Vested Capital
Vested Capital

Episode 10 · 1 year ago

(EP10): Nathan Barry, Founder Of ConvertKit.com, How They Bootstrapped To $28 Million A Year

ABOUT THIS EPISODE

Nathan Barry is the founder and CEO of ConvertKit.com, an email newsletter platform for creators to send newsletters and run email marketing campaigns.

Nathan is well known for transparency, sharing the behind the scenes growth in revenue of his company from day one. At the time of this interview, ConvertKit is generating over $28 Million a year in sales.

During this podcast we first cover all the businesses and roles Nathan had before he started ConvertKit, from running a web design agency at 17, to building IOS apps, to running an information publishing business selling books and courses on digital interface design making as much as $250,000 a year.

Then we switched into the origin and early stage growth stage of ConvertKit. This was a super insightful part of the interview as Nathan explained how after two years of stagnation at $2,000/month in revenue, over the next two years he ramped it up to $500,000/month in revenue.

What a run that is!

I also asked Nathan to explain his philosophy around raising capital, staying private, sharing equity with his employees and what the future holds for ConvertKit.

Enjoy the interview.

Yaro

Podcast: https://www.yaro.blog/pod/
Blog: https://www.yaro.blog/

Hello, this is Yarrow and welcome to vested capital, episode number ten, featuring my guest Nathan Barry, the founder and CEO of convert Kit. Vested capital is a podcast about how people make money, build capital and then put their capital to work. I interview start up founders who've enjoyed big exits, Angel Investors, venture capitalists, Crypto and Stock Traders, real estate investors and leaders in technology, which Nathan certainly is. In this episode we go back in time and do a thorough, deep dive into Nathan's history, and this is a long episode. We're almost at an hour and a half in interview time, so we got to spend quite a bit of the story with Nathan's early years running an agency in design, which eventually led to actually working for a software firm, which exposed him to a little bit of software design, both in the job itself and on weekends when he was working on side projects developing apps with some of his friends. That actually led to a teaching business fundly enough, he wrote a book about what it takes to do good design, front end design, in particular uxu, a user interface design for APPs and websites, and that led to Nathan being one of the first people ever to publish a book on that topic around the think goes two thousand and twelve when he talks about it, and that was a gateway to becoming an information publisher, so a person who has an email list who sells digital products. You would have heard plenty of stories from people like that on the vested capital podcast and my show in the past as well. In fact, I've been one of those people for many years. So Nathan was in that space in the design world. He actually launched his first book and made about Nineteen Tho in sales. So he breaks down how he was able to do that with his first ever information product, which led to him creating a business that made about two hundred fifty thousand a year at its peak, and that was actually the gateway to launching convert kid, which is now his, you know, multiple light figure business. Should say, yeah, eight figures, it is eight figures. Twenty eight million is his multiple a figures and it's an amazing story because he saw this need in the world of email marketing that was mostly around design to begin with. So being a person who's interested in front end design, he wasn't really pleased with the options available in terms of email auto responder services and how clunky they were to use. So he decided to build one himself. Very ambitious but you know, he was young guy. He dived in and for a number of years actually didn't do a whole lot of sales. He was sort of sitting around two thousand dollars a month in Arr it was a side Gig while he was still running his teaching business. And then he decide to go all in focused on convert kit and that led to some serious explosive growth. Now I'm not going to recount what he said in the interview but you really need to listen to the section. We talks about convert kits growth from two thousand a month all the way up to about I mean really up to today, but in particular from two thousand to five hundred thou so from sort of a basic business making a, you know, maybe fifty thousand a year to making six million a year. He breaks down in some detail the different marketing strategies and tactics they use some good detail to he breaks things down where I really felt like he was being generous with this explanations of what worked for them. So a lot to learn there from Nathan in terms of just growth, hacking a start up. And then towards the end of the show we talked about capital in terms of we know what's the plans for the future. Why has a Nathan taken on investors? What is he optimizing for? He went from giving profits to his team to now giving equity. They're actually in the moment doing a secondary raise so some of the team members can exit some of their their shares. So lots to cover. It really goes from the beginning to the end. I think you'll love this story with Nathan. It was a lot of fun to talk to him for I press play. If you have not done so yet, please check out INBOX DONECOM if you're the kind of person who is dealing with too much email or just needs help with anything that's kind of around your inboxes, whether that social media in boxes, helped us see in boxes, or your email or the associated task that get triggered when a person send you an email. So anything to do with updating software, forwarding messages to team members, just coordinating projects. INBOX DONECOM will provide you with an inbox manager or two or three to help you deal with all those emails, so organize them, build a system, build some documentation, build a knowledge base, reply to your emails and coordinate with your team and software that you use so you can effectively step out of all that kind of Daytoday to due list that gets generated within your inbox and you can instead spend time growing your company or having a holiday, spending time with your family, writing that book that you've always wanted to write. It all becomes an option when you get better systems and talented people, specialists, running your inbox. That's INBOX donecom check it out if that's something you might need. Now here is Nathan Barry and the convert Kit Story. All right, Nathan, thanks for joining me today. Yeah, thanks for having me on. So, as most people probably know, you're the founder of...

...convert kids, probably the primary reason I've got joined the show here. Obviously a huge success. As you record this, you're throwing out a number about twenty eight million dollars in a rr, which is huge. Congratulations at such an achievement. I actually I'm really curious about hearing more about convert kits origin story because, having been in the world of information marketing since for me like I was, I got start with an email list. Probably around two thousand and four, I think, was the first list, and I remember you guys showed up into what was already a crowded space at the time. So I can't wait to hear about why you even decide to enter such a crowd of space. Of the time it before we do any of that, you want to give us a I was asking before the show for a highlight reel of how big is convert kid become and you know, what is it? What does it do for any of those who might not know what it is? Yeah, so convert it is online marketing, email, the marking platform for creators. So think of creators. is anyone from like bloggers, podcasters, musicians, artists, filmmakers, all of that. So we have like a whole range people like amy vitality. Is this incredible in a national geographic photographer who uses us to stay in touch with her list. Tim Ferris on Schwitzeger runs his newsletter and convert it cool, to McGraw, Leon Bridges. We just acquired a company called fan bridge, which is email market for musicians, and so that brought over a few, few thousand musicians of the platform. I was actually really curious. I'll ask you at now. It was fan bridge. I was reading about your acquisition there. Yeah, and there was a part of it going. I wonder if Nathan made this acquisition because he wants to hang out with more cool musicians? You know? was there a little bit of that? And there there's a little bit of that for sure. Okay, it's one of those things. So maybe two years ago we noticed that we were getting traction in the music space. Kind of by accident. We actually got ti McGraw as a customer and that was one was like, oh, like, there's a big name. How did that? You know, it came about through connections and they were on male chimp and you know, as a natural fit and move over. But then we started putting in some more deliberate effort and just realized we could build this company for any type of audience. Right. I think some of people who get into Sass they kind of luck somewhere between luck into their customer base and default into it. We're like, you saw an opportunity and so then you started serving those customers and before you know what, you're like the biggest real estates ass company ever and you're like, but I don't actually like realtors, you know, or something nothing like that. Right, and we realize that we didn't just want to go wherever we were naturally pulled, like, for example, because I think a lot of your audience has been around information marketing for a long time. I think infusion soft as a company you know, now keep they got pulled very much just like whichever direction things went, and so they ended up with a lot of like there's like online marketing and there's the sleazy version of online marketing, and there was good money for them in it, and so they were totally okay with those people using and then they like they became very much known for that type of customer base, which hurts the liverability and it hurts like all these other things. Right, and we just realized that we didn't want to go wherever we were naturally pulled. We wanted to be very deliberate about the types of customers we served and it was going to be the creators that inspire us. We weren't going to be the company that like, years later were like, it's a great business, but we don't like the work, you know, we don't like the industry. And so about two years ago we had this conversation of like, well, who would we be most excited about to have as customers? And we had the like authors and bloggers and you know, all kinds of people were super excited about. But then like musicians set out as like Oh, these are creators that really inspire us. So we realized, oh well, that's a good business. Who like why don't we bring them into the fold as well? So kind of last two eighteen months in particular, has been expanding in music, and so you get all kinds of people like land bridges, Mandy Moore, whole bunch of other deaf lepper now used to convert. You know, it's like it's funny just all like the listeners goes on and on and it just came from a deliberate focus in that area. So that's a bit of a tangent, but it's just I think as people build their businesses, too much of it happens on out of pilot or where there's momentum and rather than deliver effort. And so just think about you know, years from now, who do you want your customers to be, and what steps you put in place now to make that happen? Yeah, such a good point, not just from the side of I want a certain type of client, but also where is the market going? I know, for example, with my own company the moment in boxed on we're getting some traction with accountants, which makes me go, okay, let's let's become the Ma management service for accountant firms. But then I'm like, do I want to spend all day basically pitching the service to this world? You know, it's like there's a personal decision as well as a business decision in there. Obviously I don't have to be the one who's doing the marketing forever as well. So there's that to think about. But many Moore, it's just kind of cool, deaf leppard to go out there and say, yeah, these are our clients. I'm sure that helps to bring in more clients as well. Just to close a loop, I know I asked you how big conversion actually is. So twenty a million runway. There's some other big numbers you can report back. Yeah, yeah, so we're sixty five people on the team. We've always been a paid...

...product up until about a year and a half ago we launched a free versions and we now have thirty six thousand paying customers and about four Hundredzero free users. Once it's been growing really quickly. Yeah, those are the main the main stats. Like we're public with all of our metrics. So if you go to convert it dot bear Metricscom, you can see like Mrr in turn and everything else in real time, just because I wanted to leave those breadcrumbs for you and I was building a company like following along. So if they're curious, like hey, I'm at Twentyzero a month and revenue and really struggling with turn, like I wonder what convert its turn was at Twentyzero a month, right, and so you can actually go back and filter back to like two thousand and fifteen when that was true and see what all our numbers were then. So, yeah, we're an open book about about everything. I think that's great. I think it possibly helped you early on to with perhaps, you know, spreading the word, getting more coverage, coming from myself the world blogging. You know, you go back fifteen years, it was all the rage for every blogger to kind of do their income report. Obviously you know Pat Flynn and John they doom has kind of really made it a thing, but everyone was doing it. No matter how much money you made. It almost became, you know, boring to say about rose a for blogger to do it. But you start doing it with with a SASS start up, which think was also really it just great. I think the transparrise fantastic. There's some risk with it too, but listen, I want to go back in time and then talk a little bit about your early years and then also the start of convert kits. So you boys, boysy boy, boy, I can say this is a ton twister. Boise boy born and raised. Yeah, I know. So. I grew up about forty five minutes sooner our outside of Boise, up in the mountains, and so I grew up roaming the hills. I was homeschooled. Have a bunch of siblings, so by common activities for us were like making swords in my dad's shop and like playing nights as we run the hills and all that. And then I've, you know, moved around the Boisey area, travel the whole bunch, but always always lived or had a home base here. Does that mean there was much internet up in the hills or was that available? We had dial up internet, you know, for you for too long. I remember the K Modem I got into. I had a new web design in high school, actually, because a girl that I dated was like making websites on geocities, you know, in life, little animated gifts and like. And I remember like watching that, knowing it's a hold on. You type what into notepad and then refresh and then how does that work, you know, and then like getting books in the library and and I just I love the immediate feedback loop of you can make this change in code and then it would immediately show up over here and like you'd make this change and then show up and it wouldn't do anything over here and have to like dig in and find out why I didn't work. So I guess I fifteen year old. That was tons of fun. And then I got photoshop and started playing from their. Actually, that was hireding photoshop on dial up. Internet is remarkably difficult. I don't know exactly. Yeah, I remember well, I remember looking for keys. It's always finally the key to open up the software. Yeah, we should be saying this on a popular recording though. Anyway, patients. Yeah, who would have thought? And photoshops as ASS now. So there you go. Yeah, so you're dating is so by saying Geo cities two, which which makes you kind of like a late mid s sort of web design. But you know, getting interested in that. Did you at fifteen? was there like plans in your mind to go to university? Like, did you have a career in mind or anything like that back then? Yeah, the first career that I want to have is as a landskeeper. So that didn't end up happening. I even like early in high school, like one of my dad's friends had landscaping business, so I like to, I'm going to do. It's not all what I'm what I ended up doing, though. I own a farm now, so maybe there's some like tie in that park. Let's see part about the high school time. I yeah, started getting projects to design, like a simple logo or a really simple website, freelance gigs for like a hundred bucks, three hundred bucks, five hundred bucks, and so that was what I was doing then. As a kid, all my friends were older than me and so I kept trying to keep up with them, and so I actually like the combination of that and being homeschooled I realized that basically I was still going to be in high school. have like a couple years of high school left. And so I went to my parents and said, like Hey, is a high school for years or is it a fixed amount of work? And I had older siblings and so they, my parents, had already find like what high school meant, like the curriculum and all that, even being home schooled. They like said no, it's it's a fixed amount of work. Like go ahead and here's the list if you want it. And so I spent, I guesses, from when I was fourteen to like fifteen and a half or thirteen to fifteen, someone in there doing all of high school. So I remember thinking, like as we drove from Boise to Seattle for like family road trip, thinking like well, I'm bored for this eight hours in the car. I'm also board while I'm doing Algebra. So I don't not combine those two and I do like a month's worth of Algebra on a eighth hour drive. And I have like mute brother be there. So I'd be like, David, how do...

...you you know I got stuck? How do you do this? and He, you know, is pre IPAD. So you nothing better to do than helping with Algebra. So I'm graduating when I was fifteen and started going to college then, first for graph design, then marketing, and then dropped out when, or seventeen when I started getting like I basically I got my first tenzero web design gig and was like, I'm here going to college to learn how to make money. I think I've learned how to make money, like I'm on to doing the next night. So okay, so you must have been like on eighteen, nineteen when you're landing these tenzero client. I was seventeen, seventeen. Wow, yeah, just so I dropped out of college before most people drop out of high school. That's definitely crazy. Okay, a few questions surface there. How do you convince one at seventeen to pay you tenzero dollars to do something? What's the phrase on the Internet? No one knows that you're a dog. Right. See, you had this picture of a guy with the beard in a mustache on your own your prophone, right, and okay, we's. It was also before video calls, and so we get on calls and I probably sounded really young, you know. But yeah, it was one of those things. I'm realizing that contract was referred by someone else who worked with one of their competitors. So basically it was software for a sign language interpreting agency out of Sacramento, and so they basically needed software to manage their freelance interpreters going to like Dr Appointments and you know all the things they would do. And so they went to one of their competitors who were they were friendly with, you know, in a different I guess in a different market, and basically said Hey, you have soffered for this. How did you do it? I'm like, Oh, we hired this guy, David and Idaho, to do it, and David was my friend. And so they went to David and he was like, Oh, well, actually have an not a compete, like I, I can't help you because your competitors and all that, and so he referred them to me and we done like with some contract web developers, I'd done some, I did websites and like small web applications, but this is the first like real web application and I did all of the design and HMNCSS and like the business side of it and then contract developer were at the back end of it. So so good profit. Like I cleared like five grand on that. One has got seventeen. That's like huge money. Yeah, it was pretty great. So it took us for them is that grow into a fullblown agency that you run. For a number of years it was basically freelance. Okay, for a few years, basically staying at that level, like enough money to earn a living. I mean it was incredible for me. Looking back, I'm like, okay, I think I was making like Fiftyzero a year or something. Now, what happened was, in its to be two thousand and eight. I just had like my best months of freelancing. I think you've been freelancing for three years then and you're justis old at that point. Yeah, yeah, okay, yeah, nineteen. Somewhere in there. You're really only twenty two right now. L Ten eight, and that's like that's right. Bringing curious. I'm all thirty one as of a week ago. So so let's see. I had learned a bunch of freelance projects. Just had like my best month ever of like Twelvezero of work in a single month. The thing that I learned about freelancing, though, is that you're like, Oh, here's the contracts I have signed, here's the money I have coming but always gets delayed, and so you like keep counting it in the same month, but you're realizing like you're counting the same you're like, Oh, this is great, I've got like tenzero coming in and like a month later, like I have tenzero coming in, but like Eightzero. It is what you expect the previous months from finishing the contract or whatever, you know, and so it's like not as good as you hope it would be, you know, but still away. So twenty years old, he's good. You know. Eight thousand a month is also it is it is. I went to on a trip with my girlfriend at the time. Well, I guess we're engaged. Then we went on a trip to South Africa with some other friends at five weeks, traveling all around, had a great time, and then came back and I went to pick up all the conversations with clients and they were all like hey, I don't know if you know, but it's two thousand and nine and we're in the middle of a recession and like we're not sending money till our client spend money. So I went from like top of the world with my freelancing to, you know, I've earned a month and a half off and then coming back I'm like there's no work to be had. Well, did you not see the GFC happening while you were traveling in Africa? Or I don't think I knew enough to pay at engine to it fair enough. At that point you don't have the trend or data points. It's just like your own localized thing and so or it's like that's the thing that affects like normal businesses, but I'm on the Internet. What I didn't realize is, like I was building websites for like construction companies and remodel there's and you know all of those, and they were basically like everything is right up. So I actually ended up taking a job with the one client that still had to work and it took a full time roll with them,...

...and they were software company and I end up staying in there for three years and during the time I got into one learned how to work on a team reckons. I had to. I thought I knew everything right, as one does that eighteen, eighteen, nineteen, twenty years old. But you know, I never liked worked on team, worked in an office in that environment, had a salary, things like that. So that was a great experience. Was it a great experience? Star was. That is a bit of a struggle because to go from kind of being your own boss to having a boss and having set hours and set salary, that must have been a bit of a shock. Now it was both. It was really helpful to have the salary and, especially at that time, and have co workers and so much of that, especially because the consistent business side of freelancing was not something that I was really good at and so having, like I said, holly was really Nice. But I remember times I really struggled, like I remember one time in particular of like something and come up and a mirror still doing a lower freelancing and I'd like just left the office to go do the other thing and, like my manager, when I got back I'm like Hey, a man, you can't do that. You know what I mean? I can't do that. And so, like everything, it was a blessing and the curse. During that time, while I was there, the IPAD came out in two thousand and ten and so we built an IPAD APP the day the IPAD was released, her, like, you know, had it ready. So that was an incredible experience to learn IOS development and design, and that turned into my next side hustle of like building apps and selling them the APP store, and that was really fun. I got to the point where was making averaging between two and four thousand dollars a month of sales in the APP store for various APPs. I had a habit tracking APP, I had a flash cards APP. I think every beginner developer makes a flash cards APP, like just out of obligation or something. I also had an APP that was for kids with autism who didn't speak or someone who had had a stroke and lost the ability to speak, and so it had like these tiles on it and you would like select the tiles that had an image or a short phrase and then it had since size speech and so it would like verbalize that phrase and there was all this dedicated PECs that were made for that that were like Sevenzero. And so with the IPAD you could like have this great hardware and everything else and and an APP that you know is so much better. So that was probably my best money maker. This was after you left the job at the software of all this was on the side while I was at the job. Okay, so I'm so basically, there were a few of us there that, like work needed us to learn objective C and I was development, and so we do it at work and then we'd all spend on our side projects and keep coding and figuring out on the weekend, which work was happy about, because then we'd show up on Monday and we're like hey, we know this much more about I was development that we did on Friday, and so they were like yeah, great, keep figuring out these projects. And there were two developers there who I would help them with a design on their APPs because that was my career, and they would helping with code. We weren't partners in any of that way. We were like, I guess, advisors for each other's projects. Like I remember coding my habits APP and getting stuck in like five different directions where you like code as far in this problem as you can. You like can't figure it out, so you work on the feature over here. Keep doing that and then if like, on a Saturday, going over to my friend Chris's House, who's co worker, and Mei okay, here's all the problems that I have and he would like be like, okay, look into it and then buy. All right, computer science one one. Let's explain number tipes, you know, because I'm like using a float when I should have been using an injer, you know, or like some of these things, and just not having that like computer science background, so to becoming an engineer almost yeah, working on it. I never like got so far into it that people should hire me to program, but I was always good at interface design and and then any front end code. That was my world. Okay, so this is a side projects. You're taking your salary now and you're selling all these APPS, so you must be cumulating, you know, a bit more money at that stage where you thinking this is great, I'm we're going to retire or, you know, I'm going to put this into my first home purchase. Like, what was your financial mindset around that time? Yeah, so I was relatively newly married and my salary was Sixtyzero a year, which I thought was an amazing salary. And, let's see, I was really saving up money so that I could quit the job. Like all of my money from iphone apps went just went straight into the bank. By the time that I did quit, it was a little over twentyzero that I had saved up specifically from IOS APPS and really I wanted to go back to freelancing and and doing apps and making products, and so that was two thousand and eleven that I quit. Yeah, and just to be a freelancer. Yeah, freelancer. And wherever that the IPHONE APPS took me. Okay, and I was it was basically like the cycle was build my own APPS, promote them, talked about design, get more APP design clients, you know, and kind of just playing this ecosystem. Where things really took off for me was the following year, in September two thousand and twelve, I wrote a book called the APP Design Handbook, which was about how to design IOS applications. At the time...

I think o'riley had a book out, but that was it there, you know. So they're now like one, traditionally published in one ebook on APP design, because everyone was talking about code. Know, I was talking about the design side well, and I built up like a tiny little email ust to eight hundred people on mail jump. I had two goals for the book. One was to get freelance clients, because I figured if I was the guy who wrote the book on APP design, like people would hire me to do that. And the second one is that I wanted to make money from products and I followed people like Chris Gillibo and Tim Ferris and others who were were either doing digital products themselves or would like profile people who were doing it, and says like Oh, I want to be like that. And so I was hoping I can make tenzero over the life of the book. It ended up making Twelvezero on lunch day and then like Nineteenzero by the end of the week. Well, and I be like fell in love with the world of publishing, selling digital products, like having a blog, having an audience newsletter. I was like going. I remember talking to one friend who lives to in Boise, because voice has a very deep internet marketing community which, ever, everyone flies into the radar. But bodybuildingcom Click Bank, click funnels, they're all founded here in Boise and there's even more. Runs is the one who actually told me or taught me how to pronounce Boise, because I kept hearing him talk so much. Yes, exactly, yeah, it's so there's just so much here. And so a friend of mine, I was tying to him I was like yeah, you know, markings incredible, like I far rather have an email subscriber than a twitter follow or instagram and he's just like Uh Huh, uh Huh. Yeah, we've all known that since two Thousan two. But like good job, like do you want to go to star? Like what do you mean? And then you know this is two thousand and twelve or whatever. How do you know make Nineteenzero on your first ever campaign selling a book? Like what was the the break through result? Yeah, so there were a few things. I built up the audience and so like eight hundred emails subscribers. Now I'm like the tensis thing, eight hundred is so small, but really, like eight hundred people is a lot. So that was the first thing. The second thing is I did a ton of guest blogging the day that the book came out. I published posts on all the top interface design posts or like sites, websites like smashing magazine that were big in the websign space, all kinds of stuff like that. I think I had maybe ten or twelve guest posts go live that's day. I was trying to make his big of a splash as possible. That's great. So you tell me them all. Card that was inspired by an article that Tim Ferris had written about launching for our body when he had done that, that same thing, and I remember like he was writing about. What was fascinating to me is that there's like sort of this narrow view of the for our body. Right, it's a health and fitness book, so you can publish like his partnership with bodybuildingcom made lots of sense. But like, what would he ever write for the Base Camp Blog? Well, obviously he would write something about how he used base camp to organize all the work for this like crazy complicated researcher book. And so it's just this example of like, Oh, if I want to talk about this thing, I can do it in a different Lens for all these different audiences and make something it's relevant to them. So that's where I was trying to do. Okay, and that was enough to bring in potentially. I mean, you must have sold nineteenzero worth of an e book. You can't be charging more than twenty thirtys right. Okay, so that's good thing. Tiered pricing is like the most important thing, and actually wrote a lot about pricing strategy and that sort of thing in two thousand and thirteen. Basically into what I did is I charged twenty nine for the book and then I had an additional package at seventy nine that had like some videos and training, you know, some of my like individual templates, photoshop files, interface builder things, and then for one hundred and forty nine, was the price that I went with, I had like a complete package that had the whole tool kid of what I used to design APPS. And so I did the math on that later in it in more than double the revenue if I had just had a single twenty nine e book. Yeah, so that was the thing that I began doing for like preaching across the Internet was like have multiple price points. Now, just charge more, but like let people self select, because actually the very first buyer of the actors I handbook was a designer at thirty seven signals and they bought the complete package and it was one of the things where you realize like Oh, they've got the company Credit Card to them twenty nine dollars and a hundred forty nine dollars of the same number, you know, until it gets over three hundred five hundred dollars, you know, something like that. The income expense report is like still just forward the receipt, you know. And actually Patrick McKenzie goes by pettio eleven all over the Internet. He said some thing. It was interesting as I was thinking about trading for content. Right. He was saying that no HR manager wants to write a payroll check that has researching free stuff on the Internet in the memo line. All right, and well, I was like, why would you buy that book? Why would...

...it? Like it's free on youtube where, it's free over here, and it's like to someone doing it as a profession, like their time. Nothing is free, you know. And so if you can give the most condensed version up front, and in this case, like they could buy the book, they would tell them how to do it, or they could buy the complete package that would have like all the templates and everything else, so they could do it x, not faster than I'm like great, because the company cares more about pace of the project than they care about the cost to get any comntal cost. Yeah, that's interesting. Yeah, kind of you have to marry the, you know, the right type of audience where you managed to reach these decision makers within companies, not just you know, your hobbyist at home who might think one s five meals versus thirty one meal, or the used to buying books and not everything else. But then you get like a leader at a company or someone where it's just like you said, an expense to them, yeah, it's nothing, and then like it's better to buy something bigger, that takes less time to it to learn from so, but take a sport. So it sounds like you became a full bill information marketer at that point. I said so blog email list. How far did you go with that? Was it a huge sales final worth of various products and so on, or I was never deep in that world, like because there's two sides of it, right the direct response marketers, who are like the pros at funnels and everything else, and there's the bloggers, who are like at the extreme, would be like I made this thing, I hope you like it, you know, and the magic of the Internet is you can make a crazy amount of money doing both. Is just one is very sophisticated, in the others, like you know, very casual. So I was somewhere in the middle. I ended up writting two more books, one about design web applications that had twice as big of a launch to, you know, threezero subscriber email list. And then later I wrote a book about Self Publishing and about my techniques and all that, which I feel like every information marketer goes from like their thing to then talking about how they did their thing, you know. So I also went on that that journey. But my maybe taking a step back. There's a blog by someone who's now a friend, Jason Cohen, who found a WP engine and he has a blog called a smart bear. And in like early two thousand and eleven they were two designers who published design ebooks on the same day, so grief and Joe Drysdale, and they had very different pricing strategies, but they should up in the same community. Sasha was charging like three dollars or six dollars for his like little book on You I design and jared had like a fully book that he's charging the twenty nine or thirty nine dollars, something like that, and they like both showed up on hacker news at the same day. And so, Jason Cohen, sow, this is like this is fascinating, like your wildly different strategies. Both of you come on my blog and explain why they like, why your strategy is better than the other person's. And so they did. And there's just these great simple, transparent posts, like they're not trying to sell anything, they just just explaining it. And I read that. Oh the other thing is like Sasha made like seven grand in forty eight hours and jared made like eight or nine thousand, and so like just remarkably close numbers and with small audience. It's right. I remember hearing like the guys at base camp. They like yeah, we selfublished our book. It made four Hundredzero, and like there's nothing relatable about that. But for me getting going, it was super relatable to be like, Oh, a designer just like me with no audience could do this thing and it can make seven or tenzero. And so what was funny is that I did all my stuff and then I went on Jason's blog some number of months later and was like they're both wrong. Here's the best pricing strategy, which is really the combination charge a lot of money, like jared was doing, and use multiple packages so that people could self the select you know, it's like, look, I did way more sales than they did with an even smaller list. Because of smart pricing, right, and that's where I got into like people were asking you more about packaging and pricing and self publishing and all of that. Even they were asking about design, because I just been transparent all the way along. And so, you know, you asked how big that Business Gott. Yeah, I don't see the whole thing, the teaching of the design part and the teaching of selling products part. I got it to about two hundred fifty thousand dollars a year, okay, and then it basically stayed at that level until actually in two thousand and thirteen is when I started to convert it. I was using mail with Jimp because in fascinated by like email marketing best practices. Thought about switching infusion SOFTCAS. That's where everyone was using at the time. But I was like teaching user experience and it felt criminals to be like a user experience, you know, expert and using a clunky tool like infusions Haft, and so I just decided up, I'm going to build my own and that's when convert it started, and there's a long road to it going. But you know, that was eight half years ago now. Yeah, okay, now I can see the connecting threads. They're so you're an information marketer. You understand this world of small business creative people who can do a lot with small audiences. You're also in the design space. That's what was your original teaching space, and it's true infusion soft. I remember...

...when I was considering them it had this nickname of confusion soft because of how confusing it was to to get, you know, started with it. You need to hire someone just to learn how to use it. So you're design guy, you're not going to like enter that world. It feels like you're, you know, going against the rules. There's a little bit of a jump, though, to then say I know, I'm just going to create my own next level email or responders platform and it's going to be very design oriented easy to use, which I do remember actually when convert get first broke out, it was kind of attached that idea. Easy to use, intuitive, simple. But it's a big difference between selling an Ebook to creating assass platform plus, like you said, infusion soft. I mean at this point in time, as a hoever active campaign mail or light mail chimp. Got The so many I can use. Yeah, I contact the list because on one shopping car was one of my first everyone. There's just tons of email, old responders, plus next level ones where the email to responders and basically crm's with customer management, check out, shopping cards, Philiate programs, all that sort of stelf built in. So if people think it's confusing now, it was still confusing ten years ago. To make that Chow I sort of about what platform to use, but you decided to make it more confusing and create another option. Right. So take me through your testing, because I like, how do you launch something like that as it because, yeah, kind of can do an MVP, but it needs to least be able to do a lot and that requires quite a bit of coding up front. This potential to lose a lot of money to launch something that no one wants. So what was the early days of convert it? Yeah, well, the first thing is I wanted to get back into making software because I had had this you, I was going to say yourlong deviation in talking about software is really like four or five months. That part of my life was so condensed, like I wrote multiple books, started convergate and all in like a seven month, eight month period. Yeah, in a one year period I wrote three books and started convergate from like summer two thousand and twelve to summer two thousand and thirteen, and so it's just I may I look back now. I don't know. How is that prolific? Like you were married, right, so you weren't like a single guy doing either the kids? Wow, okay, yeah, so, yeah, I have nine year now. So so I do the math. I would have just been your baby would have just been born run about that time. Yeah, I quit my job a week before my baby with one and then you're also works and that's just yeah, I don't know that that's the best timing, but you know, it's all life works. So let's see. Oh, as far as breaking down the problem, there were two problems that I was really frustrated by as like an Ebook, self published information marketer Type Person. One was giving way like a sample chapter or some content you know later, like Click Collins and others. You know would call it like a lead magnet, and that was surprisingly difficult to do in mail chump. You couldn't do it in the free version. In the paid version you'd have to like I would actually use their translate function, because you couldn't change the text of the like confirm your subscription button to say, like download your free guide, unless you like translated it to another language, which it was super happy. And then I also want to be able to send a, you know, Otter smonder series of emails time to when you signed up, and that, I felt like, was really clunky. So it was really trying to solve those two problems. And later lead pages came out around the same time and and like their lead boxes and all of that, and they solve the first problem. But that went from like email marketing platform to like two very specific problems that I'm trying to solve. And I actually designed an interface then for like a weed later called them email sequences, you know, but an auto responder that just had all the emails down the side with at the timing that you could see there, and then in the center panel was the email itself and even really edit it as a single flow, whereas ever of the tool would treat it as individual emails. You have to like fully click into the email, right it and then fully exit, and so in a whever mail chimp and in fusion soft it was just such a clunking process and I remember like the box side of me was like this could be so easy, like tabs, you know, and so narrowing out of those two problems really helped. It still took forever to get, I guess, enough features to be able to compete. Like I remember even for two years after I started, James Clear was a friend of mine, still is, and this is before like James Clearcom and and all of those days he was just starting attraction with that and I was trying to get him to switch over, convert it, and he did. He signed up and was like wait, you don't even have a page to I list all your subscribers. You don't have like there were so many things that were missing, and so he was like basically like I love you, but like this is not there yet. Yeah, and so it is a big deal when, like four years later, I think in two thousand and nineteen, he moved his whole list over. It couldn't ver get really away. Okay, about a real product, you know. So like that. You know, male chimp had been building their product for fifteen years at the time,...

...now twenty one years, and so it's just it's hard to catch up. So it took a long time to get that feature. Parody so like. But how do you do that? Do you launch with out the good features and then you have like a leaky bucket? You have a lot of churn because people are not happy. Is that why you crazy? I'm turn okay, but what I did was narrowing on the specific features. This is a great way to put a form in your site that gives away an opt in or something like that, or that has a free you know, of course, like the perfect use case was put this form on your sales page for a free sample chapter. You know, some put their email address and immediately sends the sample chapter in trade dropping in and then it follows up with a time email horse and can work. It was very good at that. One or two problems, you know, right, and like somewhere between bad and mediocre at all other forms of email marketing. Where the other one voting it at the time? Yeah, so I did the design and all the front end and then hired out the rub and rails development to a couple of different contractors. Okay, so if we call this period maybe two years, like that period to get back to parody, at least with expected features in an email system. How does the business grow? Like? Do you because if you're only solving a few features, I'm guessing a part of is like I don't want to promote too hard because we need to fix the leak with the churn, but I need to get cash flow to pay myself and pay the you know, the developers. How do you kind of balance your marketing with Product Development and growth of a company? Yeah, so the early days I was trying to do content marketing because when the blogging world I was like this is amazing. It's a great way to tell you books. It must also be a great way to sell software. And it's not, at least not in their early days. And so I really struggled there. Like I think content marketing is amazing for selling established software, but we just had such a leaky bucket and you wouldn't get feedback right because someone comes to your sales page, they're like Oh, this is interesting and they decided not to buy and hit the back button, but they never actually tell you why they didn't buy. And so it's about two years in we were at two thousand a month and MRR maybe last one thousd fifteen hundred somewhere there, after workings for two years and I had this conversation with a friend in heat and Shaw. We got a conference together and he was just like look, if you work in this for two years, you've been really successful. E books will be successful with something else. This isn't working, like you should shut it down and move on. And like, when he said that, I was really taking it back and surprise. But then he like let that sink in for a little bit and they said or, like you can take this really seriously, stop durating like a side project, because I was doing both, you know, the INFO marketing content business, and convert it. He's like, or you can take it really seriously, like go all in and give it the time, money and attention it deserves and build it into something remarkable. And that's ultimately what I ended up doing. So actually, I didn't shut down the INFRO product side, but I just stopped working on it. My idea was like, oh well, cap like have passive income forever and it'll be amazing. And I was doing like tenzero a month on average, without launches and that kind of thing, and in that so quickly went to two thousand a month. Like it. It dropped off very quickly, but that's when I hired someone like put actually put our savings into convert it. So I put fifty grand in and hired a full time inhouse engineer, like gave him equity, and then I started doing direct sales and and basically started trying to do everything possible to win every account and that's when we started to see growth. So we were at two thousand a month in January, two thousand and fifteen, which was just after that pivot. By July we got fifteen thousand in Mr September was like twenty two thou and then October was forty five thousand, November was sixty five thousand and seventy thousand and we close out the year at Ninety eight thousand in Mr and I was just annoyed that we couldn't get to an even one hundred thousand. Fair enough. Then the next year we went from a hundred thousand, Mr to five hundred thousand. Credible as like the flight, like it just it felt like a rocket ship. Definitely to know how that works. But just to go back, you said direct sale, so this sounds like it got you from two to a hundred thousand. MRR. Ninety eight thousand. Sorry, not a hundred direct sales of my mind means you're on any platform you can think of and you see someone mentioned I need an email alto responder. Which one do you think I should use? and and Nathan very rocks up and says, Hey, have you heard about convert kid? You know, is that kind of what we're talking about? or I mean I did some of that, but I always thought that like stockings, twitter mentions or something. I was like kind of weird and copy. Actually the a webber team does to us all the time and we're just like, what are you guys doing? Don't make your product instead of like throwing our mentions of convercate on twitter. But what I did is it started with positioning. So first we were like email marketing for people who have problems like this, and it is really lame position. That didn't resonate.

And so a friend named Tim grawl who is been in the book publishing world for a long time, just remarkable human, he kind of called me out on that and he's like look, you're not getting traction if you were to narrow down, like pick an audience, at any audience, and say like you're the best email marking tool for this narrow slice. Then like you'll get traction. People will understand how to help you, where you're like, who to refer to you and all that. And he wasn't intending that we go after authors, but I was thinking of like the Chris Gibbos and Tim Ferris's of the world and stuff like that. was like that's who we're building for, that's who I want to be. Like great convercat is now email marking for authors. And on one hand that got us an immediate traction, which is really cool because now people be like, Oh, I have a whole community of authors. Do you want to come teacher workshop to them? You know, I have a friend WHO's author. You know, like we got immediate traction. It turned out that a lot of it, though, was people who were like it wasn't the author I was thinking of, it was the my life dream is to have a fiction, you know, by published my novel on the kindle store. Oh but this is hard, never mind me Bo right. So we got immediate demand and then crazy high churn, and so my takeaway from that was that a niche is good. I just chose the wrong niche or I'm marketing positioning a wrong so like three months later we change it to email marketing for professional bloggers and started going after the people who were in a specific space in it. And I looked at who we already had to ask customers. We had a Paleo rescue blog, we had a men's fashion blog, I travel blog. Some of these others were like who had tractions. Thinking, okay, if I look at that one person to draw bigger circle around them, who would I get? And so direct sales for me looked like going after pay leo recipe blogs run by women and likes. Probably there's probably a defined list, like, instead of trying to list all the rescue like all the blogs are all the rescue blogs, like when now we're down to payeo recipe blogs, and and then the run by women are run by men. Distinguishing on there is that people tend to flock together with people like them, and so you can end up creating like big fish in a small pond or an echo chamber type thing, like I got this email, where someone maybe take a step back. So what I would do is get a very specific list of people and reach out to them all directly. I would follow them on twitter, I would comment on their blogs. I would like interacting their circles and then send them called out rich emails then, you know, try to get them to sign up. I'd be all use the one anchor client, but I had like as a reference, you know, basically like convercate used by people like and I'm like name dropping someone who I know, you already know, because it's a small circle, right, and so the direct out regimail would be like hey, I saw you using mail chump. I'm just curious. Is there anything that frustrates you with mail chump? I asked because I'm working on building a tool call to convercate in the space. I'd love you hear your feedback kind of thing. And they would always have a list of things that frustrated them and it would magically be the same things that freshrated me, because I had just come from using MALCHIMP. been like it's all the same problems. And so we go through that. One thing that happened in that process. I remember talking to a fitness blogger and she was like it feels like everyone on the Internet is switching to convercate right now, and I remember going, okay, well, we're at six thousand dollars a month and recurring avenue. So I can definitively tell you you know, and these are inside thoughts, these are not outside thoughts, I can definitively tell you that everyone in the Internet is not switching to convercate. And what I actually said was like, Oh, that's interesting, like tell me more, and she basically went to talked about her mastermind group in that space and says like well, so and so used convercing. I'm like, I know, they've been using convercate for like six months. They're the reason I'm going after this little space right this person is thinking about it, this person is about to switch and this person brought it up just the other day and on our restment, you know, like you, creates echo chamber in this feeling in a tiny group of people. Hmmm, and got really good traction. HMM. Very Smart, because the echo chambers online are really small. Like you, you feel like Internet's big, but you're actually spending your time and a couple of places where there's really only a few hundred to a few thousand people talking to each other about the same subject. So if if you're in there and four or five people keep talking about convert kit. It does feel like what everyone's switching to convert here suddenly. Right. Yeah, and we're at a time in the numbers just aren't there. So that was kind of the let's say, to fifteen thousand in Mr was a lot of that and I noticed then that every sale I made made the next sale a bit easier. And so, like Paul Graham has the lined about do things that don't scale, and I remember when I started direct sales I was thinking like I can't do this because it doesn't scale. I need do like content marketing or paint advertising or something else. Right, but the thing is it getting customers. It just helps you get customers, and so whatever you can do to get those early ones, I mean it doesn't even matter what else, what else you do is just like stack those winds.

About the Fifteenzero mark, we got three customers on the same day actually with so we went from tenzero are out of Fifteenero them are in a single day in July, and it was all from three new customers. One was a barbecue blog, like how to use your trigger kind of thing, and they didn't end up being meaningful in the story. The second was a blog called one less mama, which was very like. I remember looking for them and like they had the autocomplete in Google, like you type well on less and it like autocomplete film on this mom and I'm like, Oh, you must be you know, you must be big. They deal. So they were big in the health and wellness space. And then the the third one was Pat Flynn. He signed up and had been this long conversation with him actually through his best friend Chris Ducker, who had started using convert it like a month that you earlier. So they signed up in the same day and then what ended up happening is they started talking about it like a month or two months later. People are like what tools are you using? And some of the health and one the space, we had Katie and seth with wellness mom was talking about, oh, we're using convergate in their master minded groups. And then in the business space pat was over here talking about how he used convercate. And so then that been like the flywheel started working in the buzz started like coming in and a few months later we launched an affiliate program and started doing webin hours and and kept doing the sales right, but it was basically the sales got all that initial momentum, maybe call it up to twenty, twenty five thousand in Mr and then that turned into just this pace of half fast everything was going and it kind of blew up from there. So to go from twenty five to half a million, you said, by the end of this sort of not the second year of Your Business, but the second year of this rapid coparation. Yeah, traction, basically before you decide to quit or stay. Do you called it a pivot earlier, but it's more like you just recommitted to this is my main business. Obviously, when you say Flywheel, in my mind I understand you're saying. So we bring in more customers, which means they're more likely to talk about us, which brings in more customers. You're more likely to hit these let's call them microinfluencers within an industry, like a Pat Flinn or the wellness slogger or barbecue plug or whatever might be, Yep, which then, because they have mastermind groups, they're recommending you and it's sort of spreads virally within these small pockets of industries. I can imagine you could do that forever really, because you could just go from niche to niche, doing like you were doing, kind of direct obviously you have to expand your team. You couldn't be the only person doing that. And then if you add the affiliate component, like you said, and I know this is probably where I started hearing about convert kick, because suddenly I have passed doing one of these jv's with, you know, Nathan, and then someone else was doing one and you're suddenly there's a every day there's a convert kit show happening somewhere to an email newsletter. Right. That happened within my echo chamber and I can imagine that could be within other bubbles and different topics around the Internet. Is that enough to get you all the way to half a million a year in run? Right, that, combined with you in Webinars, you know, because what happens? Like the affiliate program is driving a lot but, like most affiliates you know, don't drive anything. You know, there's, like any Christ Gal on your Old Dad's, the ninety eight to rule where it's like only two percent of your affiliates will ever make a single sale, not even the age twenty distribution, but like ninety eight percent are useless. And then, because someone can promote at any time, they'll promote never, or like Oh, I added a time resources page, but like yeah, what else I'm going to do? And then I cust we could sign up at any time, right. You can hear about convercate in your Echo Chamber and you're like right, yeah, that's on my list for never, you know. And so a Webinarre really made an event and basically said, you know, sign up today, and that was really like those things together really drove the growth, and so that actually took us to, you know, five hundred thousand a month and revenue should be six million a year. Yeah, that's huge. Yeah, I mean we're actually ready in an hour and Nathans, I really want to just get we're not even at twenty eight million a year run rate. So first I just have to note the power positioning. It really is amazing. You do enter a crowded space, you decided to create a great Ui, in great user into face, and then you said, let's position this first for authors, them for bloggers, and then you'd be kind of did like a sniper attack within different niches for blogging. So and then Webinars and affiliate marketing take you to half a million. I'm assuming your internal team is growing while all this is happening. You know, customer sports staff, engineers, product front end back, and you're becoming less the Jack of all trades founder guy to the I'm the CEO and I hire people and do strategic, big thinking decisions. Maybe take us forward with with that kind of preface, from the six million a year business to where it is today and the twenty eight million. You just keep doing everything, hiring a better team members than you're at twenty eight million. I mean there's a lot that went into it. Somewhere in there we started to figure out paid marketing as well, but we say...

...we you hire someone to figure it out, right. So yeah, yeah, exactly. Like we grew the team. Content marketing turned into a big thing. Like I tried it early on because that was what I came from, right in the blogging world, and then it didn't work, so we moved away from it. And then, yeah, probably probably around that three hundred to five hundred thousand in Mr Range, we started to invest in a blog. We did something different. We called we like named our blog. It's called Tradecraft, and we released like dedicated issues on a particular topic. So instead of like blogging continually, we said, okay, we're going to put out one issue a month on like selling digital products, you know, on how to launch a podcasts and like that, and those got just really good traction, you know, a lot of good backlinks. The advantage is you can make it a big launch. It was a launch of a free thing, but it's a big launch all the same and it was impactable. It came with like this beautifully design pdf as well as you read on the web and that. So it generated a lot of backlinks and a lot of attention and that grew content marketing into a big channel for us. Actually, our single biggest driver of traffic today is our power by links, and right behind that would be organic search. Now a lot of organic search is branded and it's kind of a paint to split those out right. So you gotta do that. But our highest organic search converts at Double The rate the powered by does. So as far as new you know, free accounts, free trial signing up search, it's the biggest by far in a lot of is from, you know, four or five years of investment. There's one of the thing I'm not like. I'm as a soles. Like don't know if I want to give away this technic, but it's probably common enough that people do it now. One thing that we did is we started writting a lot of stories about the creators using convert it, and so we would hire photographers to go to that Creator's house like do a whole photo shoot with them, which costs, you know, between two hundred and five hundred dollars for US per story. And then one awesome thing is, like, I feel like so many people, as they work from home, they just don't have good photos for their website and they're never going to book the photographer and all that. So we do it for them and so they leave. Not only would we write the story and promote them, we'd also be like, but here's all the photos and like you have the rights to them and and use them wherever you want use in your site. So it's fun to go through like these creative websites and be like, oh, that's from our photo shoot. You know, I'm like on there about page and whenever else. But we also start asking, Hey, would you be up for it if we release these photos for free as part of our stock photo library on UN splash and pretty much everyone was like yeah, totally, that's great, and so we just had these beautiful photos on on splash and what happened is they started getting downloaded crazy numbers of times, twenty million times kind of thing. Okay, and they're quite popular and then they get used around the web. And so what our team does, like we are one of our contractors on our SEO team, is there is a reverse image search for more popular images and then just says like Hey, this is a photo from our library. Thanks so much for using it. You can totally use it without any credit, but if you you know, if you're up for it, would you mind adding a credit link to convert it and the like? They make it total claire, that you don't have to. But the result is hundreds and hundreds of back lengths to convert it and a very effective link building strategy. That is that is quite link building hack. I would have never connected the dots between all those things. And it is long. I mean it starts with photoshoots, I've creators, and goes all the way through to, you know, a crazy number of that soaks your creators then are essentially models all over the Internet. Now it's like, because all their photos are reything used. That hilarious. So and we always say like this is what it means. One of my favorite examples is a friend, courtland Allen, who runs the site indie hackers, hackers, yea, and if you go through, I see him on other people's websites so often from the converget photoshoot, because he just, you know, he's a black creator. He had this in his photos, this amazing podcasting studio. It's got like the great mood in the photos. Just like the photos are fantastic. I would use them right. You know, we have used them in our marketing and everything. But you want teachable's website and it's like, Oh, there's our photo of courtland, you know, or like all of these things. It's just so funny and you know we're joking about that on the indie hackers podcast. Of how like he's like that famous. Now I'm all over the Internet. Yeah, you don't want to builboard somewhere for something like the products. Okay, one of the aspects I know, like I was talking regarding you being like now I CEO of A. You're not not a venture back start up. One of the things you deliberally did, but is not, you know, take on investors. You've been bootstrapped or cash flow grown the entire time. I have two questions only. This an order, so just bring it back to you. Growing as your company crew. How hard is it being to be the founder within your company? is so much bigger now, you know, being more money, more customers, more team members? Your role must have completely changed. How was that evolution mean for you? Yeah, there's a moment our...

...very first team of treat we were twenty one people. We were in this period of crazy growth. It's also really stressful because, you know, our APP was going down, we had a denial of service attack against us, we're fighting spammers, we were e just like all kinds of stuff. We finally gathered in the mountains of Idaho for the first time and I remember sitting there like we're in this big living room of like Kindeth Lodge House place, and I remember looking around and realizing like okay, who's going to kick this off, like we're all here, oh, you're all you're looking for you. I'm the Good Oh, okay, here we go, you know, to being the thing of like okay, I gotta lead this group and it was super uncomfortable. First, like I'm very introverted by nature. That's part of the reason I love work from home, also the reason I lef blogging, because I go to conferences and people I want to talk to me instead of me having to like put our effort to doctor, you know, being there the ultimate hack. And so that was a big adjustment and it's still something where, even with the team now of over sixty five people, I still would rather be more in the background. But I think that also helps because then you're not the voice that's dominating every conversation. You know, you get these leaders who are like I'm the most important thing, you know, like listen to me. I'm probably stifled a lot of growth and conversation that would happen otherwise. So that was a big transition. There were other things of like just skills on reading a room, reading emotions and conversations, understanding, like it's not just about being right, it's about the connection or things like that. And so one of our executives her names Ashley, and she's been with the company for five and a half years now, so she was here through like that crazy period of growth. She was really good at later like pulling me aside and me like, okay, do you remember in that conversation when you said this, did you notice that person space? Know what what was there to notice? And those you're like okay, so next time, you know, like just giving some of that feedback of like I mean ultimately comes down to, like here's how you connect with people, Here's how you lead people, things that I just hadn't hadn't learned. I would say, like skills are on listening and decisionmaking, because there's a difference between I used to think that if I truly listen to you, or the way to demonstrate that I truly listen to you is that now I agree with you, which can't be always be true, because but if I don't agree with you, and so then do you then not feel heard? And so building skills around being able to truly listen and then being able to like make the case for your argument better than you just did, and then, in that being able to communicate my own decision. And it can be totally fine. That's different from that, but I've demonstrated that I didn't go like yeah, thinks and like go on with my thing. So those have all been leadership skills that have come over time and there's a lot to it. It's quite the journey and I don't know, it's hard to know, but it's coming along slowly. Imagine you've spent way more time hiring people recently than you've been front and designing convert kids, you know, at interface or things like that. Yeah, it's that. I like another example of that is we have like five full time designers on them between the marketing and product side of things, and I had a whole conversation with one of our designers and it was so tempting to want to dive in to like the details of the design and it's a big change that we're making. Were changing that some of the navigation and convert it. So there's like a lot that goes into it and we had to take a step back and in staid like design it process. And basically what I had to think is, like okay, if I'm not here in the next conversation, what's the process that I want him to follow? And so we like we now what are we optimizing for? Problems are we solving? Like really work through that. It's all the process and it was all about like forget the problem. The problem turned into just an example of how to implement the process. And then in that case I gave me confidence that when it's him and another designer and I'm not anywhere around, they'll follow the process rather than going their opinions. And I like almost oven and went to my opinions, which would have completely short changed like what I'm trying to do long term in the company. Yeah, that's that's that's interesting. It's it's kind of the last thing on that sure is. I've then realize, okay, that was great, that was one one on one interaction. I now have a designer who most of the time is going to think that way, which is great. But then why I did is I wrote out that entire conversation interaction that we had. I wrote it into a post and share it with the entire team so that they could all see an example of thinking about like process versus opinions, you know, so that I could like take that learning and try to pass it on to sixty five people instead of just one on one. All right, so it's trying to find as many of those moments as possible. Yeah, so from you changing to a oneone interaction so that can carry for with them without you to then the whole thing caring forward...

...to the whole team without you and keeping everyone at track. It's yeah, it's it's a task. I'd love to know, in terms of both the future growth and your past growth, your decisions around. Like I was reading an article last night, for example, you were initially all about reinvesting profits and doing profit share with your team and then you more recently switched to now you're actually worth willing to share some of the equity within your company so that when there is an exit or when there is some kind of windfall from even a float on the stock market or something like that, not just you get rich, your team members will get rich, the ones who especially, have been there the longest, which is different than this sharing profits. So there's that and there's you have never taken on investment. So like the acquisition you recently did. When I was reading about that, you pointed out the fact that you had to purchase that new company using the cash flow the or the Prophet sitting on the bank from operating the company, not from what you've taken on from investors or any kind of, you know, loan facility. So tell me about your whole philosophy around capitalization, equity ownership, even venture capital, because one of the things I know you and I were talking about behind the scenes that you've actually gone to the point now where you're bringing in more investors who are on a secondary possibly to then help some of the staff who did get equity if they want to exit some of their shareholdings now. So there's potentially new owners, small owners. Obviously you would come in, which an influences your future decisions. And then why wouldn't you go and get met your cap, because you could probably raise a maybe half a billion dollar valuation right now and just drop thousand, two hundred and fifty million dollars into your your bank account to then rapidly continue to grow. So what is your thinking around all this, around capital and money? Yeah, yeah, great questions. So first, I'm not I don't know what the word is to put on with it, but like I'm not against bet your capital in the sense that a lot of people are of like. You'll see see these articles of like from the bootstraft. Soideo community of like venture capital is evil with everything that's wrong with the world. And like I don't think that I just think it's a matter of choosing what's right for your business and being really clear on what outcomes that you want. My thing took me a few years to get to this point. So I don't want to like project the idea that I had crystal clarity on this from day one of finding and Pirk it, because I actually tried, when we were at that hundred thousand a month mark, I tried to go over his entire capital like I went down to San Francisco, met with six or seven different investors and ultimately decided both I was bad at pitching and didn't get any term sheets and also I was talked out of raising by a friend WHO's basically like no, you have the growth like six year in path, which I'm very thankful for now, that friend being Mike McDermott, the CEO of fresh books, and so big, big shot out to Mike. So let's see the biggest thing, I guess two sides of it. Know where you want to go and know who you want to answer to. So I see all these people optimizing for the destination, the destination being selling the company, retiring, starting the next thing, whatever, any of that, and they're willing to put up with a lot to get to that destination. I kind of don't think that they ought to put up with like a pretty sucky life of working super hard, putting up with co workers that they don't want any of those things and it's all about like I got to get to this, like this sucks now, but we sell the company in two years, rule IPO and then like I'll go live on a beach, and I just feel like life is too short to do that. There's no that like grind it out and put up with things for any purposes not worth it. So I think about optimizing for the journey and I think that you'll live a better life. It would be more true to your values and all of that if you optimize for the journey. And so in that it's like how can I have the biggest in back now? How can I do the work that I want to do now? And those side is, who do I answer to? And so if you're raising capital, you answer to those investors, whereas if you are if your investors are your customers, you know, if they're the ones providing all your cashual, then you've answered your customers into your team and to yourself rather than to his outside group. So you're able to think much more long term. You're not at risk of like, if you miss two quarters of earnings in a row, like the board is going to remove you as CEO and a point someone else, which happens a lot. which happens a lot, and you know, and to be fair, it's not always a bad thing. Like often there's a lot of people who should start companies and are not meant to scale companies. True, and who knows, I might be one of those people, but I don't have a board that we can remove me. So you know, yeah, all that's really interesting to think about and I just I wanted to build something that where we served creators, and we started this conversation talking about musicians and artists. I don't have to justify to a board or something that the best financial opportunity is to go after music versus a like enterprise email marketing clients. I can say I think the most enjoyable journey that will also have financial upside...

...is to go after music, you know, and that's what I'm optimizing for. So that's one side of it. The next thing you're talking about was the team side of profit sharing versus equity. I went into it thinking, if I'm optimizing for the journey, then I don't have an exit in mind. So equity does not have value. And this is something that Jason Freed and David Anim, our handson for base camp, preached a lot. I now think it's nonsense. I don't know if we swear on this podcast, but I think that it's not sense. And so, like you should always be trying everything you do, should be trying to build equity in something right. That's how wealth is created, is through equity rather than just think come and so what I realized is that if we build a valuable company, someone will always want to own part of it. Either the company will want to buy back those shares from someone who wants to sell, or there will be another investor and another friend or someone else who comes in and wants to buy some of these shares. And so, basically, granted like, we can provide liquidity for those team members one where another, without having to change our journey and without having to compromise. That'side of things. And there's companies like a last see in you know, that built this massive entirely bootstrapped, almost entirely bootstrapped company and in that process, you know, they ultimately Didn Ipo, but a few years before and IPO they raised two hundred million entirely secondary equity so that a bunch of the team can catch out some shares. So I guess another important point. Like convercts company mission is we exist to help creators in a living. In part of my like life, mission is to help as many friends, families, Co workers, humans I'm connected within any way become financially independent. Growing up poor. That like when I realize that making money is the skill that you can get good at. As a set of principles, that is like great, let's make this available to everyone. And so once I realize that convert it was going to get to the point where it would be more money than I ever needed knew what to do with, and it was like, okay, it's time to give equity to the team and make sure they can participate in the upside. So there's a lot in there, but I basically changed my perspective over time and plan to keep changing. I feel like continue to shoot more and more equity to the team. You alluded to secondary offering. It's hard to figure out how to talk about one, because I'm not like super I don't have the exact language on public solicitation, which is you get into sec rules and yeah, and stuff like that. This is this is not at all me saying people should buy shares and in convert it, but something that we realize we could do is help facilitate if there were outside investors, friends, people in the industry who wanted to buy shares from current and former team members who wanted to sell them, that we could help facilitate that transaction and that doesn't put us on a path where we have to sell. That doesn't change any thing about it, about the company, because we're like look, it's a couple percent of the company that's changing hands, it's going from one third party to another third party. There's no voting rights in the liquidation preferences that come with that and same time it gives people an opportunity to own a share of a company that I've really believe in the on terms, and so that's been a cool thing. It started with Darmess Shaw's the CTO hub spy, has been a longtime friend. He just emailed and was like Hey, I was listening to you on a podcast talked about this problem. What if I just bought a million dollars for the shares from former team members? It's like okay, you know, and then sort of snowballed into this bigger thing. Yeah, so that's kind of where we're at. The hard thing is there will be this narrative that like convert it has like raised funding or something like that till this is not at all accurate. So that's where I was like, it's hard to know how much talk about it without like casting the wrong narrative. Right, Donna Stoke the flames there too. Yeah, exactly. Okay, so last last four minutes. I know you we got to run off and Nathan ties in perfectly. So what is the next step for yourself and convert kid? Given so you're not thinking that your couple of eggsit going to grow to a billion dollar evaluation. You're not in a hurry or focus on the journey, like you said. So making an exposition to Buy Music Company is fun as well as a good growth decision. Maybe not as good a growth decision is it's, like you said, enterprise clients or something like that. But where does this go next and and are you I'm assuming you still do want to grow. It's just you're not running to a billion dollar X EVALUATION IPO as soon as possible. But maybe an IPO one day, or what are you planning for your future? Yeah, I certainly not a pose to an Ipoh, so long as we get to maintain our our direction, and I think there will be a lot of companies that. I think markets will continue to shift so that, I feel, has become even more accessible. Like if you think back to like when pits our ipoed in the early S, like I feels happened at so much smaller of a scale than today. It's like, if you don't have a hundred million R and a hundred and ten percent net revenue retention and like, you know, all these things, you can't Ipe...

Oh, and I think that will change, like the long term stock exchange things that angelist and Carter are doing. You'll get a lot more options there and you'll become more normal, which will be great. Like sometime in the future, you know, you'll be able to buy shares and companies like converted or teachable or some of the other things in an APP like Robin Hood, which will be, I think, fantastic. So there's that side of it. The biggest thing is to just build for the long term and like serve creators above all us. So I think about like we launched a product last year called converted commerce, which is really expanding our footporn quite a bit to allow you to sell digital products, all those ebooks and, you know, email courses and songs and behind the scenes footage and whatever else, directly to your audience, and that's going to be a huge new revenue stream for us because now we actually get a cut of all the payment revenue because we are our own payment processor, and so that's going to be really exciting. You know, in you see companies like shopify with shop pay, teachable has the same thing and and other companies. Right they're adding this in and customers don't feel like they're paying anymore because they were just paying car card fee before and now they're paying a credit card free and it's actually a substantial revenue for the business. That, you know, the gross merchandise volume, gmv is, is really meaningful. So let's see're asking what's next. It is basically keep building the company for the next decade and see where it takes us. I am both an active competitor with male chimp and a huge fan, because I think you look at mail chimp and so many companies sell early on right. You look at mail CHYMP and they're like what if we did this for like twenty years straight? So I think of it as like okay, I'm on, I'm eight years into a twenty year journey where at twenty eight million year and revenue, I think we're still more revenue than mail chimp was when they were eight years into their journey. And so it's like I think there's there's a huge potential for upside. Compounding is wildly powerful and so like, let's just give it, you know, plenty of time to compound, and so that's what I'm thinking about. Okay, awesome. Well, Nathan, I know we're actually we're out on the money for the time we had website. So obviously convert kitcom and Nathan burycom would be the to. You're happy to share anything else you you'd want to share? Yeah, it's a follow me on twitter and then for Nathan Barycom, I guess check out two things. I have a podcast called the art of newsletters, which is where I interview but people from like Sampar, who owns the hustle, to morning to basically all my favorite people who run newsletters. And then I have my own newsletter where I talked about band seems of the company. What else? I like talking about money. It's one of my like no one ever talks about money and so I feel like a private newsletter is a great place to do that. So, anyway, that's a Nathan Baracom and if you follow me on twitter, that's where I'm most most tact up on session networks. Awesome. I appreciate the time and just keep up the good work. Yeah, awesome. Thanks for having me. Wow, what a fantastic story. They're from Nathan. I really appreciate him sharing so much detail. In the rapid growth phase of convert kit, I was taking notes. I was thinking about things I would do for my own startup thanks to the ideas that Nathan was sharing. I hope you're were two. I think Nathan's company, convert kids, going to well and truly continue to grow. I suspect it will be a billion dollar company. It may even stay private, like he was talking about mail chimp being an inspiration. They're well and truly over billion dollar valuation if they were publicly listed. They're not either. So I'm think Nathan's inspired by that idea of just keep on bootstrapping, keep on growing your successful start up. No need take on investors, no need to go public, you can just stay in control not have that responsibility. So there's a good chance it's going to become a billion or even multibillion dollar company with Nathan still in charge. Well, maybe not, who knows? Time will tell. It's a story that's still going but I'm really glad to lock in this part of the journey now in the vest of capital podcast. So I hope you feel the same now. If you did find this episode helpful insightful and you'd like to share it with people, or maybe you were just speiacking of a specific person, family member, a friend, the colleague or a new entrepreneur. Maybe there's a person in your life that is starting a new software business, assass business, and they could benefit from hearing this story, especially get some inside into growth hacking an early stage startup. That like where Nathan talked about when they were in the early stage. Share this episode with them. It's best at capital episode number ten. You can find it by just searching for bested capital or my name, Yarrow, why a Ro Oh, in your podcast APP. So get your phone out. You can open up whether it's your apple player or your Google player or spotify or any of the third party ones. There's Amazon music as well. Tune in Stitcher, lots of places. The show is on every single one of those. All you have to do is search for it and then look for number ten, episode number ten with Nathan Barry. You can also go to my blog, why Aroro dot blog. Click the PODCAST TAB. You'll find all the subscribe buttons of there, plus all the past episodes are available, and I do recommend when you're in your APP and you've got bested capital open, if you haven't done so already,...

...they'll be a plus button or a follow button or a subscribe button. Click that and I will make sure you get every new episode when I release it, as soon as it's released, as well as an access to all the past episodes. You can download or stream anytime you like. Just look for vested capital again if you have not done so already. Thanks again for listening to this episode. My name is yarrow and I'll talk to you on the very next episode by by.

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