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Build Your SaaS – bootstrapping in 2019 on Smash Notes

Startup advice from Justin Kan, Stephanie Hulburt, and Naval

Build Your SaaS – bootstrapping in 2019 podcast.

August 15

Which is better: B2C or B2B? When should you walk away from a sale? How do you make difficult decisions?

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I actually don't I don't want to hit number one on those because I don't think I don't know how that would work out. The server might be on fire. Everyone. Welcome to build your sass. It's a behind the scenes story of Building a Web after 2018. I'm John Buddha software engineer,


and I'm Justin Jackson. I'm a product and marketing guy. Follow along as we launch transistor dot FM and spots it. Can we include that in the official intra? Now, do you think it's okay?


I think so. Yeah, I guess it's on a point. That's a thing we've


committed to. So, folks, we're back for another episode, John. And this is we're recording this on a Monday. You know, we feel this commitment to record a show once a week, and so we didn't record on Friday. We must have been totally in summer mode, John, because I didn't even think about it until you mentioned it today.


Yeah. I don't know what was going on that day. I mean, I was busy. Yeah, I was working. I was working.


I mean, it's hot outside. Things were happening. Yeah, I just went and saw John Fogarty and concert. He is He is old. How old do you think John Fogerty is?




Okay, you're actually pretty cool if he is, Uh, when was he born? He is, but he's aged 73.


Okay. What? From credence?


Yeah, he's from CCR fame. But also had a big, um, you know, a big CCR was actually only 67 to 1972 and then and so many of their hits. His hits were in that era. But then he also had, um, center field that came out in 1985.


Oh, yeah,


Put me in, Coach. I'm ready to play that one.


I do. I do enjoy some classic


CCR. Yeah. So I was surprised by how, like that dude is still rocking. Uh, I mean, there's a few songs where it was like, Okay, he looks like an old man, but his voice was still super solid. I couldn't believe it. So, I mean, if either of us are still what's the rock n roll equivalent of people building web maps? What's the Web app equivalent of?


Yeah, I don't think


that's a thing yet. Yeah. Kevin Kelly. How old is Kevin Kelly? We've talked about this before, but Kevin Kelly is the oldest Web person I know. See, he's only 65. Okay, so maybe if we're doing what Kevin's doing when we're in our sixties and seventies, Uh, anyway, we want to record an episode every week. We haven't. And we thought today what we would do because we don't have much time is we were just pick three tweets and really quickly. We picked these and we would discuss them. We would use them as jumping off points for discussion.

And this might be a trick. You want to use your in your own podcasts or block post, cause it's gonna give us something to talk about three things. But remember that to get a bigger audience, often you have to tap in to folks that have bigger audiences than yourself. And so we'll see what happens. Maybe we'll report back next week. We're gonna be discussing these three tweets and maybe the folks who are discussing a will be interested and might share what? You know, our take on it. So we'll see. Ah, you ready? John? Writing. All right.

So the 1st 1 is Justin cans, Uh, tweet All these will be in the show notes at sas dot transistor dot FM and, uh, Justin says between cell selling twitch and starting atrium, I don't even know what atrium is. I've thought a lot about beat How B to B compares to B to C favorably, in my opinion. Now this is interesting because he he's done both. And Twitch was really kind of a B to see play. Most of the big things we think about Facebook, Twitter, YouTube, those air. I'll be to see


you, but I don't hear too much about the beauty. Be a success is because they bred skit purchase behind the scenes or whatever.


Yeah, and I mean, there's a few that folks might think of. Shop, if I would be a B to B app on actually be the pro Sumer. There's a little bit of a gray area there anyway. A lot of folks, when they think of startups, think of BBC and Justin is totally in that ecosystem. So this is interesting to have kind of ah ah, Silicon Valley insider And there they have traditionally been really bullish on B two c. He's saying, Ah, wait a second maybe be to be so. He goes first and B to C and B to C. You have to ride a massive wave to become a success. This is more than just being good at building a company.

You also have to be very lucky. Google, Facebook and Twitter all road massive waves. B to B, however, is in your control the problems air known. You could just ask businesses what their problems are and make products to solve them. So, John Ah, and there's more in this thread. But what are some of your thoughts around this? B to B versus Be to see?


Yeah. I mean, I agree with him. I think be to see you obviously need, Like I said, a massive wave or a massive way of growth thematic a massive user base. I mean, talking millions, hundreds of millions of people using the thing to be successful and to get to that point. You kind of see this with companies getting massive amounts of funding and just spending money on acquisition. And then they're in debt and then they have to find a way to crawl out of a hole. Whereas it seems like B to B. I mean, he talks about being controlling. The problems are known. But it's also that I think you can, you know, charge money for things and not have to have this massive with growth.


It's also interesting that he highlights how and and I mean he had a massive success with, uh, with Twitch. But he's saying, You know, you really have to get lucky with consumers. It's way harder to figure out what they're going to want as a big group. When folks for saw Twitter, they were like, Ah, that's stupid, that's never gonna catch on. And for whatever reason, it catches on. Uh, you know, even things that seem like no brainers today.

Netflix, for example. I remember initially kind of going Well, why would I goto Netflix, you know, especially when they're just doing DVD mailing DVDs. Why would I do that instead of going to Blockbuster? Yeah, I go to Blockbuster. I could get the movie right away.


I don't have to wait. Right. There was also a nice experience. I thought I enjoyed going to movie rental


stores. Yeah, people would have thought you were crazy. And so there seems to be And if you'd said you know, to folks, it's just it's harder to get people like Maybe if you said Would you like to rent movies online? Maybe people would have said Yeah, but at the time, it was like, Well, now you know Internets really slow and expensive and so so many things have to fall in place for there to be that that thing, that massive wave. It's like You can't just get one thing right. You have to get multiple things right, right? And timing seems so important. Like if you're too early, it doesn't work out. If you're too late, it doesn't work out. You have to kind of hit it right at the right time.


Yeah, either Netflix knew that going into it or they just sort of you know how it's done on the right time and said, Well, streaming Streaming is ready to go. We're ready to do this. Let's let's try it out. And I think you know, at first I don't remember they didn't have a huge selection. It was only movies. I think I don't even know if it's TV shows


at first. The reason we got Netflix initially and we held out for a long time. We were like cord cutters, but we had an apple TV, but we were just ordering shows and movies off iTunes on. Initially, I remember looking at Netflix and going This is all garbage. There's nothing good here. But what What got us in was Dora the Explorer because we were paying a dollar 50 per episode on iTunes and soon as soon as Netflix got it, it was like, OK, well, we're gonna use this now because we'll definitely spend that much money in a month on a hunt for the Explorer. But, I mean, who would have thought like the quality wasn't great? You know,

if we had a choice between watching a movie on Netflix and I teens, we would choose iTunes because the quality was just better. Like their video, Kodak's weren't great. So many things have


to work. Yeah, exactly. Yeah, that's the Yeah, that's and then for them, there was obviously a a point where they needed They needed massive growth. They needed whatever fire ality. If you want to talk


about that, yeah,


I wanna call it that. They needed people that sort of talk about it with others. I mean, you know, Justin here mentions in the street as well will be to be of a clear execution path. You don't need to mess around with fire ality. Yeah, you know, it's you don't necessarily know. It helps for businesses, too, to recommend it to other businesses. But you're probably more so going out and trying to attract those businesses directly.


Yeah, or I mean, yeah, you could starve word of mouth, but there's a difference between getting, you know, ah, handful of word of mouth referrals every month, which were actually already getting for transistor. If you look in our inbound and I think this is this is important, you wanna have some of that signal If if you have something that people are not recommending, I think you have a problem. And the fact that people are already recommending us to their friends or to their colleagues or to their you know other folks they know that are running businesses is a good sign. But we don't need that to be viral right? We don't We don't need to hit number one on Reddit or hacker news or product on or what we need is a handful of people to do that every


month. Yeah, I actually don't. I don't want to hit number one of those because I don't think I don't know. I don't know how that would work out.


Yeah, it worries. Yeah.


Yeah. The server might be on


fire. Yeah, they might melt. So the Yeah, I think it's it's interesting. And, you know, I think does take a lot of skill to to orchestrate, be to see companies that can attract that kind of virology. B to B and especially with B to B sass. You do not need viral loops. Everyone's looking for them. You just need a handful of people to recommend your product every month. And that that would be, you know, pretty good growth for most satraps. I think this whole threads worth reading.

He also has more stuff on his. Uh, his blocks will link that up. All right, let's go to the next one by Stephanie Holbert. And she is on Twitter. She's s E Holbert. Ah. And if you're not following her already, I highly recommend it. She's an entrepreneur. She is a, uh She does image compression, I think for V R and games and things like that. Let's see what? Because she's the founder of Binomial.

Let's just see what this is here by no meal is making state of the art imaged image and texture compression. So that's what they dio. I'm guessing, uh, you know, they're building. I'm guessing she I don't I don't even know. Do you think they're probably It's probably a lot of ah, you call that low level programming, see


stuff like they're


probably Yeah, I find her really interesting. She's not really in the SAS business. I think she sells, uh, annual licenses for her her stuff. But she just always has interesting insights on marketing on sales on, you know, being a software person. She's got a great Fred on how programmers can dress up how they can improve their wardrobe with a few simple things, both for men and women.


Is that is that ah, like a stereotypical programmer?


Yeah, yeah, you know, like, how can you get just increased things a little bit anyway? Uh, so she has this interesting thread on on sales and hard sales, and she's quoting this other fellow rich eldritch and he's saying at some point, you've got to stop proving yourself and, uh, and he's talking about in a career sense. When you're first starting your career, you have a strong urge to do this. At some point stop. If somebody challenged you challenges, you just move on. So she's taking this career tweet,

and then she's saying, You know what? This also applies to sales, she says. Early in the business, we established philosophy of no hard cells and it has served us well. If someone's not convinced we move on, we may improve messaging for all. But we don't hang on trying to convince one person. It's tempting to defend yourself, but not good for business. And I wanted to bring this up because I already even with transistor, I've already had to deal with this. When folks, you know, get on a chat or send us an email and they're like in some ways almost,

uh, this is the way I receive it. Is there, like, what cell get about transistor?


Yeah, what's your What's your, uh what is that? There's an acronym


for late. Yeah, your primary value metric or your your customer customer value proposition.


Your C v p.


Yes. And you know, it's not bad that those are the questions I'm asking, too. When somebody pitches me on something, especially something I'm already using. You know, if someone has a new slack competitors, er, my question is going to be, well, what makes it better. And it's a reasonable question, and it's good to be pushed into, just like she's saying, You know, we might improve our messaging.

So every time I get challenged on, you know what makes transistor better? I'm thinking, Yeah, how can I communicate that? And working on her home page the other day, I was challenged on this and I thought, You know, one thing we need to have on her home page is unlimited host unlimited shows. That's one of the things that makes us different. You pay one monthly fee and you can host unlimited shows. But you know, there was one person that was looking for a host kind of a well known person. Ah, lot of people forded me his tweet saying this. This person has a big audience.

You might want to reach out to them, and I reached out to him and, you know, to his credit. He just had lots of questions about what makes it what makes transistor better. And and after about we probably had a back and forth about five times. I was kind of like, You know what has probably isn't worth my time,


right? This guy's not sold yet, so let's move on. And maybe we can get when the same lot of effort time get a couple of the


people. That's right. And, you know, in the beginning it's challenging because, you know, Lipson has been around for a long time. And why why wouldn't I use Lipson? And I mean, I have lots of reasons why you wouldn't want to use Lipson. Um, that, you know, I think transistor is better. But if you're already using Lipson and you're happy and everything's working, maybe you should just stay. And how much effort do I want to spend convincing somebody that they should move to us?

E. At a certain point, you have to go. Okay, I'm gonna stop trying to sell this person, and I'm just gonna move on and find somebody else. One thing this also made me think of is if you're finding your having to do the hard sell all the time. That's probably also a bad sign.


Yeah, that's gonna that I feel like an untenable situation, right? You're just gonna be start selling all the time. No one's gonna just sign up because, like, they're not dis convinced by either word of mouth or, you know, reading your home page, They're like, Oh, yeah, that sounds


great. Yeah, yes. And that the desperate Sometimes it comes about because of desperation. You're so desperate for the sale that you just keep hammering and you get one lead on the line and you're like, This is it. This is it. I've got one. And you're gonna fight for that fish, no matter what. And you know, sometimes you fight and fight and fight, and you know you're not able to reel it in or you reel it in and it wasn't worth your time. And so there is a wisdom in knowing went to went to hold them and went to walk away like you really do. And I've heard this repeated with a lot of entrepreneurs. They seem tohave this second sense about you know what? This isn't worth it. I'm just gonna walk away. They can say no and feel fine walking away.


Yeah, I think this is related to another tweet that we're not gonna necessarily talk about. But you posted. Which Waas? Oh, no, it is. Never mind. That's the next one.

Who is Naval?

He is the founder of AngelList.

So Well, that's a good segment. Let's get into the next one, which is no Val. So novel is tthe e the founder of Angel List and has recently just kind of been tweeting a lot more about his experience building. Um, his number one, uh, kind of tweet right now is how to get rich without getting lucky, which is kind of interesting. Um, there's a bunch of, you know ah, like 11 of the items in that threat is understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you. It's kind of interesting.

Um, we could actually talk about that one in different time, but the one we're gonna talk about is decisions, he says If you can't decide, the answer is no. If two equally difficult paths choose the one more painful in the short term, pain avoidance is creating an illusion of quality. So maybe this was what you were referring to, uh, in relation to the other tweet.


Ah, yeah, Well, the else Yeah, the else knows the if you can't decide the answer's No, I think that's related to Yeah, something else like heard, which is like, if it's not an emphatic yes, Just don't do it. Yeah, if you're not, if you have an idea and you're like, Yes, this is amazing. I need I need to do this. Then do it Otherwise, just like yeah,


you're thinking of Derek Sievers. It's either hell yeah or no?


Yeah, Similar. I think it's similar idea here


totally and actually like this when I see people I respect, when there's alignment and what they're saying, Uh, you know, if there's a bunch of folks and they all have different opinions, like a bunch of folks who have done it before and they all have different opinions, it's like I I don't I can't really create a compass out of that. But when there's a number of people I respect that are saying the same thing, that to me feels like a more universal truth and so decisions. If you can't decide the answer's no and this also I think goes along with, you know, decisions would have to make in partnership, right? So if you and I are fighting and we can't if we can't decide, let's just say no.


Yeah, unless it's something you have to write. Like


yes. And in that case, we've kind of reverted Thio the 37 Signals Wisdom, which is whoever cares about it, Maur Winds. So if John really wants to build, you know, a new use, a new type of authentication, that's open source thing and I'm like, I think it's stupid. I think it's gonna cause more support. And John saying No, I want to do it. He can simply can do the customer support for it and he gets he gets


the win for Or, you know, keeping in mind the recent World Cup. We could if we're tied, we just have a shoot out some sort of digital shootout, which would be a weird way to it's kind of a weird way


in the game. But I actually like that as a marketing exercise. Every time you have a disagreement that two founders get online and you have, like a battle a battle royal in, uh What's that game that everyone all the kids play?


Oh, is it Fortnight


Fortnight way? Have a fortnight, Battle Royal. Do you have you played that game?


I'm not.


No, I haven't either. So that it would be a perfect perfectly


arena. Sort of a coin cost a little bit more involved.


Could you imagine that would be hilarious.


Here's some late 30 somethings playing.


Actually, folks, if you have an idea of a game, John and I could play online and and actually, uh, a share like screen screen share tweet us at Transistor FM and we We'll try to do that sometime. Maybe we'll start a twitch channel or something. Uh, here's one thing I didn't understand about that tweet. He says The last part is he says, choose the path that leaves you more. What is this word?


Kwan? Imus. I think Ikhwan amiss when I had to look


up. Okay. What does it mean?


It is having her showing equanimity even tempered. Okay, obviously a decision that leaves you even tempered or


okay, The apple dictionary.


Calm and cool.


Yeah. Calm and composed. Why didn't he just say calm? No, Val, Come on.




words, Big words. That's interesting. So which which one makes you feel more calm?


Yeah, I agree


with that. Yeah.


I don't want to decide. You want to say yes to something that's got bring you more anxiety and stress


down the road, right? Yeah. Yeah. And what's interesting is he's contrast ing this with the previous statement, which is choose if there's two equally difficult paths, choose the one more painful in the short term. Yeah. So, you know, I think an example for us that really illustrates this is do we incorporate Do we go through the legal, uh, the pain of having to draft a partnership agreement of getting advice from a lawyer off finding a lawyer in the first place of dividing up our shares? That was painful. In the short term, it would have been way easier for us to go. Let's just get started. Think about it later.


That would've been awful down the road.


Yes. So I think this that matches up with this, right? Yeah. And did it leave us more calm and composed in the long term? Yeah. Yeah, I think so. So this is something I think is gonna become more and more important, uh, as we continue on with both spots and transistor because startups basically cos the whole idea is if you're leading a company, you're making decisions. You get paid to do two things, I think and make decisions and everything else, like the execution, which I often like to do. And,

you know, we don't really get when you're the co founder of a company. The execution really isn't what you get graded on. You get graded on thinking and making decisions, and I can see us needing to kind of think of have, ah, advice like this one. Okay, the next thing that comes up like Are we gonna You know, in some ways, spots was the was a difficult decision we had to make right away. Are we gonna pursue this now? And it is going to be painful because, you know, I want execute on it really quickly and, you know,

there's still lots to prove with spots. Do we Do we want to be in the advertising business? Do we want Thio? You know, am I going toe like that? Are you goingto like that? Is that is that so? There's a churning that is very painful in the short term, and I think sometimes my you know, my personal kind of desires. I just want to make this easy. Let's just make this easy for right now and you know we'll deal with it in the future. But you almost always have to force yourself to reverse that Another. Another tweet that this make reminds me of is hard conversations, easy life, easy conversations, hard life, you Now. So are we going to have the hard conversations now or are we gonna wait for


Yeah, you know, I mean, it's I've I've struggled with that. I think of the past. It's definitely easier in the short term to avoid those, but


yeah, and even if folks want to go back a little bit, Um And remember, this is still unfolding for John and I, um, but a good episode that I feel exemplifies this idea of like making hard decisions having hard conversations is when we, John and I talked about, I think it's our bowl. Tron needs more fuel. So if you look, that's June 26th. But it's either that episode or the one right before it, which is are started the one right after it. I see spots, but where we had to talk about like, John. What do you want?

Do you want to, you know, quit your job right away. Do you wantto You know, if we had $200,000 in investment, how would that change? Like asking those questions and getting that out in the open and then, you know, on my side, me going like, Ah, like, I'm feeling this pressure, this financial pressure for us to start, like making a bunch of money right now. How are we going to do that? Is it possible? You know, having those hard conversations now way better, then leaving


them underneath. It is. I think so. Yeah. I have a book that I bought that's been talked about a lot. Um, that I haven't read yet. I've been meaning to cult difficult conversations. How to discuss what matters most. A lot of people have talked about it can link it up in Amazon, but it's like the 10th anniversary came out, you know, eight years ago. So it's been around? Yeah, but overwhelmingly, like, positively


reviewed. Yeah, well, like that up to, um Yeah, Anything else on this one in particular.


I don't think so.


So, yeah, uh, this is a short episode, but again, we just and we might do this in the future. Maybe this will be a recurring theme is that we just choose three tweets and discuss them. If you have something you want us to discuss, tweet us at Transistor FM and ah, we might choose your tweet Thio, you know, to answer eventually, we want to get some Q and A going So having a voice, mailbox or whatever, answer a bunch of questions that that's not something we have the infrastructure for yet, but eventually


will have a place. It may be a future in


transistors. Yeah, we want this to be a feature. A transistor. So if you have thoughts about these tweets definitely reach out to us as well. You could also, if you're in breaker, you can comment right in the app If you're in cast box, you can comment right in the app Do that if you're on, listen notes. If you use that site to discuss podcasts, do it there to pot. Asi is another one where you could discuss podcasts. Um, we'd love to whenever I can. I kind of do the rands and check the conversation there. So if you're listening there right now,

please leave us comment. Leave us what you think. And we will see you next time. Ah, next Tuesday, which is the 24th. And actually, that'll be interesting, because I will be on a flight next Tuesday's so that that's Ah, we'll have hopefully by then we'll have some information about a Chicago meet up s o. Stay tuned for that. Yeah, We'll see you next week.

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