Vested Capital
Vested Capital

Episode 10 · 3 months 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 yaro and welcome toinvest a capital episode number ten featuring my guest nathan bury thefounder and co of convert kit. Vesse capital is a podcast about how peoplemake money, build capital and then put their capital to work. I interview starup 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 athorough, deep dive into nathan's history, and this is a long episodewere almost an hour and a half in interview time. So we got to spendquite a bit of the story with nathan's early years running an agency in designwhich eventually led to actually working for a software firm whichexposed into a little bit of software design, both in the job itself and onweekends. When he was working on side projects, developing apps with some ofhis friends that actually led to a teaching business funy enough, he wrotea book about what it takes to do: good design, front and design a particularuxus interface design for apps and websites, and that led to nathan, beingone of the first people ever to publish a book on that topic around. I think itwas two thousand and twelve when he talks about it, and that was a gawa tobecoming an information publisher. So a person who has an email list who sellsdigital products. You would have heard plenty of stories from people like thaton the rest of capital, podcast and my show in the past as well. In fact, i'vebeen one of those people for many years, so nathan was in that space in thedesign world. He actually launched his first book and made about nineteenthousand dollars in sales, so he breaks down how he was able to do that withhis first ever information product which led to him creating a businessthat made about two hundred and fifty thousand a year at its peak, and thatwas actually the gateway to launch and convert kid which is now his. You know,multiple life figure business, i should say yeah egh figures. It is eightfigures. Twenty eight million is his multiple at figures and it's an amazingstory because he saw this need in the world of emo marketing. That was mostlyaround design to begin with, so being a person who's interested in front anddesign. 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 tobuild one himself very ambitious, but you know he was a young guy. He divedin and for a number of years, actually didn't do a whole lot of sales. He wassort of sitting around two sand dollars a month in a r r. It was a side gig,while he was still running his teaching business, and then he decided to go allin focused on convert kit and that led to some serious explosive growth. Nowi'm not going to recount what he said in the interview, but you really needto listen to the section we talks about convert kits growth from two thousand amonth, all the way up to about. I mean really up to today, but in particularfrom two thousand to five hundred thousand, so from sort of a basicbusiness making a you know, maybe fifty thousand a year to making six million ayear. He breaks down in some detail the different marketing strategies andtactics. They use some good detail to e break things down where i really feltlike he was being generous with his explanations of what worked for them.So a lot to learn there from nathan in terms of just growth, hacking, a startup and then towards the end of the show. We talk about capital in terms of weknow. What's the plan for the future, why hasn't nathan taken on investors?What is he optimizing for? He went from giving profits to his team to nowgiving equity they're actually in the moment doing a secondary raise. So someof the team members can exit some of their the shares so lots to cover. Itreally goes from the beginning. To the end, i think you'll love this storywith nathan. It was a lot of fun to talk to him, for i press play if youhave not done so yet, please check out in box done com if you're the kind ofperson who is dealing with too much email or just needs help with anything.That's kind of around your in boxes, whether that social, medium box ishelped sin boxes or your email or the associated task that had triggered whena person send you an email. So anything to do with updating software forwardingmessages to team members. Just co, ordinating projects in box oncome willprovide you with an inbox manager or two or three to help you deal with allthose emails so organize them. Build a system build some documentation, builda knowledge base. Reply to your emails and coordinate with your team andsoftware that you use, so you can effectively step out of all that kindof day to day to do list that gets generated within your in box, and youcan instead spend time growing your company or having a holiday spendingtime with your family writing that book that you've always wanted to write. Itall becomes an option when you get better systems and talented people,specialists running your in box, that's in box done com check it out. If that'ssomething you might need now here is nathan, barry and the convert kit story all right nathan, thanks for joining metoday, yeah thanks for having me on so,...

...as most people probably know you're thefounder of convert, kids, probably the primary reason. I've got you in theshow here, obviously a huge success, as you record this, your you're throwingout a number about twenty eight million dollars in a r r, which is huge.Congratulations at such an achievement. I actually am really curious abouthearing more about convert at ors and story because, having been in the worldof information marketing since for me like i was, i got star with an emaillist, probably around two thousand and four, i think with the first list- andi remember you guys- showed up into what was already a crowded space at thetime. So i can't wait to hear about why even decide to enter such a crowdespace of the time, but before we do any of that, you want to give us a. I wasasking you before the show for a highlight real of how big is convertkid become, and you know what is it? What does it do for any of those whowho might not know what it is yeah so convertit is online marketing even marking platformfor creators, so think of creators is anyone from like baggers podcastersmusicians, artists, filmmakers, all that, so we have like a whole range ofpeople like amy batali. Is this incredible? No nation geographicphotographer, who uses us to stay in touch with her list tim ferris onschwarzenegger, runs his news letter and convert it cool him mcgrory. Wejust acquired a company called fan bridge which is email marking formusicians and so that brought over a few few thousand musicians to theplatform. I was actually really curious, i'll ask you at now with fan bridge, iwas reading about your acquisition there and it was a part of me going. Iwonder if nathan made this acquisition because he wants to hang out with morecool musicians. You know: is there a little bit of that in there there's alittle bit of that for sure? Okay, it's one of those things. So maybe two yearsago we noticed that we were getting traction in the music space kind of byaccident. We actually got timarau as a customer, and that was one were as like.Oh, like there's a big name. How that you know it came about to connectionsand they were on male chimp, and you know it's natural fit to move over, butthen we started putting in some more delivered effort and just realized. Wecould build this company for any type of audience right. I think so manypeople who get into sass they kind of luck somewhere between luck into theircustomer base and default into it were like you saw an opportunity, and sothen you started serving those customers and before you know whatyou're like the biggest real estate ask company ever and you're like, but idon't actually like weel ters, you know or something like that right and werealized that we didn't just want to go wherever we were naturally pulled likefor example, because i think a lot of your audience has been aroundinformation marketing for a long time. I think infusions oft as a company, youknow now keep they got pulled very much just like whichever direction thingswent. So they ended up with a lot of like there's like online marketing andthen there's the sleezy version of only marketing, and there was good money forthem in it, and so they were totally okay with those people using and thenthey like, they became very mikon for that type of customer base which hurtsthe liver ability and it hurts like all these other things right, and we justrealized that we didn't want to go wherever we were naturally pulled. Wewanted to be very deliberate about the types of customers reserved and it wasgoing to be the creators that inspired us. We wern't going to be the companythat, like years later, we're like it's a great business, but we don't like thework you know or we don't like the industry and so about two years ago wehad this conversation like well, who would we be most excited about to haveas customers and we had the like authors and blockers? And you know allkinds of people were super excited about, but then, like musicians set outis like. Oh, these are creators that hell inspire us. So we realized. Ohwell, that's a good business to like why don't we bring them into the foldas well and so kind of last i'd say: eighteen months in particular, has beenexpanding a music, and so you get all kinds of people like land, bridges,many more a whole bunch of other deaf wapper, now use a convert. You knowit's like it's funny, just all like the list just goes on and on, and it justcame from a deliberate focus in that area. So it's a bit of a tangent, butit's just, i think, as people build their businesses too much of thathappens on autopilot or where there's momentum, and rather than delivereffort, and so just think about you know, years from now who do you wantyour festers to be and what steps you put in place now to make that happenyeah. So it's a good point, not just from the side of i want a certain typeof client, but also where is the market going and know, for example, with myown company the moment i am buxton e, we're getting some traction withaccountants, which makes me go okay. Let's, let's become the emailmanagement service for accounting firms, but then i'm like do i want to spendall day basically pitching the service to this world. You know it's likethere's a personal essiton as well as a business decision in there. Obviously idon't have to be the one who's doing the marketing forever as well. Sothere's that to think about, but many more, it's just kind of cool de leopardto go out there and say yeah with these are our clients, i'm sure that helps tobring in more clients as well, just to close a loop. I know i asked you howbig conversion actually is. So twenty a million runway there's some other bignos 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 welaunched a free versions and we now have thirty six thousand payingcustomers and about four hundred thousand free users, since that's beengrowing really quickly. Yeah those are the main, the main stats like we'republic with all of our metrics. So if you go to a convert at dot, bearmetrico, you can see like mr insuring and everything else in real time, justbecause i wanted to leave those bread crumbs for anyone else, building acompany like falling along. So if they're curious, like hey, i'm attwenty thousand a month in revenue and we're really struggling with jurin likei wonder what convertentur was at twenty thousand a month right, and soyou can actually go back and filter back to like two thousand and fifteenwhen that was true and see what all our numbers were, then so yeah we're anopen book about about everything. I think that's great. I think it possiblyhelped you early on to with. Perhaps you know spreading the word gettingmore coverage coming from myself, the world of blogging. You know you go backfifteen years. It was all the rage for every blogger to kind of do theirincome report. Obviously you know pat flan and johned kind of really made ita thing, but everyone was doing it, no matter how much money you made, italmost became. You know boring. I e to say of a graafreinet to do it, but youstart doing it with with a sa start up, which i think was also really it justgreat. I think the transfers fantastic there's some risk with it too, butlisten. I want to go back in time and talk a little bit about your earlyyears and then also the start of convert kit. So are you a boysy boysyboy boy? I can say this is a ten custer boise boy born and raised yeah? I nowso. I grew up about forty. I minutes soon an hour outside of boys up in themountain, and so i grew up roaming. The hills i was home, schooled have a bunchof siblings so by common activities for us we're like making swords in my dad'sshop and like playing nights as we run the hills and all that but and theni've you know, moved around the boise area, travel a whole bunch, but alwaysalways lived or had a home base here. Does that mean there wasn't muchinternet up in the hills or was that available? We had dial up internet youfor two for too long. I remember the twenty tk modem i got into. I had anewweb design in high school actually because a girl that i dated was likeleaking websites on geocities. You know and like little animated gifts and like-and i remember like watching that, knowing it to hold on you type, whatinto no pad and then refresh, and then how does that work? You know and thenlike getting books in the library and- and i just i love the immediatefeedback- lip of you can make this change in code and then it wouldimmediately show up over here and like you'd, make this change and then showup, and it wouldn't do any in ver here and have to like dig in and find outwhy it didn't work. So i guess my fourteen year old that was tons of funand then i got photoshop and started playing from there. Actually, that waspirating. Photoshop on dial up internet is remarkably difficult, a load exactly. I remember well i remember looking forkeys, it's always finding the key to open up a software. Yeah, we should besaying this on a popular recording, though anyway, that ontew would havethought in photo op the fast now so there you go so you're dating isself bysaying go cities to which, which makes you kind of like a late, mids sort ofweb design that 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 acareer in mind or anything like that? Back then yeah. The first career that iwant to have is as a landscaper, so that didn't end up happening. I evenlike early in high school, like one of my dad's friends, had a landscapingbusiness. So i like to you, know, work for him and i was like. Oh, this is aot. Do it's not all on 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 proby about the highschool time, i yeah started getting projects to design like a simple logoor a really simple website. Three minutes gigs for like a hundred bucks.Three hundred pox five hundred bucks, and so that was what i was doing then.As a kid all of my friends were older than me, and so i kept trying to keepup 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 schooland all my friends are going to graduate and go to college and i stillhave like a couple o years of high school left, and so i went to myparents and said, like hey, is a high school for years or is it a fixedamount of work and i had older, siblings, and so my parents had alreadydefined like what high school meant like the curriculum and all of thateven being homeschooled. Let's, like said, no, it's a fixed amount of worklike go ahead and here's the list. If you want it- and so i spent i guess, isfrom when i was fourteen to like fifteen and half or thirteen tofifteen somewhere in there doing all of high school. So i remember thinkinglike, as we drove from boys to seattle for like family red ship thinking likewell, i'm bored for this eight hours in the car, i'm also bored while i'm doingalgebra. So why don't? I combine those two and i do like a month worth ofalgebra on a eight hour drive- and i have i like my little brother would bethere so to be like david. How do you...

...you know? I i'm stuck? How do you dothis and he you know, is pre ipad, so nothing better to do than help in athousan. So when i'm graduating, when i was fifteen and started going tocollege, then first fo graph design, then marketing and then dropped outwhen i was seventeen when i started getting like. Basically, i got my firstten thousand dollar web design gig and was like i'm here going to college tolearn how to make money. I think i've learned how to make money like i wantedto do in the next mine. So okay, so you must have been like what eighteennineteen when you're landing these ten thousand dollar plant. I was seventeenseventy wow yeah just so i dropped out of college before most people drop outof high school. That's crazy! Okay, a few questions service there. How do youconvince song at seventeen to pay you ten thousand dollars to do something? What's the phrase on the internet? Noone knows that you're a dog right, so you had this picture of a guy with abeard and a mustache on your own. Your pro fook was. It was also before videocalls and so we'd get on calls, and i probably sounded really young you know,but yeah. It was one of those things, i'm realizing. That contract wasreferred by someone else who worked with one of their competitors.So basically it was software for a sign language, interpreting agency out ofsacramento, and so they basically needed software to manage theirfreelance interpreters going to like doctor appointments, and you know allthe things that they would do, and so they went to one of their competitorswho they were friendly with. You know in a different, i guess, in a differentmarket and basically said hey, you have software for this. How did you do it?We, like? Oh, we hired this guy, david and idaho, to do it and david was myfriend, and so they went to david and he was like. Oh well, actually have anot 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 widdevelopers hat done some. I did websites and, like small weber,applications that this is the first life real wit application, and i didall the design and ishams and, like the business side of it, and then contractdeveloper were at the back end of it. So it's still good profit. Like icleared like five grand on that one is at seventeen. That's like huge money,yeah. It was pretty great, so take us for that. Does that grow into a fullblown agency that you ran for a number of years? It was basically freelanceokay for a few years. Basically, staying at that level like enough moneyto earn a living, i mean it was incredible for me, looking back, i'mlike okay, i think i was making like fifty zero a year or something now whathappened was in. It would be two thousand and eight. I just had like mybest month, o the free lance. I think i've been free a thing for three yearsthen, and your sin as old at that point: yeah yeah, okay, yeah, nineteen,somewhere in there you're, really only twenty two rightnow. Nineteen is an that's like frettin curious, i'm all thirty one asof a week yeah. So so, let's see i lined a bunch of freeness projects justhad like my best mother, ever of like twelve thousand dollars of work and asingle month. The thing that i learned about freelancing, though, is thatyou're, like oh here's, the contract. I have signed here's the money i havecoming, but it always gets delaid, and so you like keep counting it in thesame month, but you're realizing you like you're, counting the same you'relike oh. This is great. I've got like ten thousand dollars coming in and,like a month later, you're like a ten thousand dollars coming in, but likeeight thousand of it is what you expect, the previous mother for finishing thecontract or whatever you know, and so it's like not as good as you hope itwould be. You know, but stay away. So twenty years old he's good, you know,eight thousand a month is awesome. It is it is. I went to on a trip with mygirlfriend at the time. Well i guess we were engaged. Then we went on a trip tosouth africa with some other friends at five weeks. Traveling all around had agreat time and then came back and i went to pick up all the conversationswith clients and they were all like hey. I don't know ifyou know, but it's two thousand and nine and we're in the middle of arecession and like we're not sending money to our clients spend money. So iwent from like top of the world with my free lancing to you, know: i've earneda month and a half off and then coming back and like there's no work to be hadwell. Did you not see the gfc happening while you were traveling in africa or i don't think i knew enough to pay anentier 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 thingthat affects like normal businesses, but i'm on the internet. What i didn'trealize is like i was building websites for like construction companies andremodel ers, and you know all of those, and they were basically like everythingis right up, so i actually ended up taking a job with the one client thatstill had work and it took a full time,...

...roll with them and they were a softwarecompany and i ended up staying in there for three years and during the time igot into one learned how to work on a team right, because i had a. I thought.I knew everything right as one guys that eighteen nineteen twenty years old,but you know i never like worked on team- worked in an office in thatenvironment had a salary things like that. So that was a great experience.Was it a great experience, though it was that as a bit of a struggle,because to go from kind of being your own boss to having a boss and havingsaid hours and set salary that must have been a bit of a shock now it wasboth. It was really helpful to have the salary, and especially at that time andto have coworkers and so much of that, especially because the consistentbusiness side of frailey was not something that was really good at andso having like stole. It was really nice, but i remember times i reallystruggled like. I remember one time in particular of like something come upand we were still doing a little bit free, lancing and i'd like just leftthe office to go. Do the other thing and, like my manager, when i got back,i'm like hey, come in, you can't do that. You know what do you mean? Ican't do that, and so like everything, it was ablessing and a curse during that time, while i was there, the i fid came outin two thousand and ten, and so we built a knife had of the day the agidwas released. Her life, you know, had it ready, so that was an incredibleexperience to learn is development and design, and that turned into my nextside, hustle of like building apps and selling them the aptor, and that wasreally fun. I get to the point where s making averaging between two and fourthousand dollars a month of sales in the app store for various apps. I had ahabit tracking out. I had a flashcards tap. I think every beginner developermakes a pashar tact like just out of obligation or something i also had anapp that was for kids with autism, who didn't speak or someone who had astroke and lost the billy to speech, 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 sentisse speech, and so it would like verbalize that phrase,and there was all this dedicated pcs that were made for that, that were likeseven thousand dollars, and so with the i bad you could like have this greathartword and everything else and and an app that you know is so much better. Sothat was probably my best money maker. This was after you left the job at thesoftware. Develes was on the side, while i was at the job okay. So so,basically, there were a few of us there that, like work needed us to learn,objective sea and is development, and so we do it at work. And then we allspent on our side projects and keep coating and figuring out on the weekendwhich work was happy about, because then we show up on monday and we'relike hey. We know this much more about. I was development than we did on friday,o they were like yeah great, keep, picking out these projects and therewere two developers there who i would help them with design on their apps,because that was my career and they would help me with code. We werepartners in any of that way. We were like, i guess, advisers for eachother's projects, like i remember coding, my habits at and getting stuckin, like five different directions where you like code as far in thisproblem, as you can you like, can't figure it out. So you work on thefeature over here. Keep doing that and then, if i got a saturday going over tomy friend, christens house, who was coworker and me like. Okay, here's allthe problems that i have and he would like be like okay, look into it andthey say all right: computer science, one what let's explain, number teps youknow because i'm like using a float when i should have been using an injure.You know like some of these things and just not having that like computerscience background so to becoming an engineer, almost yeah we working on it.I never like got so far into it that people should hire me to program, but iwas always good at interface, design and then any friend and code. That wasmy world okay. So this is a side project, so you're taking your salarynow and you're selling all these apps. So you must be accumulating. You know abit more money at that stage. We you thinking this is great. We're going toretire- or you know, going to put this into my first home purchase like whatwas your financial mind set around that time yeah. So i was relatively newlymarried and my salary was sixty sandolas a year, which i thought was anamazing salary, and, let's see i was really safe. I got money so that icould quit the job like all of my money from ithon ax went just went straightinto the bank by the time that i did quit. It was a little over twentythousand dollars that i had saved up specifically from ios apps and really iwanted to go back to freelancing and and doing haps and making products, andso that was two thousand and eleven that i quit. We in us to be a free,lancer, yeah freelancer, and wherever that the iphones took me. Okay- and iwas it- was basically like the cycle was build. My own apps promote them.Talk about design, get more apples, an clients, you know and kind of just playin this ecosystem, where things really took off for me was the following year.In september twenty twelve, i wrote a book called thee, opposin handbook,which was about how to design iowas...

...applications at the time i thinko'reily had a book out, but that was it there. You know they're now, like onetradition published and one e book on apsi, because everyone was talkingabout code. No one was talking about the design side well, and i built up aa tin, little email us to eight hundred people and mail tump. I had two goalsfor the book. One was to get free lance clients, because i figured if i was theguy who wrote the book on a design like people would hire me to do that, andthe second one is that i wanted to make money from products, and i followedpeople like chris gilibert, tim, paris and others who are were either doingdigital products themselves or would like profile people who are doing itand so is like. Oh, i want to be like that, and so i was hoping i can maketen and dollars over the life of the book. It ended up making twelve sanddollars on launch day and then, like nineteen thousand by the end of theweek, and i be like, fell in love with the world of publishing selling to joproducts like having a blog having an audience a newsletter. I was like going.I remember talking to one friend who lives here in boise, because boysey hasa very deep internet marketing community, which everyone flies intothe radar, but body building click, bank click, funnels they're, allfounded here in boise and there's even more brunson is the one who actuallytold me or taught me how to pronounce boise, because i kept hearing him talkso lot. Yes, exactly yeah, so there's just so much her and so a friend ofmine. I was telling to him. I was like yeah, you know, marking is incredible,like i'd far rather have an email subscriber than a twitter fall orinstagram and he's just like uh huh yeah, we've all known that since two sand two but like job like do you want to go to star like what do you mean?And then you know this is two hand and twelve or whatever t. How do you go?Make nineteen thousand on your first ever campaign selling a book like whatwas the break to result yeah? So there were a few things i built up theaudience and so like eight hundred mile subscribers now i m, like the tens, is,i think eight hundred is so small, but for like eight hundred people with alot. So that was the first thing. The second thing is, i did a ton of guestblogging the day that the book came out. I publish post on all the top interfacedesign post or like sites websites like smashing magazine that were big in thewebsite space. All kinds of stuff like that, i think i had maybe ten or twelveguest posts go live that same day, i was trying to make his big of a sposhwas possible. Now, that's great, so you tell me them a hard that was inspiredby an article that temperis had written about watching before our body when hehad done that. That same thing- and i remember like he was writing about whatwas casting to me- is that there's, like sort of this narrow view of before our body right? It's a healthand fitness book, so you can publish like his partnership with body.Billocost made lots of sense, but like what would he ever write for the basecamp block? Well, obviously, he would write something about how he used basecamp to organize all the work for this like crazy, complicated besar, crippen,but- and so it was just this example of like. Oh. If i want to talk about thisthing, i can do it in a different lens for all these different audiences andmake something that's relevant to them, so that that's where i was trying to do,okay- and that was enough to bring in essentially i mean you must have soldnineteen sandolas worth of an e book. You can't be charging more than twentythirty as right. Okay, so that's the other thing. Cheered pricing is likethe most important thing and i actually wrote a lot about pricing strategy andthat sort of thing in jason, thirteen, basically, and so what i did is icharged twenty nine oars for the book and then i had an additional package atseventy nine dollars that had like some videos and training. You know some ofmy like individual templates, photoshop files, interface builder things andthen for undred. An forty nine was the price that i went with. I had like acomplete package that had the whole to okay of what i used to design apps, andso i did the math home that later and it it more than doubled the revenue. Ifi had just had a single twenty, i ol e book yeah. So that was the thing that ibecame e for, like preaching across the internet, was like. Have multiple praxpoints no just charge more, but like let people self select, becauseactually, the very first buyer of the after a hand book was the designer atthirty seven sins and they bought the complete package, and it was one of thethings where we realized, like oh they've, got the company credit card tothem, twenty in dollars and a hundred and forty in dollars of the same number.You know until it gets over three hundred dollars five hundred dollars.You know something like that: the income expense for is like still justforward the receipt you know and actually patrick mc kenzie, who goes bypatio loven all over the internet. He said something that was interesting. Asi was thinking about charging for content right. He was saying that no jrmanager wants to write a payroll check that has researching free stuff on theinternet in the memorie right as well...

...as like. Why would you buy that book?Why would i like it's free on youtube, er, it's free over here, and it's liketo someone doing it as a profession like their time? Nothing is free, youknow, and so, if you ave the most condensed version up front and in thiscase like they could buy the book, they would tell them how to do it or theycould buy the complete package that would have like all the templates andeverything else. So they could do it x amount faster than they're like great,because the nobody cares more about pace of the project than i care aboutthe cost. To get the i, the cost. Yeah, that's interesting. A kind of you haveto marry the you know the right type of audience where you managed to reachthese decision makers within companies. Not just you know your hobbyist at home,who might think one is five meals versus thirty las one meal or they usedto buying books and not everything else. But then you get like a leader and acompany or someone where it's just like you said an expense to them. Yeah, it'snothing and then like it's better to buy something bigger that takes lesstime to to learn from so but ticket for it. So it sounds like you became afulba and information marketer. At that point, i guess so blog emails. How fardid you go with? That? Was that this a huge sales final worth of variousproducts and and so on, or i was never deep in that world like because there'stwo sides of it right. The direct response marketers, who are like thepros at funnels and everything else and there's the bloggers who are like atthe 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 cray amount of money doingboth it's just one is very sopista in the other is, like you know, very casual, so i wassomewhere in the middle. I ended up writing two more books, one aboutdesign web applications that had twice as big of a launch to a you, know threethousand subscriber email list, and then later i wrote a book about selfpublishing and about my techniques, and all of that which i feel like everyinformation. Marketer goes from like their thing to then talking about howthey did their thing. You know, so i also went on that that journey, but mymaybe taking a step back, there's a blog by someone who's. Now, a friendjason cowan who found a wp engine and he has a blog called a smart bear, andin like early two thousand and eleven, there were two designers who publisheddesign e books on the same day. So i should agree if in j driest and theyhad very different pricing strategies, but they show up in the same community.Sasha was charging like three dollars or six dollars for his like little bookon you, i design and jared had like a full e book that you're charging atwenty, nine or thirty nine dol, something like that and they like bothtoted up on hackenoes at the same day, and so jason colen saw this and waslike. This is fascinating, like you have wildly different strategies. Butif you come on my blog and explain why the like why your strategy is betterthan the other persons, and so they did and there's just these great simple,transparent posts like they're, not trying to sell anything they just justexplaining it, and i read that oh, the other thing is like sasha made likeseven grand in forty hours and jared made like eight or nine thousand, andso like just remarkable close numbers and with small audiences right. Iremember hearing like the guys at base camp, the like yeah. We still focusedour book. It made four hundred thousand dollars and, like there's nothingrelatable about that. But for me, getting going it was super related willbe like oh a designer. Just like me with no audience could do this thing.It can make seven or ten thousand dollars, and so what was funny is thati did all my stuff and then i went on jason's bog some number of months laterand i was like they're both wrong. Here's, the best friing stradi, whichis really the combination charge. A lot of money like jared was doing and usemultiple packages so that people could self that you know is like look. I didway more sales than they did with an even smaller list because of smart,pressing right, and that's where i got into like people were asking me moreabout packaging and pricing and self publishing, and all that, even thoughthey were asking about design, because i just been transparent all the wayalong, and so you, oh you as how big that business got yeah. I on me thewhole thing, the teaching of the design part and the teaching of sell productspart. I got it to about two hundred fifty thousand dollars a year. Okay andthen i basically stayed at that level until actually in two thousand andthirteen is when i started to convert, i was using melt. Jimp becamefascinated by like email, marketing, best practices thought about switchingto evius on soft, because that's what everyone was using at the time, but iwas like teaching user experience and it felt criminal to be. Like a userexperience, you know, expert and using a clunky tool. Like confusion oft, andso i just decided okay, i'm going to build my own and that's when convert itstarted and it was a long road dat going. But you know that was eight anda half years ago now, yeah. Okay, now i can see the the connecting threadsthere so you're an information marketer. You understand this world of smallbusiness, creative people who can do a lot with small audiences you're, alsoin the design space. That was your original teaching space and t it's trueinfusion soft. I remember when i was...

...considering them. It had this nicknameof confusion, soft because of how confusing it was to to get started withit. You need to hire someone just to learn how to use it so you're a designguy you're not going to like enter that world. It feels like you're. You knowgoing against the rules, there's a little bit of a jump, though, becausethen say i know i'm just going to create my own next level, he mooresponders platform and it's going to be very design orientated easy to use,which i do remember. Actually, when convert kid first broke out, it waskind of attached the idea easy to use intuitive simple, but it's a bigdifference between telling an e book to creating a sass platform plus, like yousaid in fusion soft i mean at this point in time, is a weber activecampaign. Mailer life mail, chimp ha got there so many i yeah i can t shopping. Car was of my first ever.One is just tons of email, orders, ponders plus next level ones where theemailed responders and basically crams, with customer management, check outshopping carts, philip programs, all that sort of su built in. So if peoplethink it's confusing now it was still confusing ten years ago to make thatchoice on what plan for the s. But you decided to make it more confusing. Youcreate another auction right. So take me through your testing, because i likehow do you launch something like that as it, because yeah kind of can do anmb, but it needs to least be to do a lot, and that requires quite a bit ofcoding up front this potential to lose a lot of money to launch something thatno one wants. So what was the early days of convertit yeah? Well, the firstthing is: i wanted to get back into making software because i had had this.You know i was going to say. Your long deviation in talking about software isreally like four or five months that part of my life was so condensed like.I wrote, multiple books started convertit and all in, like a sevenmonth, eight month period, yeah in a one year period, i wrote three booksand started converce from like summer, two thousand and twelve to summer, twothousand and thirteen, and so it was just a man. I look back now. I i don'tknow how it was that prolific like you were married. I so you you weren't likea inoughe, kids, wow, okay, yeah, so yeah. I have a nine year old now so soi do the math i would have just been. Your baby would have just been bornround about that time. Yeah. I quit my job a week before my baby was born, andthen your users just yeah. I don't know that that's the best timing, but youknow 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 ebookself published information, marketer type person, one was giving away like asample chapter or some content. You know later like clay, collins andothers. You know would call it like a lead magnet and that was surprisinglydifficult to do in mail jump. You couldn't do it in the free version inthe paid version you'd have to like. I would actually use their translatefunction because you couldn't change the text of the like, confirm yoursubscription button to say like download your free guide, unless youlike, translated it to another language which it was super hacky, and then ialso want to be able to send a uranos monter series of benmost time to whenyou signed up and that i felt like was really conky. So i was really trying tosolve those two problems and later lead pages came out around the same time andin like their lead boxes and all of that and they solved the first problem.But that went from like email marketing platform to like two various specificproblems that i'm trying to solve, and i actually designed an interface thenfor like a weed later called them email sequences. You know, but an autoresponder that just had all the emails down the side, with the timing that youcould see there and then in the center panel was the email itself. And so youreally edited as a single flow, whereas ever the tool would treat it asindividual yumoto. I have to like fully click into the email, write it and thenfully exit, and so in a wherever male champion in fusion soft. It was justsuch a clunky process, and i remember like the excited me was like this-could be so easy. Like caves, you know it's a narrowing out of those twoproblems really helped it still took forever to get. I guess enough featuresto be able to compete, like i remember, even when two years after i startedjames, clear was a friend of mine still is, and this is before, like jameslearco and all of those is, he was just showing the attraction with that and iwas trying to get in to switch over a converce and he did he signed up andwas like wait. You don't even have a page to like list all your subscribers.You don't have like there were so many things that were missing, and so he waslike. Basically, like i love you but like this is not there yet yeah, and soit was a big deal when, like four years later, i think i two thousand andnineteen he moved his whole list over to connectit o hes, like okay, a a realproduct. You know wow so like that you know, melchim had been building theirproduct for a fifteen years at the time...

...now, twenty one years, and so it's justit's hard to catch up. So it took a long time to get that feature parody solike. But how do you do that? Do you launch with out the good features, andthen you have like a leaky bucket. You have a lot of churn because people arenot happy. Is that what you raise in train? Okay, but what i did was narrowwing on the specific features. This is a great way to put a form in your sightthat gives away an often 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 pagefor a free sample chapter. You know someone puts in the emodus andimmediately sends the sample chapter and trade propping in and then itfollows up with that time: email, corse and conor. It was very good at that oneor two problems. You know right and like somewhere between bad and mediocreat all other forms of people marketing, were you o roting it at the time yeah.So i did the design and all the front end and then hired out the rubin mailsdevelopment to a couple different contractors. Okay, so if we call thisperiod, maybe two years like that period to get not to parody at leastwith expected features in an email system, how does the business grow likedo you, because, if you're only solving a few features, i'm guessing a part ofhis like? I don't want to promote too hard because we need to fix the leakwith the churn, but i need to get cash flow to pay myself and pay the you knowthe developers, how do you kind of balance or your marketing with productdevelopment and growth of a company? Yes, so the early days, i was trying todo content marketing because when the bogging world i was like this isamazing. It's a great way to sell you books. It must also be a great way tosell software and it's not at least not in their early days, and so i reallystruggled there like. I think kindat marketing is amazing for sellingestablished software, but we just had such a leaky bucket and you wouldn'tget feedback right, because someone comes to your sales page they're likeoh. This is interesting and they decided not to buy in h, hit the backbutton, but they never actually tell you why litten by and so was about twoyears in, we were at two thousand a month in more maybe less fifteenhundred somewhere in there after working for two years- and i had thisconversation with a friend- am heat and shaw who got a conference together andhe was just like look. If you work in this for two years, you've been reallysuccessful at you books. You be successful with something else thisisn't working like you should shut it down and move on and like when he saidthat i was really taking it back and surprise, but then he like, let thatsink in for a little bit and he said or like you can take this really seriously.Stop ting it like a side project, because i was doing both. You know theinfo marketing conten business and convert it he's like or you take itreally seriously like go all in give it the time money and attention itdeserves and build it into something remarkable and that's, ultimately whati ended up doing so. Actually i didn't shut down the info product side, but ijust stopped working on it. My idea was like oh well, a like have passiveincome forever and it'll be amazing, and i was doing like ten or a month onaverage without launches, and that kind of thing, and in that so quickly wentto two thousand a month them like it dropped out very quickly, but that'swhen i hired someone like out actually put our savings into convertite. So iput fifty grand in and hired a full time in house engineer like gave himequity, and then i started doing drexels and and basically startedtrying to do everything possible to win every account and that's when westarted to see growth, so we were at two thousand a month in january, twothousand and fifteen, which was just after that pivot. By july, we got tofifteen thousand in err. September was like twenty two sand, and then octoberwas forty. Five thousand november was sixty five thousand seventy thousandand we close out the year at ninety eight thousand in m r, and i was justannoying that we couldn't get to an even one hundred sand fair enough. Then,the next year we went from a hundred thousand nembrod five hundred thousandcredible as like the flight like it. Just it felt like a rocket ship,definitely want to know how that works, but just to go back, you said directsale. So this sounds like it got you from two to a hundred thousand m rr.Ninety, eight thousand sorry, not dedere soles of my mind, means you'reon any platform. You can think of, and you see someone mentioned, i need anemail o responder, which one do you think i should use and nathan barryrocks up and says: hey have you heard about convert kid you know is: is thatkind of what we're talking about, or i mean i did some of that, but i alwaysthought that like stocking twitter mentions or something it was like kindof weird, you could be actually the a vertigo to us all the time and we'rejust like what are you guys doing? I do make your product instead of likecontrolling our mentions of converted on twitter, but what i did is itstarted with positioning. So first we were like emo marketing for people whohave problems like this, and i just really lame position that didn'tresonate and so a friend named tim gral,...

...who has been in the book publishingworld for a long time, just remarkable human. He kind of called me out on thatand he's like look you're, not getting traction if you were to narrow downlike pick an audience, a any audience and say like you're, the best emailmarking tool for this narrow slice, then, like you'll, get traction. Peoplewon't understand how to help you where you're like who refer to you and allthat, and he wasn't intending that. We go after authors, but i was i wasthinking of like the crisco and temperses of the world and stuff likethat is like that's. Who we're building for that's, who i want to be like greatconvert, is now evil marking for authors and on one hand that god, as animmediate attraction, which is really cool because now people be like. Oh, ihave a whole community of authors. Do you want to come teach a workshop tothem? You know i have a fraid, i was afther, you know like we had immediatetraction. It turned out that a lot of it, though, was people who were like itwasn't. The author i was thinking of it- was the my life dream is to have afiction. You know like publish my novel on the kindle store. Oh, but this ishard, never mind me o on right, so we got immediate demand and then crazy,high churn, and so my takeaway from that was that a niche is good. I justchose the wrong niche or i'm marketing like position in eron. So, like threemonths later, we changed it to email, marketing for professional bogers andstarted going after the people who were in a specific space in it, and i lookedat who we already had us customers, we had a pali, a recipe blog. We had amen's fashion blog, i travel block. Some of these others were like who hadtracks or them thinking. Okay. If i look at that one person to draw abigger circle around them, who would i get and so drexels for me? Looked likegoing after palio recipe, blogs run by women and, like a cob, there's,probably a defined list like instead of trying to list all the recipe like allthe blogs or all the recipe blogs like when now we're down to pale recipe,blogs and, and then the run by women are run by men distinguishing on theiris that people tend to flock together with people like them, and so you canend up creating like big fish in a small pond or an echo chamber typething. I i got this email where someone may be taking a step back. So what iwould do is get a very specific list of people and then reach out to them alldirectly. I would follow them. My twitter, i would comment on their blogs.I would like interact in their circles and then send them cold out reachemails. Then you know try to get them to sign up, i'd, be able to use the oneanchor client that i had like as a reference. You know basically likeconverce used by people like and i'm like name dropping someone who i knowyou already know, because it's a small circle right and so the direct out wigmail would be like hey. I saw that you using me tim, i'm just curious as erinat frustrates you with mail shim. I ask because i'm working on building a toolcalled tin vicat in the space and let you hear your feet back and the thing,and they would always have a list of things that frustrated them and itwould magically be the same things that freshened me, because i had just comefrom using mail tie an like it's all the same problems, and so we go throughthat. One thing that happened in that process. I remember talking to afitness potter and she was like it feels like everyone on the internet isswitching a convictor right now, and i remember going okay well we're at sixthousand dollars a month that recurring evene. So i can definitively tell youyou know, and these are inside thoughts. These are not outside that. I can dependently tell you thateveryone on the internet is not switching me convictae in what iactually said was like. Oh that's interesting like tell me more and shebasically went to talked about her mastermind group in that space and saidlike well so and so use can verkan. I know they've been using converti forlike six months they're. The reason i'm going after the sot space right. Thisperson is thinking about it. This person is about to switch and thisperson brought it up just the other day on a resturant. You know like hecreates echo chamber in this feeling in a tiny group of people and got really good traction. Hmm verysmart, because the echoed chambers online are really small, like you feel,like internets, big, but you're, actually spending your time and acouple of places where there's really only a few hundred to two thousandpeople talking to each other about the same subject. So if, if you're in thereand four or five people keep talking about convert kit, it does feel likeeveryone's switching to convert here. Suddenly, right, yeah and at a time inthe numbers just at there, so that was kind of the let's say it to fifteen thousand in a rwas a lot of that, and i noticed then, that every sale i made made the nextsale a bit easier and so, like pogram, has a lined about do things that don'tscale you know i remember when i started drexels i was thinking like. Ican't do this because it doesn't scale. I do like content, marketing or painadvertising or something else right. But the thing is that getting customers,it just helps you get customers, and so whatever you can do to get those earlyones, i mean it doesn't even matter...

...what else. What else you do is justlike stack those winds about the fifteen thousand mark. We got threecustomers on the same day. Actually it so. We went from ten thousand ri, ofifteen ozan number in a single day in july, and it was all from three newcustomers. One was a a barbecue log like how to use your tagger kind ofthing and they didn't end up being meaningful in the story. The second wasa blog called walles mama, which was very, like i remember, looking for themlike they had the auto complete in mural, like you type walles, and i likeauto, complete so well the small on like oh, you must be. You know you mustbe big big deal, so they were big in the health and wale space and then thethird one was pathlet. He signed up- and i had been this long conversationwith him actually through his best friend chris tucker, who had startedusing convertit like a month at you earlier, so they signed up in the sameday and then what ended up happening is they started talking about it like amonth or two months later, people are like what tools are using and some ofthe health and on le space we had katie and seth with one this mama talkingabout oh we're, using convertit in their master mine groups and then inthe business space pat was over here. Talking about how he used convict andso then that been like the fly wheel started working in the buzz startedlike coming in and a few months later we launched a filia program and starteddoing elevans and and kept doing the sales right, but it was basically thesales got all that initial momentum, maybe call it up to twenty twenty fivethousand in m r, and then that turned into just thispace of how fast every thing was going and it kind of blew up from there so togo from twenty five to half a million. You said by the end of this sort of notthe second year of your business, but the second year of this rapid oferotion yeah attraction, basically before you decided quit or stay to yourcolor pivot earlier, but it's more like you just recommitted to this is my mainbusiness. Obviously i, when you say, fly wheel inmy mind. I understand you're saying so: we bring in more customers, which meansthey're more likely to talk about us with brings in more customers you'remore likely to hit these. Let's call them micro influencers within anindustry like a pat flan or the wellness, slugger or barterer plug orwhatever might be yep, which then because they have mastermind groupsthere recommending you and it sort of spreads virally within these smallpockets of industries. I can imagine you could do that forever. Really,because you just go from nichten che doing like you were doing kind ofdirect, obviously to have to expand your team, you couldn't be the onlyperson doing that and then, if you add the affiliate component, like you said,i know this is probably where i started hearing about convert you, becausesuddenly i a path doing one of these j vs with you know nathan, and thensomeone else was doing line and you're suddenly there's a every day. There's aconvertite show happening somewhere to an email news letter right thathappened within my echo chamber, and i can imagine that could be within otherbubbles and different topics around the internet. Is that enough to get you allthe way to half a million a year in run rake that combined with doing wepons?You know because what happens like the ahia program is driving a lot, but,like most affiliates, you know, don't drive anything. You know, there's likean christianos. The ninety eight two rule where it's like only two percentof your phillis will ever make a single sale, not even the a twentydistribution but like ninety eight percent are useless and then becausesomeone can promote at any time, they'll promote never or like. Oh, iadded it to my resources page, but like a what else we go to do and then iacushlee could sign up at any time right. You can hear about convertit inyour reco chamber and you're like right. Yeah, that's on my list for never youknow, and so a weben are really made an event and basically said you know signup today, and that was really like those things together really drove thegrowth, and so that actually took us to you know five hundred thousand a monthin revenue which should be six million a year. Yeah, that's huge yeah. I meanwe're actually ready in an hour nathan. So i really want to just get we're. Noteven at twenty eight million a year run right, so first i just have to know thepower positioning. It really is amazing. You did enter a crowded space. Youdecided to create a great ui in greater in de face, and then you said, let'sposition this first for authors than for bloggers and then you kind of didlike a sniper attack within different niches for plugging so and then we onours and a filly, a marketing. Take you to half a million, i'm assuming yourinternal team is growing. While all this is happening. You know customersports that engineers product front end back and you're becoming less the jack of all trades founder guy to thei'm, the ceo and i hire people and do strategic, big thinking decisions.Maybe take us forward with that kind of preface from the six million a yearbusiness to where it is today and a twenty eight million. You just keepdoing everything, hiring a better team members than you're at twenty eightmillion. I mean there's a lot that went...

...into it somewhere in there we startedto figure out paid marketing as well, but they say that you hire someone tofigure it out right, yeah, yeah yeah, exactly we grew with the team kind. Entmarketing turned into a big thing like i tried it early on, because that waswhat i came from right in the bogging world and then it didn't work, so wemoved away from it and then yeah, probably probably around that threehundred 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 calledtrade craft and we released like dedicated issues on a particular topic.So, instead of like blogging continually, we said okay, we're to putout one issue a month on like selling digital products. You know on how towatch a podcast and like that and those got just really good traction. You knowa lot of good back links. The advantage is, you could make it a big lunch. Itwas a launch of a free thing, but it was a big launch. All the same, and itwas impactful, it came with like this beautiful design pdf as well as youread on the web, a no that so it generated a lot of back links in a lotof attention in that group content marketing into a big channel for us o.Actually, our single biggest driver of traffic today is our powered by linksand right behind. That would be organic search. Now, a lot of organic searchesbranded and it's kind of a pain to split those out right. So you got to dothat, but our highest organic search converts at double the rate the poweredby does so. As far as new you know, free accounts, free trial sitting upsearch is the biggest. By far in a lot of it is from you know, four or fiveyears of investment. There's one of the thing, i'm not like. I'm meditate that,because i don't know if i want to give away this tactic, but it's probablycommon enough that people do it now. One thing that we did is we startedwriting a lot of stories about the creators using converce, and so wewould hire photographers to go to that. Creator's house, like do a whole photoshoot with them, which costs you know between two hundred and five hundredlars for us per story, and then one awesome thing is like i feel like somany people as they work from home. They just don't have good photos fortheir website and they're, never going to book the photographer and all that,so we do it for them, and so they leave not on when we write this story andpromote them. Wou'd also be like, but here's all the photos and like you,have the rights to them and use them wherever you want he's an then yoursite. So it's fun to go through like these creative websites and be like. Ohthat's from our photo shoot. You know i like i there about patroan ever else,but we also started asking hey. Would you be up for it if we release thesephotos for free as part of our stock, poter library, on un splash and prettymuch everyone was like yeah totally that's great, and so we just have thesebeautiful photos on un splash and what happened is they started gettingdownloaded crazy numbers of times twenty million times kind of thing,okay and they're quite popular, and then they get used around the web, andso what our team does like? We one of our contractors on our so team, isthere's a reverse image, search for a more popular images and then just sayslike hey, there 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'reup for it, would you mind adding a credit line to convert it and the like?They make it totally clear that you don't have to, but the result ishundreds and hundreds of balings do. Can i i and a very effective link,built thing strategy that is, that is quite link building hack? I would havenever connected the dots between all those things i mean it starts withphoto shoots of creators and goes all the way through to you know a crazynumber of folks. Your creators then, are essentially models all over theinternet now lie because all their photos are being used. Hilarious so-and i always say like this is what i mean. One of my favorite example is afriend cortland allen who runs the site, indi ackers aces, and if you go through,i see him on other people's websites so often from the converce photoshop,because i just you know, he's a black creator. He had this in potes thisamazing podcasting studio. It's got like the great mood in the photo. It'sjust like the potos are fantastic. I would use them, but you know we haveused them in our market and everything, but you on teacher's website and it'slike oh there's, our photo of cortland, you know were all of these things. It'sjust so funny. You know i we're joking about that on the indianer podcast ofhow like he's like a famous now, i'm all over the internet. Yeah yo want tobillboard somewhere for some point. I okay, the one other aspects i know likei was talking regarding you being like now, i ceo of a you know, not a ventureback start at one of the things you deliberately did, but it just not, youknow, take on investors. You've been boots strapped or cash flow grown. Theol entire time have two questions. I wanted this in order, so just to bringit back to you growing, as your company grew. How hard is it being to be? Thefounder within your company is so much bigger. Now you know be more money,more customers, more team members. Your role must have completely changed. Howwas that evolition mean for you? Yeah...

...there's a moment, our very first teamof treat. We were twenty one people we were in this period of crazy growth. Iwas also really spress ful, because you know our app was going down. We had adenial service. Attack against us were fighting spammers. We were, you know,just like all kinds of stuff, but we finally gathered in the mountains ofidaho for the first time- and i remember sitting there like we're inthis big living room of like kind of his large house place- and i rememberlooking around realizing like okay who's, going to kick this off likewe're all here. Oh you're, all you're, looking to you, i'm the okay! Here we go, you know anit being the thing i'm like okay, i got to lead this group and it was superuncomfortable at first, like i'm very introverted by nature. That's part ofthe reason i love work from home. Also, the reason i lofe logging because i goto conferences and people like want to talk to me instead of me having to likeput a effort to doctor, you know being there, the ultimate hack, and so thatwas a big adjustment and it's still something where even with the team nowof 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 as dominatingevery conversation. You know you get these leaders who are like i'm the mostimportant thing. You know like listen to me, i'm probably sifl a lot ofgrowth and conversation that would happen otherwise, so that was a big transition. Therewere other things of like just skills on reading a room, bringing emotions andconversations understanding like it's not just about being right. It's aboutthe connection or things like that. So one of our executives, her name's,ashly and she's, been with the company for five and a half years now, so shewas here through like that crazy period of growth. She was really good at later,like pulling me aside and be like. Okay. Do you remember in that conversation,when you said this, did you notice that person's face? What was there to notice she's likeokay, it's next time, you know and like just giving some of that feedback of,like i mean ultimately comes down to, like you say you can act with peoplehere, saying lead people things that i just hadn't hadn't learned, i would say,like skills around listening and decisionmaking, because there's a difference between. Iused to think that if i truly listen to you or the way to demonstrate that itruly 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 sobuilding skills around being able to truly listen and then being able tolike make the case for your argument better than you just did, and then inthat being able to communicate my own decision, and it can be totally find,that's different from that. But i've demonstrated that i didn't go like yeahyeah thanks and like go on with my thing. So those have all beenleadership, skills that come over time and there's a lot to it. It's quite thejourney, and i know it's hard, but it's coming alongslowly. Imagine you've spent way more time, hiring people recently thanyou've been front and designing, convert kids, you know interface orthings like that yeah. Is that, like another example of that is we have likefive full time design or something between the marketing and products sideof things, and i had a whole conversation with one of our designers.It was so tempting to want to dive in to like the details of the design andit's a big change that we're making were changing, that some of thenavigation in cobera, and so there's like a lot that goes into it and we hadto take a step back and instead like designer process and basically, what ihad to think is like okay, if i'm not here in the next conversation, what'sthe process that i want him to follow, and so we like we now, what are weoptimizing for? What problems are we solving like really work through that?It's all the process, and it was all about like forget the problem. Theproblem turned into just an example of how to implement the process, and then,in that case, like av me confidence that, when it's him and anotherdesigner- and i'm not anywhere around they'll, follow the process rather thangoing to their opinions, and i, like almost dobini, went to my opinions,which would have completely short changed like what i'm trying to do longterm in the company yeah. That's that's! That's interesting, yeah! It's! It'skind of the last thing on that sure it is. I've been realized. Okay, that wasgreat. That was on a one and one interaction. I now have a designer whomost of the time is going to think that way, which is great, but then why i didis i wrote out that entire conversation interaction ally, had i wrote it into apost and shared it with the entire team so that they could all see an exampleof thinking about like process versus opinions. You know so that i could liketake that learning and try to pass it on to sixty five people, instead ofjust one on one right. So it's trying to find as many of those moments aspossible, yeah so from you changing to a one or one interaction so that cancarry for with them. Without you to...

...then the whole thing carrying forwardto the whole team without you and the king ever won a track. It's yeah, it'sa task, i'd love to know in terms of both the future growth and your pastgrowth, your decisions around like i was reading an article last night, forexample, you were initially all about reinvesting profits and doing profitshare with your team, and then you more recently switched to now you'reactually worse waning, to share some of the equity within your company, so thatwhen there is an exit or when there is some kind of windfall from even a floaton the stock market, or something like that, not just you get rich, your teammembers will get rich the once, especially been there the longest,which is different than just sharing profits. So there's that and there'syou have never taken on an investment so like the acquisition you recentlydid when i was reading about that. You pointed out the fact that you had topurchase that new company using the cash flow that or the prophet city onthe bank from operating the company, not from what you've taken on frominvestors or any kind of you know. Loan facilities so tell me about your wholephilosophy: around capitalization equity ownership, even venture capital,because one of the things i know you and i were talking about behind thescenes that you've actually gone to the point now, where you're, bringing inmore investors who are on a secondary, possibly to then help some of the staffwho did get equity if they want to exit some of their share holdings. Now sothere's potential new owners. Small owners obviously would come in whichthat influences your future decisions. And then why? Wouldn't you go and getmetrical, because you could probably raise a maybe half a billion dollarvaluation right now and just drop thirty to fifty million dollars intoyour. Your bank account to then rapidly continue to grow. So what is yourthinking around all this around capital and money? Yeah yeah, great questions,so first, i'm not. I i d of what the word is to put on with it, but like i'm,not against the bench of capital, in the sense that a lot of people are of,like you see the article, the black from the boost dropped so community oflike mentre capas evil. It's everything that's wrong with the world and like. Idon't think that i just think it's a matter of choosing, what's right foryour business and being really clear on what outcomes that you want. My thingtook me a few years to get to this point, so i don't want to like projectthe idea that i had chrysolite on this from day, one of frinton perkit,because i actually tried when we were at that hundred thousand a month mark itried to go a cent capital like i went down to san francisco, met with six orseven different investors and ultimately decided both. I was bad atpitching and didn't get any term sheets, and also i was talked out of raising bya friend who's. Basically like now, you have the growth like six year and path,which i'm very thankful for now that friend bane mike macdermot, the ceofresh books and so the big shot out to mike. So, let's see the biggest thing, aguess, two sides of it nowhere. You want to go and know who you want toanswer to. So i see all these people optimizing for the destination, thedestination being selling the company retiring, showing the next thing,whatever any of that and they're willing to put up with a lot to get tothat destination. I kind of don't think that they oughtto put up with, like a pretty sucky life of working super hard, putting upwith co workers that they don't want any of those things, and it's all aboutlike i got to get to this like this sex now, but we'll sell the company in twoyears or go ipo and then like i'll, go live on a beach and i just feel likelife is too short to do that, there's, no, that like grinded out and put upwith things for any purposes not worth it. So i think about octavii for thejourney and i think that you'll live a better life it'll, be more true to yourvalues and all of that, if you optimize for the journey, and so in that it'slike how can i have the biggest in back now? How can i do the work that i wantto do now, and this side is who do i answer to, and so, if you're raisingcapital you answer to those investors, whereas if you are, if your investorsare your customers, you know if they're the ones rewriting on your cash full.Then you answer to your customers into your team and to yourself, rather thanto this 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 road like theboard, is going to remove you as co and appoint someone else which happens alot which happens a lot and you and to be fair. It's not always a bad thinglike often there's a lot of people who should start companies and are notmeant to scale companies tunas. I might be one of those people, but i don'thave a boy that i can remove me. So you know all that's really interesting tothink about, and i just i wanted to build something that where we servedcreators you we started this conversation talking about musiciansand artists, i don't have to justify to a board or something the best financialopportunity is to go after music versus say, like enterprise, email markingquinet, i can say, i think the most...

...enjoyable journey that will also havefinancial upside is to go after music. You know and that's what i'm optimizingfor so that's one side of it. The next thing you talking about was the teamside of proper shame for secuit. I went into it thinking. If i'm authorizingfor the journey, then i don't have an exit in mine, so equity does not havevalue, and this is something that jason, free and david and mar hanson for basecamp preach a lot. I now think it's not sis, i don't know if we swear on thispodcast, but i think that it's not sense and solike you should always be trying everything you do should be trying tobuild equity in something right. That's how wealth is created through equity,rather than just in come, and so what i realized is that if we build a valuablecompany, someone will always want to own part of it either. The company willwant to buy back those shares from someone who wants to sell, or therewill be another investor and another friend or someone else who comes in,wants to buy some of those shares and so basically ran like we can provideliquidity for those team members one way or another without having to changeour journey and without having to compromise that's hot of things andthere's companies like a lasion. You know they built this massive entirely.Boot jobbed almost entirely boots trapped company, and in that processyou know they ultimately de nip, but a few years before an ipo. They raisedtwo hundred million entirely secondary equity so that a bunch of the team cancatch out some chairs. So i guess another important point like convertitecompany mission is we exist to elp creators? Are a living in part of my like life mission is to help as manyfriends families coworkers humans, an connected with. In any way, becomefinancially independent, growing up poor. That, like when i realized thatmaking money is a skill that you can get good at an is it a set ofprinciples, then, as like great, let's make this available to everyone, and soonce i realized that convert it was going to get to the point where itwould 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 participatein that upside. So there's a lot in there, but i basically changed myperspective over time and plan to keep changing of like continue us more andmore equity to the team. You alluded to secondary, offering it's hard to figureout how to talk about one, because i'm not like super. I don't have the exactlanguage on public solicitation, which is you get into sec rules and yeah andstuff like that. This is this is not at all me saying. People should buy shareson and convert it, but something we realized we could do is help facilitateif there were outside investors. Friends, people in the industry whowanted to buy shares from current in former team members who wanted to sellthat we could help facilitate that transaction and that doesn't put us onthe path where we have to sell that doesn't change anything about it aboutthe company because we're like look it to a couple percent of the company.That's changing hands! It's only from one third party to another third party:there's no voting rights in the liquidation preferences that come withthat, and sometimes it gives people an opportunity to own a share of a companythat i really bite on on term. And so that's been a cool thing. It startedwith darmesteter been a long time friend who he just emailed and was likehey. I was listen to you on a podcast talk about this problem. What if i justbought a million dollars for the shares from former team members? It's likeokay, you know and then i to a snow ball in to this bigger thing. Yea. Sothat's kind of where we're at the hard thing is. There will be this narrativethat, like convertit has like raised funding or something like that: trelissnot at all accurate. So that's where i was like t s hard to know how much totalk about it without like casting the wrong narrative right downto stoke the flames there to yeah, exactly okay. So let's that's fourminutes. I know you can we got to run off and nathan ties in perfectly. Sowhat is the next step for yourself and convert kid given so you're, notthinking metrical exit got to grow to a billion doll valuation you're, not in ahurry or focused on the journey, like you said so, making an exitio to buy amusic company is fun as well as a good growth decision, maybe not as good agrowth decision as like you said, enterprise, clients, or something likethat. But where does this go next and are you i'm assuming you still do wantto grow? It says you're not running to a billion dollar x, evaluation ipo assoon as possible, but may in ipo one day or what are you planning for yourfuture yeah? I certainly not opposed to an ipo so long as we get to maintainour our direction. I think there will be a lot of companies that i thinkmarkets will continue to shift so that i feel has become even more accessiblelike if you think back to like, when picks our ipod in the early s like, ifeel it happened to so much smaller of a scale than today. It's like, if youdon't have a hundred million air and a...

...hundred and ten percent net revenue ofattention and, like you know all of these things, you can't it be o, and ithink that will change like the long term stock exchange things at angelisand carta are dealing you'll, get a lot more options there and i'll become morenormal, which will be great like sometime in the future. You know you'llbe able to buy shares and companies like converted or teacher ble, or someof the other things in an hap like robin hood, which will be, i think,fantastic. So there's that side of it. The biggest thing is to just build forthe long term and like serve creators. Above alls, so i think about, like welaunched a product last year called convertit commerce, which is reallyexpanding. Our foot bark quite a bit to allow yourself digital products, allthose e books- 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 ahuge new revenue stream for us, because now we actually get a cut of all thepayment revenue because we are our own payment processor and so that's goingto be really exciting. You know, and you see, companies like shop ify withshop pay and teach me as the same thing and and other companies right, they're,adding this in and customers don't feel like they're paying anymore becausethey were just paying a credit card be before and now they're paying a creditcard fee, and it's actually substantial revenue for the business that you knowthe gross merchanise volume g mvs is really meaningful. So let's see raskait's next. It's basically keep building the company for the next decade and seewhere it takes us. I am both an active competitor with mailships and a hugefan, because i think you look at malchin and so many companies sellearly on right. You look at malta and they're like what, if we did this forlike twenty years straight, so i think of it as like. Okay, i'm on i'm eightyears into a twenty year journey where at twenty eight million year in revenue,i think we're still more revenue than male tamp was when they were eightyears into their journey, and so it's like, i think, there's there's a hugepotential for upside compounding is wildly powerful and so like. Let's justgive it, you know plenty of time to come pound, and so that's what i'mthinking about? Okay, awesome! Well, nathan! I know we're actually were onthe money for the time we had website so obviously convert kitcat and anbarrico would be the two or you're happy to share anything else. You didwant to share yeah it. They follow me a twitter and then fro nathan barcom. Iguess check out two things. I have a podcast called the art of newsletters,which is where i interview buch people from like san par who, in the hustle tomorning, brew to basically all my favorite people who run news letters,and then i have my own news letter where i talk about ben the sines of thecompany. What else i like talking about money? That's one of my like no one ever talks about money, and so ifeel like a private news letter is a great place to do that. So anyway,that's what nathan barcom! May you follow me on twitter? That's where i'mmost most effective on social networks. Also, i appreciate the time and andjust keep up the good work. Yeah awesome thanks for having me well what a fantastic story there fromnathan. I really appreciate him sharing so much detail in the rapid growthphase of convert kit. I was taking notes. I was thinking about things iwould do for my own start up thanks to the ideas that nathan was sharing. Ihope here were too. I think nathan's company convert kids going to well andtruly continue to grow. I suspect it will be a billion dollar company. Itmay even stay private like he was talking about male chimp being aninspiration. They are well and truly over a billion dollar valuation if theywere publicly listed they're not either. So i'm think nathan's inspired by thatidea of just keep on bootstrapping keep on growing your successful start up. Noneed t take on investors, no need to go public, you can just stay in controland not have that responsibility. So there's a good chance. It's going tobecome a billion or even multi billion dollar company with nathan still incharge or maybe not. Who knows time will tell it's a story, that's stillgoing, but i'm really glad to lock in this part of the journey now in thebest of capital podcast. So i hope you feel the same now. If you did find thisepisode helpful and sight and you'd like to share it with people, or maybeyou were speaking of a specific person, family member, a friend, a colleague ora new entrepreneur. Maybe there's a person in your life that is starting anew software business assass business and they could benefit from hearingthis story especially gets some insight into growth. Hacking, an early stagestart up that like where nathan talked about when they were in the early stage,share this episode with them. It's best a capital episode number ten. You canfind it by just searching for bested capital or my name, yaro yaro in yourpodcast tap, so get your phone out. You can open up whether it's your appleplayer or your google player or spotify or any of the third party ones. Thisamazon music as well tune in stitcher lots of places. The show is on everysingle one of those all you have to do is search for and then look for numberten episode number ten with nathan barry. He can also go to my blog yarodot b. L o g click, the podcast tap you'll find all the subscribe buttonsof there, plus all the past. Episodes are available, and i do i recommend,when you're in your app and you've got...

...bested capital open. If you haven'tdone so ready, they'll be a plus button or a follow button or a subscribebutton, click that and that will make sure you get every new episode when irelease it as soon as it's released as well as un access to all the pastepisode, you can download or stream any time you like just look for vestedcapital again, if you have not done so already, thanks again for listening tothis episode, my name is yaro and i'll talk to you on the very next episode byby a.

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