think um if you don't have a clear, my my my and These are impossible questions to get right, by the way. It's all you can do is like make the best possible decision um that you can with the information you have.
31:56.80
tylerking
Yeah.
31:57.37
Rick
But like generally, like one important input I think to making an investment decision is having some sort of conviction around return or ROI on that investment. So if you don't have those clear paths, then I think the decision gets made for you. um If you have like ideas um on where you can invest and then you could like sort of list those out, the cost, like but variations of experiments you could run within those, and then the ah potential ah ROIs um and likeliness of ROIs, like that would probably be the exercise I'd go through is like what are the investment opportunities? What are the flavors of those investments? And what are the probability of success versus ah ROI trade-offs? You probably can find at least one thing that you should invest in.
32:40.58
Rick
If you can't, then man, that sucks.
32:43.20
tylerking
Yeah. So let me walk through the obvious options to me, and maybe you'll have an idea I haven't considered.
32:46.21
Rick
Yeah.
32:48.88
tylerking
But like kind of investing in some kind of marketing-ish type of thing feels like obvious. Obviously, the first place to start. The reality is, so you know i've I've talked about this on the podcast, we hired DemandMaven, who's a like a marketing consultancy, to come in and like put help us put a marketing strategy together and like This isn't really their fault, but like the outcome was they basically all the ideas they said were things we're kind of already doing. and but They had some some you know little nuance here and there, but I was hoping it was like, oh, there's just like this major channel we're not even trying. and There wasn't anything like that. and so We walked away from that. like We have a much bigger marketing budget than we're spending right now because we we already just didn't know how to spend it. Now, we could hire like a marketing person
33:30.04
tylerking
But I don't know what they do is the problem.
33:30.50
Rick
Mm hmm. Mm hmm.
33:33.00
tylerking
we There's plenty of stuff they could do. like They could come in. We don't really have much SEO going on right now. But are we going to beat HubSpot and Pipedrive and Salesforce at SEO? like I'm just not optimistic about that. So let's but let me pause. like Am I thinking about this wrong? like like If you had this marketing budget, how how would you figure out how to spend it if if that was the right thing to do?
33:53.42
Rick
Oh man. Impossible question to answer on the spot. um mean i would just i I'd want to know where leads are coming from. I'd want to start throwing spaghetti against the wall. um and i would i
34:06.00
tylerking
Yeah.
34:07.45
Rick
And it's something I'm thinking about a lot a lot with like a pelt right now is this paradigm of like, there's a shift right now with AI that I think if you like, do you remember when we were at, at, um, Zane benefits, we we were on like the the cutting edge of like SEO being a thing where that you could invest in predictably.
34:22.07
tylerking
Yeah.
34:23.31
Rick
And we were, we, we rode that wave, um, at Zane benefits and people keep, um, and I, and you did it less than one CRM to a degree too, I think, um, no.
34:31.41
tylerking
ah We got traffic, but none of it ever converted.
34:34.57
Rick
yeah Okay, um i just I feel like there's a there is something there's a shift happening right now with AI. like things that um Like Google is getting less valuable in terms of trying to find what I'm looking for, what I'm trying to to do something, and I'm going elsewhere.
34:44.60
tylerking
Mm
34:50.05
Rick
I don't know what other people are doing, um but I'm trying to get answers and I'm getting, I'm getting less and less value out of the search tool that would have driven me to the solution in the past. And so there's, there's some, op there's, so and there's something that I'm, we're not doing it like a Pelt, you may not be doing it less than CRM, which is trying to figure out where people are, are going to find the answer to their problems.
35:04.40
tylerking
hmm.
35:08.57
Rick
And, and I, I. I think at the end of the day, like we can make this complicated, but there's a buyer journey that your ideal customer has.
35:15.41
tylerking
Yeah.
35:15.91
Rick
And are you in the places to be found? And are you um you know ah trick like going out to them when the the timing is right?
35:19.03
tylerking
Right.
35:24.28
Rick
um Those are the two elements. um And some some of those things are paid, and some of those things are more organic and effort-driven. But those are the things that I would be thinking about.
35:33.69
tylerking
Yeah. Okay. I think that's a good framework for thinking about it. I don't and't want to sound too defeatist, but like the throwing stuff at the wall and seeing what sticks, that's kind of what we've been doing for the last two years. um and my so On the buying journey front, I totally agree with what you're saying. People are finding things in different ways. my Our best, what we could figure out is it's it's kind of like ah directories like G2 and Captera that are just like, here are a bunch of CRMs, click through them. And we're doing everything we know to do there. We actually, we take those very seriously. Um, and then like editorial, you know, like here's a list of the 10 best CRMs or something.
36:06.60
tylerking
Those are the ones we've found and we're trying to do a little like reaching out to journalists and stuff, but that's a very hard thing.
36:07.04
Rick
Mm.
36:12.71
tylerking
But the, It's just so competitive. And there are so many of these companies that raised shitloads of money. Like Monday dot.com, even though they're barely even a CRM, they're just buying up every single piece of of you know digital real estate real estate. So it's like, we can compete we we can buy ads and stuff on those channels, but you have to pay like $30 a click. There's no way to make that work when you're making $15 per month after converting a user. So again, I'm sounding defeatist here, but like,
36:44.29
tylerking
I've kind of given up on that type of thing in a sense.
36:48.79
Rick
Yeah. So like maybe, maybe this is more about fortifying your marketing, your marketing, um, motion and just saying like, Hey, this is what it is. And if you aren't, if you're under invested in that, maybe you do need to shore that up a little bit. Um, I don't, I can't remember what your current marketing situation is in terms of talent, but that's one thing you could think about is like, ah is this thing like kind of the best it could be? And if so, like, then you go to new products, um, new offerings, new, um, new, new solutions.
37:14.13
tylerking
Yeah. So that's what, yeah you know, I'm a very product first founder. And so like what I want the answer to be is not necessarily that we should, we maybe we shouldn't hire anyone, but if we're supposed to hire someone, another developer or some, someone that moves the product ahead, which is such a cop out, like and that's what every founder wants it to be is like, Oh, if I just code all day, you know, the growth will happen. And that's not normally how it works, but yeah, we're, to your point, what we're kind of investing in right now. So we we have a conversion factory, which again is one of these like monthly subscription marketing agencies. So it's not like you're not hiring them for specific projects. It's just like X dollars per month and they kind of they work on one thing and then the next and then the next. So it's almost like having another member of the team. And they're really focused on like product marketing, especially like conversion rates on our website and things like that.
38:08.97
tylerking
Again, but the hypothesis being it's very hard to drive demand in this like everything's being bid up to an unrealistic price, but we already have some traffic coming in. Can we do more with that traffic? That's kind of the current hypothesis mixed with like UNIS, our marketing person does. you know Yeah, we do some PPC, we do some like ad other ads and stuff, but like limited.
38:32.14
Rick
Mmhmm.
38:33.02
tylerking
And then we're placing this bet on this form builder tool as like, can we create, can we create the demand or the awareness at least by our current users using the product spreading out? Like the thing we do have is we have 26,000 users, which if you're starting a new business, this is not a strategy that would work, but we' we're thinking. How can we leverage our existing customer base as much as possible? So those are kind of the two main things we're going after right now. I could talk myself into like move forms ahead faster or or build the next, like instead of like there's forms and there's appointment scheduling, whatever, build more of that, even though we haven't really seen if forms works or not yet.
39:07.02
tylerking
Anyway, I think where I land here is like, just sit on the money until we have some sense of how to spend it.
39:12.19
Rick
That's where I end up when I'm listening to you, man.
39:12.63
tylerking
Yeah. Yeah.
39:19.67
Rick
Yeah, it's, it's always good to, I think like burning the money would be bad. Like that would be stupid.
39:24.89
tylerking
The, again, this is just me saying what I want to be true. The argument for a dev is like, they become way more effective two, three, four years after you hire them. And we always have useful things for them to work on. Would it be a growth lever? Maybe not, but it would make the product better for sure. It wouldn't be burning the money. And if we need that developer three years from now, we need to hire them now to be super effective, but yeah. um I think i I have enough discipline not to do that, but that's the thing.
39:55.90
tylerking
I find that more tempting than than hiring a marketer, I think.
39:58.76
Rick
Have you, have you, um, have you gone to your customers and said like, what are you spending money on that is like adjacent to CRMs?
40:07.99
tylerking
ah i't We haven't asked that question, but they tell us a lot. um I don't know if that's the same thing.
40:11.36
Rick
It's probably email marketing, like MailChimp, like have you thought about building these things?
40:14.46
tylerking
the Yeah. Yeah. So email marketing is definitely, it's the one I least want to build and the one that they most want us to build. Um, yes, that's.
40:25.11
Rick
But like, why are you fighting that? I know that you're like, there's, there's lots of like, you could, you could build an email marketing thing and like prevent people from like using it incorrectly. Um, I w why not build that and then charge 15 bucks a month for it.
40:35.58
tylerking
Well, that's.
40:38.17
Rick
And you've doubled your caught your average revenue per user for people who buy both.
40:42.59
tylerking
Yeah, my i um I don't know if you follow Jesse from Bento. but But Bento is like the email marketing tool we use.
40:46.19
Rick
Mm-hmm.
40:48.56
tylerking
And what you learn, similar to running Chipotle isn't about making good burritos. It's about getting minimum wage employees to you know not quit all the time. um My impression is running an email marketing tool is not about the tool itself or any of that. It's about preventing spam.
41:06.35
Rick
Mm.
41:06.49
tylerking
It's just a constant battle. And I'm not talking about like our customers sending an email here or there that they shouldn't. I'm talking about like ah sp like an abusive actor, like a bad actor signing up, sending out a million emails, and then we we close their account, but the damage is done. And all our IPs get blacklisted. It just sounds like, you know I said earlier, every business has to be hard in some way. That is hard in a very different way from from our current business, and I'm not sure we have the skill set or the appetite for it. I acknowledge it would be a big business opportunity though.
41:39.35
Rick
Yeah, yeah. Yeah.
41:43.55
tylerking
and a lot A lot of people want that. A lot of people don't don't care about that.
41:48.56
Rick
yeah
41:48.88
tylerking
Anyway, I will say we've started talking about it more seriously. It's still not that serious, but like a year or two ago, if someone brought it up, I was just like, shut up.
41:52.10
Rick
Yeah.
41:56.64
tylerking
No. Now someone brings it up and I'm like, eh, I guess we have to talk about it, huh?
42:03.65
Rick
Yep.
42:06.13
tylerking
So I got to go in five minutes here. Um, anything else on your, your mind to talk about?
42:08.83
Rick
Yep. No, let's, I've got a disappointment today, unfortunately, ah but ah I'll close with um sort of a a teaser to think about.
42:13.34
tylerking
Hmm.
42:19.29
Rick
um And that is we, we have set up the profit sharing framework, like a health and it's doing its job. Like we have a, but basically revenue comes in, we're at consistently 10 K a month now. um Then we take 1% and we make that a partner distribution just to like wet our beak. um and well And it's like 50 bucks. ah But it's not it's not you know it's not much. It's like 100 bucks. So anyway, the um that then you know goes into like the the budgeted you know expenses. And then after the budgeted expenses, we start taking percentages away from the excess profit. um you know
42:56.30
Rick
tax savings, um like a treasury savings, which is meant to be reinvested in marketing. And then once we get through those that waterfall, JD gets the remainder. um One thing you suggested in the last partner meeting, which was well about a month ago, um was, hey, j maybe JD should just take the tax savings and the treasury as additional pay to get him closer to his target comp. um And we shouldn't even worry about like trying to reinvest that right now because one, we don't have tax savings, ah a need for tax savings because we we won't owe taxes for a while due to like carry forward losses.
43:29.77
Rick
And two, we aren't spending anything on marketing and we're just not like we're actively reinvesting that into Legion for him. um and And so,
43:35.09
tylerking
Mhm.
43:36.67
Rick
I just like, that is something I want to talk about. When I think about what I want to focus on, like ah with like a belt going forward, I actually do want to spend my time helping JD get more out of the outbound prospecting he's doing and then turning that into a marketing motion that's helping, you know, generate leads. Um, so I do want to spend that money. So there's like, but, but at the same time, I've been thinking a lot about like, what if we just gave that to JD and like secure, like made him more secure in his role. Um, that's very interesting. Uh, two, two ways of looking at it.
44:04.53
tylerking
Yeah.
44:07.04
tylerking
Yeah, I can, I can definitely see it both ways. I know we don't have time to totally get into it, but I might point the same question that you just said to me back at you of like, is there good stuff to spend the money on? Um, that's kind of, yeah.
44:19.63
Rick
I didn't have anything last month and so we just gave them the money. Like it was an interesting, like last month we didn't have anything. So it was like, maybe it's a like we just make the decision monthly and until there is something.
44:29.84
tylerking
Well, another thing that occurs to me, I really like that you're building this this habit of putting money in the right places. I didn't do that earlier with less knowing. And it's very hard when you're at break even and the money's all going somewhere. It's it's kind of like your personal finances. It's hard to like cut back if you need to make space for something else. One thing you could do is keep keep the money going to the tax account and the marketing account or whatever you call them. But then say, like put a cap on each one. like If it goes above $10,000, everything else goes to JD. So we still have the money flowing into it. And that habit doesn't get broken.
45:00.19
tylerking
But if we don't spend it, then the money flows out at some point.
45:03.29
Rick
That's a great idea. We should, I want to talk about that next Monday because that is, um, a very good idea. And I think that's something we should implement.
45:09.49
tylerking
All right, cool.
45:09.65
Rick
Perfect. That solved my problem.
45:10.67
tylerking
Let's talk about it.
45:11.27
Rick
I, it gives me like, and then, you know, at the other, the other thing we do is like, Oh, like we're not like w J D you worked really hard this month. Like, like, here you go. Like we could always just make that call.
45:19.11
tylerking
Yeah.
45:20.24
Rick
Like we did this last month. Um, thank you.
45:21.76
tylerking
Yeah.
45:23.04
Rick
That was what I needed. Um, I've been stewing on that one.
45:24.42
tylerking
Great.
45:25.78
Rick
Well, if you'd like to review past topics and units, visit start plus.com. We'll see you next time.
45:30.24
tylerking
See ya!