Key Lessons Learnt From Investing in 170 SaaS Startups With Rob Walling, The Founder of TinySeeds
Critical lessons from investing in reveal strategies for success. Discover insights that could transform your investment approach.
With Special Guest Rob Walling, The Founder of TinySeeds And The Host of The Popular Podcast “Start-Up For The Rest Of Us” Podcast
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The Show’s Main Transcript
[00:00:01.080] – Jonathan Denwood
Welcome back to the WP-Tonic Show this week in WordPress and SaaS. In this episode, we’ve got a returning friend of the show. We’ve got Rob Rowland in the house. He is one of the founders of Tiny Seeds, which invests in bootstrap startups. He’s also the host of the very popular Startup For The Rest Of Us, which I listen, I wouldn’t say every week, but almost every week. Sorry, Rob. I’ve disappointed so many. It should be a great show. So, Rob, would you like to give a quick 20 30-second intro to the new listeners and viewers? Absolutely.
[00:01:15.980] – Rob Walling
Thanks so much for having me, Jonathan. Nice to see you again, Kurt. I used to be a software developer. I became an entrepreneur. I bootstrap five companies, and a couple of them were successful. So, I sold my last one in 2016 and started Tiny Seed, the fund that invests in bootstrap SaaS founders. I also write books. My most recent book is the SaaS Playbook, which you can get on Amazon or SaS Playbook. Com if you’re interested in SaaS. And my fifth book, which I co-wrote with my wife, will be released in two months. Well, we do a Kickstarter in a couple of months, and that one’s about… It’s called the Exit Strategy. It’s about selling companies, the mental side of that.
[00:01:52.220] – Jonathan Denwood
And I’ve got my ever-patient co-host who deals with my badness quickly. Rob knows I’m bonkers. I’m bonkers excellently, Rob, but I’m all over the place. But what’s unusual about people trying to run their businesses? So, Kurt, would you like to introduce yourself to the new listeners and viewers?
[00:02:16.980] – Kurt von Ahnen
Absolutely. My name is Kurt von Ahnen. I own an agency called Manana Nomas. Our agency focuses mainly on membership and learning websites, and I work directly with the good folks at WP-Tonic and Lifter LMS.
[00:02:32.220] – Jonathan Denwood
As I said, with some of the subjects, we will discuss the best type of sections for B2B bootstrap, enterprise mid-size, or MGOs. We’re going to be talking about AI and SEO. We’re going to be talking about free trials or paid trials. We’ve got a load of great subjects. We will be back in a few moments, folks. I’ve got some messages from our major sponsors. We will be back in a few moments. Three, two, one. We’re coming back. I want to point out we’ve got a new sponsor for a couple of weeks. We’ve got Motorpress. Motorpress is a WordPress appointment booking and WordPress-based plugin for booking consultants for small businesses. It looks feature-rich. It seems a tremendous possible choice. You will find this, other special deals from the major sponsors, and a curated list of the best WordPress plugins and services for the WordPress professional and power user. You can get all this by going over to wp-tonic. Com/deals, wp-tonic. Com/deals. Wp-tonic. Com/deals. What more could you ask for, my beloved WordPress professionals? Probably a lot more, but that’s all you’ll get from that page. I’m sorry to disappoint.
[00:04:11.080] – Jonathan Denwood
I’ve made a career of it. So, Rob, let’s go straight into it. So I listened to your episode, Nine Things to Learn Investing, in 170 SaaS companies. First, you emphasized the concept of vertical against horizontal in a bootstrap startup. You’ve been thinking a bit about this. Have you had any additional thoughts after this particular episode? And maybe you could also initially explain what you think the concept is.
[00:05:00.630] – Rob Walling
Yeah, sure. The concept is related explicitly to SaaS companies for those unfamiliar with it. I’ve invested in a total of 191, but with a tiny seed, it’s been 171 over five years. And so you start seeing patterns of success, failure, anti-patterns, etc. The thing that we have noticed, and we’re seeing in the numbers and with headwinds and tailwinds, is that vertical SaaS tends to be easier for bootstrappers. I say easier; getting a foothold in a market tends to be more accessible. And so, for those who don’t know, a horizontal SaaS is something like Calendly or Slack. Any business in the world can use those tools. A verticalized version of those would be Calendly for realtors, Calendly for mortgage brokers, and Calendly for even salespeople. Salespeople is not technically an industry, but you get the idea. It’s when you niche down. And there’s this other term that I’ve coined over the past few months called orthogonal. And because what we notice Next is horizontal, there’s vertical. But within horizontal, we have this group that is, I’ll say, just growing faster, getting more traction, and being more accessible to move. Those folks are horizontal and target a specific job title or role at a company.
[00:06:16.370] – Rob Walling
Imagine an applicant tracking system like Jazz HR. That’s a horizontal SaaS. Any company in the world can use it. It’s not based on a specific niche vertical, but it targets what? Head of HR, HR buyer, people ops. There’s a role. And, since they know who their buyer is, they operate or seem to be behaving more similarly to vertical. So vertical and orthogonal. I’m not saying across the board that you should only… It’s not an always-never thing, but it is a pattern we see. And we recently had an exit, Jim Desk, who sold a majority’s take in his company, not even all his shares, for $32.5 million. And he was bootstrapped. He was doing $40,000 a month when he got into Tiny Seed three and a half years ago. And he just had a… I mean, talk about… It’s not even life-changing money; it’s like generational wealth. And again, he has another bite at the apple with his private equity growth company. He’s a vertical SaaS. It is a SaaS for gyms, and the entire operating system runs a gym. So that’s the hypothesis. Yeah, what do you think?
[00:07:24.600] – Jonathan Denwood
I will ask the obvious question because I think you covered it yourself. Your last exit was horizontal with a Drip. But on the other hand, you’re on your fifth startup. Do you think that was the major… That made it possible for you to succeed with that because you had all that experience.
[00:07:49.370] – Rob Walling
It’s a couple of things. So, we were horizontal. We could work for any vertical, but I focused on three verticals. So, I only listened to our marketing, sales, and the features we built. SaaS founders, bloggers, creators, and agencies were creating all this. And we initially did four. WordPress was the fourth when we first launched, and we found it wasn’t the best fit. They were more price-sensitive, whatever. There were just reasons. And so we eventually cut that off and just focused on those three. Our tool could be used vertically or horizontally, but we did focus. The interesting thing was after we sold, it was actually during the sale process they asked, what’s your breakdown of customers by type? When we went through it, 15 % of our customers were e-commerce. And I had no reach into e-com. I had never marketed or sold anything to e-com, and they were using it for some reason. So that became an exciting thing. They did pivot, being the acquirer, and did pivot drip later into being an e-commerce tool.
[00:08:52.800] – Jonathan Denwood
The other thing I got from this episode is that you talk about the optimal number of founders. Is it one, two, or three? I think you said that it didn’t go through in one particular possible investment. You had almost six founders.
[00:09:14.170] – Rob Walling
Yeah, we did. We did that one. They applied.
[00:09:15.990] – Jonathan Denwood
I would have thought two is the optimum myself. But the only problem is if those two founders disagree, not a total, where it gets nasty, but How do they deal with an honest… When there’s a 50/50 split, where they deal with a… But they’ve got an honest business disagreement, which they can’t agree. How do they deal with it where it doesn’t lead to a promising company just collapsing?
[00:09:52.000] – Rob Walling
Usually, they come to me and ask my opinion, and that’s the deciding vote. They don’t have to, but they come to an advisor, investor, mentor, or someone some unbiased third party. And the best thing is when they pitch an idea, like, one of us is pro this and one is against it, but we won’t tell you who. And so sometimes they don’t even say that. They’re like, here’s this thing, what do you think? And I’ll weigh in. And A&R will, too. He’s my co-founder, and we have other mentors who can weigh in. But that’s often what happens. What you’re pointing out, Jonathan, is that it’s a problem/paradox of having a second founder, which makes your life a lot easier, and especially if they’re complementary, one plus one can equal five. However, at the same time, one plus one can also equal the business imploding because the two of you can’t get along because one of you… It’s like a marriage. When you get divorced, the business is usually done. And so we see both of these things happening. We have seen… In fact, of the companies Tiny C, let’s see, we’ve invested 171, 6% of our companies are no longer operating, 4% have sold, and 2% have shut down.
[00:11:04.170] – Rob Walling
I believe of several that have shut down, co founder disputes was probably the number one reason. Well, co founder disputes are lack of traction and running out of money. So So it’s a big problem.
[00:11:17.100] – Jonathan Denwood
All right. Over to you, Kurt.
[00:11:19.700] – Kurt von Ahnen
Well, I took an awful lot away in this episode from a couple of standpoints. One was your percentages of who becomes a millionaire, because I love the idea of playing the lotto, even I don’t play the lotto. It’s like, wow, if I was friends with Robin part of Tiny Seed, I’d have this percentage of being a millionaire. It’s like, that’s pretty cool. But when I thought more about the horizontal versus vertical, not going to lie, I’ll be transparent. It was a struggle to figure out that phrase, The Riches are in the Nitches, because I’ve had projects where, and Jonathan knows the background on this, where in Power Sports, I have a product where I may have niche down too far. I’ve niche down so so far to a specific audience, and the audience I’m helping isn’t even the audience that’s swiping the credit card. That’s three layers up. And so I found myself having to back out of that niche a little bit and go, Okay, I got to pull in some I got to make it a wider birth. But the other way has just really paid off for me, Rob, and I’m going to give you the credit.
[00:12:23.800] – Kurt von Ahnen
It’s the inspiration. I run my agency as an agency, but it feels like a startup. It feels like a SaaS thing, right? There’s a lot of applicable things. And in my eLearning segment, I said, you know what? I’m going to focus on Scorm for a while because no one else is focusing on Scorm, and I know how Scorm works. So I’ll help people save money and put Scorm in WordPress. And we’ve got three new clients in the last week just from being very focused. The broad eLearning thing is still part of our agency, but if we focus on Scorm as a subset, we seem to get more leads, more clients. And And so I can very much see how applying that horizontal versus vertical thought pattern can work. But I also heard in one of your episodes about having a goal and shrinking the time to make a decision. When you try something like a new niche or a new pattern, or when you guys look at making an investment with Tiny Seed, is it a, let’s see what this looks like on a 30, 60, 90 day pattern Or do you say, hey, let’s take a look at this next Christmas and see what it looks like?
[00:13:34.490] – Kurt von Ahnen
How do you effectively draw a timeline to evaluate a goal or the pathway to a goal?
[00:13:42.920] – Rob Walling
Yeah, it’s a really good question, and it depends on what we are rolling out. So I’ll use a couple of examples. You referenced leaning into a marketing effort. So with Microcomp, we’re looking at doubling down on LinkedIn, probably starting next month or November. That’s where I’m going to record it. But yeah, I just have no presence there. And so it’s like, let’s try it. Youtube worked really well for us until it’s plateaued now. Podcast grows slowly. We have time, we have budget. Where are we going to invest that? And so I think it’s going to be LinkedIn. So the question is, A, the first question is, how did you get to that? And we could talk all about that process of deciding why is it LinkedIn rather than Snapchat or TikTok or whatever. And there’s reasons. But now that we’re going to do it, how long will I do it without seeing results is the question. And for me, I want to see some type of uptick within 60 days. If I’m flat, if today I get 1,500 views a week or something of these videos that I throw up not having any idea what I’m doing.
[00:14:40.480] – Rob Walling
If we’re still at 1,560 days, I’m going to probably pull a rip cord. I will have made changes along that way, but it will be if I’m out of ideas, I’m out of ideas, or I’ll bring in a consultant. Now, in this case, we’re actually going to have a consultant from day one, so I expect it to work. So it’s tight time, 60 to 90. Now, when we invest in tiny seed companies, It’s like, you got 5 to 10 years, and we’re not going to know. I mean, I say we’re not going to know. We see the progress along the way, but also we’ve had some companies where we invest and they’re just plugging along. We invest at 10K MRR, and it’s like a year later, they’re at 15 or 20, and we’re like, Well, I guess this one maybe isn’t going to work. And then suddenly they figure something out and they bootstrap their hockey stick, and then they’re at a million a year later. It is shocking the variability to some of these things.
[00:15:27.150] – Kurt von Ahnen
I’m going to ask you a question based on this first question discussion here with the 170 companies. How many people do you think, percentage-wise, that you sit with for a potential investment and you think to yourself, they’re just ahead of the market? They saw the problem so far in advance that they don’t have a real customer base to market to. That market hasn’t realized their pain point yet, so they’re not a real client yet. That’s interesting.
[00:15:55.690] – Rob Walling
Not many. And the reason is, is because we tend to talk to face to face, Zoom. If they make it to that point, they have decent traction. And so if they’re ahead of it, they would struggle to get to that point. So it’s self-fulfilling. I think the question may be better phrased as, of all applicants, we get 500, 600 applicants, however many we get, what percentage of those are ahead of the market? And that, I have no idea. Because if I go down and see a bunch of companies at zero or $100 or 300 MRR, I don’t know. I don’t think long enough about, Oh, are they ahead of the It hasn’t been a data point that I’ve thought about.
[00:16:34.090] – Kurt von Ahnen
Yeah.
[00:16:34.850] – Jonathan Denwood
Yeah. Okay.
[00:16:35.580] – Kurt von Ahnen
Jonathan?
[00:16:36.560] – Jonathan Denwood
Yeah, thanks. In your episode, 7 Key Takeways in 2024: The State of Independence. I think one of the main parts of that particular episode was the ever-going discussion between free trials and paid trolls, and when you should take the credit card details at the beginning or at the end of the troll. I think the other thing that you discussed in that episode was the best target for a B2B startup. Is it enterprise mid-size? You were surprised a lot of them are going for MGOs. You got any additional thoughts about… Would you agree they were the two main elements of that particular episode?
[00:17:29.910] – Rob Walling
Yeah. There’s always… I think the three founder companies performing best was also curious because that goes against my intuition, to be honest. Usually it’s one or two, and I think that’s a great number of bootstrappers. Three, I’m always like, One of you is probably a weaker link, maybe. I don’t I’m not going to say this too strong because we have tiny-suit companies with three founders, and I’m not subtweeting them right now. So I thought that was an interesting thing, and it was just data. It was like, companies with three founders tend to grow faster than companies with one or two. But yeah, There’s always the debate in the conversation for what, 15 years now of free trial with credit card, free trial without. Should you use freemium? Usually not. I guess here’s what I’ll say. If I were launching a SaaS today, I would give thought to, does my end user, the person who wants to use the SaaS, want to use my product, who’s going to get value out of it, do I expect them to have a credit card, a business card? A business card. And if it’s a developer at a big company, then they probably won’t.
[00:18:34.620] – Rob Walling
There are exceptions, but they probably won’t. So then I would say, All right, so how do I let them get into a trial without a credit card and then do it later? This is in the early stage when I’m first launching. Now, once you get to the point where you know your ideal customer profile, you can make this decision more easily because you start to see patterns. I’m like, Oh, 80% of them do have credit cards. Therefore, I am going to ask for credit card upfront because I only want qualified people in my funnel. Now, why only qualified people? No, because it reduces the number of conversations you need to have, the support, the whatever else. On the flip side, if I had a product where the support was not high and where I did just want to widen the funnel like Craig Hewitt did with Castos, he removed credit card up front and doubled or I think it was tripled the number of leads basically in his funnel. So would I do that ultimately? Probably. That’s probably what I would try to get to. I would try to get to the point of lower friction in my trial, but I I tend to be tentative, especially at the start when I’m launching something new and it’s like, Oh, don’t product market fit?
[00:19:34.040] – Rob Walling
I don’t really want a bunch of freebies in here poking around confusing me. Who do I listen to? If everyone’s in with no credit card, who do I listen to? At least if people have a credit card, it’s like, Oh, there’s some buy-in, and I can hopefully use that as a filter. So it’s a nuanced topic, obviously. No hard and fast rule, but I have a general framework of what I would do.
[00:19:56.810] – Jonathan Denwood
Yeah, it’s quite a really gray area because I remember I can’t remember the lady’s name, but you had a successful founder that I think has taken investment from Tiny Seed. And she did thousands of direct messaging. I think you mentioned her in this particular show. I apologize not remembering her name, but I did listen to the…
[00:20:21.000] – Rob Walling
Sorry. Yeah, it was Marie from Tally. She hasn’t taken Tiny Seed funding, but she has built a pretty incredible $1.5 million business.
[00:20:27.930] – Jonathan Denwood
Yeah, I remember the episode because I think I might be deluded, but maybe Kurt would agree. I’m a pretty determined individual, but she showed a level of focus and determination that impressed me enormously. I think she impressed you as well, didn’t she?
[00:20:52.010] – Rob Walling
Oh, yeah. To build a… It was just her and her partner, and they built it to one point. When I recorded that, it was 1.3 million, and they’re growing like crazy with one support person. It was like, no staff. It’s like, How did you do this? And they did it with free, and they had FreeMium. It’s tally. So. They’re a form builder. So they’ve used FreeMium, and she sent out thousands of DMs, per your point, to get people, because you still have to market freemium, right? Fremium doesn’t just market itself. And in a very crowded space where we know there’s type form and jwt form and every other noun dot form, she started tally. So and has traction. It’s incredible bootstrap business. She’s actually speaking at MicroComp Europe here in about a month because I want to hear more of her story.
[00:21:37.640] – Jonathan Denwood
Yeah, it was quite… So I think that’s another great point because it’s especially big in the WordPress space, that this idea that 3dium will market itself, and it doesn’t, does it? Having a free product, I think you still got to drive It’s all in it, even if you’re offering it for free, haven’t you?
[00:22:02.970] – Rob Walling
That’s right. Yeah. It’s just like engineering is marketing. This thing, idea of, I have a core tool I want to sell, and I’m going to engineer his market, meaning I’m going to go build this free tool that people can use, and that’s going to market my main product. It’s like, great. Now you have two products to market. That is what it is. You can’t just engineer your way out of it. Same thing. The reason, someone might say, a WordPress developer, well, I need the free version to be in the WordPress repo, right? WordPress. Org plugin repo. And it’s like, yeah, that’s true. You It doesn’t work because it’s free. It works because the repo has a bunch of search traffic. It’s a search engine that people come to to solve a problem. And so, yeah, if I were in WordPress, would I have a free version of my plugin? Absolutely. That’s just the default in this space. And then I would have paid add-ons. That tends to be whether it’s a subscription or one time or annual, that tends to be the approach there.
[00:22:54.220] – Jonathan Denwood
Right. Fantastic. I think it’s a good spot for us to go for a mid break. It’s been a fascinating discussion. We got some great stuff to talk about in the second half. We will be back in a few moments, folks. Three, two, one. We’re coming back, folks. I want to point out, if you’re looking for a great WordPress partner, if you’re a single freelancer or you’re somebody who’s a power user and you’re looking to build a membership or community-focused website, why don’t you look at becoming a partner with WP Tonic? To find more about our partner scheme, all you have to do is go over to Wp-tonic. Com/partners, Wp-tonic. Com/partners, and we love to work with you. Over to you, Kurt.
[00:23:54.250] – Kurt von Ahnen
Well, it’s an extension of the freemium question from my standpoint, Rob, and that is, And you mentioned it talking about this tally thing. You said she’d gotten to this growth with one person in support. I think if I were to think of any one main core reason that I am not a product person is Because I panic. I think if I made a product, I’d live in ever panic of having to support it. The amount of questions, and I don’t want to say misuse, but everybody wants to customize or tweak something or connect an API to something and automate something. And you’re going, that’s not even why I built this product. But now it’s become this burden on your shoulders because someone’s bringing it to you. When you are looking at a freemium experience, and I heard you talk about this in a couple of your shows, but understanding what part you give away for free and how you support it, how you support it seems to be one of the biggest cogs in the machine. So is it… At what point do you think someone needs to have a person behind support over an AI chatbot or over a Facebook community group that supports each other?
[00:25:13.840] – Kurt von Ahnen
At what point do you think an actual support interactive person needs to come into play?
[00:25:22.130] – Rob Walling
Well, I think once anyone’s… In general, I think when someone’s paying for something, I want to support it. That’s it. If they’re not paying for It’s like, if it was a completely free WordPress plugin, it’s like, Hey, it’s community. It’s open source. You have a problem? Talk with your commit. And that’s the thing that I think I want to point out to your first segment of that, Kurt, where you said, I don’t know if I could be a product person because what if they ask for this and everybody wants to do everything? You get good at elegantly and tactfully saying no. You say no a lot, and especially the more and more people that use it, and you learn to say who to say no to and what to say no about. And you just have to get good at that if you are going to be a product person. I didn’t start that way. I was terrified the first time someone was, I got to build everything every minute. They say, Listen to your customers. So I’m going to build everything every minute. But no, that’s not what you want to do. You want to learn who to say no to and who to say yes to.
[00:26:12.850] – Rob Walling
And there’s a bit of founder gut, and there’s a filter there. Sometimes there’s a market poll where a whole group of people are like, No, build this thing and we’ll pay 10 times more. And then you’re like, I got to dig in. The thing with freemium, to tie freemium in with support, specifically, as you brought it up, is you shouldn’t do freemium if your product is hard to support, if it requires a lot of support, if it is hard to get onboarded, if there is an incremental cost to each person using it, if there’s no virality. There are four components to where I say, if you have all four of these, then consider freemium. Still not saying do it, but if you don’t have all four of those, don’t do freemium. With Drip, for example, that was my last startup. It was marketing automation, quite complicated. You build these big visual workflows. You can do all kinds of stuff. It was almost a touring complete language with if then else is built into the thing. I didn’t do freemium. The acquirers did freemium after we got acquired, and it didn’t work. They shut it down.
[00:27:10.250] – Rob Walling
To your point, it’s like you should know if you’re getting into freemium, what you’re doing. For me, and I steal these criteria from Ruben Kama, as he’s a founder of Sunwell, but if you have high support or if there’s a lot of support required, just don’t do freemium. Unless if you’re Dropbox, if you’re Slack, if you’re Evernote, who else we can name, who has a free plan, great. If you’re a public company, you have hundreds of millions in the bank, then go do that. But if you’re bootstrapping or mostly bootstrapping, like most of us are, only 5 % probably bootstrapper should use for them. It’s a very small number.
[00:27:42.560] – Kurt von Ahnen
Yeah. Yeah. Thanks for that. Jonathan?
[00:27:46.910] – Jonathan Denwood
So in the episode which I think you had with the founder of Signwell, I think the episode I’m talking about is where you’re talking about SEO, the age of AI, free human, and brand becoming important. One area where I don’t agree with you, well, that’s probably a bit strong, because I think I could see where you’re coming from, but I think you’ve moved your own view is around branding, because what I took from that conversation and your views around branding is, especially people that are used are working in large organizations, they buy a branding pack where they sold a logo for $10,000 and a branding pack, and they haven’t even got their first customer. But I think in earlier, so you were extremely a bit negative about branding, and it doesn’t really produce any results. I think you now have changed your position. Am I putting words in your mouth, or maybe you can explain your thoughts around branding, because I think they’ve changed a bit, haven’t they?
[00:29:11.900] – Rob Walling
Yeah, I think that’s a good point. And I am definitely a person who, when I get new data or new information, I will change my viewpoints over time. I have no shame about this. I’m not running for president. You know what I mean? It’s like, if it’s the right choice now, maybe it changed. Maybe the world changed over the last 10 to be- That’s much That’s much too sophisticated for American politics, isn’t it?
[00:29:33.540] – Jonathan Denwood
That’s much too sophisticated philosophy, isn’t it?
[00:29:37.150] – Rob Walling
Totally. So, yeah, that was episode 725. And the podcast has been going for 14 years. And so I have changed a lot of opinions over the years. And one This one I have because when we first started the podcast, and especially from, let’s say, 2005 to about 20… When was it? It was probably 2014, maybe 2013, ’14. All of my businesses were basically direct response. This is a You pay for the tool, and the logo is me typing something out, the name of the website out in a font, and putting it in a place, and then picking a color. That was it. The tool, and the marketing, and the copy sells it, and it’s utility, and you stick around for it. No brand, didn’t care. And it all worked for me, right? So back then, I would have been like, you don’t need a brand, you don’t need a brand, especially if you’re bootstrapping small niches, blah, blah, blah. Then, as I built Microconf, as I started writing books and my name, Rob Walling, became a It is a brand. It is a personal brand that people recognize. As I built Drip, and that became a brand, I didn’t focus on making them brands.
[00:30:40.900] – Rob Walling
I focused on making them the best products that I could. I wanted Drip to be really successful. I wanted my books to be amazing. I wanted to say smart things that help people. I wanted to build Micro Conf, which is a conference series I run, into an amazing thing. So I didn’t focus on brand up front. Brand happened. Brand happened on its own. Brand is what people say about you or your product when you’re not in the room. That’s my shorthand for it. Visual design is part of brand positioning. It’s a bunch of stuff. But realistically, as I started building brands, and now I realize, in certain circles, if I say MicroKopf, Tiny Seed, Startup For the rest of us, Rob Walling, SASS Playbook. Each of those things evokes something. Maybe some people think, That guy’s an asshole. Maybe that’s part of my brand. Or maybe other people think, Really good information or trustworthy, someone who shows and ships and has my back, so to speak, and someone I like and I trust and is knowledge of. You know what I mean? That’s part of brand. As I built those, I realized the power now.
[00:31:40.310] – Rob Walling
Then everything I launch from here on till I’m all done, it has the luxury of being part of my brand. When we launched Tiny Seed five years ago, already it had a little bit of a shine on it because people were like, Oh, that’s Rob Walling’s thing. Why do they know that? Well, because Rob Walling has a brand now. So that’s where I’ve… It’s not both It can exist. If I’m doing direct response and I want to build a 10K, 20K, 30K a month lifestyle business, totally, you can do that. Don’t worry about brand. You can also build brands over time. The thing that I still don’t like is what you said, Jonathan, which is I see bootstrappers saying, Well, I’m going to I’m going to build this tool for this niche, and to do it, I’m going to start a media brand. I’m going to start a YouTube channel and a podcast, and I’m going to start this whole… I’m going to start a conference series. I’m going to start… And it’s like, You’re going to do that to sell a SaaS company? You’re going to build an audience? Don’t. That’s not a It’s a good idea.
[00:32:30.440] – Rob Walling
It’s such a waste of your time. First get customers, build a great business. The brand will evolve, and you can- Well, I think you might understand, but that might be linked to the other topics that we’re going to discuss, because I think you’re going to…
[00:32:46.300] – Jonathan Denwood
I totally understand where you’re coming from, but I think also that might be changing a little bit, because I think the difference between… And I think you’re an example of it in some ways, but in some ways you could push back, is that you are a personal brand. Rob Rowland has become a brand. But Drip was definitely… You had a podcast where where the two founders of Drip, where you used to have a weekly discussion about how you were freaking out with the pressure, the ever-mounting pressure of getting this thing launched, launched and being in driving it, which I learned a lot from, but I also thought you were crazy to do it. Can you see? But that was part of a personal brand building at the same time you were building a SaaS, wasn’t you?
[00:33:51.140] – Rob Walling
Yeah. It didn’t help- No, it didn’t help us at all, did it? It didn’t grow the company. I’m not saying it hurt It just didn’t… That’s the type of stuff I see some founders say, I’m building the brand because I’m telling the story of it. And it’s like, how about I get customers some other way? Because I was doing SEO, cold outreach, going to events, doing partnerships. I was doing a bunch of marketing that actually closes. The podcast you’re talking about with Derek and I, we were recording that over the course of a year, and then we put it out all at once in a big chunk. It’s at startupstoriespodcast. Com, if you want to hear it. And it’s agonizing for me now to listen to. It’s like 90 minutes of us just like, we don’t have product-market fit. We’re bleeding customers out. It’s the early days of every startup. And it turns out it worked for us, but it might not have. But yeah, that didn’t. And did that help build my personal brand? Yeah, sure. It kept me top of mind. But did it help the company or did it help the product?
[00:34:43.740] – Rob Walling
No. And that’s the thing I want to caution founders against is you being an influencer is usually not going to help you sell your software. It might help all your audiences.
[00:34:53.100] – Jonathan Denwood
What about if the podcast is targeted at the audience of your SaaS or your product, or your YouTube channel is what I call educational marketing. Do you think that works better?
[00:35:09.980] – Rob Walling
It can. The question I always ask is, is that the best marketing approach to do next? That’s it. And of all the tiny seed companies, 171 investments, somewhere less than 5 % have any type of audience and have ever had any type of audience. And yet We have Jim Desk selling a portion of his equity for $32.5 million with zero audience. And so the vast majority of the B2B SaaS companies that I see don’t build an audience. They don’t build a media brand. They do build a strong brand with their customers. Their customers start to have affinity to it. Frankly, if I’m honest, if I started a SaaS tomorrow, of course, I would have a YouTube channel and a podcast because that’s what I do. That’s what I love, right? But don’t kid yourself that that’s the best use of your time. Seo, cold outreach, content, good partnerships are probably… You just don’t want to do them. And I don’t mean you, Jonathan. I just mean the developer listening to this right now. They don’t want to do the grind, which is marketing and sales. Some folks want to be an influencer, and it’s like, I can’t really help you.
[00:36:15.260] – Jonathan Denwood
Well, I do a bit of everything, but I learned my lesson. And I think Kirk knows how much effort I put in SEO, do you? But SEO, one of your first companies that were successfully sold?
[00:36:32.960] – Rob Walling
I did, yeah. It was a six-figure exit for that one.
[00:36:40.360] – Jonathan Denwood
It was based on it. It was a SEO tool. You know the market. It was a popular SEO tool. Is it actually still going?
[00:36:48.770] – Rob Walling
No, it got shut down a couple of years ago. So they bought it for me in 2015, if I recall. As drip was taken off, I was like, It’s called HitTail. And I was like, I can’t run two companies. I can’t grow. I try to grow both companies. So I sold it. And I got a good price for it. It was a nice chunk of money. But yeah, they shut it down a couple of years ago. I went to the domain. I was like, Oh, sad.
[00:37:09.090] – Jonathan Denwood
All right. So you covered this in this particular episode, AI and SEO. And you talked about, I hope you’re impressed that I’ve obviously listened to all your episodes. You really have. This is great. And I told Kirk that he had to listen to them, or I don’t know, he doesn’t listen to it, but I say, anyway, half the time. And I don’t blame him, actually, because he would drive you crazy listening to me all the time. But AI, obviously, Google’s got a bit of problem, but I think the fundamental… I don’t think anybody really understands how all this is going to work out anyway, do they? Because I think there’s all different types of searches, and people are on different paths of their searches because there are… So it’s all up in the air, what’s your own thoughts? Have you had time to think about this? Because it’s rather important because if… It is. Because it was a fundamental… Am I correct in stating, in your early days, it was the fundamental That’s the thing that you really dug in and learned and you utilized to try and build up your own sasses, wasn’t it?
[00:38:37.720] – Jonathan Denwood
That’s right.
[00:38:39.340] – Rob Walling
Yeah. I never really got it working with Drip that well because the market was so crowded, but it was every product I owned before that, basically, SEO, AdWords, display ads. I don’t know, there were some others, but those are the big channels. Yeah, no one knows. You’re right. I don’t even think they know within Google what this is going to look like. If I had a business that was heavily based on SEO, I would not panic, but I would definitely be mindful and concerned about it. Here’s the thing. If you listen to that episode 725, where I talk about it with Ruben Gomez, his business has a tremendous SEO funnel for Signwell, which is a competitor. Well, it’s electronic signature, right? It’s like DocuSign, HelloSign. But Signwell is a great tool. Tons of SEO traffic. So when I ask him, Are you concerned? Are you just going to see a trickle off? He says, We’ve already been seeing that for years because of the no-click Google results, because of the fact that above the fold, even on a huge monitor, it’s all ads.
[00:39:42.520] – Jonathan Denwood
So he’s like- They’ve done it best to destroy it anyway, but what else you’re going to do apart from paid advertising?
[00:39:49.190] – Rob Walling
Exactly. So a big thing that he says in there, one of the key takeaways, it’s only a sentence or two. He says, The old approach, because the approach I used to do 10, 15 years ago was to Write a blog post, publish it with keywords in it, build some links. Hey, look, I rank. He’s basically like, that’s just going to work less and less and less. And AI will answer all those questions better than your blog post. So what do you do? What are the things people are searching for that are not blog posts these days? You look for tools, you look for video sometimes. Tools is a big one. There’s a bunch of stuff that’s not written. Sometimes you look for audio, a bunch of stuff that’s not written content. And so If that’s the SEO play, I think that that doesn’t go away. Ai can’t. If I want to convert, I don’t know, do something complicated. I want to electronically sign a document, and I go to AI and say, How do I electronically sign a document? It’s not going to do that for me. It’s not going to give me a paragraph of information that electronically signs my document.
[00:40:46.830] – Rob Walling
It’s going to say, There are four or five tools, blah, blah, blah, go over here. For those things, there’s still room. But yeah, it’s going to change in a big way. I’d say the majority, more than 50 % of tiny seed companies or companies that I’m invested in, SEO is a major part of their marketing. So I’m aware of this and thinking about it.
[00:41:08.540] – Jonathan Denwood
I’ll give you, before I throw it over to Kurt, I’ll give you a little something that hopefully you can comment on. I’ve had the same podcasting equipment for almost seven years. I utilize a USB mic, a Technic mic, that I bought for $70, and I used StreamYard, and it’s worked. But recently, I’ve been having some… My sound today, I presume, has been okay, but I had a really great friend of the show, Matt Madeas, who’s well known in the WordPress space, but he’s also one of these audio nutsies, Rob. So he said, Your volume, your volume is not high enough. So I’ve gone it. So I’ve decided I decided I bought a non-USB mic, which is come, and I’ve bought a separate sound deck. So I started doing a research, Rob, trying utilizing search. I’ve hit this site. Is it paid placement, or is this a real review? Then I go to YouTube and have to waste four hours looking at YouTube videos, spending most of my Saturday researching. I’m not looking to become a professional artist. I just want the quality of my sounds. So when I get Matt, my day is back on the show, the sound that’s it.
[00:42:49.350] – Jonathan Denwood
I’m not flux and spend the next 10 minutes trying to adjust my sound. But I think trying to find out a product, trying to find out the right service. I think it’s even got worse than a couple of years ago. What’s your insights about that?
[00:43:08.230] – Rob Walling
Marketers ruin everything. That’s my insight. Marketers ruin everything. The more marketers who learned SEO, learn so that they could build more links and send more traffic to their thing they’re selling, or, well, I’ll just be an affiliate marketer. And as you’re saying, a bunch of these review sites, top 10, blah, it’s whatever the number one is the one that pays them the most commission. It’s just agonizing, right? So yes, to your point, I did the same. Number one, anyone listening to this, unless you want to be an audio pro, just get a USB mic. They go to Craig Hewitt’s channel or Casto’s channel, and they have a USB mic. Mine’s a ATR-2100x, and I love this thing. I switched away the same thing to an XLR. It’s been a struggle, and I regret it. I spent $700 on it.
[00:43:53.990] – Jonathan Denwood
Oh, thank you. I have to spend that. I haven’t got your money, Rob.
[00:43:57.670] – Rob Walling
This is the one Kurt’s using, and If I could go back to this, I would consider it. But here I am on an SM7B, which is what Joe Rogan uses and other people. And I’m like, well, obviously this makes me sound better incrementally. You know how I picked this mic? I went to a trusted source. Speaking of brand, earlier, I didn’t go to Google type in best podcasting mic. I didn’t want to hear all that noise. I went to the Castos blog post because I trust Castos is not bullshitting me because Castos is a podcast company, and I’m an investor in them. Tiny Seed is. That’s not why I went there. They I didn’t make money because I bought from their recommendation. It’s just that I trust that they weren’t making a recommendation based on money. And so that is an interesting point of what’s changing, Jonathan, is so if SEO is-Well, the reason I bring this up, Google’s trying to deal with this.
[00:44:47.110] – Jonathan Denwood
Well, it’s got nothing to do with AI. It’s got to do with paid placement on Google in everywhere. The boundaries between how money sponsorship, whatever that sponsorship is, it affects what people are saying, doesn’t it? And the way they deal it is they read it. Every term you do, a competitive term, they’ve got read it on top of search. But if you know anything about read it, I wouldn’t believe anything anybody says on read it, because it’s accessible at best, Reddit. They’ve got some of the worst advice I’ve ever received from that bloody site. So it just amuses me. But am I being cruel about Reddit?
[00:45:43.700] – Rob Walling
It depends on the subreddit. When I search for anything in my hobbies, playing the guitar, Dungeons and Dragons, comic book collecting, no subreddits are great. They’re great. The people who are jerks get downvoted and the advice at the top. When I’m Dungeon mastering, when I’m DMing a game and I need rules, a clarification, and I’m like, I don’t know how this rule works, I go to Google, and if there’s a reddit post at the top, I’m like, Amazing. Someone has the same question, five people answer, always get the answer. So I think it depends on the subreddit. I think the general reddit is pretty rough.
[00:46:11.860] – Jonathan Denwood
All right. Over to you, Kurt.
[00:46:14.520] – Kurt von Ahnen
Just Just like that, this podcast-Oh, God, you need to turn your volume down.
[00:46:19.480] – Jonathan Denwood
You’re blowing me away.
[00:46:22.160] – Kurt von Ahnen
And just like that, this podcast will be shared on Twitch and Discord because he mentioned Dungeons of Dragon. Not only do I listen to your stuff, Rob, I want to set the record straight. I have even downloaded the entrepreneurs guide to Keeping Our Shit Together by Sherry. So I’m a fan of the whole family. I just want to set it straight. If we could jump into question four and talking about burnout and the updates on your progress, I’d love to get there. And I’m interested. I’m going to mix something else into the question, and that is, you have your new course coming out. Is your new course coming out a tool to edge against future burnout? I’m almost thinking, if I create this evergreen product, along with books and all the other stuff that you do, is this going to edge against future input and help release some of this potential cause of burnout?
[00:47:28.820] – Rob Walling
Say again, the course More specifically? What was that? Say the last part again. Are you talking about the course Helping Against Burnout?
[00:47:38.000] – Kurt von Ahnen
Yeah, that’s where my head was at because I saw that you were releasing this course, and I was like, he’s already got books, he’s already got microcom, he’s already got all this stuff. And I’m like, so at the end of all this… So me and Jonathan, we’re used to dealing with people coming to market with a course first. I’m going to make a course and I’m going to become a millionaire. And it’s like, I don’t think that works. And then You are coming to the table and saying, I’ve already made a mark. I’ve already published some successful books. I’ve already got microcomps and tiny seed, and now I’m coming out with a course. And in my mind, again, thinking about this episode about burnout, I was like, that’s a great tool for somebody that’s climbed this ladder to edge off some input. You put out the course and now you can say, Oh, that’s great. I’d love to talk to you for 6 hours about that, but I have a course for that. I have a course.
[00:48:28.940] – Rob Walling
Oh, that’s such a good point. I hadn’t thought about it. I’ll tell you the reason why a course. I haven’t done a course in 14 years. I did one back in 2009, actually, 2010. They’re just ridiculous amount of work, and they’re just brutal. Absolutely brutal. Especially this is 10 hours of video content that was like… I mean, we probably spent 100, 200 editor hours on it. It’s highly, highly produced because that’s what I want to put out today. I want my brand to look like that. The reason we put the course out, it’s for early stage folks. It’s like coming up It’s fast ideas. It’s vetting them. It’s building an MVP. It’s building a launch list. It’s launching. I just get that question so much. It’s exactly that of like, originally, I wrote it as a book, and I didn’t publish the book because I was like, no, people are going to read this and not to actually take action. It wasn’t media enough. I couldn’t get into the weeds. In this course, I get way deep into the weeds. Then we have quizzes and worksheets, and there’s a community people can be part of.
[00:49:27.940] – Rob Walling
I feel like you don’t just need need information at that stage. There’s a little bit of motivation, accountability. And that was where it was like, let’s do a course for this and really try to actually help people get started. Now, might I turn this into a book a year or two down the line because all the content’s there? I might. I’m going to see how it goes. But right now, it is the definitive. Anyone has a question for me about how to get started, I’m going to be like, yeah, I’ll tell you on a podcast or whatever, but that’s it. That’s it. That’s the knowledge. It’s all in there. And I really wanted to… When we started, it was like, We’re going to do 15, 16 videos, and it was going to be five hours. It’s 28 videos, and it’s nine and a half hours because we just kept saying, you know what? Let’s cover that. You know what? Let’s cover that. Let’s cover that topic. And then let’s interview Derek Reimer about building an MVP and Ruben about SEO. And it was the next thing and the next thing. So, yeah, I don’t know that it was to hedge my burnout because I’m not burned out on talking about this stuff.
[00:50:21.670] – Rob Walling
It really was there’s just a market need for a high quality course like this, and I don’t know of another one that exists.
[00:50:29.050] – Kurt von Ahnen
Nice. On a more personal question for people that haven’t read the books or listened to all the podcasts, let’s call it status. As your status has grown, have you found the potential for burnout to increase or do you feel like it was harder at the beginning?
[00:50:47.460] – Rob Walling
I think it was harder at the beginning. But here’s the thing, it’s not about status or reach. It’s about resources. It’s that I bootstrap five companies, and I raised funding for the sixth. We raised $42 million for Tiny Seed. That doesn’t go in our bank account. It’s to invest in startups. But we get management fees off those. It’s the first funded company I ever had as a multimillion dollar budget each year out of management fees. I’ve never had that before. It turns out when you have a bunch of money in your bank account and you can hire super senior, highly capable people to do all the stuff that they’re really good at, it’s their zone of genius, that you’re not, suddenly, you get to do exactly what you want every day and really enjoy it. And so that’s my life now. So I don’t burn out because I love, this is the best job I’ve ever had. It’s not because the status is, I would say, it may be relevant a little bit of things are easier because I’m me. Things are easier because people respond to my email. But realistically, the reason I’m not burning out is because we just have money to hire people to do all this shit that I used to do, and I didn’t enjoy it.
[00:51:51.150] – Rob Walling
Because that’s what burnout is, right? It’s like doing stuff for a long time that you don’t want to do or doing too much of it.
[00:51:56.940] – Kurt von Ahnen
Yeah. Now, I got one more question out of curious. Out of curiosity, and then I probably have to go run this live for Lifter LMS. But just out of curiosity, what platform did you choose to put your course on?
[00:52:08.750] – Rob Walling
We used a circle. So. And the reason is that there’s a good chance we’re leaving Slack. Microkonf pays $80,000. They wanted to charge us $130,000 this year for MicroKonf Connect. We made slightly more of that with our subscriptions to that community and not a lot more. And so we negotiated them down to about 80 grand, and it’s like, they’re untenable. Salesforce, since they acquired them, it’s just ridiculous. So what we said is, what’s a replacement for Slack? Well, there is none. We know that. But what’s the next best thing? We started looking at the circle. So then we said, well, let’s give Circle a try for this course because they can do courses, community, and other stuff. Cool. So that’s where we are. It’s going well so far.
[00:52:51.250] – Kurt von Ahnen
It might be a future episode on the Membership Machine Show, then.
[00:52:54.890] – Rob Walling
I’d be happy to join. I’m a freezer, my GM.
[00:52:57.290] – Jonathan Denwood
Well, I hope. But there’s no chance to persuade you to look at WordPress. You don’t like it, do you? No.
[00:53:05.580] – Rob Walling
Com is hosted on WordPress. Startupsotherrested us. Com is hosted on WordPress. I’ve always liked WordPress.
[00:53:11.260] – Jonathan Denwood
Yeah, you do. I’ll be nasty. But there we go. That’s me. Let’s talk about AI. I think we’ve covered the broader subject. Let’s go a little bit more focused. Is there any AI? Because It’s made an enormous difference to me, AI, because of my dyslexia, Rob. I utilize a lot of AI almost daily, and it’s made a massive difference in my life. I wish this technology had been there 10 15 years ago. But are there any particular AI tools or services you’ve used regularly for yourself and your company, Rob?
[00:54:05.560] – Rob Walling
Absolutely. I use ChatGPT a few times a week. I’ve had to name three books. Take it easy, Kurt. I’ve had to name three books in the last 12 and 15 months, and I love brainstorming with ChatGPT. And then internally, we use… What is it? Podsqueeze, I believe it’s called. For podcast production, we upload an episode, we get a transcript, we get show notes, a draft of show notes with timestamps, and a bunch of other stuff. I don’t even remember what because my team does it, but they get a bunch of assets that we must comb through. But it’s like having a virtual assistant do it. It gets us a perfect first draft. I also use PodScan, which is our call thing, and it is like Google Alerts for podcasts. So I can type in my name, book name, and microcoma tiny seed. And every day, podcast., I believe it is, downloads every podcast episode, every new one, transcribes them, searches for those terms, and then alerts you. Someone mentioned your name on this podcast yesterday. It’s a pretty cool tool. I think AI is here to stay, and I think it’s great.
[00:55:15.940] – Rob Walling
I don’t think it’s going to take over programming. I believe that we’ll always need developers to make us better. Well, I think it’s a bit like AI and SEO.
[00:55:24.190] – Jonathan Denwood
Nobody knows, do they? Yeah, they don’t. Have you got another 10 minutes, or must we wrap it up now?
[00:55:32.540] – Rob Walling
I do. I have a lunch appointment. I do need to wrap it up.
[00:55:36.090] – Jonathan Denwood
All right. That’s understandable. So, Rob, what’s the best way for people to learn more about you and some of your great ideas? Why, thank you.
[00:55:47.620] – Rob Walling
Robwalling. Com might be the easiest way to see everything. If folks like watching stuff on YouTube, you can go to the Microcomf YouTube channel. And that’s where I put out a video every other week. And, of course, podcast Startups For The Rest Of Us.
[00:56:01.700] – Jonathan Denwood
Com. It’s a fantastic podcast. I’ve learned so much from it, Rob. Thank you for being so diligent about producing it every week. It’s been a great discussion. Rob’s a friend of the show. I hopefully see myself as a personal friend. We have met a couple of times higher. Hopefully, we might meet up next year. And hopefully, he will come back next, probably at the beginning of next year or something, because we’re entering the last quarter of this year. Where has it gone? It’s been a great discussion. Share this with everybody you know if you want to support the show. And we’ll be back next week with another great interview. We’ll see you soon, folks. Bye. Bye.
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